An overwhelming 88 per cent of Fortis shareholders voted in favour of a resolution to remove Brian Tempest, the last of the four old directors, from the board of the hospital chain and unanimously confirmed the appointment of three new independent directors at an extraordinary general meeting (EGM) on Tuesday.
The shareholders vote went against the promoter entities which voted in favour of Tempest.
Tempest, former chief executive officer (CEO) of Ranbaxy Laboratories, was appointed by Fortis founders Malvinder Singh and Shivinder Singh, who had to step down from the board in March amid allegations of siphoning off funds and after that lenders seized the brothers’ pledged shares. The total voting percentage was around 66 per cent. Of this, around 99 per cent supported the appointment of the three new independent directors nominated by shareholders and 88 per cent voted in favour of removal of Tempest.
Three directors — Harpal Singh, Sabina Vaisoha and Tejinder Singh Shergill — appointed by the former promoters, had stepped down a day ahead of the EGM, possibly aware of a certain defeat. Resolutions seeking their removal were thus rendered infructuous.
The four directors had voted in favour of the offer made by Sunil Munjal's Hero Enterprises Investment Office and the Burman family office. Now, the decision is under a cloud.
The EGM was called at the behest of institutional shareholders Eastbridge Capital and Jupiter India Fund, which own 12.04 per cent in the company, to overhaul the board, following controversies surrounding proposed capital raising.
The investors proposed the appointment of Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee. Around 99 per cent of voters supported the resolution for their appointment.
Promoters and institutional shareholders unanimously voted in favour of the three directors while a few negative votes were cast by ordinary public shareholders. The result was announced on Wednesday.
Similarly, promoters (include family members of the Singh brothers apart from RHC Holding and Malav Holdings) voted against removal of Tempest while 86-89 per cent of institutional and public shareholders voted for his removal.
YES Bank is the largest shareholder in Fortis Healthcare controlling around 15 per cent stake.
“The result can be interpreted in one way. The vote signals that the new board needs to correct course by amending the past mistakes quickly,” proxy advisory firm IiAS said.
“The board will be well within its rights to relook at the decision. There is a revised bid from the Manipal-TPG group and IHH has indicated that it is willing to come back with a more compelling offer. The dilemma for the board is having committed to Munjal-Burman, can they now walk away unscathed from it,” IiAS added. Several competing bids have already come in for Fortis - Manipal Hospitals with TPG, IHH and Chinese investment firm Fosun, apart from the Munjal-Burman combine.