Kapoor told Mint that in his capacity as a Yes Bank co-founder, he met Madhu Kapur and her daughter Shagun Gogia on 11 October with a written proposal to combine the stakes and voting rights of the two co-promoters and their affiliates to become a single promoter group.
This, Kapoor hopes, will help both sides to name directors on the Yes Bank board without violating its knotty and contentious articles of association (AoA).
Kapoor said he also met Gaurav Kapur, late co-founder Ashok Kapur’s son, with the same proposal on Friday.
“All we can confirm is that two meetings were held on Sunday between Madhu Kapur, Shagun Gogia, Bindu Kapoor (wife of Rana Kapoor) and Neeru Puri (sister of Madhu Kapur and Bindu Kapoor from Delhi). Joint promoter group agreement is one of the many possible solutions which could possibly be considered," said a Yes Bank spokesperson.
Messages and an email sent to Gogia on Wednesday and Thursday remained unanswered.
The Reserve Bank of India (RBI) on 17 September restricted Kapoor’s term as the head of Yes Bank to 31 January, sparking the latest chain of events. The bank’s request seeking additional time did not find favour with RBI.
“In order to discuss on the settlement terms, Madhu Kapur, Bindoo Kapoor, Shagun Gogia and another sister of Madhu Kapur met in Mumbai on Sunday twice," one person aware of the matter said. Yes Bank’s senior group president Rajat Monga too reached out to the Kapurs on 10 October, this person added on condition of anonymity.
The proposal, if agreed upon, will allow Kapoor to nominate himself or one of his affiliates on the board of the bank even after his exit as managing director and CEO, without opposition from other co-founders.
If the Kapurs agree to Kapoor’s proposal, all promoters will be able to exercise their rights as per sections 110 and 127 of Yes Bank’s Articles of Association at any time, said another person close to Kapoor’s family.
At present, Kapur, along with her associate firms, holds around 9.23% in Yes Bank while Kapoor holds around 10.7% in the bank directly and through his associate firms. After the proposed agreement, the combined holding of the promoter group will be around 20%.
The latest move comes in the backdrop of RBI’s recent directive to Yes Bank to restrict Kapoor’s tenure till 31 January.
With this, his ability to nominate a director of his choice is circumscribed by the AoA, which requires consensus between promoters. The bank’s complex AoA complicates the task of finding a new boss.
The conflict between Yes Bank’s promoters began soon after co-founder Ashok Kapur was killed in the 2008 terrorist attack in Mumbai.
In April 2009, Ashok Kapur’s widow Madhu Kapur and Gogia first met the Yes Bank board and sought a nomination for either of them. The board members then felt that neither met the RBI’s fit-and-proper criteria for bank directors.
According to a 2013 Mint report, in a series of letters in May and June, Kapur and Gogia spoke of their frustration at attempts to join the board.
A 2 May, 2013 letter by Gogia to Kapoor said, “Dear Rana uncle, it is indisputable that obtaining the banking licence was a product of joint efforts of my father and you. It is also indisputable that after his unfortunate and tragic demise, your efforts and passion have brought the bank to the position it is at today. However, it appears that the contribution of my father is overlooked. My father’s name is deleted from the promoters’ shareholding and does not even appear in the ‘Yes Bank Story’ at all."
The letter also recounts Gogia meeting the board in January 2009 and being told “to wait a couple of years prior to assuming directorship on the board or exercising our right to nominate a nominee director."
“I respected the decision and abided by it as you were party to it," Gogia wrote.
When Kapur and her family’s interests were allegedly ignored by Kapoor, Madhu Kapur in a letter on 4 June, 2013, to Kapoor said: “I do not want to say our family’s trust in you was misplaced… But we are indeed feeling wrongly deprived of our rights as if you alone have them all. This is not acceptable."
The special rights, responsibilities and positions which the Madhu Kapur group was referring to includes the right by the co-founders to nominate directors on the bank’s board.
Madhu Kapur wrote another letter on 5 June, in which she invoked the bank’s AoA that say that both Indian partners have a right to nominate directors.
“Nomination of three directors by two Indian partners should be as far as possible by consensus. In the absence of a consensus, one director may be nominated by each of the Indian partners and the third be appointed on an alternative basis," said the letter, before suggesting that Gogia’s nomination to the board be made jointly by both promoters “for a positive beginning now".
When things were not forthcoming, the Madhu Kapur family filed a case in June 2013 in Bombay High Court against Rana Kapoor and Yes Bank.
Gogia had said over email that the decision to go to court “was done most reluctantly and with sadness...as it could not be settled in the family", according to an 18 June 2013 Mint report.