1 week ago
Rashi Peripherals Shares Fall After Director Raises Governance Concerns
An independent director named Anil Khandelwal quit the board of Rashi Peripherals.
He said some important company decisions were not handled properly.
He also raised concerns about firms connected to two other independent directors being hired for an acquisition.
Khandelwal said these possible conflicts were not properly disclosed when the board approved the deal.
The company’s chairperson rejected the allegations of wrongdoing.
He said the firms worked independently and that their services were mentioned to the board.
He also said decisions about directors and senior employees were approved unanimously.
After the resignation became public, the company’s shares fell almost 10 percent.
Regulators or legal authorities could decide whether the disputed practices broke any rules.
Independent director Anil Khandelwal resigned from Rashi Peripherals’ board, citing concerns about governance and board processes.
Khandelwal alleged that management handled matters assigned to the nomination and remuneration committee, including director appointments and key management compensation.
He also questioned the use of law and accounting firms linked to two independent directors during an acquisition’s due diligence.
Chairperson Krishna Kumar Choudhary denied governance or legal lapses, saying the firms were engaged at arm’s length and their services were disclosed to the board.
Rashi Peripherals shares closed 9.82% lower at ₹782.85 on the BSE, valuing the company at just under ₹5,200 crore.
- Who
- Anil Khandelwal, an independent director and former Bank of Baroda chairperson, resigned from Rashi Peripherals’ board; chairperson Krishna Kumar Choudhary defended the company.
- What
- Khandelwal resigned, citing governance concerns involving board decision-making, executive compensation, director appointments, and acquisition-related professional engagements.
- Where
- Rashi Peripherals and its board; the stock traded on the BSE.
- When
- Khandelwal resigned on Monday, and the company disclosed his resignation letter on Tuesday; the shares closed lower Tuesday.
- Why
- Khandelwal said he saw a divergence between his understanding of sound governance and how certain matters were handled.
Khandelwal’s governance concerns
Rashi Peripherals’ response
Board and management responsibilities
Khandelwal’s governance concerns
Khandelwal alleged that director appointments and key management personnel compensation, which he said belonged to the nomination and remuneration committee, were handled by management.
Rashi Peripherals’ response
Choudhary said resolutions concerning director selection and key management personnel remuneration were unanimously approved by the nomination and remuneration committee.
Acquisition-related conflicts
Khandelwal’s governance concerns
Khandelwal said the law and accounting firms used for an acquisition were associated with two independent directors, were not disclosed at the relevant board meeting, and the directors did not recuse themselves.
Rashi Peripherals’ response
The company said a board presentation mentioned that the firms’ services had been used, that they were engaged at arm’s length, and that their fees were within statutory limits.
Whether governance rules were breached
Khandelwal’s governance concerns
Khandelwal said the issue went beyond technical compliance and questioned whether the company’s interpretation of disclosure requirements was legally sustainable.
Rashi Peripherals’ response
Choudhary characterized Khandelwal’s observations as a subjective assessment of internal deliberations rather than a breach of law or regulation.
Key facts
- Company
- Rashi Peripherals Ltd, an IT hardware distribution company
- Resigning director
- Anil Khandelwal, former Bank of Baroda chairperson and managing director
- Share-price move
- The stock closed 9.82% lower at ₹782.85 on the BSE
- Market capitalization
- Just under ₹5,200 crore after Tuesday’s close
- Board composition
- Nine members, including four independent directors, after Khandelwal’s exit
- Main allegations
- Management involvement in nomination and remuneration matters, and possible conflicts in acquisition due diligence
- Company response
- Chairperson Krishna Kumar Choudhary said the firms were engaged at arm’s length, fees were within statutory limits, and relevant resolutions were unanimously approved
Quotes
Krishna Kumar Choudhary
Chairperson of Rashi Peripherals
“During my tenure, I have experienced a fundamental divergence between my understanding of sound governance and the manner in which certain important matters have been approached.”
livemint.com
“All suggestions of the outgoing Director were always considered and to the extent considered desirable, duly implemented.”
livemint.com
Sources
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