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The board of trustees of SKS Trust Advisors, the single-largest shareholder in SKS Microfinance, has decided to approach the Company Law Board (CLB), alleging "oppression of minority shareholders", as well as "mismanagement" in the company.
In its petition, the trust will also plead for the induction of its nominee on the board of the company by virtue of it being the single-largest shareholder in the microfinance company. SKS Trust has 12.6 per cent stake in SKS Microfinance. Recently, it had bought the stake of the company's founder, Vikram Akula.
Confirming the development, Biksham Gujja, chairman of SKS Trust, said: "Yes, the board of trustees has decided to move the CLB."
Sources said the trust's petition to the CLB might also include contentious issues. It might question the reappointment of M R Rao as managing director. Earlier, the trust had claimed the company didn't conduct its annual shareholders' meeting according to regulations. It has already written to the Securities and Exchange Board of India (Sebi), alleging irregularities at SKS's 10th annual general meeting (AGM), held in Mumbai on Tuesday.
"It may be of interest to note that one of the special resolutions - item seven, pertaining to Esops (employee stock ownership plans) for employees - was defeated, while some of the other resolutions, especially item number five - relating to the reappointment of the managing director - barely scraped through. We believe if the incomplete proxies were precluded from the valid votes, as decided by the scrutinisers, the results may well have been different," SKS Trust Advisors wrote in its letter to Sebi.
A few months ago, SKS Trust had requested the microfinance company to induct Akula as its nominee on the company's board. In the industry, Gujja is known as a close friend of Akula.
In 2011, Akula had to step down as the chairman of SKS Microfinance, following an alleged conflict with other board members over matters related to the way the company was being run. The company didn't allow Akula's re-entry, as it felt its shareholders did not have the right to nominate directors.
The company has been looking at various legal options to secure a nomination to the board, including convening an extraordinary general meeting at which the appointment would be part of the agenda.
Under Section 169 of the Companies Act, 1956, shareholders who hold more than a tenth of the paid-up capital can convene an extraordinary general meeting. Upon receiving such a requisition, the company's directors have to call the meeting. For such meetings, the agenda may include issues such as corporate governance, shifting of the registered office, the company's current affairs and the appointment of an additional director on the board.
As a minority shareholder, SKS Trust can approach the CLB under Sections 397 and 398 of the Companies Act. Under Section 397, shareholders can appeal against 'oppression' of their interests; under 398, they can complain against mismanagement. At least 100 shareholders or those with a combined holding of at least 10 per cent, whichever is less, are required for filing such a case.
The Companies Act confers on the central government and CLB powers to investigate the affairs of a company, on their own accord or on a petition by members of a company. This is allowed in case a company has share capital and an application has been received from not less than 200 members or from those holding not less than a tenth of the total voting power therein.
STAKEHOLDER'S GROUSE
* In its petition, the trust will plead for the induction of its nominee on the board of SKS Microfinance, by virtue of it being the single-largest shareholder
* SKS Trust has 12.6 per cent stake in SKS Microfinance
* Earlier, the trust had claimed the company didn't conduct its annual shareholders' meeting according to regulations
* It has already written to the Securities and Exchange Board of India (Sebi), alleging irregularities at SKS's 10th annual general meeting (AGM), held in Mumbai on Tuesday
