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Proxy firm Stakeholders Empowerment Services (SES) has claimed a statutory board committee of Pfizer India was not constituted in accordance with the Companies Act. It has also recommended shareholders vote against the reappointment of one of the directors, who was part of this panel, on the grounds that she violated the law by getting appointed to the committee.
According to SES, the nomination and remuneration committee of the company should not have executive directors as members. Such a duly constituted panel is essential to implement an independent and transparent director appointment and evaluation process.
However, Pfizer India had two executive directors as members, it said. One of them, Lakshmi Nadkarni, is seeking reappointment in the company’s annual general meeting scheduled for Sunday, July 12.
In response to a Business Standard query, Pfizer said: "As a matter of policy, we are unable to comment on views or opinions. The company believes that it is in compliance with the provisions of the law. As always, this is best left to shareholders, who can cast their votes on the basis of facts and merit."
According to SES, the board on April 28, 2014, constituted the nomination and remuneration committee, which comprises Pradip Shah as chairman; R A Shah and Uday Khanna as independent directors; and Aijaz Tobaccowalla and Lakshmi Nadkarni as executive directors.
Section 178(1) of the Companies Act, 2013, and Clause 49 of the Listing Agreement requires that the nomination and remuneration committee should consist of three or more non-executive directors with independent directors forming the majority.
These provisions allow the chairman of the company whether executive or not, as member of the committee. Other than the chairman, who is not allowed to chair the meetings of the committee, no other executive director is allowed as member of nomination and remuneration committee.
“However, the committee constituted by the company has two executive directors as members, therefore, the composition is non-compliant with Section 178(1) of the Companies Act, 2013 as well as Listing Agreement," SES has said.
The proxy firm also questioned the secretarial and statutory auditors of the company. The secretarial audit report of FY15 stated that the company is compliant with the Companies Act. Further, the certificate of compliance by the auditors state that the company has complied with the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement. “The practicing company secretaries and statutory auditors need to explain to the shareholders on what basis they gave certificate of compliance to the company,” the SES report said.
