United Spirits shareholders are expected to decide whether Vijay Mallya should continue as chairman during the November 24 annual general meeting.
The meeting assumes significance as Mallya will preside over the AGM even though he has been formally asked to step down following an internal enquiry, which indicated various improprieties while carrying out certain transactions between 2010 and 2013. Mallya was owner of USL during that period.
The board has said that in case Mallya refuses to step down, it will recommend that shareholders seek his resignation.
The AGM is being held a couple of months after its scheduled date as the USL management had sought its postponement but the plea was rejected by the Registrar of Companies recently.
USL said the board had asked the Registrar for an extension because of multiple requests by several agencies for documents related to the inquiry report it had conducted. “The Registrar replied on September 5 denying this request. The Registrar’s response did not explain why the reasons provided by USL were found to be not tenable,” the company said in its latest annual report.
During the AGM of UB Holdings last month, Mallya had announced that he will preside over the United Spirits AGM and that the money his group owes to financial institutions was inflated. He, however, did not say by how much the dues were inflated.
But Relay B V, the majority shareholder of USL during the AGM on September 30, 2014, had said that its parent Diageo had a contractual obligation to support Mallya continuing as non-executive director and chairman of the company, subject to certain conditions. However, in case Mallya refuses to step down, the USL board had said it will request Diageo to review the shareholders’ agreement it has with the Chairman.
In an email response to BusinessLine , a Diageo spokesperson said no decision has been taken so far regarding the review of the shareholders agreement with Mallya.
Some of the shareholders during the AGM are expected to ask for a copy of the inquiry committee even though the company had made it clear that it will not make the report public or submit it to the stock exchanges. The report has, however, been provided to the auditors of the company as well as Diageo.
Meanwhile, the company has said with regard to other employees who appear to have been involved in certain transactions covered by the inquiry, the board has directed the MD and CEO to initiate necessary internal proceedings.
“The company has made significant progress with these internal proceedings and the board is being updated on these proceedings regularly,” the report said.