 "Vijay Mallya")
Uncertainty clouds the annual general meeting (AGM) of liquor giant United Spirits (USL), scheduled for Tuesday.
The company has said its parent, Diageo, is evaluating its contractual position with chairman and erstwhile promoter Vijay Mallya. Typically, the AGM is convened and chaired by the chairman. Mallya had on September 28 said he would be doing so, when it was held.
Things are not as simple. Following an internal probe, USL’s board of directors had asked Mallya to step down. He he has not heeded the request. Though the company has not initiated any coercive action, information in the public domain suggests a communication breakdown.
A Business Standard report dated September 29 quoted Mallya at the AGM of his other firm, United Breweries Holdings: “As I am still chairman and hold a significant portion of equity shares in USL, I will chair its AGM for 2014-15, when held.”
Adding: “As the company (USL) is yet to file the annual report for fiscal 2014-15 to the regulatory authorities (stock exchanges), the date for its AGM has not been decided.” However, the notice for the AGM was dated September 23, a good five days before the Mallya statement.
Proxy advisory firm Stakeholders Empowerment Services sees corporate governance issues in the manner the AGM was called and the lack of clarity around the relationship between the company and Mallya. “The notice for AGM is dated September 23, the Directors’ report is dated September 23 and the auditors report is dated May 27...one interpretation is that Mallya has been kept in the dark and is not aware of what the board is doing and what is happening in the board,” it said in a report.
“In such a scenario,” it went on, “SES (feels) Diageo as promoter of the company should have proposed a resolution for removal of Mallya as a director, for shareholders’ consideration, or explained the reasons for not forcibly removing him despite their public declaration for having lost confidence in Mallya...”
SES also questioned if the notice was pre-dated. By the rule, AGMs are required to be held by September 30. But, USL sought an extension, rejected on September 5 by the registrar of companies. Yet, it did not hold the meeting in time.
When asked, an USL spokesperson said: “We will not be making any statements.” Adding that the reason for the delay in the AGM had been stated clearly in the annual report.
Shareholders note that USL did not inform the exchanges through notifications on the date and other details of the AGM. The notice was attached to the annual report.
The company, held SES, had not complied with some requirements of the listing agreement with the stock exchanges, as it had failed to intimate the book closure dates, date of AGM, etc.
“SES does not understand the reasons for such secrecy and failure to announce the date of the AGM to shareholders and the public at large,” it stated.
