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Proxy advisory firm SES has told shareholders that a clarification issued by Max Financial Services (MFS) to stock exchanges has no meaning unless approved by the company’s Board and incorporated in the resolution.
Last month, MFS sent out a resolution notice to its shareholders, wherein it proposed a 2 per cent commission of the total annual profits of the company to its founder non-executive chairman Analjit Singh. BusinessLine reported on Tuesday that SES, run by former SEBI official JN Gupta, has asked shareholders to vote against the MFS proposal. On Wednesday, MFS hit back saying that the SES report was inaccurate as it did not take into account a ‘subsequent clarification’ issued by the company to the stock exchanges.
In the clarification to exchanges on April 19, MFS said it would cap the ‘monetary’ commission to Singh at ₹3 crore.
‘Withdraw resolution’
SES says that the company should withdraw its resolution since it is at variance with its clarification and lacks clarity of Board approvals regarding such a clarification. The voting on resolution has to happen at the end of this month. “Can a disclosure made to the stock exchanges be deemed to be a notice to shareholders for a meeting?” SES asked MFS in its addendum that was issued on Wednesday.
SES says that the approach of MFS towards shareholders is creating more confusion as it believes that shareholders will be voting on the ‘resolution’ and not on the 'subsequent clarification.' Therefore, the clarification issued by the company to stock exchanges has no meaning when the resolution, which is issued after consultation with the company Board, says something different, Gupta told BusinessLine
“We stand by our report, which says that shareholders should vote against this proposal. Information given in the resolution notice, as approved by the board and additional disclosure are at variance and they cannot be said to be part of the notice. The proposed resolution should be withdrawn by MFS and put to vote only after the final decision of the board on this,” SES said in its addendum.
SES says that the company should clarify who authorised the clarification-- which said that there was a ‘monetary’ cap on the commission to Singh-- as such a clarification has no meaning unless approved by the Board.
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