SKS Trusts want to quit as promoters to avoid regulatory responsibilities

SKS Trusts have sought to be delisted as the promoter of SKS Microfinance Limited, the country's only listed micro-lender, to avoid "the onerous responsibilities of complying with various regulatory guidelines", according to Bhiksham Gujja, the chairman of SKS Trust Advisors Private Limited (STA).

STA is the sole trustee of five SKS Mutual Benefit Trusts which together hold 12.5% stake in SKS Microfinance.

"Since SKS Trusts had no ability to exercise any control or influence in the affairs of SKS Microfinance, the Board (of trustees) requested the Company to delist as a promoter which has since been accepted. This move will help the Trusts to focus on its core activities of furthering financial inclusion while avoiding the onerous responsibilities of complying with various regulatory guidelines as a promoter", Gujja, who is currently out of the country, stated in an e-mail to Business Standard.

Last week, SKS had informed stock exchanges that "taking cognisance of their requests and instructions", it shall cease to treat the five mutual benefit trusts, Vikram Akula, Mauritius Unitus Corporation (MUC) and Sequoia Capital India as promoters of the company.

While MUC and Sequoia have entirely divested their stake, SKS said that Vikram Akula, former executive chairman of the company, currently holds only 10 equity shares.

Akula, who founded SKS, had quit the firm in November 2011 over differences with the company's board. SKS had turned down STA's request last year to induct Akula as its nominee on the board. SKS said that its shareholders did not have the right to nominate directors.

Given this background, there are speculations over the future course of action of STA, which is still one of the largest shareholders of SKS. Though Gujja did not elaborate, sources close to him said that, as of now, STA would continue to remain as an investor in SKS and exercise its rights as a shareholder, particularly at the company's annual general meetings (AGM).

In the tenth AGM of SKS, held in December 2013, STA had questioned the re-appointment of MR Rao as the managing director of the company. It had also written to the Securities and Exchange Board of India (Sebi) alleging irregularities in the AGM.