SKS Microfinance dismisses claims of irregularities at its AGM

Says allegations are factually incorrect, legally untenable

SKS Microfinance, the only listed micro-lender in India, on Thursday dismissed claims of anomalies in its 10th annual shareholders' meeting. The microfinance company said the allegations made by SKS Trust Advisors, one of its largest shareholders, were factually incorrect and legally untenable.

The proxies issued and the votes cast by some of the shareholders at the company's annual general meeting (AGM) on Tuesday in Mumbai had raised the eyebrows of the trustees of SKS Trust Advisors, who in turn wrote to the Securities and Exchange Board of India (Sebi) questioning it.

“Even though I have given your allegations anxious consideration, I regret to conclude that this entire sequence of events clearly suggests your letter is merely an afterthought. In summary, none of the points raised in your letter is factually correct or legally tenable,” P H Ravikumar, non-executive chairman (interim) of SKS Microfinance, said in a letter to Biksham Gujja, chairman and managing director of SKS Trust Advisors. A copy of this letter was also sent to Sebi, National Stock Exchange, BSE and the Registrar of Companies, Mumbai.

SKS Trust Advisors, currently holding a 12.6 per cent stake in the microfinance firm, had said the proxies were incomplete, the proxy closure time was not mentioned, and the register of proxies was not produced for inspection despite a request from the shareholders.

SKS Trust Advisors also alleged the authorisation letters or proxies submitted by five entities — Crown Capital, Kismet SKS, Kumaon, Westbridge and Sandstone — were not authenticated by respective authorities. It questioned the validity of the resolution that was passed re-appointing M R Rao as managing director of SKS Microfinance and requested Sebi to direct the micro-lender to hold back the poll results till an independent enquiry is conducted. SKS Trust Advisors also demanded a recount of the valid votes cast by proxies.

“The entire ballot process was supervised by an independent and professional scrutiniser along with two public shareholders. There is no basis to re-verify the resolutions duly passed at the AGM or to suspend the decisions that were correctly taken at the meeting,” Ravikumar wrote in his letter to Gujja.

SKS Microfinance also issued a statement clarifying it maintains a proxy register, but no shareholder ever asked for it either at or before the AGM. It also dismissed claims that proxy forms were not proper saying that the forms in question comply with all requirements of law. It may be noted that only a few months ago SKS Trust Advisors had requested the microfinance company to induct Vikram Akula as its nominee on the board.

Gujja is known in the industry as a close friend of Akula. In 2011, Akula had to step down as the chairperson of the micro-lender following alleged conflict between him and other board members over the running of the company.

The firm has so far not allowed the re-entry of Akula in the company as it felt its shareholders do not have the right to appoint directors on its board.