Burmans Threaten Legal Action vs Saluja’s ESOPs; Care Health Retaliates
TL/DR –
The Burman family, which owns over 25% of Religare Ltd through four associate firms, has threatened legal action against the board of Care Health, the largest subsidiary of Religare. The Burmans allege that the Care Health board granted 22.7 million stock options to the non-executive chairperson of Care Health, Rashmi Saluja, despite the Insurance Regulatory and Development Authority of India rejecting the proposal. In a letter to the Care Health board, the Burmans requested that no further equity shares be issued from the stock options granted to Saluja, and asked that all dividends and voting rights attached to Saluja’s shares be frozen.
A Controversial Offer
Care Health, a notable subsidiary of Religare Ltd, faces turmoil after the Burman family’s open offer was rejected by the Religare board in 2023. Despite their initial welcome of the offer, controversy followed when it was revealed that Care Health’s non-executive chairperson, Saluja, was granted 22.7 million stock options, even after Insurance Regulatory and Development Authority of India (Irdai) rejected the proposal.
Burman Family’s Holdings
The Burman family, owners of Dabur Ltd and other firms, hold over 25% in Religare through four family investment companies. They protested the stock options allocation to Saluja and alleged that Saluja continues to exercise “illegal CARE options”, monetizing from such ill-gotten CARE options.
Burmans’ Demand
The Burmans urged the Care Health board to halt issuing further equity shares resulting from Saluja’s stock options and requested a freeze on all dividends and voting rights attached to shares arising from these options. Failure to follow these directives, the Burmans warned, could result in legal action against the board members.
Allegations and Rebuttals
Spokespersons for both sides have voiced their stances, with the Burmans stating that Saluja has an aggregate value in excess of ₹400 crore from the REL Group, while REL has had inadequate profits. The Religare spokesperson countered by accusing the Burmans of waging a smear campaign against Saluja’s reputation.
Legal and Regulatory Responses
Reactions from the Care Health and Religare boards, as well as from Irdai, remain pending. Both sides have threatened legal action against each other in this ongoing dispute over Care Health’s stock options.
A Detailed Look at the Stock Options
Saluja was denied the initial request for 27.76 million stock options by Irdai in May 2022, but was later granted 22.71 million stock options by the Care Health board in June 2022, worth at least ₹250 crore. When granting the stock options, Care Health stated that the design of the ESOPs would align with shareholder value creation.
The Takeover and Its Aftermath
The Burman family’s announcement of their open offer for Religare Enterprises in September 2023 sparked this dispute. The Burmans, who already hold indirect stakes in Care by virtue of their stake in Religare, seek to become the sole owners of Care Health. However, the proposal was met with opposition from the Religare board, leading to accusations about Saluja’s considerable stock options from Care Health.
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