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Photo: iStock

Murugappa feud points to deeper gender bias woes

On Monday, shareholders rejected Valli Arunachalam’s bid for a seat on Ambadi Investments Ltd’s board. Valli, the daughter of late M.V. Murugappan, has 8.15% stake in Murugappa Group’s holding firm. It highlights the glass ceiling women face in boardrooms. Mint explores.

On Monday, shareholders rejected Valli Arunachalam’s bid for a seat on Ambadi Investments Ltd’s board. Valli, the daughter of late M.V. Murugappan, has 8.15% stake in Murugappa Group’s holding firm. It highlights the glass ceiling women face in boardrooms. Mint explores.

What is Valli’s take on her bid being rejected?

New York-based Valli has alleged gender bias behind the rejection of her bid. She blames the eight-member all-male Ambadi Investments Ltd’s (AIL) board as being against a woman getting a seat even as it, as she claims, has appointed a 23-year-old male heir to the board. This is despite 59-year-old Valli being a nuclear scientist with several patents in her name and advising top-notch multinational companies.

After more than a year of relentless pursuit for a seat on the board that went in vain, Valli’s family, which includes her sister and mother, is now ready to take the battle to the court.

What are the issues around Valli’s case?

Valli is the ‘Karta’ of the Hindu Undivided Family that also comprises her sister, Vellachi Murugappan, and mother, M.V. Valli Murugappan. Many are making this an issue under the Hindu Succession Act, which may not be the case. The issue is around the representation she is seeking on the board of the company, founded by her father, which she says is being denied to her because the male-dominated family doesn’t want women in business. The issue is likely to be taken up under the Companies Act which has rules on women’s representation on the company boards, different from succession.

Murugappa Group trivia
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Murugappa Group trivia

Is the malaise of women’s representation deeper?

According to a 2018-19 study by AON, only 1 out of every 7 board members in India was a woman director and 22% of boards did not have an independent woman director. The issue is also societal. In India, many families don’t allow any woman– family member or not– or anyone from outside their caste to be a board member even as they may take them in other roles.

What are the legal aspects of the issue?

The issue could be argued at the courts under The Companies Act and Securities and Exchange Board of India Act. Companies Act mandates appointment of at least one woman on the board of firms with paid-up share capital of 100 crore or more and annual turnover of at least 300 crore. According to Valli, the majority shareholders, most of whom are board members, had earlier agreed to allow her nomination but did not proceed with it. They had asked her to wait for the next AGM, wherein her bid was subsequently rejected.

Will a legal pursuit help Valli’s case?

Valli is proposing two options—either give a board berth to her or her sister, or buy her family’s 8.15% stake in AIL at a ‘fair value’. AIL’s FY20 income was 83.23 crore, with share capital as on 31 March 2020 at 2.44 crore, both below the thresholds mentioned in the Companies Act. As per law firm L&L Partners’ Harish Kumar, a woman nominee can be a non-independent member too. “It would be interesting to see this further in case there are any rights vested upon her pursuant to, inter alia, any agreement/arrangement."

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