Nykaa's institutional investors against giving more rights to promoters

Nykaa has passed a resolution to amend its Articles of Association that allow promoters to nominate one-third of directors and the chairperson

Almost 80 per cent of institutional investors of e-commerce Nykaa, which include mutual funds, insurance companies and foreign portfolio investors, voted against a resolution of the board to amend its Articles of Association (AoA).

Regulatory filings showed that the two amendments – Article 114(a) and Article 134 – allow special rights to the promoters and their family trusts to nominate one-third of the directors on the board and also the chairperson.

However, the resolution was approved by the board as a cumulative of 94 per cent shareholders voted in favour. Apart from the promoter group, which has a 52.56 per cent shareholding in the company, some private equity funds and HNIs also voted in favour of the resolution. Institutional investors have a total of 9.15 per cent shareholding in the company.

Here are the two amended articles accessed on the BSE:

Article l 14(a)

With effect from the date of receipt of final listing and trading approvals from the stock exchanges on which the equity shares of the Company are proposed to be listed, following an initial public offering of the equity shares of the Company and, subject to the approval of the Shareholders through a special resolution passed in the first general meeting held after receipt of such listing and trading approvals, (i) as long as Ms. Falguni Nayar, Mr. Sanjay Nayar, the Falguni Nayar Family Trust and the Sanjay Nayar Family Trust and their respective promoter group continue to hold at least in excess of 25 per cent of the paidup equity share capital of the Company, Ms. Falguni Nayar, Mr. Sanjay Nayar, the Falguni Nayar Family Trust and the Sanjay Nayar Family Trust shall, collectively, have the right to nominate up to 50 per cent of the number of Directors to the Board subject, to compliance with applicable law; and (ii) as long as any of Ms. Falguni Nayar, Mr. Sanjay Nayar, the Falguni Nayar Family Trust and the Sanjay Nayar Family Trust continue to be classified as promoters of the Company, such promoters shall, collectively, have the right to nominate up to 1/3rd of the number of Directors to the Board (rounded up to the higher integer), subject to compliance with applicable law.

Article 134:

With effect from the date of receipt of final listing and trading approvals from the stock exchanges on which the equity shares of the Company are proposed to be listed, following an initial public offering of the equity shares of the Company, and subject to the approval of the Shareholders through a special resolution passed in the first general meeting held after receipt of such listing and trading approvals, as long as any of Ms. Falguni Nayar, Mr. Sanjay Nayar, the Falguni Nayar Family Trust and the Sanjay Nayar Family Trust continue to be classified as promoters of the Company, such promoters shall, collectively, have the right to nominate the Chairperson of the Board.