The firm can seek I&B ministry approval after that, Yes Bank said in reply to Dish TV’s notice
Last week, Dish TV said Yes Bank has proposed to replace seven directors on the company’s board
Yes Bank Ltd has asked Dish TV India Ltd to table the resolution on appointing seven new board members at the annual general meeting (AGM) to be held on 27 September, according to two persons aware of the matter. The company can then seek the approval as per clause 5.1 of the up-linking guidelines of the ministry of information and broadcasting, Yes Bank said in reply to Dish TV’s notice dated 6 September.
Yes Bank’s reply is based on legal opinion sought from law firm Cyril Amarchand Mangaldas.
In the case of Dish TV, Zee TV and NDTV, shareholders have elected the board directors first and then gone to the ministry for approval, said the first person aware of the letter.
“What they (Dish TV) are seeking is highly unusual. The company has also not informed the stock exchanges about Yes Bank’s email on 9 September, as per the Listing Obligations and Disclosure Requirements Regulations," the person said.
Last week, Dish TV disclosed to BSE a 28-page letter from Yes Bank, which proposed to replace five directors on the company’s board, including managing director Jawahar Goel. In their place, the bank is seeking to appoint Akash Suri, country head, stressed asset management, Yes Bank; and Sanjay Nambiar, general counsel as nominee directors. It has also recommended Girish Paranjpe, former chief executive officer of Wipro Ltd; Vijay Bhatt, formerly with KPMG; Haripriya Padmanabhan, a lawyer; Narayan Prabhutendulkar, former executive director with Hewlett Packard Enterprise India Ltd; and Arvind Nachaya to be the five independent directors who will form the new seven-member board of Dish TV.
Emails sent to Dish TV and Yes Bank were not answered till the time of going to press.
Yes Bank has begun reaching out to other large shareholders of the company to get the minimum 75% votes to replace the company’s current set of directors, according to the people mentioned above. “Yes Bank, which has alleged corporate governance lapses in Dish TV, believes it will get support from other shareholders, including IndusInd Bank, which owns about 12.4% stake in the company, bringing the total to 48% of shareholders who want a new board at Dish TV," said the first person. “A few financial shareholders such as HDFC and L&T Finance, which own about 5% and 1.95%, respectively, in the company, are yet to make their stance clear," this person said.
The decision of proxy advisers will also be crucial as large fund houses are also likely to vote according to their recommendations.
However, analysts believe that if 10% of shareholders want a company to discuss a certain agenda, it is mandatory for the company to put it before shareholders at the AGM.
The decision to revamp the board was taken after Dish TV’s board cleared a ₹1,000 crore rights issue, despite repeated objections by the bank. The lender alleged that the board was acting at the behest of minority shareholders, with the objective of diluting the bank’s stake.
Yes Bank has an exposure of ₹8,000 crore, including interest, to the Essel group companies run by Goel’s brother Subash Chandra. The bank had invoked the promoter shares of Dish TV pledged with it after the group companies defaulted on the loans. In May last year, Yes Bank, through Catalyst Trusteeship Ltd, picked up a 24.19% stake in Dish TV by invoking pledged promoter shares.