A day after Ashneer Grover, the controversial co-founder of BharatPe, requested the removal of CEO Suhail Sameer from the board, Shashvat Nakrani, the other founder of the fintech startup, has shrugged off the chief executive and said that the official continues to enjoy his confidence.
In a move expected to complicate Mr Grover’s drive to oust Sameer as both founders must jointly agree to remove the CEO, Mr Nakrani claimed that he has not authorized such removal himself and that the CEO still enjoys his support.
Legal experts argue that the CEO cannot be removed from the board at any request by Ashneer Grover and that such removal can only be made jointly by both co-founders. Lawyers also confirmed that if the CEO is a candidate of both founders, the unilateral withdrawal of one founder is not legally valid.
When contacted, Mr. Nakrani confirmed that he has not authorized or asked for Suhail Sameer to be removed from the board of directors.
“I have neither given my consent nor requested the removal of Suhail Sameer from BharatPe’s board of directors. News reports suggesting this is incorrect,” Mr Nakrani said.
He added: “I can confirm that I was one of the two joint nominees in the nomination resolution of Suhail Sameer as CEO and Board Member of BharatPe, and he continues to enjoy my support.” According to the bylaws of the company (clauses 91.3 and 91.7), Suhail Sameer, the CEO, was jointly nominated by two founders – Ashneer Grover and Shashvat Nakrani, as the founders’ nominee on the board of directors.
Experts believe that neither Ashneer Grover nor Shashvat Nakrani have any individual right to revoke the appointment of the CEO from the board, and any removal from the board can only be done jointly by them.
BharatPe’s board of directors currently consists of nine members — the two founders, one co-founder (CEO), four nominated investors and two professional independent directors (Rajnish Kumar and Kewal Handa).
The current term for the CEO is five years and can be reconfirmed upon completion.
According to Mathew Chacko, Founding Partner of Spice Route Legal, the standard venture capital documentation would give a nomination group the power to fire a director so named.
“Common misconceptions exist that these are personal powers granted to the person who most often exercises these powers – in reality, these are often joint powers, which must be exercised after consultation with the group,” said Mr Chacko .
He further pointed out, “The requirement for a group to act collectively acts as a powerful check on individual propensities to take on a god complex. Yes – they must act collectively to remove a driver”.
Referring to the bylaws document, Rishi Anand, partner at DSK Legal, said Article 91.7 states that a board member can only be dismissed with the written consent of the shareholder who nominated such director.
“So, a jointly appointed person can only be removed with joint consent,” Anand said.
With Mr Grover recently launching an offensive against BharatPe investors after he was faced with an investigation into alleged fraud, abrasive behavior and corporate governance issues, the company said on Friday that it was questioning the integrity of board members and misrepresenting presentation was painful.
“The (corporate) board has followed proper procedure in all its actions in the best interest of the company. We insist that the confidentiality and integrity of board review and board meetings be maintained by all,” BharatPe said in a statement.
Grover was sent on three months’ leave after allegations of foul language against Kotak Mahindra Bank staff and fraudulent practices. He reportedly claimed that he was “tipped on the fingers” by the company’s investors to go on leave and that he had lost faith in CEO Sameer Suhail.
While BharatPe has engaged Alvarez and Marsal and PwC to review its governance practices, Mr Grover denies all allegations.