In what could be a setback for Yes Bank founder,managing director & CEO Rana Kapoor,the Bombay High Court on Monday said the nomination of three directors Ravish Chopra,Diwan Arun Nanda and MR Srinivasan to the banks board,will be subject to the courts approval.
The court also asked the bank to bring forward its board meet to consider the nomination of Shagun Kapur Gogia,daughter of late co-founder Ashok Kapur,to the board of the bank. The board meeting,earlier scheduled for July 24,will now be held on June 27.The court will hear the case next on July 1.
This is in line with Yes Banks proposal as per its letter dated June 6,2013, a media statement from Kapoor said. According to sources,Rana Kapoor had sent a letter to Madhu Kapur,wife of late Ashok Kapur and mother of Gogia and her family on June 6,requesting them to nominate their representatives for the banks board.
Yes Bank on Monday released the results of the postal ballot conducted at Saturdays AGM seeking shareholder approval for the nomination of the above mentioned directors. While votes of 57% of the shareholders were recorded in the ballot,80% of those who voted,had done so in favour of the appointment of the three directors,the bank said in a statement. The three had already been appointed as additional directors to the banks board last October.
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Madhu Kapur,mother of Gogia and the widow of late Ashok Kapur,had approached the High Court last week asking for a stay on the banks annual general meeting (AGM). On Friday,the court had provided interim relief to Rana Kapoor,by not staying the AGM though it said the appointments of these directors,even if approved by shareholders,would be finalised only after approval from the court.
Madhu Kapur and her family hold about 12% in Yes Bank while Rana Kapoor and his factions own close to 14%.
According to sources,the problem began in 2009,when Madhu Kapur requested her daughter Shagun Kapur Gogia to join the board. However,the request was denied citing the fit and proper criteria of the Reserve Bank of India (RBI). The request was reportedly reiterated in recent months. In the meantime,Yes Banks current management announced its intention to appoint three directors on the board. Kapur alleges in her complaint that she and her family were not consulted regarding these announcements and that the family does not have enough representation on the board.
While shares in Yes Bank traded 2.6% lower on Monday on the Bombay Stock Exchange,analysts do not expect these developments to affect the banks stock. Analysts also noted that the Yes Bank board is rather lean with only seven members,including Kapoor. Macquarie Equities Research analysts,Suresh Ganapathy and Parag Jariwala also said that none of the board members is in any way related to Kapoor. Since Mrs Madhu Kapur has a significant stake,we would presume asking for a board seat is not unrealistic, analysts said.