Yes Bank to approach regulator over Goel’s tenure on Dish board

Yes Bank Ltd managed to convince the majority of Dish TV India Ltd shareholders to prevent Jawahar Goel’s continuance as managing director on Friday. However, there was a twist in the tale: guarded by the company’s Articles of Association (AoA), Goel continues as a non-executive director, catching Dish TV’s largest shareholder Yes Bank, and other minority shareholders, by surprise.

This is because on 6 January 2007, three months before Dish TV went public, its board passed a resolution appointing Goel as an additional director “not liable to retire by rotation”. Mint has seen a copy of Dish TV’s filing with the Registrar of Companies in this respect. The same day, he was also appointed Dish TV’s managing director, a post he occupied until last week when shareholders forced him to step down.

A miffed Yes Bank, which has fought nearly 10 months to oust Goel and recast Dish TV’s board, is now planning to approach the Securities and Exchange Board of India (Sebi) on this issue, a bank official said, requesting anonymity. “Once it is listed, the company cannot go back to pre-listing covenants, if any. In a publicly listed firm, a director cannot continue, especially when shareholders have rejected his candidature,” the bank official said.

Last week, 78.9% of shareholders voted against the resolution to reappoint Goel as managing director, while 21% voted in favour. Goel, who owns 5.93% of Dish TV, is the younger brother of Essel Group founder Subhash Chandra.

Dish TV confirmed Goel is a non-retiring director.

“In terms of the extant provision of law, the directorship (non-executive position) of Mr. Goel survives even upon vacation of the office of managing director, which position is also backed by various (precedents),” said a spokesperson for Dish TV. “Further, as you are aware, Mr. Goel was appointed as a non-retiring director and was subsequently appointed managing director. His appointment/re-appointment as managing director since 2007 has been approved with the requisite majority by the shareholders. Also, the disclosures made by the company in this regard are in compliance with the applicable extant provisions of law,” the spokesperson added.

Queries emailed to a Yes Bank spokesperson remained unanswered.

Yes Bank is likely to approach Sebi on a particular clause in Dish TV’s AoA, which says, “The managing director shall not, while he continues to hold that office, be subjected to retirement by rotation, and he shall not be reckoned as a director for the purpose of determining the retirement of director or in fixing the number of directors to retire subject to the provisions of any contract between him and the company.”

Yet, the development has further riled investors and some proxy advisory firms, who want to know why this information was shared only with the ministry of corporate affairs, and not with shareholders or disclosed in an annual report. Mint reviewed Dish TV’s annual reports starting in 2007, and there is no mention of Goel being a non-retiring director.

India does not ban directors from continuing on board forever. However, according to at least one proxy advisory firm, this development raises questions about corporate governance.

“Such directorship clauses of promoter directors continuing in perpetuity and embedded into AoAs of listed companies is not a good governance practice. It defeats the rights of shareholders to ever replace such a lifetime tenured director,” said Shriram Subramanian, founder and MD, InGovern Research Services Pvt. Ltd, a proxy advisory firm.

In 2021, JK Cement proposed to change its AoA, which would have granted lifetime tenure to the company’s promoter directors, Raghavpat Singhania and Madhavkrishna Singhania. Shareholders rejected the recommendation.

For Yes Bank, which first pressed Dish TV board to reconstitute its board in September last year, the fight for control of the satellite television provider continues. Besides Goel, Dish TV’s current board comprises three independent directors, including B.D. Narang, Rashmi Aggarwal and Shankar Aggarwal. Narang’s term ends this year.

Varun Sood in Bengaluru contributed to the story.