UGRO Capital, the MSME-focused non-banking finance company (NBFC) strongly dismissed criticisms from a proxy advisory firm that has recommended institutional investors vote against the re-appointment and proposed compensation package for the company’s vice-chairman and managing director, Shachindra Nath, at the upcoming annual general meeting on September 29, 2026.
The proxy advisory firm advised its clients to vote against the resolution for Nath’s re-appointment and the linked compensation structure, raising particular concerns about a share price‑linked variable pay component. The advisory characterised that variable element as effectively equivalent to cash‑settled Stock Appreciation Rights (SARs), which are restricted for promoter persons under the Securities and Exchange Board of India ‘s (SEBI) share‑based employee benefits regulations.
UGRO’s rebuttal and independent benchmarking
In a regulatory filing to stock exchanges, UGRO said the proposed compensation package is at or below the market median and noted that this conclusion was independently confirmed by Aon, the global compensation advisory firm. UGRO said Aon was engaged by the company’s 100 per cent independent Nomination and Remuneration Committee in April to benchmark remuneration.
The filing also argued that proxy advisory firms have a pattern of opposing the appointments of managing directors at comparable NBFCs despite those executives receiving similar or higher pay packages. “In each case, the compensation was similar or higher, shareholders rejected the advisory recommendation and the respective individuals continue in their roles today,” UGRO stated.
UGRO Chairman’s defence and principle of alignment
UGRO chairman Satyananda Mishra, former Chief Information Commissioner of India, defended the proposed variable pay structure as a mechanism for aligning the founder’s interests with those of shareholders- not for enrichment. “Should the variable pay resolution be approved, any compensation determined will be benchmarked independently against comparable companies, with the sole objective of aligning the founder’s interests with those of all shareholders,” Mishra said. “It will be fair, market-referenced, and never excessive – only alignment, never enrichment.”
Personal commitment and guarantees
The company highlighted Nath’s personal commitment to UGRO’s balance sheet as a material factor in assessing his remuneration and role. “One fact deserves recognition: Nath has voluntarily guaranteed Rs 1,830 crores of the company’s borrowings — without a single rupee of commission or fee, while building an institution that employs 2,500 professionals and serves 2,50,000 MSMEs across India,” Mishra said in the filing. “This level of personal commitment is rare in Indian corporate life.”
UGRO’s filing also noted that during March and April 2026- the same period in which the governance controversy surfaced- Shachindra Nath’s promoter vehicle, Poshika Financial Ecosystem Private Ltd, purchased 18,54,374 UGRO equity shares from the open market at prices between Rs 107.65 and Rs 110.94 per share. The purchases represented an outlay of roughly Rs 20 crore and raised cumulative promoter holding to 2.88 percent of the company’s total diluted share capital, UGRO said.
Dilution-to-build and promoter classification
UGRO emphasised that Shachindra Nath founded the company in 2018 and transformed a dormant listed shell into India’s first listed MSME-focused DataTech lending NBFC, raising more than Rs 2,500 crore of equity capital over eight years. The filing underlined that Nath’s personal shareholding was diluted to below 3 percent as a deliberate consequence of capital raises: “This is dilution‑to‑build, not disengagement,” the company said.
The filing added that this promoter classification, with cumulative holding below 3 per cent, permanently excludes Nath from ESOPs, SARs and other equity‑linked long‑term incentives that comparable professional managing directors typically receive in India, forcing him to rely more heavily on cash compensation and any permitted alignment mechanisms.
The controversy sets the stage for a close watch by institutional investors and proxy advisors when UGRO holds its annual general meeting on September 29 this year. The proxy advisory firm’s recommendation to vote against the re-appointment may influence some institutional holders, but UGRO’s independent benchmarking, public defence, and the company’s emphasis on Nath’s demonstrated personal guarantees and market purchases form the core of its rebuttal.
UGRO’s position is that the proposed compensation is market-referenced and intended to align interests rather than enrich the promoter, while the proxy adviser regards the variable pay design as potentially conflicting with SEBI rules and governance best practice. The voting outcome will provide a clearer verdict on how shareholders weigh independent benchmarking, personal commitments by management, and proxy-adviser guidance in governance disputes.