Reliance Industries backs Saudi Aramco chairman as independent director

RIL said in a stock exchange filing that the appointment of Yasir Al-Rumayyan will 'benefit Reliance through the transition from oil to chemicals and the aim to achieve Net Carbon Zero by 2035'

Reliance Industries Ltd said on Wednesday Saudi Aramco Chairman Yasir Al-Rumayyan met all regulatory criteria for his appointment as an independent director, pending a shareholder approval on the decision.

The California State Teachers' Retirement Fund (CalSTRS, a shareholder of the Indian conglomerate, had last week decided to vote against the move based on U.S. proxy advisory research firm Glass Lewis' recommendation, Business Standard had reported last week.

The voting to confirm Al-Rumayyan's appointment for a period of three years will end on October 19.

In a stock exchange filing, Mukesh Ambani-led RIL said the appointment will "help strengthen the Board's diversity and skill-sets and benefit Reliance through the transition from oil to chemicals and the aim to achieve Net Carbon Zero by 2035".

"H.E. Yasir Al Rummayyan is an accomplished global business leader. H.E. is the Non-Executive Chairman of Saudi Aramco (SA). H. E. 's experience encompasses over 25 years working in some of Saudi Arabia's prominent financial institutions, including as the Governor of the Public Investment Fund of Saudi Arabia. His experience encompasses international business and governance experience, expertise in finance, global energy industry and insights on emerging technology-led business models. This will help strengthen the Board's diversity and skill-sets and benefit Reliance through the transition from oil to chemicals and the aim to achieve Net Carbon Zero by 2035," said Reliance in a statement.

Rumayyan's appointment has no connection with the contemplated transaction with Saudi Aramco, Reliance had sought to clarify.

"The appointment of H. E. Yasir Al Rumayyan has no connection with the contemplated transaction with Saudi Aramco. Further, as approved by the shareholders, the O2C business of RIL is being spun off to a subsidiary and as per the terms of the proposed transaction, Saudi Aramco will participate in the equity of the O2C subsidiary. The O2C Subsidiary Board may have nominees of Saudi Aramco to protect its interest... RIL has been and shall continue to adhere to the best practices of corporate governance in all matters including appointment of independent directors," said RIL.

CalSTRS has decided to oppose the appointment of Yasir Al-Rumayyan due to his position in Saudi Arabia’s Public Investment Fund (PIF), as its governor, as well as in Aramco.

PIF has already invested Rs 9,555 crore in Reliance Retail and Rs 11,367 crore in RIL’s Jio Platforms. Aramco and RIL have been in talks for another equity deal that involves 20 per cent of Reliance’s oil-to-chemical business.

An on June 30, 2020, CalSTRS held 5.3 million fully and partly paid shares of RIL, according to its website. CalSTRS is the America’s second largest public pension fund with assets totalling approximately $318.4 billion as of August 31, 2021.

CalSTRS’s opposition is based on a report by Glass, Lewis & Co., an American proxy advisory services company, that claims to advise more than 1,300 clients. According to Glass, Lewis & Co, its clients include a majority of the world’s largest pension plans, mutual funds and asset managers, who collectively manage more than $40 trillion in assets.

Speaking at the 44th annual general meeting (AGM) of RIL, Ambani said Al-Rumayyan “joining our board is also the beginning of internationalisation of Reliance. You will hear more about our international plans in the times to come”.

According to Glass, Lewis & Co., since Al-Rumayyan has a key role in the operations of Aramco and PIF, he does not qualify to be an independent director. Under the Indian law, an independent director cannot have a role in any company that has a business or equity partnership with the company that intends to appoint him or her. As PIF has a stake in RIL’s subsidiaries and Aramco is looking to buy stake in Reliance OTC Ltd, Al-Rumayyan’s ‘independence’ on the RIL board is under question.