A former Delhi top cop is named Religare director. Burmans say rules broken.

Former Delhi Police commissioner Rakesh Asthana appointed as director on the board of Religare Enterprises Ltd. (Photo: HT)
Former Delhi Police commissioner Rakesh Asthana appointed as director on the board of Religare Enterprises Ltd. (Photo: HT)

Summary

  • Asthana, an Indian Police Service officer from the 1984 batch of Gujarat cadre, had joined Religare in August as group head of corporate affairs and business advisor

MUMBAI : The billionaire Burman family has questioned the process of appointing former Delhi Police commissioner Rakesh Asthana as a director on the board of Religare Enterprises Ltd, calling it a breach of listing rules.

The Burmans, locked in a battle for control of Religare where they own more than 25%, have written to the market regulator that the company erred in not getting Asthana's 2 November appointment as whole-time executive director cleared by shareholders within the mandatory three months.

Section 17 of Securities and Exchange Board of India's (Sebi) listing obligations and disclosure requirements (LODR) mandate every publicly listed company appointing an executive director to secure shareholders' approval through a special resolution. The approval should be sought at the first general meeting of shareholders following the appointment, or within three months from the date of appointment, whichever is earlier.

On 7 February, 2024, after the three-month period ended, Religare issued a notice to its shareholders for approval for various resolutions via e-voting, without mentioning the Asthana appointment, Burmans alleged.

"It is well settled that seeking the approval of the shareholders through a special resolution by way of a remote e-voting facility is nothing but a general meeting of the company (REL). In this context, your attention is drawn to Section 110 (2) of the Companies Act, 2013 and Rule 22 of the Companies (Management and Administration) Rules, 2014," said the 6 March letter.

"By not seeking the approval of the shareholders for appointment of Mr. Rakesh Asthana in the forthcoming general meeting, REL has breached Regulation 17(1C) of the SEBI LODR. This is a violation of shareholder rights on an important matter of having an incumbent whole-time executive director assuming directorship of a listed company," the letter said.

Email queries sent to a Sebi spokesperson, Saluja, and Asthana remained unanswered.

"As a matter of policy, we do not comment on regulatory matters," a spokesperson for the Burman family said in response to queries by Mint.

A Religare group spokesperson said, "REL being an NBFC is regulated by the RBI. The appointment of directors which would amount to change of management as per regulatory framework of Reserve Bank of India can be made only after the prior approval of the Reserve Bank of India. The approval by board was clearly indicative of this regulatory requirement. The approval of RBI for the appointment is awaited. In the absence of such regulatory approval, the question of seeking shareholders' approval cannot arise. It is only after the approval of RBI is received, that REL is required to approach its shareholders for approval within the timelines specified in Sebi Regulations."

Asthana, an Indian Police Service officer from the 1984 batch of Gujarat cadre, had joined Religare in August as group head of corporate affairs and business advisor. Before his retirement as Delhi Police commissioner in 2022, he was chief of Border Security Force (BSF), director general of the bureau of civil aviation security (BCAS), and as the director general of narcotics control bureau (NCB). He also served as a deputy inspector general at CBI. He has been felicitated by the President’s police medal for distinguished services.

"More than three months have elapsed since 2 November, 2023. Regulation 17(1C) of the SEBI LODR prescribes an outer time frame of three months within which the approval of shareholders for appointment of the person to the board of directors must be obtained. This has also not been followed," the letter said.

The Burmans' letter said that under Rashmi Saluja's chairmanship, Religare "continues to act in blatant breach of the Sebi's listing rules, and due to such allegedly prejudicial conduct, the shareholder interest is being compromised".

The Burmans also urged Sebi to direct Religare to add an agenda matter to the meeting notice to consider Asthana's appointment.

Appointing an executive director will need the approval of at least 75% of shareholders, a hard task for Religare given that the Burmans who are fiercely opposed to its current leadership hold more than 25%. This empowers them to block special resolutions.

The letter says if Religare does not comply with the above, Sebi should direct the company to withdraw, cancel, and annul Asthana's appointment as a director and make appropriate announcements to all shareholders.

If Sebi finds merit in the Burmans' complaint, it may penalize the board of Religare and reject Asthana's appointment as director.

The Burmans, who began buying Religare shares in 2018, moved to take control of the financial services group in September 2023, but the move was resisted by the Religare board. Following this, Burmans have frequently written to Sebi about alleged corporate governance lapses, Saluja's share sales, and her excessive remuneration including hefty stock options.

In November, two FIRs were lodged against the Burmans in Mumbai’s Matunga police station in relation to the controversial Mahadev betting app. In a statement, the Burman family had blamed REL for these FIRs. A person close to the Burman family said on condition of anonymity that these were done at the behest of Asthana. However, given that the special resolution to appoint him never came up for voting, the Burman family, which is Religare's biggest shareholder, never got an opportunity to block it either.

Religare has fixed a remuneration of Rs. 6 crore per annum for Asthana as director. In March 2024, the group attempted to appoint him on the board of Religare's biggest cash-generating subsidiary CARE Health Insurance Ltd. However, the proposal was rejected by the insurer's second largest shareholder Kedaara Capital, which had earlier supported the controversial ESOP issuance to Saluja.

The Burmans own their Religare shares through M.B. Finmart Pvt Ltd, Puran Associates Pvt Ltd, VIC Enterprises Pvt Ltd, and Milky Investment & Trading Company.

On 25 September, the Burmans announced that after increasing their stake beyond the crucial 25% mark, the family will acquire an additional 26% in Religare at Rs. 235 per share from the public via an open offer to establish control as the company's promoters. Religare shares closed down at Rs. 214.65 on Friday. The Saluja-led board, however, believes the company is valued at least 300 a share, and minority shareholders are not getting a fair deal in the open offer.

 

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