Fortis Healthcare's four directors, whose removal has been sought by two institutional shareholders, have denied allegations that they failed to maintain corporate governance and fairly represent interests of all shareholders.
In a joint representation to shareholders, Brian W Tempest, Harpal Singh, Sabina Vaisoha and Tejinder S Shergill said the board had decided to consider only the binding bids for Fortis, considering the immediate financing needs of the company.
National Westminster Bank Plc as trustee of Jupiter India Fund and East Bridge Capital Master Fund, which together hold 12.04 per cent stake in Fortis Healthcare, have demanded that the matter of removal of these directors from the company's board be taken up at the company's EGM on May 22.
In their letter to the shareholders, the directors said the board decided to consider only binding bids as "the non-binding bids involve considerable uncertainty and merely running a due diligence process does not guarantee a binding bid, which the board had wanted in the best interest of the company".
They added: "Given that there are four binding offers for consideration as on date and considering the need for a certain and quick solution for the company, it was considered prudent that only binding bids should be considered."
Manipal-TPG, Munjals-Burmans, IHH Healthcare and KKR-backed Radiant Life Care have given binding offers to acquire Fortis. The company's board will decide the winning bid on May 10.
The directors said that in the last 18 months, Fortis has been trying to close a possible transaction and has seen interest from both financial and strategic players.
Stating that significant amount of time and effort of the management has been spent with the potential investors, they said the board "wished to end this seemingly unending process in the best interest of the company and therefore decided to evaluate only the binding bids..."
The four board members further said that their decision was also supported by the new additional board members, who were suggested by the two institutional shareholders.
Refuting allegations of not exercising their fiduciary duties, the board members said after media reports came out, and before the formal institution of an investigation by SEBI and other regulatory bodies, the audit committee of the board, initiated an independent enquiry by Luthra & Luthra Law Offices.
"Taking the ground of governance and our fiduciary duty, we directed the management to accord all assistance to the investigating agencies, and to make sure that the allegations are thoroughly examined in order to facilitate a completely impartial investigation," they said in their letter.
Calling for a continuity of the members, they said, "We believe that the current Board due to its association with the company over a period of time is completely capable of taking the company out of its current issues and is also familiar with the workings of the company and the skill sets of the management."
A complete change of the entire board at this time will certainly add more turbulence and ambiguity for Fortis as well as the management, they claimed while asking the shareholders to take an informed decision while voting on the requisition by the two shareholders.
Stating that appointment of Lt Gen Shergill as an independent director for five years with effect from February 12, 2018, has already been approved by the shareholders via a postal ballot, the directors said, "This to us also conveys that the majority of the shareholders are supportive of the current Board and its decision.