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YES Bank, on Monday, said that it had wanted to change the Articles of Association even before the recent court order to incorporate the changes brought about through the Companies Act, 2013.
“Unfortunately, we didn’t want to amend the Articles during the pendency of the suit, as it was sub-judice. The Articles are dated 2003 when we were a start-up company and became a bank in August 2004, and our institutional character of a professional bank of India has developed significantly since then,” Sanjay Nambiar – Group President and General Counsel, YES Bank, said.
“ …Pursuant to the Companies Act, 2013, sweeping changes were effected to the company law, which warranted amendments to the Articles. Also, the RBI definition on Promoter / Promoter Group has been elaborated in February 2013 as per the new bank licensing guidelines, which were made applicable to existing private sector banks as well by the RBI in February, 2014. Thus, there is a real need now to refresh the Articles, both for consistency with the applicable laws and to avoid redundancy,” Nambiar added.
The bank’s counsel said that the court has also unequivocally held that the board has ample authority to appoint, re-appoint or re-validate any of the directors. “Thus, the court has upheld the autonomy and freedom of the board and has also reiterated that the decisions taken by the general body of shareholders shall prevail. The court has unambiguously held that there is no finding of any disqualifications of any of the directors for want of ability or credentials,” Nambiar said.
In a banking company, the constitutional documents can be amended only with the prior consent of the RBI and the shareholders are also required to approve the same under the Companies Act by way of a special resolution. It is paramount to uphold the interest of the vast majority of public shareholders and the same shall have an overriding effect in all important decisions pertaining to the bank, he said.
Nambiar reiterated that the court has also unequivocally rejected the “repeated expectation of a reserved seat for Madhu Kapur. The court has emphatically held that YES Bank cannot be run like a “family estate”. Thus, Madhu Kapur does not have any personal or individual right to nominate members on the board.”
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