Proxy Advisors Urge Shareholders to Reject Yes Bank’s Special Rights to SMBC; Voting Dates & AGM Schedule Here

Yes Bank Ltd's recent decision to allow Sumitomo Mitsui Banking Corp (SMBC) to nominate directors on key board committees has sparked controversy. Two proxy advisory firms, Institutional Investor Advisory Services India Ltd (IiAS) and Stakeholder Empowerment Services (SES), have advised investors to oppose this proposal as per Mint.

Yes Bank Board Resolution Voting Dates and AGM Schedule

The voting period for this resolution is from 18 August to 20 August, with results expected after the Annual General Meeting on 21 August. According to IiAS, granting SMBC and State Bank of India (SBI) special rights undermines the board's independence. "SBI will have the right to nominate an SBI Director on each of the committees of the Board," stated IiAS.

"SMBC will have the right to nominate at least one SMBC Director on each of the committees of the Board, i.e. the Audit Committee, Nomination and Remuneration Committee and Risk Management Committee....We do not favour provisions that allow committee nomination rights as we believe board committee composition is a prerogative of the board and must be decided by the board independently," said IiAS as the news report mentioned.

Yes Bank Shareholding Structure and Special Resolution

For SMBC to gain these special rights, a special resolution requiring 75% shareholder approval is necessary. As Yes Bank lacks a promoter, public investors hold all shares. By June 2025, banks owned 33.70% of Yes Bank, foreign institutional investors held 26.9%, retail investors had 29.3%, and mutual funds and insurance companies owned 10%. Currently, SBI is Yes Bank's largest investor with a 24% stake.

In May, SMBC agreed to acquire a 20% share in Yes Bank for Rs 13,500 crore ($1.6 billion) from SBI and other private sector banks like HDFC Bank, Kotak Mahindra Bank, and ICICI Bank. Once regulatory approvals are secured, SBI's ownership would reduce to 10.8%. Despite this transaction, it remains uncertain how investors will respond to IiAS's recommendation against the resolution.

Proxy Advisory Firms' Stance

SES has also advised against granting SMBC special rights but approved similar privileges for SBI. SES opposes alternate directorships unless justified by compelling reasons due to advancements like video-conferencing for board meetings. "The concept of alternate director has lost its relevance," noted SES in its report.

The share purchase agreement between Yes Bank and SMBC allows SMBC to appoint two non-independent directors if they maintain at least a 15% shareholding. An anonymous investor mentioned that even if shareholders reject the resolution, it may not hinder the proposed transaction with SMBC.

The chairperson of Yes Bank is former Reserve Bank of India deputy governor Rama Subramaniam Gandhi, while Prashant Kumar serves as CEO. Sandeep Tewari and T.K. Kumar are nominee directors from SBI on Yes Bank's 14-member board.

Emails sent to Yes Bank seeking comments went unanswered.