Shriram Subramanian, Founder & MD, InGovern, says: “When we looked at the annual report, we figured out that the executive chairperson, Rashmi Saluja, who was an independent director and in 2021, became the executive chairperson, has been issued options worth Rs 480 crore which will mature over the next two-three years. But the disclosures have not been properly made to the Religare shareholders. Also Religare has a material subsidiary called Care Health Insurance which is 67% held by Religare. There also options worth Rs 250 crore have been issued to Dr. Saluja, who is not even an executive member of Care Health Insurance.” If you could talk to us about some of the key things which you have culled out from the annual reports which are not widely known, but may be quite negative for the shareholder interest?
We wanted to find out the reason why the Religare management is opposing a large shareholder, and that is the Burmans move of enhancing and increasing their shares. When we looked at the annual report, we figured out that the executive chairperson, Rashmi Saluja, who was an independent director, in 2021, became the executive chairperson. She has been issued options worth Rs 480 crore which will obviously mature over the next two-three years. But the disclosures have not been properly made to the Religare shareholders. Also Religare has a material subsidiary called Care Health Insurance which is a 67% held by Religare. There also options worth Rs 250 crore have been issued to Dr. Saluja, who is not even an executive member of the Care Health Insurance. She is only a non-executive chairperson of Care Health Insurance.
So to that extent, IRDA had opposed this move of issuing ESOPs to Dr Saluja. Yet the company, which is Care Health Care, went ahead and issued options to Saluja as an employee of the holding company which is an employee of Religare but that itself is not a disclosure made to shareholders of Religare, because if a material subsidiary is issuing so much options to the chairperson, then that should be coming in the compensation disclosures made by Religare itself. The shareholders of Religare have to approve specific compensation. They have taken an omnibus approval saying that any options issued by subsidiary companies will also be considered etc.
But what has happened is that the shareholders have not approved the specific compensation element of this.
The third part, why IRDA has this regulation that more than 10 lakh cannot be paid to non-executive directors is the impact on policyholders of Care. Not only are shareholders important, the policyholders are also important because they are also funding their premiums, etc. So to that extent, issuing Rs 250 crores of options to a non-executive director on Care is against IRDA’s guidelines and regulations. IRDA has specifically sent a letter to Care saying that that should not be issued. And so to that extent, that was a violation by the company and the company needs to take action on that front.
What should be the road ahead for both the parties to come and sit together and make a way to solve it because after all, it is the shareholders’ interests which need to be guarded?
Yes, so it is not clear why the Religare board is objecting to a large shareholder coming in and also when the mandatory open offer triggers at 25%, the SAST and SEBI regulations are actually very procedural in nature. In that sense, the open offer is made, minority, other shareholders, if they want to tender, they can tender or they do not need to tender, etc. But the reasons are not very clear, the reasons given by the current board and the independent directors have written to SEBI saying that the Burman’s source of funds is not clear, etc, etc.
It does not matter because at the end of the day, there is a large shareholder coming in and a mandatory open offer has been triggered at the 25% threshold and that is a very procedural SEBI regulation. So, at the end of the day, the board has to state its reasons very clearly, the minority shareholders are affected and they are waiting and watching. SEBI needs to show some directions to both the board as well as the Burmans on what are the next steps. I think the open offer trigger would be passed and I think that is a very procedural matter.
