Reliance General Insurance Company Ltd (RGCIL) on Monday said two of its Independent Directors (IDs) have resigned.
Per an exchange filing, Rahul Sarin and Prem Kumar Malhotra resigned effective from December 1 and December 3, respectively.
Anil D Ambani had resigned as a Non-Executive Director of RGICL with effect from November 29, 2021.
RBI supersedes Board
The resignation comes in the wake of the RBI superseding the Board of Directors of RGCIL’s parent (Reliance Capital Ltd or RCL) on November 29, 2021.
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Sarin is former member of Competition Appellate Tribunal, a statutory body under the Competition Act, 2002. He was also on the board of RCL.
Malhotra was Secretary, Legal Affairs as well as a part of the Legislative Department in the Ministry of Law and Justice and a Member of the Law Commission of India, among others.
Initiation of Corporate Insolvency Resolution Process
RBI, in a statement on November 29, said it took the aforementioned action in view of defaults by RCL in meeting the various payment obligations to its creditors and serious governance concerns which the board has not been able to address effectively.
Nageswar Rao Y (Ex-Executive Director, Bank of Maharashtra) has been appointed as the administrator of the company. The central bank also constituted a three-member advisory committee on November 30, 2021, to assist the administrator in discharge of his duties.
The aforementioned advisory committee comprises of Sanjeev Nautiyal, former Deputy Managing Director, State Bank of India; Srinivasan Varadarajan, former-DMD, Axis Bank; and Praveen P Kadle, former MD & CEO, Tata Capital Ltd
The RBI had, on December 02, 2021, filed an application for initiation of Corporate Insolvency Resolution Process against Reliance Capital under the Insolvency and Bankruptcy Code (IBC), 2016 at the Mumbai Bench of the Hon’ble National Company Law Tribunal.
Also see: NCLT admits RBI plea to initiate insolvency petition against Reliance Capital
IDBI as trustee
According to RCL’s annual report, the parent company (RCL) had pledged its entire equity holding (about 25.15 crore shares) in RGICL in favour of IDBI Trusteeship Services Limited (Trustee) against dues guaranteed by the parent company.
The trustee, on November 19, 2019, invoked the pledge and presently holds the shares of RGICL in its custody.
“Vide orders dated December 4, 2019, and December 27, 2019, Insurance Regulatory and Development Authority of India (IRDAI) has informed the Parent Company that the shares are being held by the Trustee in the capacity as Trustee and the shares have not been transferred,” the report said.
Per the report, said order was challenged in the Securities Appellate Tribunal, Mumbai which confirmed that the Trustee is holding shares as Trustee or custodian and will not exercise any control over RGICL and cannot exercise any voting rights on shares of RGICL.
Accordingly, RGICL continues to be a wholly owned subsidiary of RCL.