Stocks

Shareholders oust 5 Finolex directors

PALAK SHAH Mumbai | Updated on October 01, 2021

Prakash Chhabria scored a minor win against his cousin Deepak Chhabria in the ongoing family dispute, with the entire board of Finolex Cables (FCL) voted out by shareholders on Wednesday.

Prakash, the largest shareholder in the company, had objected to the reappointment of the directors as they seemed to be close to Deepak. Prakash has alleged that Deepak was in breach of the mandate given by the majority shareholders and accused him of destabilising the equilibrium of the group.

Battling for control

Prakash and Deepak have been battling for the company’s control since 2016, when Finolex group founder Pralhad Chhabria handed over a gift deed to his son, Prakash, which made him the largest shareholder in FCL.

This became a bone of contention between Prakash and Deepak, son of FCL’s co-promoter Kishandas Chhabria.

Though Prakash is the largest shareholder, FCL’s day-to-day management is currently with Deepak as the executive chairman. While the overall dispute over the family deed is yet to be resolved, Prakash may have scored a minor victory as he wanted the directors out. Only Deepak, chairman, escaped the shareholder onslaught, as he did not offer himself for reappointment on a rotational basis.

Proxy advisory firms Ingovern and SES had also asked shareholders to reject the proposal for the reappointment of five FCL board members citing violations of the Companies Act and SEBI’s Listing Regulations for the past three years.

But soon after the ouster of five directors, FCL announced that it had already appointed five new directors. FCL said the decision to appoint these five directors was taken on September 24, just four days before the September 29 AGM, where shareholders ousted the old board members. Legal experts say FCL pre-empted the AGM outcome and took steps to save the board from a collapse.

The concern among proxy advisors is that the shareholders will now get a chance to vote on the appointment of the new board only at next year's AGM.

When contacted, the company did not comment on the questions of corporate governance but Mahesh Viswanathan, Chief Executive Officer, FCL, said in a statement, “While it is not appropriate to comment on matters that are sub judice, it is apparent that Prakash Chhabria is instigating actions against the interests of FCL including by causing Orbit and Finolex Industries (of which he is the Executive Chairman) to vote against the re-appointment of long-standing, respectable directors of FCL two years ago, and again against all the directors last year. Two FIRs have been registered by the Pune police against Prakash Chhabria and others, and investigations are ongoing in both.”

Published on October 01, 2021

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