Proxy advisory SES wants BASF board appointments voted out

Mumbai-based proxy advisory firm Stakeholders Empowerment Services (SES) has asked minority shareholders of chemicals company BASF India Ltd to vote against key director appointments to the company’s board.

Ahead of the company’s upcoming annual general meeting on September 28, BASF India wants shareholders to approve the re-appointment of Andrea Frenzel, from the company’s global parent, to the board of the Indian subsidiary. Simultaneously, it wants shareholders to approve the appointment of Lakshmi Nadkarni as an alternate director for Frenzel.

In a report to shareholders, SES noted that while “no concern has been identified regarding the profile of Dr Andrea Frenzel”, she “attended only one board meeting in 2016-17 and was appointed as an alternate director.” SES, the report said, “is of the view that if an original appointee cannot attend... the board meetings, she should gracefully vacate the position as the shareholders have appointed a specific person based on her qualifications, skills, etc.”

The terms of appointment are such that Nadkarni will be a whole-time director for an intermittent period; her position will change from a WTD to Alternate Director to an ordinary employee of the company. SES said it appeared the company was trying to bypass the provisions of the law relating to the vacation of office of an alternate director by “cleverly” drafting the resolution for her appointment. SES recommends that shareholders vote against the appointment of both directors to the board.

When contacted, a spokesperson for BASF India said, “Dr Frenzel has been on the board of BASF India since January 2015. As President of the Asia-Pacific Region (since) March 2017, she has an overview of various projects and businesses in India with Dr Raman Ramachandran — CMD, reporting in to her. Thus, Dr Frenzel’s role is not restricted to attending the board meetings of the company. As non-executive director and not being in full-time employment of the company, her re-appointment is in compliance with the provisions of the Companies Act, 2013”.

On the appointment of Lakshmi Nadkarni, the spokesperson added: “As Dr Nadkarni is in whole-time employment of the company, she is deemed a whole-time director. As an alternate director, no special powers have been delegated to Nadkarni and she continues to discharge only the duties, roles and responsibility as employee.” The company also pointed out that another proxy advisory firm, Institutional Investor Advisory Services (IiAS), had in its recent report advised minority shareholders to approve both appointments to the board.

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