Suzlon To Appoint Khaitan & Co To Review Corporate Governance Practices

Suzlon Energy Ltd. plans to appoint law firm Khaitan & Co to conduct a review of its corporate governance practices after an independent director recently resigned over standards not meeting his expectations.

Gautam Doshi, chairman of the audit committee, has agreed to take up the responsibility of evaluating suggestions on corporate governance practices following a request from the company’s Chairman Vinod Tanti, the renewable energy solutions provider said in a stock exchange announcement yesterday.

Doshi has decided to appoint Khaitan & Co to conduct a review and to further aid the process, certain additional advisors may also be appointed, it added.

Suzlon reiterated that it is committed to achieving the highest standards of corporate governance and the review exercise is being carried out with an aim to identify any gaps in the existing practices of the company and ways to further strengthen them.

The development comes after Independent Director Marc Desaedeleer last week resigned flagging certain issues with the company’s corporate governance standards.

Desaedeleer, who has been associated with Suzlon since April 2012, was serving his second term as an independent director. His term was about to be completed in September 2024, but he decided to step down now.

FAILING EXPECTATIONS

In his resignation letter to Tanti, Desaedeleer reiterated that he was very pleased with the operational and financial performance recorded by Suzlon over the last 18 months.

“But, over the same period and including recently, several situations occurred where the corporate governance standards applied by the company did not meet my expectations, including situations where communications lacked the level of openness and transparency I would have liked to see,” Desaedeleer said in the resignation letter dated 8 June.

Desaedeleer, who discussed several of these situations with Tanti and shared some with board members, also sent a note to him covering these situations hoping that this information can be used in a constructive manner, according to the letter.

“As a result of the above, I decided to resign from my position as independent director of the company and from all associated committee memberships,” he noted.

Desaedeleer didn’t share the details about those situations in his resignation letter. In its latest announcement, the company also didn’t provide specific details pointed out by Desaedeleer.

PACIFYING INVESTORS

On 9 June, Suzlon held a business update conference call to apprise investors regarding the resignation of Desaedeleer.

During the call, Suzlon Group Chief Executive Officer J.P. Chalasani said Desaedeleer has not highlighted any lapses in matters of financial and legal non-compliance but has asked for inclusion of best-in-class standards of corporate governance and improving transparency, according to the conference call transcript filed with the stock exchange.

Chalasani also said there are no lapses on account of financial or legal implications and the company conforms to the standards as stipulated by the law governing bodies of India.

The company has the confidence and support of other four independent directors, who are standing strong with the company, he added.

“We take comments highlighted by Marc [Desaedeleer] constructively and the same shall be implemented in a phased manner,” Chalasani said.

He didn’t reveal the issues raised by Desaedeleer.

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