Meeta Makhan will be the chairperson of the CoD with Shakti Sinha and Satish Kumar Kalra being the other two members.
LVB said the CoD would be composed of three independent directors and the panel would exercise the discretionary powers of MD & CEO in the ad-interim.
Even as the Reserve Bank of India (RBI) has approved the appointment of a three-member committee of directors (CoD) to run the day-to-day affairs of Lakshmi Vilas Bank (LVB), prominent proxy advisory and corporate governance firms told FE that the bank should speed up the process of raising capital as well as finding a new MD and CEO.
LVB said the CoD would be composed of three independent directors and the panel would exercise the discretionary powers of MD & CEO in the ad-interim. Meeta Makhan will be the chairperson of the CoD with Shakti Sinha and Satish Kumar Kalra being the other two members.
Meanwhile, shares of the bank on Monday pared early losses to close higher by 5% after the RBI nod. The stock bounced back during the fag-end of the trade and gained 5.21% to close at Rs 20.20 on the BSE. During the day, the stock declined 5.72% to Rs 18.10. On the NSE, it rose 5.21% to close at Rs 20.20. During the day, it tanked 6.25% to Rs 18.
Amit Tandon, founder and MD of Institutional Investor Advisory Services (IiAS,) told FE that the bank now needed to: One, focus on finding a new CEO; two, work on capital raise in consultation with the RBI; and three, appoint new auditors.
IiAS had recommended voting against four re-appointments prior to the AGM of LVB, citing that a strong board would have enabled the bank to break from the past and give confidence to the buyers that they were free to address legacy issues.
Shriram Subramanian, founder and MD of corporate governance advisory firm InGovern Research Services, told FE that for LVB, the key focus should be to raise capital, so a transaction with Clix Capital or any other investor should be keenly pursued. On appointing a new MD & CEO, he said any new investor might want to bring in his/her own MD & CEO as well.
On shareholders rejecting the re-appointment of seven directors in the AGM, he said in LVB’s case, only a little above 6% is with the promoters’ group and rest of the stakes are spread across different categories of investors.
“From that perspective, this (AGM) was the right forum for the shareholders to be active and to take a stand on the non-performance of the bank. So, they collectively came forward and chose to express their unhappiness, by voting against those who have been at the helm of bank, when their reappointments were taken up,” he said.
According to him, the new development would not have any effect on the bank’s day-to-day operations and it was anyway under prompt corrective action (PCA).
Sources close to the promoters said the rejection of certain directors would not have any impact on merger talks with Clix. They said due to the current development, the banking regulator’s focus had shifted to the bank, which would only accelerate the process of capital raise.