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In one of the rarest events concerning India Inc, institutional investors of billionaire Anil Agarwal-owned Vedanta voted against the adoption of annual financial accounts and rejected the appointment of three of the four independent directors, including that of UK Sinha, former Chairman, SEBI, which was proposed by the company.
However, the resolutions were passed due to promoter and public non-institutional support.
The company had proposed to appoint four independent directors including Padmini Somani, Dindayal Jalan, Upendra Kumar Sinha and Akhilesh Joshi. Except for UK Sinha, all other proposals were moved as ordinary resolutions.
In the case of UK Sinha, of the overall 268.26 crore votes cast, about 48.63 crore votes or 15 per cent were against the reappointment as an independent director. Similarly, about 16 per cent of the voters were against the appointment of Jalan. About 14 per cent of the voters were against the appointment of Joshi.
However, the appointment of Somani faced little resistance with just 0.03 per cent of voters against her appointment as an independent director.
Proxy advisory firms
Both proxy advisory firms IiAS and SES had recommended shareholders to vote against the adoption of accounts due to the auditor qualification on internal financial controls.
Asking investors to vote against the appointment of Dindayal Jalan and Akhilesh Joshi, the proxy advisory firms said both had worked at various Vedanta group companies and affiliates in senior executive positions such as CFO and CEO till 2016.
In regard to the advice to reject UK Sinha’s reappointment, the advisory firms said he has been on the board since March 13, 2018 and the independent directors have not protected the minority shareholder-rights by maintaining a passive stance and allowing cash flow support to the group through the company and Hindustan Zinc.
“We, therefore, do not support Upendra Kumar Sinha’s reappointment as an Independent Director,” it added.
Raising concern over terms in loans and guarantees between the company and its subsidiaries or affiliates, the audit report said it could potentially result in loans being advanced and guarantees being issued in a manner that may impact the recognition, measurement and disclosure of such transactions in the financial statement.
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