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The overwhelming vote to remove Fortis Healthcare independent director Brian Tempest signals that the new board needs to quickly correct course by amending the past mistakes, proxy advisory firm IiAS has said in its latest report .
“The vote reflects investor ire with both the process and the pick,” the IiAS report states.
“The ballot is a clear signal to the new board that there is a compelling reason to relook at the decision. And the board will be well within its rights to do so,” it adds.
IiAS has advised shareholders to vote for resolutions seeking removal of four directors. “The dilemma for the board is having committed to Munjal-Burman, can they now walk away unscathed from it versus ignoring higher value credible offers, and their fiduciary duty to the company and its stakeholders,” IiAS said.
“It is not an easy choice. But the shareholders have signalled what they expect and consequently how the board should now behave. The board has no option but to listen,” the report said.
Manipal-TPG consortium has revised its bid by valuing Fortis at Rs 180 per share, and IHH has offered Rs 175 per share indicated that it is willing to come back with a more compelling offer. Munjal-Burmans offered to invest Rs 1,800 crore valuing Fortis shares at Rs 172 apiece.
After the extraordinary general meeting (EGM), Fortis on Wednesday announced that its shareholders passed resolutions seeking removal of Brian Tempest and ratified appointment of three board members recommended by minority shareholders on the board.
Out of seven resolutions moved at the EGM, shareholders took up four resolutions for voting pertaining to removal of independent director Brian Tempest and ratifying the three directors — Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee — nominated by minority shareholders East Bridge Capital and Jupiter India Fund.
Shareholders didn't take up voting on removal of Harpal Singh, Sabina Vaisoha and Tejinder Shergill as they have already submitted resignations
The EGM was called by Fortis minority shareholders East Bridge Capital and Jupiter India Fund in April to remove the directors on an allegation that the Board failed to be fair to all shareholders.
Manipal-TPG extends validity of offer
Earlier in the day - Manipal-TPG said it has extended the validity of its modified offer for Fortis to June 6.
“As you are aware, our modified new offer is valid till May 29, 2018 and in order to provide the Fortis board with sufficient time to consider our modified new offer, we propose to extend the validity of our modified new offer...,” Manipal-TPG said in a letter to Fortis directors.
The modified new offer shall remain valid and binding in its entirety until June 6, 2018, for acceptance by Fortis board and for recommendation to the shareholders of Fortis, Manipal-TPG said.
Share of Fortis declined 1.42 percent to close at Rs 142.60, while benchmark Sensex gained 0.93 percent to end 34,663.11 points.
On May 17, Malaysia’s IHH Healthcare had extended the acceptance period of its enhanced revised proposal for Fortis to May 29.
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