ICICI Bank voted in favour of approving MD and CEO Chanda Kochhar as a Director on the board of ICICI Securities despite proxy advisory firms advising shareholders to reject the proposal. The bank holds 79.22 percent stake in ICICI Securities.
Kochhar is on leave after the bank decided to probe allegations of conflict of interest and quid pro quo in some of the loans extended by ICICI Bank. She is the Chairperson of ICICI Securities.
US proxy firm Glass Lewis said: “We note that there are significant legal and regulatory issues involving the company’s non-executive chair, nominee Chanda Deepak Kochhar. We believe shareholders should be very concerned about the matters facing Kochhar, which includes her being forced to take a leave of absence from the ICICI Bank Board, pending the outcome of the investigation…”
Institutional Investor Advisory Services (IiAS) had also asked shareholders to oppose the proposed reappointment of Kochhar. ICICI Bank had, in a recent filing to the US SEC, said there was the possibility of increased regulatory scrutiny and reputational risks from these developments, which could materially and adversely impact operations and financial performance. “In such a scenario, her presence on the board of ICICI Securities, while legally compliant, exposes the company to the same risks (as highlighted by ICICI Bank to SEC) and the possibility of legal and regulatory sanctions. We believe she should be reappointed to the board only after all charges against her have been cleared,” IiAS said in a report.
“While the issues pertain to the company’s parent company, ICICI Bank, the mere fact that she has been forced to take leave may be representative of serious lapses of governance issues that carry reputational risk issues which may negatively impact the company. Given the severity of issues confronting Kochhar, we do not believe shareholders should support her candidacy at this time,” Glass Lewis said asking shareholders to vote against the appointment of Kochhar.
Kochhar is also a director on the boards of ICICI Lombard General Insurance, ICICI Prudential Life Insurance, ICICI Prudential AMC as well as ICICI Bank Canada.
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