By Venkatachari Jagannathan
Chennai, Jan 7 (IANS) With the current head of the Murugappa group being inducted into the holding company board soon after his father passed away, the argument that legal heirs do not have the right to acquire directorship based on inheritance, is not a valid one against the family’s claim, a Murugappa family member said on Tuesday.
“We believe that simply searching for a written agreement, or saying that there is no legal right for heirs to acquire directorship is not the only barometer. It is also a question of fairness, transparency and good governance that all stakeholders be provided fair and equal representation,” Valli Arunachalam told IANS here.
US-based Arunachalam, the daughter of late M.V. Murugappan, has alleged that the group promoters have a gender bias against women getting into family business and hence she and her sister were denied a board berth in Ambadi Investments Ltd after their father’s death in 2017.
Arunachalam said that after her father’s demise, her family does not have a board representation in the group holding company Ambadi Investments.
Experts in company law have told IANS that a board berth for a female or male is not guaranteed by birth, or by getting married into the family, nor it is hereditary.
Recalling the circumstances that led to Executive Chairman M.M. Murugappan being inducted into the board of Ambadi Investments, she said it was occasioned by his father M.M. Muthiah passing away on January 6, 1979.
“M.M. Murugappan (then in his early twenties, barely out of college and having just joined the family business) was appointed on the Ambadi board on March 3, 1979.. strange, I assume that he expressed an inclination to be appointed only once his father passed away and the board decided to include him only once his father passed away,” Arunachalam said.
She wondered what work experience Murugappan had then to be inducted into the Ambadi Investments board.
“Does this not lead to an inference that there is some practice being followed of respecting each family’s position on the board?” she asked.
“You should also know that when the family made the assertion to us that the directorship is not connected to inheritance, we brought up the above example to them, and they have not refuted this,” Arunachalam added.
Pointing out that Ambadi Investments is just a holding company of the group and not an operating company she asked: “Would it then not be natural for all the family branches to be represented. Also, we do not understand that if there can be eight directors (ensuring all branches are represented). What, then, could be the concern for members of the family or the management of Ambadi to not ‘include’ us, that is, exclude us?”
Queried about whether there exists a shareholders agreement that provides for board berths for legal heirs, Arunachalam said that there is no such written agreement to her knowledge.
She also added that her family members do not have access to all the information that the members of other family branches have.
Citing news reports pertaining to the unwritten practice followed by the group of keeping out female members from the family business, Arunachalam said: “It is a very technical and artificial stance to search for a written agreement or clause in the articles demonstrating gender disparity and bias, when there is enough material in black and white indicating the existence and acknowledgment of a practice.”
Arunachalam also said if the family’s demand for board berth is not met, then the other branches of the family should pay a fair market value for her eight per cent stake held in Ambadi Investments.
According to Arunachalam, she is trying to enforce her father’s will to secure a board berth for the family member based on the shareholding in Ambadi Investments.
She had broached the subject of board membership with the family seniors but didn’t get a satisfactory reply and any affirmative action in this regard.
One of the leading and respected industrial conglomerates, the Chennai-headquartered Murugappa group has 28 business, including nine listed companies.
The major companies in the group are: Carborundum Universal, Cholamandalam Financial Holdings, Cholamandalam Investment and Finance Company, Cholamandalam MS General Insurance Company, Coromandel International, Coromandel Engineering Company, E.I.D. Parry (India), Parry Agro Industries Ltd, Shanthi Gears, Tube Investments of India, and Wendt (India).
Meanwhile, the Murugappa group maintains a studied silence on the family rift that has now come out into the open.
According to a company law expert, the rift is not a material development for the group’s listed entities to intimate the stock exchanges.
–IANS
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