According to a recent report by InGovern, primarily focused on India, Raymond, in its AGM on 5th June, proposed a contentious related party transaction where it wanted to sell one of its prime properties to its Chairman and some of his relatives. As bad as things have gotten in America, I do not recall seeing anything quite like it.
The price which was lower than 1/10th of the market value. While the company said through the explanatory statement that this would result in a loss for the company, we didn’t see any reason as to why the Audit Committee and the Board didn’t strike down the deal itself and block it from being put up for shareholders’ approval.
Even the chairman and managing director himself, Gautam Singhania, urged shareholders to vote against the sale.
The tripartite agreement entered in year 2007 between the company, lessor and occupants, all of whom were related parties, to offer apartments for sale at a substantial discount to the current prevailing market prices which would cause a major loss to the company and shareholders. Keeping this in mind, the company decided not to act on this agreement. (Raymond CMD urges shareholders to vote against JK House sale at AGM)
What about major embarrassment to the company? Eventually, the proposal was voted against by 70.6% of voting shareholders, which included only non-promoters.
I frequently think boards are doing crazy things in U.S. markets. However, I don’t ever remember seeing this kind of related party transaction or attempt. Do readers know of such examples?
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