Billionaire Mukesh Ambani's Reliance Industries Ltd on Wednesday defended the appointment of Saudi Aramco Chairman Yasir Al-Rumayyan on the company board, saying all regulatory criteria for his appointment as an independent director were met, pending shareholder approval on the decision. The California State Teachers' Retirement System (CalSTRS), a shareholder of Reliance, had last week decided to vote against the move based on US proxy advisory research firm Glass Lewis' recommendation.

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The voting to confirm Al-Rumayyan's appointment for a period of three years will end on October 19. In a stock exchange filing, Reliance said the appointment will "help strengthen the Board's diversity and skill-sets and benefit Reliance through the transition from oil to chemicals and the aim to achieve Net Carbon Zero by 2035."

The company board had made the appointment based on the recommendation of the Human Resources, Nomination and Remuneration (HRNR) Committee and pursuant to the provisions of the Companies Act, and the same was announced at the annual shareholders meeting in June.

The appointment has taken effect from July 19, 2021, for a term of three years. "The law (Indian Companies Act, 2013) and the regulations prescribed by SEBI, the Indian Securities Regulator, lay down stringent criteria for independence for appointment as independent directors of a listed company like RIL. His Excellency Yasir Al Rumayyan satisfies everyone of this criteria laid down in the law and regulations," the firm said.

CalSTRS decided to oppose the appointment due to Al-Rumayyan's position in Saudi Arabia's Public Investment Fund (PIF), as its governor, as well as in Aramco. PIF has already invested Rs 9,555 crore in Reliance Retail and Rs 11,367 crore in RIL's Jio Platforms. Also, Aramco is in talks to buy a 20 percent stake in Reliance's oil-to-chemical business.

"The appointment of Yasir Al Rumayyan has no connection with the contemplated transaction with Saudi Aramco," the firm said. The O2C business of RIL is being spun off to a subsidiary.

"As per the terms of the proposed transaction, Saudi Aramco will participate in the equity of the O2C subsidiary. The O2C subsidiary board may have nominees of Saudi Aramco to protect its interest," it added. Reliance said the HRNR Committee of the Board of Directors consists of four independent directors out of the total strength of five.

"The Committee, based on interaction with Yasir Al Rumayyan and considering his versatile experience, after satisfying itself that he meets the criteria for independence, made a unanimous recommendation to the Board for his appointment as an independent director. This was in turn unanimously approved by RIL Board which consists of 50 percent independent directors," the filing said.

Al-Rumayyan, it said, "is an accomplished global business leader." He is the non-executive chairman of Saudi Aramco (SA) and has over 25 years of working experience in some of Saudi Arabia's prominent financial institutions. "It encompasses international business and governance experience, expertise in finance, the global energy industry and insights on emerging technology-led business models. This will help strengthen the Board's diversity and skill-sets and benefit Reliance through the transition from oil to chemicals and the aim to achieve Net Carbon Zero by 2035," it said.

An on June 30, 2020, CalSTRS held 5.3 million fully and partly paid shares of RIL, according to its website. CalSTRS is America's second-largest public pension fund with assets totalling approximately USD 318.4 billion as of August 31, 2021. CalSTRS's opposition is based on a report by Glass, Lewis & Co, an American proxy advisory services company. According to Glass, Lewis & Co, since Al-Rumayyan has a key role in the operations of Aramco and PIF, he does not qualify to be an independent director.

Under Indian law, an independent director cannot have a role in any company that has a business or equity partnership with the firm that intends to appoint him or her.

Disclosure:

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First Published:Sept 29, 2021 5:06 PM IST