Former IPL commissioner Lalit Modi’s son Ruchir Modi has yet again written to the market regulator SEBI alleging corporate governance violations at the family-owned tobacco company Godfrey Phillips (GPI). Ruchir, also a GPI director, has told SEBI and the Ministry of Corporate Affairs (MCA) that his grandmother Bina Modi’s appointment as the company's President and Managing Director (MD) is illegal. The letter was written last week week.
“The appointment was effectuated in a fraudulent manner and in flagrant disregard and violation of statutory provisions and principles of corporate governance and failure of the board of directors of the company to disclose certain material events under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Most fundamental canons of basic corporate governance norms have been set at naught,” the letter to SEBI said.
The Modi family, earlier headed by late K K Modi, is embroiled in a dispute over division of assets after the family patriarch died in 2019. KK Modi is said to have left behind a Will, which talks about the division of over ₹11,000 crore worth of assets among family members. There is a legal tussle over the settlement and sale of assets now. GPI is jointly owned by the Modi family and UK’s Phillip Moris Global Brands.
“Bina Modi is continuing as MD despite the resolution for her appointment (being) defeated by shareholders,” the letter says.
Three options
As per Ruchir, post the demise of his grandfather, Bina was required to call the Board of Trustees of KK Modi Trust within 30 days to unanimously decide on three options: A decision to continue to own all trust fund; sell a part of the trust fund; or sell the whole of the trust. The KK Modi Trust owns the assets. The decision on any of the above options was required to be made by 'unanimous consent', failing which it was mandated that the entire trust including all family controlled businesses be sold immediately.
“Bina Modi was appointed despite being over 70 years and having no experience, knowledge, or qualification of handling a company of the size of GPI. The Companies Act prohibits a person aged 70 years from being appointed as MD without a special resolution passed by shareholders. The explanatory statement should provide justification for appointing such a person . As Bina Modi was above 70 years, the shareholder consent was required to be put in place,” Ruchir said.
Ruchir has further said that material facts having bearing on GPI and its shareholders, which were required to be disclosed for her appointment, were not disclosed to the stock exchanges and shareholders. GPI did not reply to an e-mail query from BusinessLine .