Shareholders of Lakshmi Vilas Bank have rejected resolutions to appoint seven directors, including the Managing Director and CEO to its board as well as statutory auditors at its recent Annual General Meeting.
“…this is to inform that the shareholders of the bank at the 93rd Annual General Meeting have not passed the Ordinary Resolution pertaining to appointment of Statutory Auditors of the Bank,” Lakshmi Vilas Bank said in a regulatory filing on Saturday night.
Accordingly, P Chandrasekar LLP, Chartered Accountants, Bangalore proposed to the shareholders for appointment as Statutory Central Auditors of the Bank was not appointed, it further said.
In a separate regulatory filing, it also informed that shareholders did not approve resolutions for appointment of additional directors on the board.
The resolutions which were not passed include appointment of S Sundar as Executive Director - Managing Director and CEO, appointment of non-executive and independent directors including N Saiprasad, Gorinka Jaganmohan Rao, Raghuraj Gujja, KR Pradeep, BK Manjunath and YN Lakshminarayana Murthy.
Sundar had been appointed as the interim MD and CEO in January this year.
Consequently they ceased to hold office with effect from September 25, when the AGM was held.
While the bank did not specify the reason for the shareholders not passing these resolutions, sources said that this was largely as many have not been happy with the financials of the private sector lender.
“These directors had been associated with the bank for long and had not contributed to its progress. So what is the point of shareholders of appointing them? There is a need to bring in a different set of directors. InGovern had advised shareholders against appointing them. The RBI should appoint some other directors to run the bank. Corporate India should also realise that shareholders will increasingly look for performing directors,” said Shriram Subramanian, Founder and MD, proxy advisory services firm InGovern.
The shareholders however, approved the appointment of Shakti Sinha, Satish Kumar Kalra and Meeta Makhan as non-executive, independent directors.
They also approved amendment to the Memorandum of Association of the bank to increase the authorised share capital.
Lakshmi Vilas Bank’s current situation
Loss making Lakshmi Vilas Bank has been looking for an investor for some time. The bank reported a net loss of Rs 112.28 crore in the first quarter this fiscal. Its Capital Adequacy Ratio (CAR) as per Basel Ill guidelines, was also at just 0.17 per cent as on June 30, 2020 as against 1.12 per cent as on March 31, 2020.
It has been in talks with Clix Capital, co-founded by former GE Capital CEO Pramod Bhasin for a probable stake sale and had signed a preliminary, non-binding letter of intent with the Clix Group.
On September 15, it had said the mutual due diligence is substantially complete, and the parties are in discussions on the next steps. “The bank will continue to share any further information as and when they materialize,” it had informed the bourses.
The lender is under Prompt Corrective Action norms of the Reserve Bank of India due to high bad loans and insufficient capital since September 2019. In April last year, its board had approved a merger with Indiabulls Housing Finance through a share-swap deal but it was rejected by the RBI.