InGovern Research, a proxy advisory firm, has recommended the shareholders of Finolex Cables to defer two resolutions related to re-appointment of its Executive Chairman Deepak Chhabria for 5 years and payment of commission.
It has observed that the corrigendum does not meet the requirement of Section 118 (10) of the Companies Act and ICSI Secretarial Standards.
The original notice was issued on September 4, 25 days ahead of schedule AGM on September 29.
The recommendation to appoint executive chairman was made through a corrigendum on September 16, without giving an adequate notice period.
However, the corrigendum has been tabled to shareholders just 13 days ahead of the AGM.
“The corrigendum does not meet the Companies Act requirements and the ICSI Secretarial Standard 2,” said the proxy advisory firm report.
The ICSI Secretarial Standards 2 states that any amendment to the notice, including the addition of any item of business, can be made provided the amended notice is given to all persons entitled to receive the notice of the meeting at least 21 days before the meeting.
The notice of any amendment, including the addition of any item of business, should be sent individually and cannot be given through advertisement.
Given that 13 days is a shorter notice for a significant addition, many shareholders would not have got the time to study it. More importantly, the corrigendum does not disclose all material facts as to why NRC on June 29 did not put a cap on the total remuneration. The revised draft agreement as approved by the Board of Directors and NRC has not been kept for inspection as per Companies Act.
InGovern has further stated that the changes to Item No 4 are inadequate and shareholders should ask for more detailed disclosures on the compensation structure and overall compensation to be paid.
Also, it said that there is a misleading statement in the notice and explanatory statement to the effect that Deepak Chhabria has been involved in the growth of the company from its inception from 1967 whereas he was born in 1962. It cannot be that he started working from the age of five, it said.
The proxy firm said the company should withdraw the resolution No 4 and No 6 from the AGM and represent the above changed proposals by giving proper notice and details.