Active Stocks
Tue Apr 23 2024 15:29:59
  1. Tata Steel share price
  2. 161.05 -0.49%
  1. Tata Motors share price
  2. 988.00 1.48%
  1. NTPC share price
  2. 347.10 1.18%
  1. Bharti Airtel share price
  2. 1,349.00 3.89%
  1. HDFC Bank share price
  2. 1,507.00 -0.35%
Business News/ Companies / News/  Burman Family demands SEBI investigation into allotment of Religare ESOPs to REL Chairperson Rashmi Saluja
BackBack

Burman Family demands SEBI investigation into allotment of Religare ESOPs to REL Chairperson Rashmi Saluja

The allotment of 2.14 crore shares to Rashmi Saluja through ESOPs requires investigation in terms of compliance with SEBI Takeover Regulations, says the Burman Family.

Rashmi Saluja's acquisition of an 8% stake in RFL through stock grants occurred on September 26. Premium
Rashmi Saluja's acquisition of an 8% stake in RFL through stock grants occurred on September 26.

The Burman family on January 3 said the allotment of 8% of the Religare Finvest Ltd (RFL) shares via Employee Stock Ownership Plans (ESOPs) to Rashmi Saluja, who is the executive chairperson of Religare Enterprises Limited (REL), will require an investigation to confirm compliance with SEBI takeover regulations.

"The allotment of approximately 2.14 crore shares, constituting ~8% of Religare Finvest Limited (RFL), to Rashmi Saluja through Employee Stock Ownership Plans (ESOPs) requires investigation in terms of compliance with SEBI Takeover Regulations. It is unfortunate that a solitary executive has cornered significant quantum of remuneration through ESOPs at Religare Enterprises Limited (REL), Care Health Insurance Limited, and RFL, all without approval and requisite disclosure to REL shareholders. This raises question mark on the management and the independence of the independent directors and their complicity in such unjustified dole-outs. REL board should answer the shareholders whether there exist more instances of ESOP issuances to entities, and potential conflicts of interest. These actions have eroded trust and confidence in the REL board, necessitating urgent need to restore credibility," the spokesperson of the Burman Family said in a statement on Wednesday.

Also read: ‘No discussion on fuel price cuts’: Amid Red Sea attacks, Hardeep Singh Puri says rates won't be affected unless...

On Tuesday, media reports revealed that Rashmi Saluja has acquired an approximately 8% stake in the company's wholly owned shadow bank, RFL, through the utilisation of an Employees Stock Option Plan (ESOP) award. 

This development transpired just one day after the Burman Family, the company's largest shareholder, revealed their intention to initiate an open offer to acquire additional shares with the aim of gaining control over the conglomerate.

According to an Economic Times report, the estimated value of the ESOP award in the company falls within the range of 150–260 crore. InGovern Research, a proxy advisory firm, valued the stock options of REL and its subsidiary, Care Health Insurance Limited, issued to Saluja over the past 3–4 years at over 480 crore in November of the previous year. 

Also read: Adani-Hindenburg Case Verdict: Adani Group stocks rally up to 12%; overall m-cap jumps over 15 lakh crore

When factoring in the award in RFL, the overall compensation through ESOPs earned by her can vary between 630 crore and 740 crore. This, coupled with Saluja's annual salary, positions her as the highest-paid executive in the history of Indian corporates.

In a contentious struggle for control of the conglomerate, the boards of Burmans and Religare have engaged in a regulatory dispute against each other. Led by Saluja, the Religare board contends that the Burmans are unsuitable to assume control of the financial services company. 

In retaliation, the Burmans have accused Saluja of engaging in insider trading and abusing power to secure excessive remuneration. Both parties vehemently deny these allegations.

The acquisition of an 8% stake in RFL through stock grants occurred on September 26. The day prior, the Burman Family had announced an open offer for additional shares in Religare at 235 per share, a proposal that was rejected by the board. The Burmans, in turn, claimed that the stock grants issued to Saluja violated takeover rules.

Also read: I G Petrochemicals: This multibagger stock is down 49% from its all-time high; is this the right time to buy?

During the annual general meeting of RFL, the Employee Stock Ownership Plans were approved as part of the "special business." Documents reviewed by ET indicate that the RFL resolution was voted upon and passed by a show of hands. However, the issuance of ESOPs was not disclosed to REL shareholders. 

Notably, during REL's AGM on September 27, a resolution reappointing Saluja as chairperson was approved. The AGM notice issued to REL shareholders on September 5 made no mention of any proposed ESOP issuance to Saluja by RFL, despite the RFL AGM notice being issued on September 1. This contradicts the assertions made by Saluja's office.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 03 Jan 2024, 06:32 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App