Religare ESOPs case: Religare Ent says arm didn’t issue shares to chairperson Rashmi Saluja, no norms flouted

Religare Enterprises, the subject of a keen contest for corporate control, Wednesday clarified that the group had not violated rules on issuance of securities to key managerial personnel as its non-bank lending arm, Religare Finvest, didn’t issue any shares to its chairperson.

Although shareholders of Religare Finvest had approved an employee stock options (Esop) plan in favour of chairperson Rashmi Saluja, the proposal was not acted upon, the company said in a statement.

Securities and Exchange Board of India (Sebi) rules demand a company seek shareholder approval through a special resolution for granting Esops that exceed 1% of the concerned entity’s issued capital.

On September 26, 2023, shareholders of Religare Finvest approved the proposal of granting 21.4 million stock options to Saluja. Since then, however, the company didn’t place the proposal before the nomination and remuneration (NRC) committee.

Only when a proposal is placed before the NRC, stock options can be allotted to Saluja.

“Since no new shares were issued/allotted to (Saluja), there is no contravention of Sebi takeover regulations,” said the Religare Enterprises statement. ET, in its January 3 edition, reported that Saluja acquired 8% of the issued capital of Religare Finvest through 21.4 million stock options.”The allotment of approximately 21.4 million shares, constituting 8% of Religare Finvest to Saluja through Esops, requires investigation in terms of compliance with Sebi regulations,” said a spokesperson of the Burman family, the single largest shareholder at Religare Enterprises.

The Burman family has made an open offer to minority shareholders to buy more equity in Religare Enterprises and take control.

“It is unfortunate that a solitary executive has cornered a significant quantum of remuneration through Esops at Religare Enterprises, Care Health Insurance and Religare Finvest – all without approval and requisite disclosure to Religare Enterprises shareholders,” said the Burman family spokesman. “This raises a question mark on the management and independence of the independent directors and their complicity in such unjustified dole-outs. The board should answer the shareholders whether there exist more instances of Esop issuances to entities, and potential conflicts of interest.”

Meanwhile, the board of directors of Religare Enterprises endorsed the company’s latest statement on the issuance of securities in Saluja’s favour. Its board said that Religare Enterprises follows all regulations and that it stands by the management amid the ongoing ownership contest with the Burman family.