Prakash Industries issued different AGM notices

Second notice had an extra resolution on promoter remuneration

Prakash Industries, one of the two companies that got interim relief from the recent crackdown on shell companies, had issued two different notices for its annual general meeting held on July 26.

In the first notice issued, which was part of the annual report released on July 3, still available on the company website, there were seven resolutions. Most shareholders and institutional investors had seen this resolution.

However, a subsequent notice published contains eight resolutions. Both documents are still available on the company's website The eighth resolution relates to appointment and approval of remuneration of a promoter director. This was a special resolution that would enable the company pay its chairman VP Agarwal, a monthly salary of Rs 40 lakh and other perquisites such as a chauffeur driven car and other allowances.

Normally, companies issue a corrigendum in such cases so that investors are alerted if there are any changes in such statutory documents and regulatory filings.

A Business Standard email seeking comments addressed to the company's compliance officer sent on Tuesday did not elicit any response.

While it is not clear what actually led to this twin notices, many public shareholders seem to have missed the eighth resolution and this reflected in the voting results published by the company following the AGM.

While close to six million public shareholder votes were polled on resolutions 1 to 7, on the resolution number 8, only about 0.42 million such votes were polled. Of these, only 324 votes went against the resolution.

It is unlikely that these investors consciously decided not to vote on the eighth resolution alone, while they participated in other resolutions. It appears that most investors who voted did not see the second notice at all.

J N Gupta, managing director of Stakeholders' Empowerment Services, said, "The company has erred in providing two separate notices of the same date with different contents. This is grossly incorrect. If there was a mistake, the company should have rectified the same by informing the stockexchanges regarding the error and the same should have been immediately disclosed on the company's website."

According to him, a revised notice could have been issued or an addendum should have been issued. This would not have caused the confusion.

Gupta's company SES, which closely tracks AGM notices, also missed out on the eighth resolution and issued its comments only on the seven resolutions.

Usually institutional investors and proxy firms such as SES track these filings through google alerts. Once the document is accessed, further alerts are ignored unless there are key words such as "addendum, corrigendum etc".

The regulator should go into the matter and issue directives to ensure such instances, whether deliberate or inadvertent are avoided in the future, Gupta added.