Experts feel that the appointment of whole-time directors will be much easier if a settlement is reached, as the current disagreement is over the same.
Rival promoters of Yes Bank, Madhu Kapur and Rana Kapoor, have started preliminary talks to reach an out-of-court settlement and withdraw their decade-old legal cases against each other, sources told Mint.
People close to Rana Kapoor confirmed this development and said it is best for the bank if these cases are withdrawn and a truce is called. "Rana Kapoor has approached Madhu Kapur and her family and both parties are willing to opt for an out-of-court settlement, keeping in mind the long-term vision that was set by Ashok Kapur and Kapoor for the bank," sources said.
This comes after the Reserve Bank of India (RBI) cut short the tenure of managing director and CEO Rana Kapoor till January 2019. This order was followed by a process of looking for a new head, which was made lengthy due to the company’s articles of association (AoA), which requires both sides to agree on any appointment to the board.
Experts are sure that the appointment of whole-time directors will be much easier if a settlement is reached, as the current disagreement is over the same.
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Rana Kapoor and Madhu Kapur’s conflict began in 2009, a year after co-founder Ashok Kapur was killed in the 2008 terrorist attack in Mumbai. In 2013, Kapur and her daughter Shagun Gogia approached the Bombay High Court, demanding the right to appoint directors, which they were granted in 2015. The ruling has been challenged before a division bench.
Due to the uncertainty, the bank’s stock sank by 59 percent from its high of Rs 404 to Rs 166.15 between August 20 and September 28.
The board promoted Rajat Monga and Pralay Mondal as executive directors, subject to RBI approval on September 25. However, Madhu Kapur wrote to the Yes Bank board saying that this would be struck down as these appointments were done without consultation with the co-founders.
The bank had also appointed two external experts in its five-member search and selection committee to look for a successor for Kapoor. Global leadership advisory firms have also been approached to assist the search committee.