Reliance Industries has defended its decision to appoint Saudi Aramco chairman Yasir Al-Rumayyan as an independent director, stating that there was “no connection” between the appointment and the stake sale talk between the two companies.
The appointment meets all regulatory criteria, the Indian conglomerate said in a statement to the stock exchanges on Wednesday. This came in response to a proxy advisory firm that had questioned the appointment citing
’s talks with Saudi Aramco for a potential sale of stake in its oil-to-chemicals (O2C) business.
“The appointment of His Excellency Yasir 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 announced that it was in talks with Saudi Aramco to potentially sell a 20% stake in its oil-to-chemicals business for an enterprise value of $75 billion. In September 2020, the company announced a detailed plan to create a separate entity for the O2C business. While the two companies continue to talk, they have not given a clear timeline for a deal.
At the company’s annual general meeting in June, RIL announced that Al-Rumayyan would join its board, which was seen as a signal by investors that the two companies were still in talks on the deal announced two years earlier. He has been appointed for a term of three years beginning July 19.
RIL clarified on Tuesday that this appointment adhered to the criteria laid down for the appointment of an independent director by the Indian Companies Act, 2013 and the regulations of the Securities and Exchange Board of India.
RIL said Al-Rumayyan was selected for this position for his “versatile experience” and the global leadership he had 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,” it said.
Saudi Aramco will participate in the equity of the O2C subsidiary, which may have nominees of Saudi Aramco to protect its interest, RIL said.
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 said. “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.
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