Religare board has no power to reject open offer for company: Burmans

The independent directors of the Religare board, however, have the powers to make a recommendation to the shareholders, lawyers said

The Burman family said on Wednesday that the Board of Religare Enterprises Ltd (REL) has no power to reject its open offer to acquire an additional 26 per cent stake in the financial services company.

The independent directors of Religare Board, however, have the power to make a recommendation to the shareholders, lawyers said.

The Religare Board has rebelled against the Burmans, saying they are not meeting the fit and proper criteria of the Indian regulators. The Burmans own a 21 per cent stake in the company and have made an open offer for the company to acquire an additional 26 per cent stake at a cost of Rs 2,200 crore (assuming full acceptance).
 

“The Board of REL does not have the power or authority to reject our open offer. It only has the power to recommend the open offer to the shareholders. It is a separate matter, that the shareholders have already seen the governance lapses in REL and whether the directors can be said to be discharging their duties correctly. Ultimately, it is for the shareholders to decide whether to tender the shares in the open offer, or stay invested, post regulatory approvals to the open offer,” said a spokesperson of the Burman family.

The statement said the Board issued a press release on September 25 this year welcoming Burmans' investment in REL.

"The open offer price is calculated as per the formula provided in the SEBI Takeover Regulations. As per this formula, the calculation comes to around Rs 221. The open offer price of Rs 235, is at a premium to that price. Keeping the overall shareholder interest in mind, we will move towards closing the transaction expeditiously working with all the regulators,” the spokesperson of the Burman family said.

“Given our credentials, an overwhelming majority of the shareholders are supportive of the proposed transaction and we remain confident that under our guidance, REL’s performance would see significant uptrends," the spokesperson said.

On November 20, the Board of REL issued a statement and backed its embattled chairperson Rashmi Saluja, saying she had turned around the financial services company whose market cap has increased to about a billion dollars from under $100 million in March 2018.

The Board had said the accusations made by Burmans had not only targeted Saluja but the entire Religare management that had made the company debt-free.

The Board said a one-time settlement with banks was completed through organic collections and payments of more than Rs 9,000 crore were made.

"Religare has now grown into a leading financial services player and has enhanced value for all its stakeholders, including shareholders, employees and customers while maintaining the highest levels of corporate governance," said the REL Board.

The Board consists of six members - Rashmi Saluja, the Executive Chairperson, and five independent directors. The independent directors - Malay Kumar Sinha, Hamid Ahmed, Praveen Kumar Tripathi, Ranjan Dwivedi and Preeti Madan have rubbished the allegations made by Burmans against Saluja.