Reliance Industries has defended its decision to appoint of Saudi Aramco Chairman Yasir Al-Rumayyan as an independent director stating that there is “no connection” between the appointment and the stake sale talk between the two companies, the Indian conglomerate said in a statement to the bourses.
said that the appointment meets all the regulatory criteria in a response to a proxy advisory firm that had questioned it in the backdrop of RIL being in talks with Saudi Aramco for a potential stake sale in its oil-to-chemicals business.
“The appointment of His Excellency Yasi r Al Rumayyan has no connection with the contemplated transaction with Saudi Aramco. Further, as approved by the shareholders, the O2C business of RIL is being spun off to a subsidiary and as per the terms of the proposed transaction, Saudi Aramco will participate in the equity of the O2C subsidiary,” RIL said.
In August 2019, RIL first announced that it is in talks with Saudi Aramco to potentially sell 20% stake in its oil-to-chemicals business for an enterprise value of $75 billion. Subsequently, the company announced a detailed plan to create a separate entity for the O2C business in September 2020. While the two companies continue to talk, they have not given a clear timeline for the deal.
At the company’s annual general meeting in June, RIL said that Al Rumayyan which was seen as a signal by the investors that the two companies continue to be in talks for the deal announced two years ago. Al Rumayyan has been appointed for a term of three years beginning July 19.
RIL clarified on Tuesday that this appointment adheres to the criteria laid down for the appointment of an independent director by the Indian Companies Act, 2013 and the regulations of Securities and Exchange Board of India (SEBI).
RIL said that he was selected for this position for his “versatile experience” and the global leadership he has provided to Saudi Aramco. “This will help strengthen the Board’s diversity and skill-sets and benefit Reliance through the transition from oil to chemicals and the aim to achieve Net Carbon Zero by 2035.”
RIL also said that Saudi Aramco will participate in the equity of the O2C subsidiary, which may have nominees of Saudi Aramco to protect its interest. In case there is a material change in circumstances at any time that may have an impact on the status of a member of the board as an independent director, necessary review and action will be taken. “It is a practice in RIL that any director who is deemed interested recuses himself/herself from participating in the relevant agenda item. RIL has been and shall continue to adhere to the best practices of corporate governance in all matters including appointment of independent directors,” the company said.
According to Indian law, an independent director is a non-executive director who does not have any kind of relationship with the company or any company that has a business relations or equity partnership with the company that is appointing him.