SKS Trust Advisors questions MD's re-appointment

Alleges irregularities at the micro-lender's AGM

SKS Trust Advisors, one of the largest shareholders in SKS Microfinance, on Tuesday questioned the re-appointment of M R Rao as managing director (MD) of the company, claiming the micro-lender did not conduct its annual shareholders' meeting according to regulations.

It has written to the Securities and Exchange Board of India (Sebi), alleging irregularities in SKS' 10th annual general meeting (AGM), held in Mumbai on Tuesday.

"It may be of interest to note that one of the special resolutions - item number seven pertaining to ESOPs [employee stock ownership plan] for employees - was defeated, while some of the other resolutions, specially item number five relating to re-appointment of MD, barely scraped through. We believe if the incomplete proxies were precluded from the valid votes as decided by the scrutinisers, the results may well have been different," SKS Trust Advisors wrote in its letter to Sebi.

SKS Trust had 12.6 per cent stake in the microfinance company at the end of September, data available on the BSE showed. Only a few months ago, it had requested the micro-lender to induct Vikram Akula as its nominee on the board. Biksham Gujja, chairperson of the trustees of SKS Trusts, is known in the industry as a close friend of Akula.

In 2011, Akula had to step down as the chairperson of SKS Microfinance, following alleged conflict between him and other board members over the running of the company. The micro-lender did not allow Akula's re-entry in the company as it felt its shareholders did not have the right to nominate directors.

SKS Trust Advisors alleged the register of proxies was not produced by SKS Microfinance for inspection, despite requests from the shareholders.

Also, the proxy closure time was not mentioned. The authorisation letters of proxies submitted by five entities - Crown Capital, Kismet SKS, Kumaon, Westbridge and Sandstone - were allegedly not authenticated by the respective authorities.

"Our representatives pointed out the anomalies to the scrutinisers for the AGM...and handed over a written complaint in this regard but they refused to acknowledge the written complaint despite repeated requests. They also do not seem to have taken cognisance of the complaint made by SKS Trust representatives," it said.

It requested Sebi to direct the micro-lender to hold back the poll results till an independent probe was conducted to verify the true facts and a recount of the valid votes cast by proxies. "We request for the re-verification of the proxies/authorisation letters pointed out by our authorised representatives and order for recounting of the votes cast by the valid members/authorised representatives/proxies in the presence of representatives of SKS Trust," it said.

SKS Microfinance, however, claimed that there were no irregularities in the AGM. "The entire AGM, including the voting process, was conducted according to the existing rules and regulations," a spokesperson of the company told Business Standard.