Yes Bank pro­moter not for Kapoor’s ex­ten­sion

Madhu Ka­pur, the sec­ond largest share­holder in Yes Bank, tells the board its de­ci­sions are not in the lender’s best in­ter­ests IT’S KA­PUR VS KAPOOR

Mint Asia ST - - News - BSY HAYAN G HOSH

es Bank Ltd’s de­ci­sion to re­quest the reg­u­la­tor to ex­tend man­ag­ing di­rec­tor Rana Kapoor’s ten­ure is not in the best in­ter­ests of the lender, Madhu Ka­pur, widow of co-founder Ashok Ka­pur and the bank’s sec­ond largest share­holder, wrote to the board.

In the 28 Septem­ber let­ter to the Yes Bank board, Ka­pur sug­gested that the board ex­pe­dite the process of find­ing a suc­ces­sor to Kapoor so that the bank does not suf­fer any long-term set­back.

“The de­ci­sions that the board ap­pears to have taken are not, in my view, in the best in­ter­ests of the bank as a pub­lic trust fi­nan­cial in­sti­tu­tion,” Ka­pur said. Mint has re­viewed the con­tents of the let­ter.

On 25 Septem­ber, the board of Yes Bank had said it would ask the Re­serve Bank of In­dia (RBI) to ex­tend man­ag­ing di­rec­tor and chief ex­ec­u­tive Rana Kapoor’s ten­ure by eight 1.7 months. The board de­cided it would first seek an ex­ten­sion for Kapoor till 30 April 2019 for fi­nal­iza­tion of fi­nan­cial state­ments for the year to 31 March, and there­after a fur­ther ex­ten­sion till 30 Septem­ber for com­plet­ing the an­nual gen­eral meet­ing process.

The bank’s board de­cided on the course of ac­tion af­ter RBI agreed to ex­tend Kapoor’s ten­ure till 31 Jan­uary 2019 in re­sponse to the bank’s re­quest for a three-year ex­ten­sion till 31 Au­gust 2021. Yes Bank shares have fallen 18.65% in Septem­ber be­cause of the un­cer­tainty re­lated to Kapoor’s reap­point­ment.

An email sent to Yes Bank did not elicit any re­sponse till press time.

Madhu Ka­pur wrote that Yes Bank should re­spect the views of RBI as the bank­ing reg­u­la­tor and take ap­pro­pri­ate steps at the ear­li­est to iden­tify a per­son as Rana Kapoor’s suc­ces­sor, “who is cred­i­ble, of spe­cial cal­iber, with unim­peach­able in­tegrity”, un­der whose lead­er­ship the bank will reach greater heights.

The board at its 25 Septem­ber meet­ing de­cided to set up a search com­mit­tee to iden­tify a suc­ces­sor to Kapoor. The com­mit­tee will in­clude three ex­ist­ing nom­i­na­tion and re­mu­ner­a­tion com­mit­tee board mem­bers, along with two ex­ter­nal ex­perts. The board also de­cided to pro­mote Rajat Monga and Pralay Mon­dal as ex­ec­u­tive di­rec­tors, sub­ject to ap­proval from RBI.

Cit­ing a 4 June 2015 Bom­bay high court rul­ing, Ka­pur said in her let­ter that even the ap­point­ment of Monga and Mon­dal as whole-time di­rec­tors had been struck down ear­lier by the court. She added that th­ese ear­lier ap­point­ments were done with­out con­sul­ta­tion with the co-founders.

Ka­pur has also re­quested the board to not take any ac­tion con­trary to the RBI direc­tive and the judge­ment of the Bom­bay high court, so that the “chal­leng­ing sit­u­a­tion presently faced by the bank is re­dressed with­out suf­fer­ing any long­time set­back to the bank and its stake­hold­ers”.

She fur­ther wrote that as one of the largest share­hold­ers, the co-founders wish to act con­struc­tively in the best in­ter­est of the bank and are will­ing to take steps to pro­tect and fur­ther the in­ter­est of the bank and all its stake­hold­ers.

On 28 Septem­ber, Rana Kapoor tweeted that his shares in the bank are akin to di­a­monds and vowed not to sell them to cut his or his fam­ily’s pro­moter hold­ing in the bank. This was pre­ceded by a re­port in The Eco­nomic Times on the same day that Madhu Ka­pur had sold 0.04% of her stake on 21 Septem­ber. At the end of June, Kapoor held a 4.34% stake and Ka­pur 7.62%. Other pro­mot­ers in­clude Yes Cap­i­tal (In­dia) Pvt. Ltd (3.28%), Mor­gan Cred­its Pvt. Ltd (3.05%) and Mags Fin­vest Pvt. Ltd. (1.7%).

“Con­sid­er­ing our vested rights as co-pro­mot­ers and In­dian part­ners en­shrined in the bank’s ar­ti­cles of as­so­ci­a­tion, you will ap­pre­ci­ate that a con­struc­tive and con­sul­ta­tive pos­i­tive ap­proach in­clud­ing in the ap­point­ment of whole-time di­rec­tors, will go a long way in pro­vid­ing com­fort to all stake­hold­ers amidst the es­ca­lat­ing un­cer­tainty,” said Ka­pur, adding that iden­ti­fy­ing a good suc­ces­sor to Kapoor is the only pri­or­ity now.

“We sug­gest that a spe­cial­ized agency/ agen­cies of re­pute be iden­ti­fied and ap­pointed to ex­pe­dite the process of iden­ti­fy­ing a suit­able suc­ces­sor,” added Ka­pur.

The con­flict be­tween Yes Bank’s pro­mot­ers be­gan in 2009, a year af­ter co-founder Ashok Ka­pur was killed in the 2008 ter­ror­ist at­tack in Mum­bai. The board had de­clined to ap­point Sh­a­gun Go­gia, daugh­ter of Ashok Ka­pur. In 2013, Madhu Ka­pur and her daugh­ter Sh­a­gun Go­gia ap­proached the Bom­bay high court seek­ing greater say in ap­point­ing di­rec­tors and wanted the court to up­hold their right to jointly nom­i­nate di­rec­tors.

In June 2015, a sin­gle-judge bench of the Bom­bay high court ruled that both pro­mot­ers must fol­low the ar­ti­cles of as­so­ci­a­tion. Both Ka­pur and the bank have chal­lenged the rul­ing be­fore a di­vi­sion bench.

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