An overwhelming number of public shareholders of commodity major Vedanta have voted against a resolution to re-appoint UK Sinha, the previous chief at market regulator Sebi—on its board. While the resolution was still passed on the back of promoter support, it underscored the extent of emphasis institutional investors are placing on issues such as corporate governance and transparency.
Anil Agarwal-promoted Vedanta floated a special resolution at its annual general meeting (AGM) for the re-appointment of Sinha as a non-executive independent director for the second and final term of three years.
The AGM voting results disclosed by the company shows, 70.7 per cent of public institutions and 56.7 per cent of public non-institutions (largely individual shareholders) casted an against ‘vote’ on the motion.
Overall, the special resolution—which requires a minimum of 75 per cent ‘for’ votes— got 84.65 per favourable votes thanks to the promoter group, which holds 65.18 per cent stake in Vedanta.
“The resolutions pertaining to the accounts, appointment of directors was approved with an average majority of 85 per cent. Please note that the statutory auditor’s report on the financial statement is clean and not qualified. Further, we have a strong and diverse board. The induction of the new directors will strengthen the board and management oversight, steer our strategic direction and create long term shareholder value,” said a company spokesperson.
Among the major public shareholders of Vedanta are Citibank and state-owned LIC. It couldn’t be ascertained how these two firms voted. Sources said several mutual funds and foreign portfolio investors casted against vote on the recommendation of voting advisory firms.
Stakeholders Empowerment Services (SES) and Institutional Investor Advisory Services (IiAS) had recommended their clients to oppose the resolutions pertaining to Sinha’s appointment due to some observations made by the company’s auditors. The former Sebi chief is also the member of the audit committee– an internal panel composed of majority independent directors tasked with overseeing finances.
“While no concern is identified with respect to his (Sinha’s) profile, time commitments or independence, shareholders may note that SES is recommending ‘against’ the re-appointment on account of him being an audit committee member yet accounts of the company are qualified,” said SES in a note.
In the note, the proxy advisory firm has noted that the audit committee chairman had resigned in November within a month of qualification by the auditor.
“The subsequent inaction by the board on the given loan and in fact allowing the loan recast – shows that the board members, especially the audit committee members failed in their fiduciary duties to shareholders and this highlights a collective failure of duty towards shareholders by the board, especially of independent director,” SES said in a note.
As on March 31, 2021, Vedanta and its subsidiaries had a total receivable of Rs 211 crore from Konkola Copper Mines (KCM) – an erstwhile promoter group entity –for the supplies of raw material.
“KCM has not supplied the material during the contracted period and has ceased to be a related party with effect from May 21, 2019. The promoter parent company has since lost control over KCM and a provisional liquidator has been appointed for running the operations, who is not responding to the communications sent by the group regarding these advances…. the then audit committee failed in its duty to scrutinise the terms of advances and this has resulted in a cash loss of almost Rs. 213 crore for the company,” SES said.
Sinha has served as Sebi’s chairman between February 2011 and March 2017. During his tenure, the market regulator had taken several initiatives to improve corporate governance standards at listed companies.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
For more information call us at 9891563359.
We are a group of best insurance advisors in Delhi. We are experts in LIC and have received number of awards.
If you are near Delhi or Rohini or Pitampura Contact Us Here