Raymond's Independent Directors Say No Law Requires Them To Investigate Matrimonial Disputes between Directors, Retain Berjis Desai as Counsel
Moneylife Digital Team 01 December 2023
While maintaining that they are alert to ensure that the marital disputes between the two promoter directors do not affect the company, independent directors (IDs) of Raymond Ltd decided to retain senior counsel Berjis Desai to advise them. "...neither any law nor any corporate governance standard requires ID to enquire into, investigate, or delve into the merits or otherwise, of such matrimonial disputes, which lie beyond the remit of the ID," they say in a communication.
In a regulatory filing, Raymond has shared the communication it received from the IDs. "The IDs, over the last few weeks, have been meeting and monitoring the situation so far as it affects the Company and the minority shareholders and reiterate their commitment to protect, at all times, the interests of non-promoter minority shareholders, employees and other stakeholders."
She also alleged that company funds were being used for Gautam Singhania's personal benefit (chief executive officer—CEO excesses) - and that she was acting as a whistle-blower.
The IDs of Raymond say, "The ID are alert to ensure that the matrimonial disputes between the two promoter directors do not in any manner affect the capacity of the CMD to manage the affairs and business of the Company. The ID shall continue to exercise utmost vigilance in watching the evolving situation and shall not hesitate to proactively initiate measures, the moment required, to protect the interests of all stakeholders."
Earlier this week, Institutional Investor Advisory Services India Ltd (IiAS) wrote a letter to the IDs of Raymond stating that "Your actions must protect the company from what proposes to be a long-drawn acrimonious battle between Nawaz Modi and Gautam Singhania."
The letter has been addressed to independent directors, Mukeeta Jhaveri, Ashish Kapadia, Dinesh Lal, K Narsimha Murthy and Shiv Surinder Kumar.
IiAS says, "Despite such serious and heinous accusations by one board member against another, you have been silent. Investors are worried, which is reflected in the significant erosion in stock price over the past few days. Your silence can be misconstrued – surely you don't want stakeholders thinking that these accusations are to be tolerated."
"At the very least, as independent directors, you need to communicate with investors and other stakeholders—assuage their concerns and articulate a course of action that you have taken following these public allegations. In the interest of the Company and to safeguard the interests of a larger set of stakeholders, we urge you to undertake an independent investigation into the allegations of both assault and CEO excesses," the corporate governance advisory firm says.
Earlier this month, Mr Singhania issued a statement to announce his separation from his wife, Nawaz Modi Singhania. Ms Modi Singhania is a director in at least 10 of the private and publicly listed companies of the Singhania family, including its flagship Raymond.  
As reported by Moneylife, in India, debilitating family fights over the distribution of wealth are common. "Family-run companies also tend to hide health issues involving their executive leadership, particularly amid succession battles. Especially worrying is a recent incident where the chairman of a high-profile company attacked his board director wife, causing her to be hospitalised. While no complaint has been filed, this chairman is already involved in a nasty war with his father and a new area of conflict should concern investors, especially since corporate finances have just perked up and the stock is flying." (Read: Family Feuds: Greed, Ego and Value Destruction for Minority Investors)
3 months ago
Free Helpline
Legal Credit