Religare defers AGM to December, irks investors
Summary
- The delay becomes crucial as chairperson Rashmi Saluja was up for reappointment at this AGM, initially scheduled for September
Religare Enterprises Ltd has deferred its annual general meeting (AGM) by three months, delaying the resolution of the tiff between shareholders and the company management till at least December.
Three institutional shareholders said they were unhappy with the decision to postpone the AGM, especially since the company has given no explanation. The delay becomes crucial as chairperson Rashmi Saluja was up for reappointment at this AGM, initially scheduled for September.
According to Section 152 (6) of the Companies Act, one-thirds of the directors, excluding independent directors, need to retire each AGM.
Saluja is the only non-independent director on the Religare board and, therefore, comes up for retirement at each AGM. The vote to reappoint her will now take place in December after the company secured approval to defer the AGM by three months.
Also read | Sebi directs Religare’s board, Saluja to seek approvals for Burman open offer
“We are very upset about it. It should not have been done. Accounts have been filed and submitted to the exchanges, so there is no valid reason for pushing the AGM," one of the investors said on condition of anonymity. Religare told the exchanges on 22 August that it had filed for an extension of the AGM on 21 August, which the Registrar of Companies had granted.
Religare did not respond to a request for comment on why the company had pushed its AGM.
“The reason to push the AGM seems to be to avoid the vote," another investor said.
The current impasse at Religare stems from last 25 September when the Burman family signalled their intent to acquire a controlling stake in Religare Enterprises. The promoters of consumer goods company Dabur India Ltd have been accumulating shares through MB Finmart, Puran Associates, VIC Enterprises, and Milky Investment and Trading Co., entities belonging to cousins Anand and Mohit Burman. After acquiring a 9.9% stake in April 2018, they increased their holding to 14% in June 2021 and then acquired an additional 7.5% in August 2023. In January this year, they raised their stake to 25.18%, which gives them veto rights on any special resolution introduced by the company.
“Under Indian law, the postponement of an AGM may suggest underlying issues within the company, such as corporate governance disputes or strategic decisions that are yet to be finalized," said Ketan Mukhija, senior partner, Burgeon Law.
“In this case, Religare is in the midst of a high-stakes boardroom battle involving its management and the Burman family, who are attempting to take control of the company through an open offer. The ongoing conflict and regulatory scrutiny, including Sebi’s (Securities and Exchange Board of India) involvement, might be key reasons behind the delay," Mukhija said. “For shareholders, this postponement could indicate potential volatility in the company’s governance and future direction, as the outcome of this power struggle will likely impact the company’s strategic plans, share value, and overall governance."
Read more | SAT grants Religare time till 22 July to comply with Sebi order in Burman Family’s open offer matter
Saluja-led Religare board’s resistance to the takeover move by the Burman family has caught regulatory attention in recent months.
On 19 June, Sebi pulled up the Religare management for its failure to file the necessary approvals and asked the company to file them promptly. Sebi also issued a show-cause notice to the company’s board asking why it should not act against them. The company and the board have appealed this decision, and a hearing is expected later this month.
“Investors now have three options: contest the extension of the AGM, call for an extraordinary general meeting (EGM) or wait for another three months to seek her removal," the second investor cited above added.
Shareholders owning more than 10% voting rights combined can call an EGM.
The postponement of Religare’s AGM is a significant development for shareholders as it delays crucial decisions regarding the reappointment of board members and governance, said Nilesh Tribhuvann, managing partner, White & Brief, Advocates & Solicitors.
“In a board with no current shareholder representation, this delay heightens concerns about the continued lack of direct oversight by those vested in the company’s future," he said. “The company must provide clear and transparent reasons for this delay and a revised timeline to ensure that shareholders' interests are adequately represented and safeguarded."