Update, May 23:
Fortis shareholders remove Brian Tempest from the board
The much awaited Fortis Healthcare extraordinary general meeting (EGM) at the Air Force Auditorium, Delhi, concluded on Tuesday with few sparks.
The meeting began at 10 AM and barely lasted for half an hour, with sparse attendance.
People present during the Fortis Healthcare management include the current chair of the board, Dr Brian Tempest, CEO Bhavdeep Singh, company secretary Rahul Ranjan amongst others.
It was a quieter than anticipated EGM primarily due to two reasons. Firstly, many shareholders including the prominent ones are likely to have cast their votes electronically, hence the low attendance.
Read also: Three directors quit Fortis Healthcare board amid takeover battle
And secondly, three of four directors, who were to be removed at this EGM, already resigned from their posts.
The EGM was called on behalf of the East Bridge Capital Fund and Jupiter India Fund, that hold around 12% in the company, to vote on two resolutions.
The first one was removing four existing directors and second one was ratifying three new directors recommended by East Bridge and Jupiter.
The four existing directors, who were to be voted off were Brian Tempest, Harpal Singh, Sabina Vaisoha and Lt. Gen Tejinder Singh Shergill.
Off these, Harpal Singh, Sabina Vaisoha and Lt. Gen Tejinder Singh Shergill, submitted their resignations on May 20, two days ahead of the EGM, citing personal reasons.
That leaves Brian Tempest, whose fate on the Fortis Healthcare board will be decided by tomorrow or day after, once the counting is completed, unless he resigns before the outcome.
The shareholders will also ratify the appointment of the three independent directors, Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee, recommended by the East Bridge and Jupiter.
While nobody can tell what the final outcome will be, one of the likely scenarios is Brian Tempest being asked to step down and the three new directors being ratified.
In that case, the board will then consist of four members, Suvalaxmi Chakraborty, Ravi Rajagopal, Indrajit Banerjee (recommended by East Bridge and Jupiter) and Rohit Bhasin (appointed on April 19, 2018).
Read also: The devotion of the Singh brothers of Fortis runs deep into their businesses
Only a minimum of three board members are needed, but questions of lack of board strength and maybe objectivity (since three members are appointed by one set of foreign institutional investors) could resurface. However, the most pressing question will be, whether the legitimacy of the Munjal-Burman bid chosen on May 10 still stands?
To recap, the decision of choosing Munjal-Burman's bid was taken with a majority, but without a unanimous vote.
The point of contention was that off the eight members, the five who voted for Munjal-Burman, were the four old directors and new inductee Rohit Bhasin.
This decision raised questions of collusion and lack of governance. More so, three of the five directors, who voted for the Munjal-Burman bid have stepped down within two weeks of the decision and one might be on his way out.
On the other hand, despite the final decision being taken by the board, Manipal-TPG submitted a fresh bid with an offer at Rs 180 per share – the highest on the table currently.
Malaysia-based IHH Healthcare Berhard followed the suit and renewed their last offer of Rs 4,000 crore at Rs 175 per share with Rs 3,350 crore subject to due diligence to the May 29 as well.
Shareholders have noticed too. For example, Yes Bank that holds 15% stake in Fortis Healthcare has pressed on the board to consider all revised bids, in order to derive maximum value for the shareholders.
Read also: Yes Bank urges Fortis to consider revised or new bids
Governance experts said that given the current scenario, it’s likely that Fortis Healthcare could see another round of bids.
And this time, it could start by allowing bidders to conduct due diligence. Due diligence will provide a fair assessment of the assets and a more transparent bidding process as per experts, even if bidders might not like what they see.
But there are a few other things to track in Fortis healthcare in the next few days. How and by when will the Fortis board be strengthened? What happens to the SRL Diagnostics board? Will Harpal Singh and Tejinder Singh Shergill resign from there as well? When will the Q4 numbers be released? (No date intimated as yet).And last, but certainly not the least, the street is keenly awaiting the Serious Fraud Investigation Office (SFIO) probe which is expected at the end of May.