InGovern Research has alleged Pune-based Finolex Cables violated corporate governance norms over the appointment of board of directors.
We at ET Now spoke to Shriram Subramanian, MD, InGovern on the issues flagged off for Finolex Cables. He started by giving us an understanding of the issue. He said that there are two issues- the first one being normally companies appoint independent directors as additional directors, subject to shareholders’ approval at its next general meeting.
But Finolex Cables appoints additional directors immediately after the AGM and doesn’t call for shareholder approval. The company every year has a board which is no stable quote. He further adds that this has been happening for the last three years. And there is no governance within this method since the directors aren’t appointed shareholders.
The second issue he highlighted is that the company had earlier appointed Chhabria as a permanent director for life. The appointment of an executive Chairman not liable to retire by rotation is a violation of the Companies Act.
When we asked for a solution for these problems he said that when the company comes to the shareholders with the proposal they should ask for a fresh set of directors who are acceptable to shareholders.
He adds that in Finolex’s case, the competence of the directors is in question since they haven’t been approved for a whole year. He further adds that since this is happening for a few years the entire genesis of this seems to be some sort of a promoter issue that is still not known properly and that also needs a resolution.
He ends by saying these are the corporate governance issues the regulator and other investors/shareholders need to take note of. Times Now News