Murugappa group rift: Hereditary board article not a legal right, say experts
Chennai: Even as the $37,000 crore Murugappa group is maintaining a studied silence on the allegation of sex bias in offering board membership, company law experts say the law doesn’t recognise any hereditary rights to a berth in any firm’s board.
They also said gender bias may not be the reason for denial of a plank berth.
“There can’t be any gender discrimination for board berth.
US-based Valli Arunachalam, the daughter of late M.V. Murugappan, has alleged that the band promoters have gender bias against girls getting into family business and hence she or her sister had been denied a board berth in Ambadi Investments Ltd following their father’s death in 2017.
“Company law does not recognise any hereditary rights for a board berth.
Varadarajan said that Valli Arunachalam should provide her candidature for appointment at the ensuing annual general meeting of the company by following the provisions of company law.
He said if there’s a shareholders’ agreement in this respect, she can enforce it.
Demanding a board berth for her or her sister, Arunachalam also said if the demand isn’t fulfilled, then the other branches of the family should pay a reasonable market value for approximately eight per cent stake held in Ambadi Investments.
According to Arunachalam, she is trying to apply her father’s will to procure a plank berth for the relative dependent on the shareholding in Ambadi Investments.
According to reports, she had broached the subject of board membership with the family seniors but didn’t get a decent reply and any affirmative action in that respect.
“The rift appears to be more to maintain the family’s right to get a board berth. The issue will be sorted out easily. This is the first time that the family tussle has come out into the open,” a long-timer from the group told IANS preferring anonymity.
“It has become the group’s practice not to bring in women into running the business, be it daughters or daughters-in-law. The female members of the Murugappa family are involved in running the schools owned by the group or come for other major functions,” the official added.
One of the respected and leading industrial conglomerates, the Murugappa group has 28 business including nine listed companies.
The major companies in the group are: Carborundum Universal Ltd, Cholamandalam Financial Holdings Ltd, Cholamandalam Investment and Finance Company Ltd, Cholamandalam MS General Insurance Company Ltd, Coromandel International Ltd, Coromandel Engineering Company Ltd, E.I.D. Parry (India) Ltd, Parry Agro Industries Ltd, Shanthi Gears Ltd, Tube Investments of India Ltd, and Wendt (India) Ltd..
Except for two, all of the other listed group companies are run by professionals.
“There is the Murugappa Corporate Advisory Board. While the Board is led by a family member as Executive Chairman, the tenure ends when the individual attains 65 years old. The transition has always been smooth,” another senior official of the group told IANS on the condition of anonymity.
“Not all the male heirs of the family get to head a group firm. A relative enters the group company as a management trainee and goes up in the ladder purely on performance,” a group official pointed out.
Queried about Arunachalam’s demand of paying the household a fair market value for the stakes held, team officials said she or her family might not go the level of selling out to outsiders if the other members of the Murugappa household do not buy them out.
“It may not be worthwhile for an outsider to obtain the stakes held by Arunachalam’s family. The buyer will become only a minor stake and will have no major voice in running the group against the other household members,” the official said.
Officials are of the opinion that it may be the time for the Murugappa family on inducting the female members of their family to decide.