Experts are calling for the resignation of UK Sinha from the board of Vedanta Ltd after the majority institutional shareholders voted against his reappointment as an independent director. Sinha, the former chairman of Securities and Exchange Board of India (SEBI), was reappointed mainly on the backing of promoter group and public non institutional entities who voted in his favour.

On moral ground

“As per the voting pattern disclosed by the company, it’s very clear that Sinha has lost the confidence of large Institutional and public shareholders. Him being the former SEBI chairman should take high moral ground and set the record straight by stepping down as independent director,” said Anil Singhvi, founder of proxy advisory firm IiAS.

“Otherwise it will be difficult to take his views as of an Independent Director protecting the rights of public shareholders since they seem to have voted him out,” Singhvi said.

IDs are mainly supposed to represent the interest of public shareholders on a company board and expected to play a significant role as crusaders of corporate governance.

When he was the SEBI chairman between 2013 and to 2017, Sinha was a staunch supporter of the ID concept. SEBI had brought in the ID concept to ensure that there are some directors on the board of a company who do not have any material or pecuniary relationship with its promoters or related persons.

However on August 10, Sinha and other independent directors reappointment on Vedanta board became possible mainly as promoters entities of the company voted in their favour.

Singhvi says that if voting pattern is any indication to go by, then Sinha is more a dependent director now. “Vedanta voting indicates that public shareholders are not buying what companies want to feed them. The instance shows that investors are taking into account every action of the IDs at the board level to determine if they meet the parameters of being independent,” said J N Gupta, founder, SES proxy advisory.

Cloud over delisting

Shareholders have been up in arms against Vedanta ever since the company had announced its delisting offer post the severe market crash in 2020 due to Covid. Vedanta had announced the floor price for the offer at ₹89 against the fair value, which SES said was more than ₹300. Vedanta IDs did not raise any voice despite the proxy advisory reports criticising the company.

Finally, the delisting offer failed as large institutional bids came at around ₹320.

Sinha did not respond to phone calls and messages.

comment COMMENT NOW