Four directors of the Fortis Healthcare Ltd have made a joint appeal to its shareholders urging them to “take an informed decision.” They have made this request to the investors as a resolution sought the removal of the four directors during an EGM. Incidentally, the EGM was convened at the behest of two institutional shareholders as they are not satisfied with the performance of the four directors. However, the four directors defended themselves in a joint representation by justifying their actions. The company is up for sale, and there were offers from different companies, and it is quite likely that they would also be taken up.
The four board members, Brian W Tempest, Lt. Gen. Tejinder S Shergill, Sabina Vaisoha and Harpal Singh, were not happy with the charges leveled against them by the minority shareholders. The four directors have countered the arguments of the two financial institutions and listed key decisions to defend their actions. This included initiation of an independent inquiry to go into the allegations of fraudulent transactions that the company has allegedly committed.
The four members also pointed out that as part of governance and fiduciary duties, they have directed Fortis Healthcare Ltd management to keep records of every kind of assistance to the agencies involved in the investigation. They have also wanted to make sure that investigators examine allegations thoroughly so that there would be a fair and impartial investigation. The four members made it clear that they were not trying to defend anyone. They have pointed out that they themselves offered for questioning before the investigating agency. They were also ready to be a part of any investigation and by any agency.
A group of minority shareholders has sought on EGM on April 18 to remove the four directors from the company’s board. Their charge was that the members have failed in their fiduciary duties towards every shareholder of Fortis, Economic Times reported. The shareholder’s group also felt that these directors have not been able to maintain the levels of corporate governance that they have expected. As a result, the group termed the board’s performance as unsatisfactory.
Their earlier statement said, “The minority shareholders like us have lost confidence in the suitability, bona-fides or independence of the current members of the board and therefore are seeking their removal.” This apart, they have felt that the directors were not representing the shareholders’ interests at all and based on the recent events, they felt that the directors’ continuance is untenable.
According to earlier reports, IHH Healthcare made a binding offer to inject Rs.650 crore into Fortis. The group indicated that it would be through a preferential issue of Rs.160 a share. However, there are riders attached to it like offering immediate access to carry out due diligence. There was not much different from its original price of Rs.4,000 crore or $1.3 billion.
There are also other bidders like TPG-Manipal, KKR- Radiant and Munjal – Burmans. Incidentally, Renuka Ramnath, a member of the expert committee, has quit the three-member panel established to assess bids from bidding companies.