This time, section of shareholders want CEO’s spending powers curbed
By CL Jose
KOCHI/October 20-2022: In yet another move typical of Dhanlaxmi Bank, a group of nine shareholders of the troubled Thrissur-based nonagenarian bank have called for an extraordinary general meeting (EGM) on November 12, seeking controls on the spending powers of its chief executive officer (CEO).
This is the second time such a meeting is sought by a section of shareholders in less than five months, as 11 shareholders of the bank including Ravidnran Pillai were behind convening of an EGM that took place on June 12.
Again, it was just over two years ago, the then CEO of Dhanlaxmi, Sunil Gurbaxani was ousted by shareholders at its annual general meeting (AGM). The squabbles-battered bank has also sought three months’ extension to announce its FY22 financials, which is otherwise already due.
The internal issues of the bank coupled with its idiosyncratic financial woes have landed the bank in a situation that could pose even crucial challenges on its capital front if not sorted out quickly.
As everyone knows, a 1:2 rights issue planned to raise about Rs130 crore in capital has been hanging fire for a couple of months now due to the issues related to the bank’s Board.
The nine shareholders, who have sought the EGM, hold around 13 per cent shares in the bank, with Ravindran Pillai of the storied R P Group alone owning 9.99 per cent of the company.
As per a notification issued by the bank, one of the resolutions the shareholders have sought is the suspension of delegated powers exercised by the managing director (MD) and CEO regarding “all capital and revenue expenditure except statutory payments like salaries and wages, central and state taxes”.
“All such suspended powers for incurring the expenditures, if any, shall jointly be exercised by any two non-executive directors of the Board during the above-mentioned period,” it said.
It further added that the powers will remain suspended till the date on which proper quorum and composition of the board of directors of the bank, audit committee, and other mandatory committees of the board are reinstated as per the guidelines of Reserve Bank of India (RBI) and SEBI.
The shareholders are also seeking a settlement on the issue of a legal battle with some shareholders regarding board positions.
The current directors on the bank’s board are C K Gopinathan, a former director of CSB Bank with 10 per cent equity, perceivably the largest shareholding; Chief Executive Officer (CEO) & MD, J K Sivan; independent director, G Rajagopalan Nair, an expert on fintech with a long experience in banking; and the two RBI nominees: DK Kashyap and Jayakumar Yarasi.
The high court had in March this year disallowed the bank to hold annual general meeting (AGM) for the appointment of directors, until the legal issues regarding the board membership are sorted.
Shareholders also want Gopinathan and Nair to be empowered to settle the dispute through negotiations.
Though it was believed that Dhanlaxmi Bank had left behind all its vexatious issues when the bank in 2019 came out of the four-year prompt corrective action (PCA) framework imposed by RBI due to its deteriorating financial health, the fact was that the real issues had started emerging since then.
