By Venkatachari Jagannathan
Chennai, Jan 6 (IANS) Even as the Rs 37,000 crore Murugappa group is maintaining a studied silence on the allegation of gender bias in offering board membership, company law experts say that the law does not recognise any hereditary rights to a berth in any firm’s board.
They also said gender bias cannot be the reason for denial of a board berth.
“There cannot be any gender discrimination for board berth. Similarly there cannot be written or any unwritten rules whereby daughters, daughters-in-law and sons-in-law can be denied board berth and board membership is reserved only for the male heirs,” D.Varadarajan, a Supreme Court advocate specialising in company/competition/insurance laws, told IANS.
US-based Valli Arunachalam, the daughter of late M.V. Murugappan, has alleged that the group promoters have gender bias against women getting into family business and hence she or her sister were denied a board berth in Ambadi Investments Ltd after their father’s death in 2017.
“Company law does not recognise any hereditary rights for a board berth. Nor can the Articles of Association can provide for that,” practicing chartered accountant P.S. Prabhakar told IANS.
Varadarajan said that Valli Arunachalam should offer her candidature for appointment at the ensuing annual general meeting of the company by following the provisions of company law.
He said if there is a shareholders’ agreement in this respect, she can enforce it.
Demanding a board berth for her or her sister, Arunachalam also said if the demand is not met, then the other branches of the family should pay a fair market value for about 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.
As per reports, she had broached the subject of board membership with the family seniors but didn’t get a satisfactory reply and any affirmative action in that regard.
“The rift seems to be more to claim the family’s right for a board berth. The issue will be sorted out smoothly. This is the first time the family tussle has come out into the open,” a long-timer in the group told IANS preferring anonymity.
“It has been the group’s practice not to bring in women into running the business, be it daughters or daughters-in-law. The female members of the Murugappa family are involved in running the schools owned by the group or come for other major functions,” the official added.
One of the leading and respected industrial conglomerates, the Murugappa group has 28 business including nine listed companies.
The major companies in the group are: Carborundum Universal Ltd, Cholamandalam Financial Holdings Ltd, Cholamandalam Investment and Finance Company Ltd, Cholamandalam MS General Insurance Company Ltd, Coromandel International Ltd, Coromandel Engineering Company Ltd, E.I.D. Parry (India) Ltd, Parry Agro Industries Ltd, Shanthi Gears Ltd, Tube Investments of India Ltd, and Wendt (India) Ltd.
Except for two, all the other listed group companies are run by professionals.
“There is the Murugappa Corporate Advisory Board. While the Board is headed by a family member as Executive Chairman, the tenure ends when the person attains 65 years of age. The transition has always been smooth,” another senior official of the group told IANS on the condition of anonymity.
“Not all the male heirs of the family get to head a group company. A family member enters the group business as a management trainee and goes up in the ladder purely on performance,” a group official pointed out.
Queried about Arunachalam’s demand of paying the family a fair market value for the stakes held, group officials said she or her family may not go the extent of selling out to outsiders if the other members of the Murugappa family do not buy them out.
“It may not be worthwhile for an outsider to acquire the stakes held by Arunachalam’s family. The buyer will get only a minor stake and will not have any major voice in running the group against the other family members,” the official said.
Officials are of the view that it may be the time for the Murugappa family to decide on inducting the female members of the family into business.
(Venkatachari Jagannathan can be contacted at [email protected])