Rashmi Saluja’s reappointment rejected by Religare shareholders

Shareholders of Religare Enterprises Ltd almost unanimously rejected chairperson Rashmi Saluja’s reappointment as director, effectively ending her six-year stint at the helm of the financial services firm that she helped save from bankruptcy.

More than 97% of the votes cast by shareholders were against Saluja’s reappointment, the voting outcome released on Sunday showed. That translates to about 191.3 million votes against her, versus 4.8 million votes in her favour.

“The Resolution No. 2 (Ordinary Resolution) failed to passed with the requisite majority,” concluded MAKS & CO., the Delhi-based audit and tax firm, which was the scrutinizer for the AGM proceedings, in its note.

At the company’s annual general meeting (AGM) on Friday, Saluja had blocked shareholders from further voting on the resolution to reappoint her. About three-fifths of the company’s shareholders had participated in the voting exercise through electronic voting in the run-up to AGM.

“As per the 2nd resolution, I don’t offer myself for re-appointment as I am not liable to retire by rotation,” she said, as per a draft copy of the AGM proceedings that Religare shared with the stock exchanges late on Friday night.

As Saluja’s candidature as a director failed to get majority approval from shareholders, Religare’s current four-member board, comprising independent directors, would need to appoint a new chair. The independent directors include retired bureaucrats P.K. Tripathi, Malay Sinha, Ranjan Dwivedi and Preeti Madan.

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Saluja had earlier moved the Delhi High Court against the company she heads. She sought court intervention to stay the AGM proceedings, arguing that the resolution on her reappointment violated her contractual tenure at the company’s helm, which is secured until 2028. However, the Delhi High Court granted her no relief.

“Corporate law in India dictates that shareholders’ rights are superior to the rights of directors,” said Shriram Subramanian, managing director of proxy advisory firm InGovern, referring to Saluja’s claim that the reappointment bid violates her contractual rights to a tenure till 2028. The proxy advisor had recommended that shareholders vote against Saluja’s reappointment, as had two other such firms – Institutional Investor Advisory Services and Stakeholder Empowerment Services.

Religare’s takeover battle

Religare is in the midst of a takeover battle since late 2023 after the Burman family, the promoters of Dabur and Religare’s largest shareholders, made an open offer to acquire 26% more shares in the financial services firm. Although initially in favour of the takeover, Saluja and the company’s board soon rejected the offer, stating the offer undervalued the company. This was followed by protracted acrimony involving allegations and counter-allegd Sebi to rule swiftly on the legality of the Burmans’ takeover timeline.

So far, Saluja has unsuccessfully argued before the courts that the shareholder meeting agenda violated her contractual tenure as chairperson, which is secured until 2028, and the conditional Reserve Bank of India (RBI) approval given on 9 December 2024.ations.

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However, the Burmans’ open offer at ₹235 per share still hangs in the balance, after US-based investor Digvijay Gaekwad proposed to make a competing offer late in January at ₹275 per share. After markets regulator Securities and Exchange Board of India (Sebi) rejected Gaekwad’s bid for being too late – over a year after Burmans’ open offer was made as against the stipulated deadline of 15 days – a Religare shareholder moved the Delhi High Court to intervene. When the court did not offer any relief, the shareholder, Sapna Sapna Govind Rao, moved the Supreme Court.

This prompted Gaekwad to file a petition before the Supreme Court on Thursday. On Friday, the apex court directed Gaekwad to deposit ₹600 crore in an escrow account by 12 February to prove the credibility of his counter offer and also asked Sebi to rule swiftly on the legality of the Burmans’ takeover timeline.

So far, Saluja has unsuccessfully argued before the courts that the shareholder meeting agenda violated her contractual tenure as chairperson