Reliance seeks shareholder nod to appoint Ambani as head for another 5 years at nil salary

Reliance seeks shareholder nod to appoint Ambani as head for another 5 years at nil salary

Reliance Industries Ltd, India’s most valuable company, has proposed a resolution to its shareholders seeking approval for the reappointment of Mukesh Ambani as the chairman and managing director for another five-year term until 2029. This extension is notable as it comes after Ambani’s 70th birthday, which is the age limit set by the company law for a chief executive to hold such positions.

For Mukesh Ambani to continue as the chairman and managing director beyond the age of 70, a special resolution is required by the shareholders. A special resolution is a formal proposal that requires approval from a higher percentage of shareholders compared to an ordinary resolution. In most jurisdictions, including India, a special resolution typically requires approval from at least 75% of the voting shareholders.

Despite being eligible for a salary as chairman and managing director, Mukesh Ambani has chosen not to receive any remuneration during this extended term. This decision demonstrates his commitment and confidence in the company’s growth and the belief that his leadership will continue to add value to Reliance Industries.

Mukesh Ambani is widely recognized for his visionary approach in steering the company’s expansion and diversification across various sectors, including telecommunications, retail, and digital services. Under his leadership, Reliance Industries has grown into one of the largest and most influential conglomerates in India and the world.

By seeking shareholders’ approval for his reappointment and foregoing his salary, Mukesh Ambani is demonstrating a strong commitment to the company’s success and aligning his interests with those of the shareholders. His decision to continue leading Reliance Industries beyond the age of 70 is a testament to his dedication and confidence in steering the company towards sustained growth and prosperity.

In the special resolution put forward by Reliance Industries Ltd, the company sought the approval of its shareholders to appoint Mukesh Ambani as the head of the company until April 2029. The resolution also includes provisions for providing security to Ambani and his family members, with the company bearing the expenses for this security, and clarifies that such expenses will not be considered as perquisites (additional benefits) for Ambani.

The resolution highlights that Mukesh Ambani will reach the age of 70 years on April 19, 2027. According to the company, Ambani’s leadership has been instrumental in driving the multifold growth of Reliance Industries. It is in the best interest of the company to have him continue leading the organization even after he crosses the age of 70 years.

The company emphasizes that Mukesh Ambani meets all the conditions specified in the company law and is not disqualified from being appointed as a director. This likely refers to compliance with regulatory requirements and corporate governance norms.

By seeking approval through a special resolution, Reliance Industries aims to secure a higher level of support from its shareholders, reinforcing their commitment to Mukesh Ambani’s continued leadership and the company’s future growth.

Overall, the special resolution seeks shareholders’ endorsement for Mukesh Ambani’s extended term as the head of Reliance Industries Ltd, expressing confidence in his leadership and acknowledging his significant contributions to the company’s success and growth.

According to the Articles of Association of Reliance Industries Ltd, as per Article 86(1), Mukesh D. Ambani is not required to retire by rotation. This means that he is not subject to the usual process of directors’ retirement by rotation, which is a standard practice in many companies where directors retire by rotation at regular intervals and seek reappointment by shareholders.

However, Regulation 17(1D) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 stipulates that in cases where a director is not liable to retire by rotation, the continuation of that director’s position is subject to approval by the shareholders in a general meeting once every five years. In other words, despite not being required to retire by rotation, Ambani’s continuation as a director still needs to be approved by the shareholders at least once every five years.

The company seeks to reappoint Mukesh Ambani as the head of Reliance Industries until April 18, 2029. To formalize this reappointment, a resolution is presented to the shareholders, and it is referred to as a special resolution, as it requires approval from a higher percentage of shareholders.

In response to the economic impact of the COVID-19 pandemic, Mukesh Ambani voluntarily chose to forego his salary for three consecutive years, including the financial year 2022-23. His remuneration for the mentioned fiscal year was recorded as “nil” in the company’s latest annual report.

By foregoing his salary during these challenging times, Ambani has demonstrated his commitment to the company’s welfare and solidarity with the employees and stakeholders as they faced the pandemic’s impact on the business and economy.

In summary, Ambani’s reappointment as the head of Reliance Industries is subject to shareholders’ approval, as mandated by the SEBI regulations, even though he is not required to retire by rotation as per the company’s Articles of Association. Additionally, he voluntarily opted to forgo his salary for the past three years due to the pandemic’s effects on the company and the broader economy.

Mukesh Ambani, the Chairman and Managing Director of Reliance Industries Ltd, made significant gestures of solidarity and responsibility towards the company and the nation during the challenging times of the COVID-19 pandemic. In June 2020, he voluntarily decided to forego his salary for the financial year 2020-21, considering the severe impact of the pandemic on India’s society, economy, and industries.

His commitment to the cause continued beyond 2020-21, as he chose to forgo his salary for the subsequent two financial years, i.e., 2021-22 and 2022-23, as well. During this period, Ambani abstained from availing any allowances, perquisites, retiral benefits, commission, or stock options that are typically associated with his role as the Chairman and Managing Director of the company.

Even before the pandemic-induced salary reductions, Mukesh Ambani had already taken a stance on moderation in managerial compensation levels. Starting from the financial year 2008-09, he voluntarily capped his salary at Rs 15 crore, setting a personal example of restraint in executive remuneration. This Rs 15-crore salary remained consistent for 11 years until the financial year 2019-20.

These decisions demonstrate Ambani’s commitment to responsible leadership and his willingness to prioritize the interests of the company, employees, and stakeholders over personal financial gain. It also highlights his empathy towards the economic challenges faced by the nation during the pandemic.

By foregoing his salary and adhering to a moderate compensation level, Mukesh Ambani has shown a strong sense of stewardship and solidarity, reinforcing his dedication to Reliance Industries and its role in supporting India’s development and growth.

The information provided gives an overview of the remuneration details of key individuals associated with Reliance Industries Ltd for the financial year 2022-23. Here are the key points:

1. Mukesh Ambani (Chairman and Managing Director):
– Ambani has kept his salary, perquisites, allowances, and commission at Rs 15 crore since 2008-09.
– By doing so, he has forgone over Rs 24 crore per annum in salary and other benefits.

2. Nikhil and Hital Meswani (Cousins of Mukesh Ambani):
– Their remuneration rose to Rs 25 crore each, including a commission of Rs 17.28 crore, which remained unchanged from the previous fiscal year (2021-22).

3. Executive Directors P M S Prasad and Pawan Kumar Kapil:
– P M S Prasad drew Rs 13.50 crore in 2022-23, including performance-linked incentives for 2021-22 (which were paid in 2022-23). This amount increased from Rs 11.89 crore in the previous fiscal year (2021-22).
– Pawan Kumar Kapil received Rs 4.40 crore in 2022-23, up from Rs 4.22 crore in 2021-22. However, he completed his 5-year term on May 15, 2023, and has since ceased to be a director of the company.

4. Nita Ambani (Wife of Mukesh Ambani and Non-Executive Director):
– Nita Ambani earned Rs 6 lakh as a sitting fee in 2022-23, up from Rs 5 lakh in 2021-22.
– She received a commission of Rs 2 crore for 2022-23, which remained unchanged from the previous fiscal year (2021-22). In 2020-21, she received a sitting fee of Rs 8 lakh and a commission of Rs 1.65 crore.

It is evident from these details that while Mukesh Ambani has chosen to maintain a fixed remuneration of Rs 15 crore since 2008-09, other key individuals’ remuneration has seen fluctuations based on various factors, including performance and tenure. Nita Ambani’s remuneration as a non-executive director includes a sitting fee and commission, with her commission remaining consistent over the years.

The information provided gives an overview of the remuneration details of non-executive directors associated with Reliance Industries Ltd for the financial year 2022-23. Here are the key points:

1. Non-Executive Directors (excluding Nita Ambani):
– The non-executive directors include Dipak C Jain, Raghunath A Mashelkar, Adil Zainulbhai, Raminder Singh Gujral, Shumeet Banerji, former SBI chairperson Arundhati Bhattacharya, former CVC K V Chowdary, and Saudi sovereign wealth fund nominee Yasir Othman H Al Rumayyan.
– All independent directors received a commission of Rs 2 crore and sitting fee.

2. K V Kamath (Appointed in January 2023):
– K V Kamath, who joined the Reliance board in January 2023, was paid a sitting fee of Rs 3 lakh and a commission of Rs 39 lakh for the financial year 2022-23.

The remuneration details provided here highlight the compensation received by the non-executive directors for their role and contributions to Reliance Industries Ltd during the specified fiscal year. Non-executive directors typically play an essential role in corporate governance and decision-making but are not involved in the day-to-day operations of the company. They may receive sitting fees and commissions for their participation in board meetings and providing valuable insights and guidance to the company’s management.