9 resolutions a success before Apollo hiccup
Eclectic firms from sectors ranging from chemicals and cement, to technology and healthcare have all passed resolutions on related parties in key management positions over the last one year.
An analysis of such moves over the last 12 months from company tracker Prime Database shows that there were at least nine resolutions about related parties in key management positions, including appointments and changes in compensation. Each of these resolutions was successfully passed.
This is in contrast to the situation faced by Apollo Tyres’ scion Neeraj Kanwar. A resolution for re-appointment did not pass with the requisite majority.
The resolution for his reappointment as managing director was not passed as a special resolution as the votes cast in favour (72.72 per cent)
of the resolution were less than three times the number of votes cast against (27.28 per cent) the resolution, said the exchange notice following the vote.
“Apollo Tyres’ board of directors will discuss the resolution in the next meeting and determine the course of action to be taken with respect to it. The company would like to reiterate that it is the vision and resolve of the company and its senior leadership to deliver value to all its stakeholders, including employees, shareholders, customers, partners and other relevant communities,” said a statement from the company. Interestingly, the resolutions for continuation of S Narayan as independent director and Robert Steinmetz as non-executive director of Apollo were passed with the requisite majority.
The change in the case of Kanwar is in contrast to the norm over the last 12 month. All the other companies in the sample managed to successfully pass resolutions on related parties in key management positions. An example is the resolution for Electrosteel Castings’ appointment of Radha Kejriwal Agarwal as an officer on special duty related to strategy and corporate affairs. The appointment was approved.
Another example was Star Cement’s revision in the remuneration of Rahul Chamaria and Sachin Chamaria. This, too, was approved.
Other companies successful in passing such resolutions include Aarti Industries, Advanced Enzyme Technologies and Narayana Hrudayalaya.
Resolutions have to be viewed on a case-by-case basis. But a 100 per cent success rate would suggest that opposition is still infrequent.
Experts, however, pointed out that there have been notable exceptions over the years after a new legislation was introduced. This empowered minority shareholders to reject such resolutions in related party transactions and other resolutions too. “Since e-voting has been introduced under the new Companies Act, each vote is being counted. We have since seen about 80 shareholder resolutions being defeated across categories – related party transactions (RPTs), employee stock option plans (ESOPs), appointments, change in articles and many more,” said Amit Tandon, founder and managing director at IiAS. With over 4,000 listed companies, each with multiple resolutions a year, there may be plenty of shareholder activism to come.