MUMBAI: Uncertainty looms large on shareholders of ICICI Securities The broking arm of ailing private lender ICICI Bank, which has been under intense regulatory scrutiny, is likely to witness one of its toughest battles yet, while reappointing its MD & CEO Chanda Kochhar.
Kochhar is currently on a forced indefinite leave at the parent entity pending the outcome of an internal inquiry. Regardless, she offered herself for reappointment as a director on ICICI Securities, which has put the resolution up for approval during its forthcoming Annual General Meeting on August 30.
However, proxy firms aren’t on the same page. Some favour the move, while others differ.
The resolution needs a simple majority, which can be easily acquired if the ICICI Bank, which holds 79 per cent in ICICI Securities, votes in favour. In the absence of such a move, the decision falls on public shareholders.
While Institutional Investor Advisory Services (IIAS) recommend investors to vote against the proposal, another firm Stakeholders Empowerment Services (SES) is against the move.
“Kochhar’s presence on the board of ICICI Securities, while legally compliant, exposes the company to the same risks and the possibility of legal and regulatory sanctions. We believe she should be reappointed on the Board only after all the charges against her have been cleared,” IIAS said in a note.
On the other hand, SES said Kochhar’s appointment was compliant with the law and no concern has been identified in her profile, attendance performance and time commitment. However, it recommended voting against some other resolutions floated by ICICI Securities pertaining to ESOPs, citing non-disclosure of exercise price.
It may be noted that markets regulator SEBI has also issued a showcause notice to Kochhar and ICICI Bank over alleged violation of disclosure norms. Also, in a recent filing with the US market regulator Securities and Exchange Commission, ICICI Bank highlighted the possibility of increased regulatory scrutiny and reputational risks from these developments impacting its operations and performance.
The bank chairman G C Chaturvedi on Thursday said the Srikrishna panel report on Kochhar is expected in the next two months. He added that the bank was yet to respond to SEBI’s notice regarding loans to Videocon.