New Delhi: In a possible succession planning exercise, pharma giant Cipla's promoter family has proposed to vote together as a single unit under overall direction of patriarch Yusuf Hamied in his lifetime, and under his brother Mustafa Hamied thereafter.
After the demise of both the brothers, or both of them being incapacitated, the family would continue to act as a single unit under the "overall direction and supervision" of a family member owning the highest number of shares.
Interestingly, the 'family agreement', which was made public today by the markets regulator Sebi, also provides that Kamil Hamied, son of Mustafa Hamied, would be deemed as representative of the existing main promoter Yusuf Hamied in the current scenario if neither of the two brothers is able to attend a shareholder meeting for any reason.
There have been speculations in the past that Y K Hamied, who hanged his boots as Managing Director in March 2013, is grooming his nephew Kamil as the next leader at the home-grown pharmaceutical giant. Currently, Y K Hamied and M K Hamied are non-executive directors and the day-to-day operations of the company are run by a professional management team.
The 'agreement' has been made public by Sebi in relation to an 'interpretative letter' requested by Y K Hamied about whether the "voluntary and consensual family understanding" involving the arrangement of voting rights would trigger an open offer for the minority shareholders of the company.
There were no replies to specific queries made to Cipla and Hamied himself, including on whether the 'agreement' has already been signed and if it was part of succession planning.
Sebi has opined that the proposed arrangement would qualify for exemptions from open offer.
Hamied further told Sebi that historically no proxies were executed among individual family members, except that Sophie Ahmed (his sister) whould execute a proxy in his favour.
"Sophie Ahmed has reserved her right to be party to the Agreement and should she chose to act according to the Agreement she would be made a party or deemed to be party to the Agreement," he wrote in his request letter to Sebi.
He further said that the Agreement was proposed as part of a "voluntary and consensual family understanding, and with the intent of putting into writing the broad understanding in respect of the manner in which the Group will exercise votes in respect of the Company".
The Agreement also provides for a "preemptive right in case the shareholders choose to transfer their shares", he added.
Y K Hamied, 78, who took over the reins of the company after death of his father Khwaja Abdul Hamied in 1972 and remained at its helms for 40 years, is known as one of the biggest forces behind making Cipla one of the best family-run companies in the country. It commands a market value of over Rs 53,000 crore and has turnover of over Rs 10,000 crore.
All promoters put together hold 36.8 percent stake in Cipla, while Y K Hamied individually owns 15.55 percent. His sister Sophie holds over 5 percent stake.
Interestingly, Sebi was also requested for another 'guidance letter' with regard to transfer of certain shares by way of 'gift' to Y K Hamied from his wife Farida. To this also, Sebi opined the arrangement is exempt from open offer. Farida also has over 5 percent stake.
The 'informal guidance' on both the issues was sought by Y K Hamied in October 2014, while Sebi gave its reply to him on proposed share transfer from Farida on January 29, 2015. The reply on the second issue was given on February 2, 2015.
However, Hamied had requested for "confidentiality" in respect of Sebi's interpretative letters on both the issues. As per Sebi rules, the matters were therefore kept confidential for 90-day periods. While one letter was made public earlier, the second one was published today.
As per the proposed agreement, the intention of the parties is to have a coordinated approach and act as a single unit for the purposes of exercising their voting rights.
"... The parties hereby agree and undertake to act jointly in that respect as a single unit, subject to and under the overall direction and supervision of Yusuf Hamied during his lifetime, and Mustafa Hamied after the demise of or upon the incapacity of Yusuf Hamied to act," it said.
After the demise of both Yusuf Hamied and Mustafa Hamied or both of them being incapacitated, the Hamied family shall act jointly in respect of voting with respect to the company as a single unit.
"This would be subject to and under the overall direction and supervision of the member of the Hamied family who owns the highest number of shares," it said.
Cipla, which has presence in over 150 countries, sells more than 2,000 products across various therapeutic categories.
The company has 34 manufacturing facilities that make active pharmaceutical ingredients (APIs) and formulations.
