Yes Bank appoints two new directors amid legal case - Livemint

Yes Bank managing director and chief executive officer Rana Kapoor, directly and through other family-owned ventures, holds a 13.59% stake. Photo: AFP

Mumbai: Y es Bank Ltd has appointed two independent directors to its board amid a legal battle between two of its largest shareholders.

The bank said its board in its meeting on 23 April had appointed Saurabh Srivastava, a former chairman of industry lobby group Nasscom, and Vasant Gujarathi, a former partner of consultancy PricewaterhouseCoopers, as independent directors, the private lender told BSE.

Srivastava will also chair the bank's IT (information technology) strategy committee while Gujarathi will be a member of the audit committee, Yes Bank said. The notice was issued to BSE on Wednesday after the bank's board met to consider its annual results.

The new directors have been appointed "in accordance with extant Reserve Bank of India (RBI) regulations and the New Companies Act 2013", the bank said in a statement.

It also announced the formation of two new committees, IT strategy and CSR (corporate social responsibility), as mandated by the new companies law.

Yes Bank is one of the respondents in a case filed in the Bombay high court by Madhu Kapur, wife of late co-founder Ashok Kapur, demanding the right to nominate directors to the bank's board.

Madhu Kapur holds a 12% stake in the bank, while Yes Bank managing director and chief executive officer Rana Kapoor, directly and through other family-owned ventures, holds a 13.59% stake.

Madhu Kapur, sister-in-law of Rana Kapoor, filed a case last June, which is being heard by a two-judge bench of the high court.

As part of the case, Madhu Kapur is opposing the appointment of three new directors in June 2013 because she, as co-promoter, had not been consulted before they were appointed.

The three nominee directors, M.R. Srinivasan, Ravish Chopra and Diwan Arun Nanda, were unfit to serve on the bank's board, the petition said.

It has also challenged the appointment of three other Yes Bank directors, Rajat Monga, Sanjay Palve and Pralay Mondal, naming them as respondents in the case.

Madhu Kapur's daughter Shagun Kapur Gogia had also applied to be on the bank's board, as directed by the court in June, but the board rejected her nomination in a meeting held the same month, ostensibly because she does not have sufficient experience to be a director.

On 24 March, a single-judge bench of the high court ruled that it has the jurisdiction to hear Madhu Kapur's plea overturning the bank's contention that directors of the bank were fully elected by shareholders and, under section 10 A (6) of the Banking Regulation Act, the court has no jurisdiction beyond the board.

Shagun Kapur Gogia declined to comment.

Yes Bank subsequently filed an appeal to a two-judge bench of the high court challenging the single-bench order. Earlier this month, a two-judge bench of justices S.J. Vazifdar and B.P. Colabawalla had asked both the parties to try and work out a solution within a week.

The last hearing was adjourned to 29 April as both parties had sought time until after this week's board meeting. A person close to Madhu Kapur, who declined to be named, said the appointments have taken them by surprise.

"We have been specifically told that there will be no new directors appointed when we agreed to postpone the hearing last time. Now we will consult our counsel for the next course of action," this person said, not ruling out challenging the new appointments.

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