Amid a boardroom crisis, Yes Bank promoters have laid down nine conditions for a mutual settlement of the family dispute ahead of the December 13 board meeting to discuss the appointment of Rana Kapoor’s successor.
Kapoor, the bank’s managing director and chief executive officer (MD and CEO) and also the largest promoter, has reached out to the second largest promoter Madhu Kapur to arrive at a consensus to appoint members on the board.
“Rana Kapoor has reached out to Madhu Kapur and both have presented their wishlist. It is still work in progress and both parties have made additions and subtractions in the conditions from the previous attempts to reach a consensus,” sources told Moneycontrol.
According to sources close to Madhu Kapur, “Rana Kapoor has approached and we are ready to reach a consensus. We only want our rights as per the court judgment. We should be entitled to the nomination of the directors on board, the appointment of MD and CEO, non-executive directors and the executive directors. No agreement has been signed yet.”
Some of Rana Kapoor’s conditions are that Indian Partners (Rana Kapoor and Madhu Kapur's late husband Ashok Kapur) will have right to appoint three directors as long as they hold at least 10 percent stake. Three appointed directors will include one director nominated by each partner and the third nominated director will be jointly recommended by the Indian Partners.
Additionally, each partner will accept the director nominated by the other Indian Partner subject to board & Nomination & Remuneration Committee (NRC) approval. Also, one director nominated by each partner will not be liable to retire by rotation.
Sources confirmed of the nine-point conditions but did not reveal further details.
At present, Kapoor, also through his promoted entities, owns around 10.66 percent while Kapur, along with her associate firms, holds around 9.23 percent in Yes Bank. The combined holding of the promoter group will be around 20 percent.
Family-cum-promoter dispute
Both Rana Kapoor and Madhu Kapur are involved in a family dispute at the Bombay High Court, which in its latest judgment in 2015, allowed Madhu Kapur, as the legal heir to Yes Bank Indian Partner, to have joint rights to nominate whole time directors on board.
Rana Kapoor’s wife Bindu Kapoor and Madhu Kapur are sisters.
Over the last two weeks, the mid-sized private sector bank has faced multiple resignations from its directors on the board including its chairman.
The board at present has seven board members, after the resignations of Ashok Chawla, Vasant Gujarathi and R Chandrashekhar.
Also Read: What The Top-Level Resignations At Yes Bank Mean
Further, on November 27, global rating agency Moody's Investors Service downgraded Yes Bank's foreign currency issuer rating to Ba1 from Baa3 and revised its outlook to negative, citing leadership transition and governance issues as credit negative.
Moneycontrol has also learnt that Rana Kapoor is willing to drop the plea against the Bombay HC order at the court’s division bench granting Madhu Kapur right to nominate directors only if the conditions are met by her.
If Madhu Kapur gives consent, only then will the appeal by Rana Kapoor will stand withdrawn, sources said.
Currently, as per the Bombay High Court judgment, Indian Partners will continue to enjoy all joint rights as per Articles of Association (AoA) Of Bank.
The move comes just ahead of the bank’s board meeting on December 13 to discuss the successor to Rana Kapoor. Kapoor will step down as Yes Bank’s MD and CEO on January 31, 2019, on the Reserve Bank of India’s directive in September.
After the RBI directive, Rana Kapoor and his wife met Madhu Kapur and her son Gaurav Kapur and daughter Shagun Gogia, at least four times but no settlement was reached.
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