Setback for Rashmi Saluja, Burmans as court stays Religare’s AGM and RBI’s approval for open offer | Company Business News
In a setback for Religare Enterprises Ltd chairperson Rashmi Saluja, the Madhya Pradesh High Court stayed the company’s annual general meeting that was scheduled for 31 December. It also suspended the approval granted by the Reserve Bank of India to the Burman family to make an open offer to acquire an additional 26% stake in Religare Enterprises.
The stay on the AGM may cause unrest among REL shareholders as the non-banking financial company’s management had already pushed the meeting from September to December. The delay is particularly crucial as Saluja was up for reappointment at the AGM.
A division bench of Chief Justice Suresh Kumar Kait and Justice Vivek Jain passed the order on 18 December in response to a public interest litigation filed by Madhya Pradesh-based advocate Vijayant Mishra, which aimed to protect the interests of Religare’s minority shareholders.
Mishra’s plea stated that the shareholding of 73,263 persons who hold up to ₹2 lakh worth of REL stock each would be adversely affected by the consolidation of four Burman family entities—Puran Associates, VIC Enterprises, M B Finmart, and Milky Investment & Trading Company—to acquire an additional stake in REL.
Mishra argued that after the Burman family—the promoters of consumer goods company Dabur Ltd—announced their intention to increase their stake in REL there had been volatility and disputes surrounding the family’s open offer.
He requested the court to set up an independent commission of enquiry to oversee and monitor the proposed acquisition of REL to protect the interests of minority shareholders.
The Burman family is Religare’s largest shareholder, controlling about 25% of the company’s shares through the four entities.
The Madhya Pradesh High Court C has issued notices to the Burman family, Saluja, RBI, and the Securities and Exchange Board of India. The court has listed the case for further hearing on 17 January.
Annual retirement and reappointment
According to Section 152 (6) of the Companies Act, one-third of a company’s directors, excluding independent directors, need to retire at each AGM.
Saluja is the only non-independent director on the Religare board and, therefore, her position comes up for retirement at each AGM.
The ongoing dispute between Religare and the Burmans dates back to 25 September 2023, when the Burman family signalled their intent to acquire a controlling stake in Religare Enterprises. The promoters of Dabur have been accumulating shares through their four entities, which belong to cousins Anand and Mohit Burman.
After acquiring a 9.9% stake in April 2018, the Burman’s increased their holding in REL to 14% in June 2021 and then acquired an additional 7.5% in August 2023. In January this year, the Burman family raised their stake in REL to above 25%, gaining veto rights on any special resolution introduced by Religare Enterprises.
