Yes Bank family feud could unravel today : All you need to know

HC to hear Kapurs’ amended plea today against Yes Bank

In the battle for a board seat, the Madhu Kapurcamp, part of one of the founding families of Yes Bank, has filed a revised petition before the Bombay High Court. She has challenged the appointment of three new whole-time directors after the bank challenged their joint nomination rights. Alleging lack of corporate governance at the bank, theMadhu Kapur faction, whose request for the appointment of ShagunGogia as a director was rejected by Yes Bank, is alsoseeking court intervention to protect their interest.

The petition is slated for hearing today.

Yes Bank has been in the news following a tussle between the families of Rana Kapoor and the late Ashok Kapur, comprising the largest shareholder blocs in the private sector bank. Shagun Kapur Gogia, daughter of the late Ashok Kapur, has staked her claim to a seat on Yes Bank’s board, which has so far been denied to her.

At the last hearing on 8 July, Yes Bank counsel hadopposed some of the amendments by Madhu Kapur to her originalpetition.

Following the opposition, Justice S J Kathawala adjourned thematter to 15 July.While Madhu Kapoor and her two children (Shagun Gogiaand son Gaurav Kapur) together hold 12 percent inthe bank, the current Managing Director and chief executiveRana Kapoor, who along with the late Ashok Kapur co-foundedthe bank in 2003, holds 13.7 percent. Madhu’s sister Bina ismarried to Rana.

Amendments to the original petition seek a reversal of recent appointments of senior executives

Amendments to the original petition seek areversal of the recent appointments of senior bank executives,Sanjay Palve, Rajat Monga and Pralay Mondal, as whole-timedirectors of the bank, saying the Kapurs were not consulted onthis, despite being a promoter entity.The amended petition highlights how Rana Kapoor did notrecuse himself during the appointment of Ravish Chopra andDiwan Arun Nanda as additional directors in October 2012 eventhough he had nominated them. Yes Bank says there was no need for Rana Kapoor to recuse himself as they were not related to him in any way.

Also, according to minutes of the nomination andgovernance committee meeting, there was only one otherdirector, Arun K Mago, in attendance.“Rana Kapoor’s participation vitiated the free and fairassessment of these nominations,” says the petition, while aperson close to the Kapurs also questioned the veracity of thecommittee, if only one eligible person (Mago) was present while making these appointments.

The Kapurs have already challenged the appointments ofthree other directors – Diwan Arun Nanda, Ravish Chopra and MR Srinivasan – on the bank board, at the High Court.

Apart from seeking to reverse appointments of the newtrio, which was done even as controversy raged, the amendedpetition also wants court to prohibit Rana Kapoor from makingany new director level appointments without consulting the Kapurs.They also allege that the business at the bank’s annualgeneral meeting held on 8 June was not conducted properly,saying the minutes did not have important details like thenumber of shareholders and the proxies present or why one SLKapur, who is neither a shareholder nor a director, wasallowed to speak at the AGM. Therefore, the petition seeks toaccess the video recording of the AGM to ascertain facts.

Additionally, the petition points out that two of thedirectors - MR Srinivasan (69 years, who also is non-executive chairman of the bank) and Nanda (again 69 years) -are well past the RBI-prescribed age limit of 35 to 65 yearsand hence do not meet the RBI’s fit and proper criterion forbeing appointed as directors. Yes Bank says a more recent RBI circular has raised the age limit to 70.

The Kapurs also question the eligibility of Nanda, who was amember of the audit committee of the defaulter KingfisherAirlines till September 2011 and was nominated even thoughthe record of the airline was well known.Madhu Kapur approached the Bombay High Court in June seeking astay on the appointment of Srinivasan, Nanda and Chopra as the directors appointed by the promoters.

Madhu Kapur also alleges that ever since herhusband’s death, there were sustained efforts on the part of RanaKapoor to strike out the name of Ashok Kapur in all bankdocuments, including its annual reports and a book on thebank’s history.

Yes Bank says no such thing was done, and Ashok Kapur figures as promoter in page 109 of the annual report.

Madhu wants her daughter Shagun appointed to the boardas one of the promoter-nominee directors.The Bombay HC had earlier asked the bank board toconsider the same, but the board declined it, saying Shagundoes not meet the fit and proper criterion set by the RBI.The board decision was “pre-determined and mala fide…the purported reasons given by the board for rejecting thenomination are malafide, perverse and unsustainable in law,“the amended petition says.

Another twist:Yes Bank tussle could be part of a larger corporate battle

In another twist in the Yes Bank family feud, the bank’s CEO and MD, Rana Kapoor, had written a letter to the Reserve Bank of India (RBI) in 2012 seeking declassification of Madhu Kapur, according to a CNBC-TV18 report.

Yes Bank management sources also told the channel that the bank thinks that the feud over a position on the board of Yes Bank could be part of a larger corporate battle, adding that perhaps this whole issue was instigated at the behest of one or two rival corporate houses.

In term of market capitalisation, IndusInd Bank , Kotak Mahindra Bank and ING Vysya are its closest peers.

According to the CNBC-TV18 report, Yes Bank management is considering two options right now. They may approach the Reserve Bank of India (RBI) and try to convince the central bank of a possible corporate hand, or they could approach the Competition Commission of India (CCI).

With inputs from PTI

(Editor’s note: The above article has been corrected from an earlier version after some errors were pointed out by Yes Bank.)