Even as proxy consultancies reported corporate governance issues at Finolex Cables and also advised shareholders to vote against three directors at the annual general meeting scheduled for Tuesday, the company has publicly accused Prakash Chhabria, Deepak’s cousin Kisandas Chhabria, for inciting shareholders and creating controversy.
Proxy consultancies Stakeholder Empowerment Services (SES) and Ingovern Research have accused Pune-based Finolex Cables, run by Deepak Chhabria, of taking its shareholders on a ride by violating numerous provisions of the company law and of Sebi Standards and advised shareholders to reject the reappointment of three directors, PR Barpande, Avinash Shridhar Khare and Firoza Fredoon Kapadia as additional directors who were on board as of September 30, 2020.
Mahesh Viswanathan, managing director of Finolex Cables, called the allegations false and spread at the behest of Prakash Chhabria, the cousin of Finolex Cables chairman Deepak Chhabria and chairman of Finolex Industries.
While it is not appropriate to comment on cases that are pending (as of November 2016), it is evident that Prakash Chhabria is inciting actions against the interests of Finolex Cables by prompting Orbit and Finolex Industries to vote against the renewal of our long tenure. , respectable directors, two years ago and again against all directors last year, “Viswanathan said in the statement.
Regarding the ongoing civil litigation since November 2016 over the majority stake in the holding company of the Orbit Electricals group, he said: “One issue in this litigation concerns the alleged donation of the majority of Orbit shares by PP Chhabria to Prakash Chhabria, very shortly before his death, but after leaving several documents indicating how his Orbit actions should be handled, ”Viswanathan added.
He also recalled the two FIRs that Pune police had registered against Prakash Chhabria and four others in February 2021 over a complaint filed by Deepak Chhabria accusing him of allegedly forging documents to take control of Finolex Cables and Finolex Plasson. after the death of his father in 2016.
The lawsuit alleges that Prakash and the other defendants prepared false deeds, share transfer forms and share certificates to gain control of the two companies.
“Finolex Cables is in compliance with the law and required corporate governance standards. We have responded to stock exchanges on these issues. These are rumors spreading at the initiative of Prakash Chhabria,” the statement concluded.
The nearly $ 3 billion Finolex group established in 1958 includes the holding company Orbit Electricals, Finolex Cables of Deepak Chhabria and Finolex Industries of Prakash Chhabria.
Orbit owns 30.7 percent in Rs 7,500 crore Finolex Cables which manufactures electrical and telecommunications cables and 14.5 percent is owned by Finolex Industries and the rest is with the public and these three companies have four joint directors- Deepak and Prakash Chhabrias, Sunil Pathak and Sanjay Asher.
The main points of contention are the reappointment of PR Barpande, Avinash Shridhar Khare and Firoza Fredoon Kapadia as additional directors. The board of directors had appointed them additional directors on September 30, 2020 and is now seeking the approval of shareholders to appoint them independent directors for a term of five years under various resolutions, even if they are likely to resign by rotation in under resolutions 3, 4 and 5 at the AGM. This makes them unlikely to retire on a rotational basis.
According to SES, these resolutions are superfluous for a person and violate Sebi standards in addition to going against the spirit of the law.
In asking shareholders to vote against the appointment of these directors, SES said: “We are of the opinion that resolutions 3, 4 and 5 are superfluous and serve no purpose as the company has proposed to appoint these directors as directors. ‘independent directors under resolutions 8, 9 & 10 and that if the superfluous resolutions 3, 4 & 5 adopted would have the unintended consequence of allowing these directors to continue as directors even if their independence is compromised. has never provided that an independent director should continue to remain a director even if his independence is tainted, except for express reappointment by the shareholders.
He also accused the company of failing to disclose any reason for Shishir Lall’s change of management from independent to non-independent director, saying that such a conversion / transfer raised serious questions about independent directors on the board of administration.
“If both resolutions are considered valid, there is an inherent conflict between the two. For one, an independent director cannot be appointed upon retirement, it is against the law. Second, according to the first resolution, the administrator is appointed on a rotational basis, while in another resolution they are appointed without rotation. Which resolution will prevail? SES asks.
And that if an independent director already knows that he would continue as a director even after the end of his mandate as independent director, this will have an immediate impact on his independence since the mandate is not specific, says the report.
SES also notes that at the 2020 AGM also, Finolex proposed a similar resolution to appoint Devender Kumar Vasal, Jayaram Rajasekara Reddy and Kavita Bhaskar Upadhyay as directors, who were likely to retire by rotation as well as directors. independent in two separate resolutions. However, shareholders voted against these resolutions.
A few days ago, Ingovern urged shareholders to vote against the appointments of directors because the company’s articles of association violate the provisions of section 152 (6) of the Companies Act, in addition to violating the standards. Sebi’s listing, which goes against corporate governance. According to Ingovern, all directors, including Chairman Deepak Chhabria, should be required to retire on a rotational basis. But the company had appointed him permanent director for life.