India's first fat-finger voting error at a bank?
PremiumEquitas did acknowledge the mistake, but not before the development caused an embarrassment to the Chennai-based small finance bank
BENGALURU : A proposal seeking shareholder approval for a salary hike for a senior executive at Equitas Small Finance Bank got rejected after an executive at the lender’s holding company inadvertently voted against the resolution, making it probably the country’s first such fat-finger error.
Equitas did acknowledge the mistake, but not before the development caused an embarrassment to the Chennai-based small finance bank. The incident is a cautionary tale for shareholders and companies alike when they exercise their voting rights on resolutions in the ongoing season of the annual general meetings.
Equitas Small Finance Bank sought shareholder approval on 13 resolutions, including a resolution seeking an increase in remuneration of executive director Rohit Phadke. Shareholders were allowed to vote on the board-approved recommendation using the electronic voting facility between 16 July and 18 July.
When the voting results were announced on 22 July, Equitas Holding Ltd, which owns 74.52% of Equitas Bank, was found to have voted against the proposal on remuneration, even as promoters and public shareholders approved all the remaining 12 proposals.
The voting results confounded many shareholders, some analysts and at least one proxy advisory firm. This was because the promoter cleared at least two other resolutions relating to Phadke, including his appointment as a director and another recommendation of the executive director.
Institutional Investor Advisory Services India Ltd, the proxy advisory firm, even called the voting outcome a surprise in a note on Monday.
But almost all stakeholders missed Equitas’s clarification on the blunder to the stock exchanges on 21 July.
“With respect to Resolution No. 10, the Bank has received a letter dated 18 July 2022, from the Promoter company ‘Equitas Holding Ltd (EHL)’ mentioning that the vote for Resolution No.10 was cast as ‘Against’ instead of ‘For’ inadvertently during the e-voting process," Equitas informed the BSE.
“Promoter had informed that the intent has been to vote in favour of all resolutions, including Resolution No. 10. In view of the inadvertent dissent voting in the e-voting portal (which could not be later modified due to applicable statutory restrictions), Resolution No.10 was not passed with requisite majority. The bank will plan to take necessary measures to approach the shareholders again at the appropriate time, which will be duly intimated."
A bank spokesperson declined to comment on the fumble by the holding company.
“We have seen instances of fat-finger trades, but this is probably the first fat-finger voting we have seen," said Amit Tandon, founder and managing director of IiAS. “The bank will need to approach shareholders again with the same resolution. It is embarrassing for the holding company and costs the bank time and effort, but the leadership team will remain intact."
Founder and chief executive Vasudevan P.N. started Equitas as a microfinance player in 2007 after he borrowed money from M.A Alagappan, the then chairman of the Murugappa Group, and M. Anandan, Cholamandalam’s former managing director. Three years later, Equitas became a non-banking financial company. It went public in November 2020 and ended last year with an income of ₹2,576 crore and a profit of ₹281 crore.
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