Burmese family calls for dismissal of Care Health president amid ED investigation

The Burman family, the largest shareholder of Religare Enterprises Ltd, has called for the removal of its chairman Rashmi Saluja from the board of directors of subsidiary Care Health Insurance Ltd, ahead of the insurer’s annual shareholders meeting on Monday. .

In a Sept. 27 letter to Care Health’s board of directors citing the insurer’s bylaws, the Burman family wrote that a recent Enforcement Directorate (ED) investigation into Saluja makes her unsuitable for the director position. These articles define an unsuitable person as someone who faces investigation by government agencies or someone who has been charged and may face more than six months in jail.

On September 6, the ED presented a first informative report against Saluja for allegedly filing false cases against the Burman family. The charges against Saluja are listed under sections 420 (cheating) and 120B (criminal conspiracy) of the Bharatiya Danda Samhita (formerly Indian Penal Code).

For checks and balances

The Burmese wrote that “Care must implement the checks and balances mechanism established by its shareholders and therefore has a duty to remove Rashmi Saluja from her position as non-executive chairperson of Care immediately.”

The Burmese letter has no legal force, said Pratap Venugopal, additional independent non-executive director of Care’s board. “Based on the legal advice received, there is no standing as an investigation by ED and/or Sebi would not automatically disqualify a director from being reappointed,” he said. “Re-election is decided by the Annual General Meeting, not the board of directors of Care Health.”

Saluja’s re-election as Chief Care Officer will be discussed at Monday’s annual general meeting.

Religare owns about 64% stake in Care, private equity firm Kedaara Captal about 16%, employees about 10% and Union Bank of India 5%.

Despite owning more than 25% of REL’s shares, Burmese are not represented on REL’s board of directors. It is unclear how his decision to fire Saluja from Care’s board will be approved.

Saluja, Care Health Insurance, Kedaara Capital, Religare Enterprises and Burmans did not respond to requests for comment on Sunday.

Care’s Annual General Meeting comes after its parent company Religare moved the Companies Registry in August to postpone its own Annual General Meeting until December, a fact that has upset shareholders, Mint reported.

Care Health, considered the jewel in Religare’s crown, is expected to go public later. The company is worth at least $10,000 crore, based on its share price in $110 in its last rights issue in 2022. It subscribed a premium of $6,864.5 crore in 2023-24, registering a year-on-year growth of 33-51%.

Irdai fined Care Health

The Insurance Regulatory and Development Authority of India (Irdai) fined Care Health last month for ignoring its earlier order and issuing Esops to Saluja. In December 2021, Care had sought the regulator’s permission to grant 22.7 million share options to Saluja. In May 2022, the regulator rejected the proposal, but the company still issued them in June 2022 after receiving legal opinion from former Irdai chairman J. Hari Narayan and lawyer Arvind P. Datar, Mint reported on last month.

In July, the insurance regulator canceled the Esops awarded to Saluja in Health Care.

Care’s argument was that Saluja had been granted share options in her capacity as an employee of Religare, which was dismissed by Irdai on the grounds that prior approval from the regulator was still required for the remuneration of non-executive directors of insurers. like Saluja. Irdai prohibits share-linked benefits for non-executive directors as they could encourage excessive risk-taking. The Securities Appellate Tribunal (SAT) stayed this order of Irdai until a final decision is made.