Prakash Ind issued different AGM notices
Prakash Industries, one of the two companies that got interim relief from the recent crackdown on shell companies, had issued two different notices for its annual general meeting (AGM) held on July 26.
In the first one, part of the annual report released on July 3, there were seven resolutions. Most shareholders and institutional investors had seen this one. However, a subsequent notice contains eight resolutions. Both documents are still available on the company's website.
The eighth resolution relates to appointment and approval of remuneration of a promoter-director. This was a special resolution for enabling the company to pay its chairman, V P Agarwal, a monthly salary of ~40 lakh, perquisites such as a chauffeured car and other allowances.
Normally, companies issue a corrigendum in such cases, so that investors are alerted if there are changes in such statutory documents and regulatory filings.
A Business Standard e-mail seeking comments, addressed to the company’s compliance officer and sent on Tuesday, did not elicit any response.
While it is not clear what led to the twin notices, many public shareholders seem to have missed the eighth resolution and this reflected in the voting results, published by the company after the AGM. While close to six million public shareholder votes were polled on resolutions one to seven, only 0.42 mn such votes were polled on resolution number eight. Of these, only 324 votes went against the resolution.
It is unlikely that these investors consciously decided not to vote on the eighth resolution alone, while participating on the other ones. It appears most investors who voted did not see the second notice at all.
JN Gupta, managing director of Stakeholders’ Empowerment Services, said, “The company has erred in providing two separate notices of the same date, with different content. This is grossly incorrect. If there was a mistake, the company should have rectified the same by informing the stock exchanges regarding the error and this should have been immediately disclosed on the company’s website.” A revised notice or an addendum should have been issued. This would not have caused the confusion.
Gupta’s company, SES, which closely tracks AGM notices, also missed seeing the the eighth resolution and issued its comments only on the seven others. Usually institutional investors and proxy firms such as SES track these filings through Google Alerts. Once the document is accessed, further alerts are ignored, unless there are key words such as “addendum, corrigendum, etc.”
The regulator should go into the matter and issue directives to ensure such instances, whether deliberate or inadvertent, are avoided in the future, Gupta added.
The second nitice had an extra resolution on promoter remuneration, missed by many investors