Proxy advisory firm Institutional Investor Advisory Services (IiAS) has asked shareholders of Adani Total Gas (ATGL) to vote against a special resolution seeking alterations to the company’s articles of association (AoA), citing lack of adequate transparency in disclosure supporting the resolution.

ATGL proposes to amend the AoA to include certain provisions of the shareholders’ agreement, which allows changes in board nomination rights to TotalEnergies Holdings (THS) group and the existing promoter group, based on their shareholding in the company. Voting for this resolution, along with two others, will cease on April 6.

Also read: Government’s infrastructure push and its impact on the textile industry

The proposed clause will give board nomination rights to the THS group and the existing promoter grouping, subject to a minimum shareholding threshold of 26%. The CEO of ATGL will be appointed on mutual agreement between THS and the existing promoter of the company.

“The company has neither defined THS and the existing promoter group nor has it disclosed the existing AoA for us to determine the impact of the change. The promoters and THS will vote in tandem to give effect to Article 4.2. However, Article 4.2 has not been disclosed,” IiAS said in its report.

The proxy advisory firm also alleged that ATGL has not done full disclosure relating to one of the company’s articles that relates to the position of the company’s CEO.

The resolution states that if the executive director ceases to be the CEO, he/she shall resign from the board or will be removed from the board. Further, THS and ATGL promoters will exercise their voting rights and take all actions necessary to cause the removal if the executive does not voluntarily resign from the board immediately upon vacating the post.

“As per this clause, when the executive director ceases to be CEO, he is required to resign from his role as an Executive Director, failing which THS and promoter group will remove him. Since the entire Article 4.3 is not disclosed, it is difficult to assess the full impact of the proposed insertion,” IiAS further added. THS holds 411 million equity shares in ATGL giving it a stake of 37.4% in the Adani Group company under the foreign entity category of the promoter group. An exact quantum of stake is held by Gautam Adani and Rajesh Adani on behalf of SB Adani Family Trust and others, leading to a total promoter stake of 74.8% in ATGL.

Also read: Farm to peel: Embracing digital technology and sustainable farming

A mail sent to the Adani Group seeking responses to the IiAS recommendations did not get a response at the time of going to press.

In an earlier separate development in February, TotalEnergies announced that it was pausing the transaction of acquiring 25% interest in Adani New Industries until an independent review ordered by the Adani Group and an investigation by the government released their findings.