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Reliance Industries Ltd on Wednesday said the appointment of Yasir Al-Rumayyan, the non-executive chairman of Saudi Aramco and the Governor of the Kingdom’s Public Investment Fund, as an independent director on its board has no connection with the potential stake sale transaction with Saudi Aramco.
This comes after the California State Teachers’ Retirement Fund (CalSTRS), America’s second-largest public pension fund and a minority shareholder in RIL, decided to vote against the induction of Rumayyan based on a recommendation from Glass, Lewis & Co., a proxy advisory research firm based in the US.
Glass, Lewis & Co has cited Rumayyan’s key roles in the operations of Aramco and Public Investment Fund (PIF) to suggest that he does not qualify to be an independent director on RIL's board.
An independent director cannot have a role in any company that has a business or equity partnership with the company that intends to appoint him or her, under Indian laws.
As PIF has a stake in RIL’s subsidiaries and Aramco is looking to buy a 20 per cent stake in Reliance O2C Ltd, Al-Rumayyan’s ‘independence’ on the RIL board is under question, Glass, Lewis & Co., said in its recommendation.
Shareholder to vote
RIL had announced the appointment of Rumayyan at the last annual general meeting. The voting by shareholders to ratify this proposal will end on October 19.
Backing Rumayyan’s appointment, RIL said, “The appointment of Yasir Al-Rumayyan has no connection with the contemplated transaction with Saudi Aramco. Further, as approved by the shareholders, the O2C business of RIL is being spun off to a subsidiary and, as per the terms of the proposed transaction, Saudi Aramco will participate in the equity of the O2C subsidiary. The O2C Subsidiary Board may have nominees of Saudi Aramco to protect its interest,” Reliance said.
Also read: ‘Deal to sell 20% stake in O2C business to Aramco this year’
“Any material change in circumstances at any time which may affect the status of a member of the Board as an independent director will be reviewed and appropriately acted upon by the HRNR committee. Further, it is a practice in RIL that any director who is deemed interested recuses himself/herself from participating in the relevant agenda item,” it added.
Meanwhile, at least three Indian proxy firms BusinessLine spoke with, said they were yet to firm up their views on the issue. “We have an internal committee process. It hasn’t taken a view so far. So, I am not sure what the firm’s call on this is,” said an executive with one of the proxy advisory firms.
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