An overwhelming 88 per cent of Fortis shareholders voted in favour of a resolution to remove Brian Tempest, the last of the four old directors, from the board of the hospital chain and unanimously confirmed the appointment of three new independent directors at extraordinary general meeting on Tuesday.
The vote of shareholders went against the promoter entities who voted in favour of Tempest. Former CEO of Ranbaxy Laboratories, Tempest was appointed by the Fortis founders - Malvinder and Shivinder Singh, who had to step down from the Fortis Board in March, amidst allegations of siphoning funds and after lenders seized the brothers' pledged shares.
The total voting percentage was around 66 per cent. Of this, around 99 per cent supported the appointment of the three new independent directors nominated by shareholders and 88 per cent voted in favour of removal of Tempest. Harpal Singh, Sabina Vaisoha and Tejinder Singh Shergill, three directors appointed by former promoters, had stepped down a day ahead of the EGM, possibly aware of a certain defeat.
Resolutions seeking their removal were thus rendered infructuous. The four previous directors had voted in favour of the offer by Sunil Munjal's Hero Enterprises Investment Office and the Burman family office. Now, the decision is under cloud. The EGM was called at the behest of institutional shareholders Eastbridge Capital and Jupiter India Fund, that own 12.04 per cent in the company, to overhaul the board following controversies surrounding proposed capital raising.
The investors proposed the appointment of Suvalaxmi Chakraborty, Ravi Rajagopal and and Indrajit Banerjee and over 99 per cent of voters supported the resolution of their appointment. Promoters and institutional shareholders unanimously voted in favour of three new directors while a few negative votes were cast by ordinary public shareholders.
The result was announced on Wednesday. Similarly promoters (that include family members of the Singh brothers apart from RHC Holding and Malav Holdings) voted against removal of Tempest, former CEO of Ranbaxy Laboratories, while 86-89 per cent of institutional and public shareholders voted for his removal.Yes Bank is the largest shareholder in Fortis Healthcare controlling around 15 per cent stake.
"The result can be interpreted only in one way. The vote signals that the new board needs to quickly correct course by amending the past mistakes," proxy advisory firm IiAS said in a note."The board will be well within its rights to relook at the decision. There is a revised bid from the Manipal-TPG group, and IHH has indicated that it is willing to come back with a more compelling offer. The dilemma for the board is having committed to Munjal-Burman, can they now walk away unscathed from it," IiAS remarked.Several competing bids have come in for Fortis - Manipal Hospitals with TPG, IHH and Chinese giant Fosun apart from the Munjal-Burman combine.