Burmans ask Care Health to cancel Rs 350 cr ESOP given to Religare's Saluja

The Burman family, owner of consumer goods major Dabur, are seeking the cancellation of stock options valued at Rs 350 crore granted to Religare chairperson Rashmi Saluja by Care Health Insurance, a subsidiary of Religare, according to a report by The Economic Times (ET). Saluja serves as the non-executive chairperson of Care Health.

The crux of the dispute lies in the alleged wrongful grant of 22.7 million stock options, equivalent to 1.25 per cent of Care Health's share capital, to Saluja in January 2022. Although the insurance regulator Insurance Regulatory and Development Authority of India (Irdai), disapproved of these options in May 2022, citing Saluja's role as largely akin to that of a non-executive director, the Care board proceeded with granting the options under the premise of Saluja's employment with Religare Enterprises rather than her role at Care.

Despite assertions from Religare's board that the issuance of employee stock ownership plan (ESOP) was compliant with regulatory norms, the Burmans are reportedly adamant about halting any further exercise of stock options by Saluja at Care.

In a letter dated March 12 addressed to Care, the Burmans, who hold a substantial 25.94 per cent stake in Religare, expressed their dissatisfaction with the granting of these employee stock options to Saluja, stating that it has caused them significant financial loss, as reported by ET. The Burmans further warned the Care board of legal action, including the attachment of personal assets of directors, if the stock options were not revoked.

Religare, led by Saluja, has sought the intervention of the Securities and Exchange Board of India (Sebi) in the matter.

The Burman family's recent attempt to increase its equity ownership in Religare through an open offer to public stockholders faced opposition from the company's board. After seeking intervention on the matter, the Burmans are still awaiting approval from various regulatory bodies, including the central bank, the capital-markets watchdog, and the insurance regulator.

Meanwhile, the Burmans have already increased their stake in Religare to 25.18 per cent from 21.18 per cent after receiving approval from the Competition Commission of India (CCI) on January 23. This increased ownership allows the Burmans to block special resolutions at Religare and make an open offer for an additional 26 per cent of the company's shares from public shareholders.