Didn't get proposal for board slot from SKS Trust at AGM: S Dilli Raj

Interview with CFO, SKS Microfinance

SKS Trust Advisors, one of the largest shareholders in SKS Microfinance, has questioned the proxies issued and the votes cast by some promoters and public shareholders of the company at its annual shareholders' meet on December 3, 2013.

The micro-lender has dismissed the allegations saying the claims are factually incorrect and legally not tenable. SKS Microfinance's chief financial officer (CFO) S Dilliraj, while interacting with Somasroy Chakraborty, throws light on the controversy. Edited excerpts:

SKS Trust Advisors claim that the proxies at the microfinance company's annual general meeting (AGM) were not proper. Can you explain why it is claiming the proxies to be improper?

The MBT (mutual benefit trusts whose sole trustee is SKS Trust Advisors) had four representatives at the AGM. But none of them had asked for a review of the register of proxies. We had received only one notice for an inspection of the proxy forms and we made them available for inspection at the AGM.

Since they did not review the register, I don't know how they can claim that the proxies were not proper. We are offering to make these documents available for inspection at our registered office. Shareholders can come and review the register if they want.

SKS Trust Advisors also allege that proxies submitted by five entities were not authenticated by respective authorities. Is that true?

Two of these five entities are promoter companies of SKS Microfinance. I can confirm that the proxies submitted by five entities were properly authenticated as per the law. One of the representatives of MBT submitted a hand written note stating that the proxy forms of these shareholders are not proper. But she did not explain why she thought so.

Did SKS Trust Advisors requested nomination of one of their representatives on SKS Microfinance's board at the AGM?

As per the Company Law, any shareholder holding more than 10% in the company, could have written to us 14 days in advance of the AGM and asked for a resolution in favour of their nominee as a director. However, we did not receive any such proposals from any shareholder.

SKS Trust Advisors claim the resolution seeking reappointment of MR Rao as managing director "barely scraped through" and the poll results would have been different if incomplete proxies were precluded from the valid votes. Can you share some details on the voting results on this resolution?

Shareholders holding 54.9 million shares voted in favour of the resolution, while shareholders holding 16.8 million shares voted against it. The votes in favour represented 50.74% of the paid-up capital while those against were only 15.59% of the paid-up capital.

Also, not all shareholders voted. Out of the votes polled, 76.5% were in favour of the resolution while 23.5% were against it. I don't know if we can call this as scraping through.

The resolution pertaining to ESOP's for employees was defeated. Any reason why it did not receive shareholders' approval?

The resolution was seeking re-pricing of stock options granted to employees below the rank of assistant vice president (AVP) including employees in the field. It included field assistants, assistant branch managers, associates, executives and helpers – anyone below the rank of AVP. It was a special resolution.

For special resolutions to get approved, votes in favour must be three times the votes against it. Unfortunately, at the AGM, the votes in favour of this special resolution were not three times the votes against it.