Bombay High Court proposes Yes Bank promoters pare holding below 10%
Madhu Kapur, the widow of YES Bank co-founder Ashok Kapur, had filed a case against the bank and Rana Kapoor, its MD and CEO over her nomination right in 2013.
Justice Gautam Patel, who is hearing the dispute between the promoters, asked Madhu Kapur and Rana Kapoor to jointly nominate independent directors, failing which the bank board could decide to do so.
A final order on the dispute has been reserved till Tuesday.
Madhu Kapur, the widow of YES Bank co-founder Ashok Kapur, had filed a case against the bank and Rana Kapoor, its managing director and chief executive officer over her nomination right in 2013. Mr Kapoor and the bank rejected her claim and argued before the court that her late husband’s rights are not automatically transferred. Justice Patel agreed with this contention on Thursday but upheld Ms Kapur’s right of joint nomination. Ashok Kapur died during the November 2008 terror attacks in Mumbai.
"The plaintiff (Madhu Kapur) has the right to nominate director’s on the board jointly but that does not give her a seat on the board," Justice Gautam Patel said.
"There is no question of reservation for anybody on the board. For the future Rana Kapoor and Yes Bank must accept that the recommendation under (Article) 110 so long as holding is over 10% nomination will be jointly done."
"If you cannot agree there are no IP (Indian Promoter) representatives, period. There are none. The board can do whatever they want," said Patel.
YES Bank’s articles of association say that the Indian partners together have the right to appoint three directors and also non-executive chairman, managing director and the chief executive officer.
The judge’s mention of 10% refers to the individual stakes held by Rana Kapoor family which is 11.77% and Madhu Kapur family, which is 10.29%.