Proxy Advisory Firm Raises Red Flag Against Religare Enterprises

New Delhi: Proxy advisory firm InGovern Research has raised concerns about potential vested interests and regulatory breaches by Rashmi Saluja, the Chairperson of Religare Enterprises. The report alleges that Saluja has received excessive remuneration and engaged in questionable transactions, including the issuance of stock options to herself in contravention of regulations.

Excessive Remuneration and Regulatory Breaches

According to the report, Saluja has received a total valuation of over Rs 480 crore in options of Religare Enterprises Ltd (REL) and its subsidiary Care Health Insurance Limited (CARE) over the past 3-4 years. This is in addition to the compensation paid to her at REL. Shares of CARE were issued to Saluja through ESOPs, despite rejection from the Insurance Regulatory and Development Authority of India (IRDAI) and without the approval of REL shareholders.

InGovern further alleges that there was no disclosure of CARE ESOPs in the REL annual report as part of Saluja's compensation. However, Care Health Insurance independent director Pratap Venugopal refuted the charges, stating that the ESOPs were granted to Saluja only in her capacity as an employee/Executive Director and Chairperson of REL and were not intended for her role as Non-Executive Chairperson of Care Health Insurance.

Conflicts of Interest and Need for Investigation

The proxy advisory firm has called for detailed investigations by IRDAI and SEBI into the allegations of excessive remuneration and conflicts of interest. In particular, InGovern has highlighted the grant of 1.05 crore options of REL to Saluja since her appointment as Executive Chairperson in February 2020, which are currently valued at over Rs 230 crores. Additionally, Saluja has received excessive grants of stock options in CARE, valued at over Rs 250 crores, despite being a Non-Executive Chairperson.

In the case of CARE, ESOPs of 2.27 crores were issued to Saluja in January 2022, in contravention of IRDAI regulations that limit the issuance of stock options to Chief Executive Officers, Whole-time Directors, and Managing Directors. These options were issued without waiting for the outcome of IRDAI's approval, which was ultimately rejected due to the breach of regulatory limits on profit-related commission for Non-Executive Directors.

Frequent Resolutions and Share Sale Allegations

In REL, frequent resolutions have been tabled seeking shareholders' approval to grant ESOPs and revise Saluja's remuneration within a short span of three years. Additionally, the Burman family, which has made an open offer for REL, has approached SEBI with allegations that Saluja sold shares on September 20, 2023, after being made aware of the open offer. Religare, however, refuted the allegation, stating that the sale of ESOPs was part of a long process triggered several days prior to the meeting.

The allegations raised by InGovern Research have brought attention to potential irregularities and conflicts of interest within Religare Enterprises. The need for thorough investigations by regulatory authorities, such as IRDAI and SEBI, is crucial to ensure transparency, accountability, and the protection of shareholders' interests. The outcome of these investigations will be closely watched by investors and stakeholders alike.