Madhu Kapur, family challenges the appointment of 6 directors on Yes Bank board

MUMBAI: Madhu Kapur, the wife of late Ashok Kapur co-founder of Yes Bank on Monday challenged the process and appointment of six directors on the bank board. The Kapur family filed a revised petition today after the bank challenged their joint nomination rights.

The petition based on the provisions of the articles argues that the Kapur family has the right to joint nomination as the Indian partner.

The family on June 6 had challenged the appointment of Diwan Arun Nanda, Ravish Chopra and MR Srinivasan on the board complaining that the family was not consulted while the articles provide for joint nomination. On similar grounds now they have also challenged the appointment of three Yes Bank executives Rajat Monga, chief financial officer, Sanjay Palve head of corporate finance, and Pralay Mondal branch and business who were appointed as whole time directors in the June 27 board meeting.

In the same meeting the bank rejected the nomination of Shagun Gogia, citing that she was inexperienced to be on the board of the bank.

The petition filed by the Kapur family questions the process followed by the bank in the appointment of directors Diwan Arun Nanda, Ravish Chopra and MR Srinivasan.

According to the petition Rana Kapoor and Arun K Mago were present for the October 22, 2012 meeting to decide on the appointment of the three directors.

""Defendant No I (Rana Kapoor) was interested party in the appointments was present and participated in the nomination and governance committee and one MR Arun K Mago was present,'' said the petition. This petition tries to point out that a fair process was not followed. It also states that the bank did not seek adequate disclosures from the directors like Arun Diwan Nanda. The petition claims that details of Nanda being a member of the audit committee of Kingfisher Airlines till 2011 was not disclosed in the AGM notice.

The track record of Kingfisher Airlines in its dealings with the banks and financial institutions and the Government is in public domain. In this regard, it is pertinent to note that the notice of the 9th Annual General meeting fails to disclose the above and other material facts to the shareholders,'' said the petition.

Questioning the process of the AGM the petition claims while all the other resolution passed at the AGM was proposed and seconded by shareholders the appointment of these three directors was neither proposed nor seconded.

M R Srinivasan who acted as chairman of the meeting even when the resolution concerning the own reappointment as the director was being considered. This is ex-facie illegal as he was interested concerned in the resolution,''said the petition.

""There is a conflict of interest if the person heading the AGM is the chairman and at the same time his name is nominated as being appointed as one as the one of the directors in the same meeting,"" says Chandubhai Mehta, managing partner of Dhruve Liladhar & Co.

""As per Company's Act, no resolution can be passed without the same being proposed and seconded by the share holders presented at the meeting. While, as far as nomination of an independent director in listed companies is concerned, its mandatory to inform the exchange regarding him/her being appointed as director on the board of listed companies.""