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BENGALURU : Shareholders of Dish TV India Ltd delivered a stinging rebuke to the company, with a majority of them rejecting all three resolutions tabled by the company, including the adoption of financial statements and reappointment of a director, prompting calls from proxy advisers for the resignation of directors on moral grounds.

On Tuesday, Dish TV disclosed the voting results on the three resolutions tabled before shareholders at its annual general meeting on 30 December. The company was forced to disclose the results after the Securities and Exchange Board of India gave an ultimatum over the weekend to declare the results. Dish TV was wrangling with the regulator for over a month over making the results public, contending that courts were adjudicating the matter.

Setback for board
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Setback for board

Nearly 78% of shareholders voted against adopting financial statements for the year ended March 2021, while 79% rejected the appointment of director Ashok Kurien. In addition, more than 53% of the shareholders voted against the remuneration to the cost auditor.

“A board is the custodian of shareholders. If shareholders have voted that they don’t trust the board that brought these resolutions before shareholders, it is tantamount to a ruling party that fails to get a majority vote on a money bill, and hence losing the moral right to continue," said Amit Tandon, founder and managing director at Institutional Investor Advisory Services India, a Mumbai-based proxy advisory firm.

The outcome of the results may cause a bigger headache for the company’s management as the board’s strength stands depleted. The rejection of the reappointment of Kurien leaves only five directors, including two executive directors, chairman Jawahar Goel and chief executive officer Anil Dua. B.D. Narang, Rashmi Aggarwal and Shankar Aggarwal are the three independent directors. Both Goel and Dua’s terms will end later this month, while Narang is set to retire at the company’s next annual general meeting.

Current Sebi rules require a company with more than 1,000 crore in revenue to have at least six directors. Chairman Goel, the younger brother of Essel Group founder Subhash Chandra, owns 5.93% of Dish TV.

“There does not appear to be a precedence to the ongoing developments at Dish TV," Tandon said. “I would like to believe that the current board now has run out of most options, and so, it makes you think what else can the current board do to continue."

A spokesperson for Dish TV said, “it is important to note that vide order dated 23 December, the hon’ble high court of Bombay, in interim application No. 29574 of 2021, directed that the outcome of the results of AGM to be held on 30 December shall abide by the orders of the hon’ble high court."

“It is a matter of record that the interim application is still sub judice and pending adjudication... Further, Dish TV shall take all such actions/steps as may be required in law to remain complaint (sic) with the extant statutory and regulatory provisions in respect of the outcome of the AGM," the spokesperson added.

The trouble at Dish TV started seven months ago when it faced a revolt by its largest shareholder, Yes Bank. Alleging corporate misgovernance, Yes Bank, which owns 25.63% of Dish TV’s shares, sought reconstitution of the board in a letter dated 4 September. It wanted to remove five directors and sought the induction of seven members. Yes Bank was also peeved that Dish TV agreed to raise 1,000 crore via a rights issue in February last year, despite objections by the bank. Dish TV, which denies these allegations, argued that Yes Bank is looking to take control of the company by demanding reconstitution of the board. After Dish TV rejected the lender’s demand, Yes Bank called for an extraordinary general meeting. Dish TV rejected this demand too. Subsequently, both Yes Bank and Dish TV sought courts to adjudicate. At least five lawsuits, including Yes Bank’s demand to hold an EGM, are being heard before a company court in Mumbai and the Bombay high court.

“What initially started as Yes Bank’s fight against Dish TV has now become a revolt by the majority of other shareholders," said an executive at Yes Bank.

ABOUT THE AUTHOR

Varun Sood

Varun Sood is a business journalist writing on corporate affairs for the last fifteen years. He also writes a weekly newsletter, TWICH+ on the largest technology services companies. He is based in Bangalore. Varun's first book, Azim Premji: The Man Beyond the Billions, was brought out by HarperCollins in October 2020.
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