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Proxy advisory firm InGovern on Sunday expressed concern over governance in Religare Enterprises amid a delay in its annual general meeting (AGM) without a valid reason, and called for a comprehensive probe by the Securities and Exchange Board of India (Sebi) into the postponement.
Financial firm Religare has put off its AGM from September to December this year. The postponement comes at a time when its executive chairperson Rashmi Saluja has been under fire for stalling the open offer by Burmans - the largest shareholders in the company - and faces allegations of insider trading and violations in the issuance of employee stock options (ESOPs) from a subsidiary.
The company had cited pending statutory/regulatory approvals concerning the ongoing open offer and the potential impact on the company and its shareholding as a reason for the postponement.
In a report published, the proxy advisor pointed out that the postponement led to frustration among shareholders as the company had not provided a valid reason for the delay, especially when it had already published its financials on the exchanges.
"The postponement is particularly significant because Dr. Rashmi Saluja, the Executive Chairperson, was due for re-appointment as she will retire by rotation at the originally scheduled AGM in September. As the only non-independent director, her position requires re-appointment at each AGM, making the timing of this delay critical," said InGovern.
Emailed queries to Religare seeking comments on the allegations remained unanswered till the time of press.
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Certain institutional investors have expressed their discontent and suggested that it may be a strategy to avoid a vote on Saluja's reappointment, the report added.
"Sebi has the authority to initiate comprehensive investigations into the circumstances surrounding Religare's AGM postponement. The regulator may examine the decision-making processes that led to the delay, as well as the company's actions regarding share allotments and Employee Stock Ownership Plans (ESOPs). This scrutiny aims to uncover any potential corporate governance issues or regulatory violations," InGovern noted.
The market regulator is already probing Saluja for insider trading allegations for trades before the open offer, and stake purchase by the Burmans.
"Shareholders now face several options in response to the delay: contesting the extension of the AGM, or waiting for the rescheduled AGM to vote on Saluja’s reappointment and other matters," added the proxy advisor.
In a response to queries sent by Business Standard, Religare termed the report by InGovern as derogatory and motivated to tarnish the image of the company's board and management.
"It seems that InGovern has no regard for the courts/tribunals and investigating agencies of the country. It not only supresses material information that the matters being commented upon are ‘sub-judice’, but also goes on to give its final verdict to influence the securities market," said a spokesperson.
"What would have been prudent as an ethical practice from an analyst firm would have been to validate the information before publishing, by interacting with the leadership at REL for a 'true and fair' view of the situation at hand," it added.
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