Wait until Monday to know YES Bank board meet outcome

FP Staff June 28, 2013 13:28:41 IST
Wait until Monday to know YES Bank board meet outcome

The suspense over Shagun Gogia's appointment on YES Bank board will continue until Monday as the outcome of Thursday's board meeting will only be disclosed once the bank submits its final decision to the Bombay High Court on 1 July.

In a statement, YES Bank said, "As the matter is sub-judice, the final decision of the board of directors of Yes Bank on the subject will be submitted to the Bombay High Court at its scheduled hearing on July 1, as per the court order."

So far, the bank management has refused board representation to the family of its late co-founder Ashok Kapur. It has also not given the family any right to appoint or nominate directors on the board.

A report in the Economic Times, quoting a person close to the dispute , said the 26 June letter gives Kapoor the right to vote in the board meeting. "The letter clarifies that the name of Shagun Kapur as a director is not proposed by the Indian partner (i.e. Rana Kapoor)," he said.

Gogioa's mother Madhu Kapur has 12 percent stake in the bank while Rana Kapoor owns 13.7 percent. Madhu Kapur is the sister of Rana Kapoor's wife Bindu Kapoor.

Wait until Monday to know YES Bank board meet outcome

Earlier in 2009, the bank's board had rejected the appointment of Shagun Gogia as a board member after the death of Ashok Kapur in 2009. AFP

Earlier, this month the Bombay High Court had directed YES Bank to advance its board meeting to June 27 to consider appointment of Gogia as a director on the board. Earlier, YES Bank was to hold the board meeting on July 24 to consider Gogia's appointment. The court had posted the matter for next hearing on July 1.

As the promoters are holding at least 10 per cent of the issued and paid-up share capital of the company, Ashok Kapur and Rana Kapoor's successors have the right to nominate three persons as directors in the capacity of 'Indian promoters'. However, this is the most contentious issue that will come up for hearing on 1 July.

While Gogia claims she has the right due to her status as legal heir, Kapoor argues that she may not pass muster on the RBI's 'fit and proper' criterion for bank directorship. If the court upholds this right, the Kapur family can nominate any individual of their choice.

In a note Macquire Securities said, "If we look at the board composition, only Rana Kapoor from the promoter group is on it. The board is very lean with seven members (including him). None of the board members are in anyway related to Rana Kapoor. Since Madhu Kapur has a significant stake, we would presume asking for a board seat is not unrealistic."

On June 6, 2013, Gogia and Madhu Kapur, had sought a stay on Yes Bank's annual general meeting (AGM) on June 8, since the board had appointed three new directors without their prior consent in October 2012.

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