Setback for Burmans as court stays Religare’s AGM and RBI’s approval for open offer

In a significant development, the Madhya Pradesh High Court has stayed Religare Enterprises Ltd's (REL) annual general meeting (AGM) scheduled for 31 December and the Reserve Bank of India's (RBI) approval granted to the Burman family for an open offer to acquire an additional 26% stake in REL.

Religare chairperson Rashmi Saluja, who is up for reappointment at the AGM, finds herself in the midst of a power struggle with the Burman family, the largest shareholders of Religare. The AGM had already been postponed from September to December.

The division bench comprising Chief Justice Suresh Kumar Kait and Justice Vivek Jain issued the order on 18 December, acting on a public interest litigation (PIL) filed by Madhya Pradesh-based advocate Vijayant Mishra. Mishra's plea aimed to safeguard the interests of Religare’s minority shareholders, arguing that the consolidation of Burman family entities—Puran Associates, VIC Enterprises, M B Finmart, and Milky Investment & Trading Company—could adversely impact the 73,263 shareholders holding up to ₹2 lakh worth of REL stock each.

The PIL highlighted the volatility and disputes that ensued following the Burman family’s announcement to increase their stake in REL. Mishra called for the establishment of an independent commission to oversee the proposed acquisition, ensuring protection for minority shareholders.

The Burman family, who are also the promoters of consumer goods company Dabur Ltd, currently control about 25% of Religare through the four entities mentioned.

In response to the PIL, the Madhya Pradesh High Court has issued notices to the Burman family, Rashmi Saluja, RBI, and the Securities and Exchange Board of India (SEBI). The case is set for further hearing on 17 January.

Annual Retirement and Reappointment

Under Section 152 (6) of the Companies Act, one-third of a company’s directors, excluding independent directors, must retire at each AGM. As the sole non-independent director on the Religare board, Saluja's position comes up for retirement at every AGM.

Proxy advisory firms InGovern and Institutional Investor Advisory Services (IiAS) have advised shareholders to vote against a fresh five-year term for Saluja. They argue that the ongoing battle between the Saluja-led management and the Burman family, along with the resultant litigation, could serve as a significant distraction for the company's board.

The high-stakes power struggle within Religare continues to unfold, with the next hearing poised to shape the future course of the company's governance and ownership structure.