Religare Controversy: Ingovern Calls For Rashmi Saluja To Step Down

After the abrupt postponement of the annual general meeting (AGM) of Religare, the shareholder advisor Ingovern says that chairperson Rashmi Saluja and key management persons (KMPs) should step down from the company. Religare Enterprises is embroiled in a fierce power struggle and the recent AGM postponement has raised eyebrows amid mounting regulatory scrutiny. With the AGM delayed and no clear explanation for the delay, questions swirl around Religare's governance practices as Saluja and the Board grapple with serious allegations of misconduct, said Ingovern. In such a situation, Ingovern feels that for Saluja and KMPs stepping down from their roles in the company would signal a commitment to accountability and a fresh start with a fresh Board and leadership for Religare Enterprises.

"It is fait accompli that Dr. Rashmi Saluja’s reappointment in the ensuing AGM will be defeated by shareholders. Hence, the AGM was postponed," Ingovern has said.

Religare is currently under scrutiny by SEBI, Delhi High Court and the Enforcement Directorate amid ongoing investigations into alleged insider trading, money laundering and financial misconduct, raising concerns about the leadership credibility of the management, Ingovern said.

Saluja and a few other KMPs face intense pressure from SEBI and the Enforcement Directorate over alleged insider trading, casting doubt on their leadership amidst a turbulent corporate battle for control. In June, SEBI issued an interim order and a Show Cause Notice (SCN) to Religare and the whole board to file an application for change of Control and also why the directors should not be debarred from the capital markets for stalling the offer. IRDAI passed an order cancelling the ESOPs issued to Dr. Saluja in CARE and asking the company to buy the ESOPs back. ED has filed an ECIR for money laundering. The Mumbai Police has filed an FIR. The ongoing scrutiny by regulators and law enforcement agencies puts Dr. Saluja's position as Chairperson at risk, highlighting the precarious nature of corporate governance at Religare Enterprises

"Corporate Drama has intensified. The postponement of the AGM signals deeper issues within Religare, as Dr. Saluja navigates a treacherous path amid allegations threatening to undermine her authority and a possible loss of Board seat for Dr. Saluja, being the only non-independent director, seeks re-appointment by rotation at the upcoming AGM before December 2024," Ingovern said.

The Delhi High Court has intervened by challenging a three-month extension granted by the Registrar of Companies (RoC) to Religare for holding its 40th AGM. Burman group, the largest shareholder in Religare, had argued that the extension violates legal provisions, as it was granted without special reasons, raising concerns about the management's practices amid ongoing scrutiny from regulatory authorities.

Statutory Auditors cold feet
A soon to be appointed auditor M/s. Nangia & Co LLP, proposed by the Board, have withdrawn their consent for being considered for appointment as statutory auditors.

Trust Eroded
With SEBI and ED investigations underway, and the IRDAI order, confidence in Religare’s leadership is wavering, raising alarms for investors and stakeholders alike. As investigations loom, the credibility of Religare’s leadership hangs in the balance, igniting fears of instability within the diversified financial services company  

Issues and Charges Faced by Religare
1. Insider Trading Allegations: The Burman family has accused Dr. Rashmi Saluja of selling shares while in possession of undisclosed price-sensitive information. SEBI is investigating potential insider trading violations linked to Dr. Saluja.

2. Ongoing Investigations: In 2022, the Ministry of Corporate Affairs ordered an investigation into the affairs of Religare Enterprises Limited and Religare Finvest Limited by the Serious Fraud Investigation Office (SFIO). During the investigation, financial transactions between the companies under investigation and the transferor companies were noticed, which could adversely affect the ongoing investigations.

3. Potential Impact on Merger/Amalgamation: The ongoing investigations into Religare Enterprises Limited and Religare Finvest Limited have raised concerns that granting permission for any merger or amalgamation could adversely affect the ongoing investigations against the companies under investigation.