RIL backs Saudi Aramco chairman appointment as independent director

Reiterates that his induction has no connection with Saudi Aramco's plans to buy a stake in RIL's oil-to-chemical business

Reliance Industries today backed the appointment of Saudi Aramco Chairman, Yasir Al-Rumayyan as an independent director on its board and reiterated that his appointment has no connection with Saudi Aramco's plans to buy a stake in its oil-to-chemicals business.

In a statement filed with the stock exchanges, RIL said its O2C (oil-to-chemicals) business is being hived off into 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 said.

US-based proxy advisory firm, Glass, Lewis & Co., had said as Al-Rumayyan has a key role in the operations of Aramco as chairman and governor of Public Investment Fund (PIF); he does not qualify to be an independent director of RIL.

Under 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 already has a stake in RIL’s subsidiaries and Aramco is looking to buy a stake in Reliance OTC, Al-Rumayyan’s ‘independence’ on the RIL board is under question, it said.

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 percent of Reliance’s Oil to chemical business valuing the O2C company at an total enterprise valuation of $75 billion.

In its statement today, RIL said its board, based on the recommendation of the Human Resources, Nomination and Remuneration (HRNR) Committee had approved the appointment of Rumayyan as an Additional Director, designated as an independent director. This was also announced at the AGM held on June 24, this year and the appointment has taken effect from July 19 for a term of three years.

The law (Indian Companies Act, 2013) and the regulations prescribed by SEBI, the Indian Securities Regulator, lay down stringent criteria for independence for appointment as independent directors of a listed company like RIL. “Rumayyan satisfies all of these criteria laid down in the law and regulations. The HRNR committee of the Board of Directors consists of four independent directors out of the total strength of five,” RIL said.

The committee, based on interaction with Rumayyan and considering his versatile experience, after satisfying itself that he meets the criteria for independence, made a unanimous recommendation to the Board for his appointment as an independent director. This was, in turn,  unanimously approved by the RIL board which consists of 50 per cent independent directors.

RIL said Rummayyan is an accomplished global business leader and his 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 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, it said.

“It is a practice in RIL that any director who is deemed interested recuses himself/herself from participating in the relevant agenda item,” it said. RIL has sought shareholders’ approval via a postal ballot and  the California State Teachers’ Retirement System (CalSTRS), which owns 5.3 million shares in RIL, has said that it will oppose the appointment.