InGovern flags governance concerns at REL, questions ESOP clawback

Business Standard

13-07-2025

InGovern Research Services has flagged concerns over potential governance lapses at Religare Enterprises (REL) over an undeclared conflict of interest at its health insurance arm, Care Health Insurance (CHIL), and the continued opacity around the clawback of employee stock ownership plans (Esops) granted to former chairperson Rashmi Saluja.
InGovern says Pratap Venugopal's 'dual role' — he was simultaneously REL's external legal counsel and an independent director of CHIL — 'raises fundamental governance questions'.
The firm argues that the arrangement compromised the independence of REL's nomination and remuneration committee, and that disclosures on the conflict appear to be 'not transparently disclosed'.
Responding to a query on the issue, Venugopal said he was never a legal advisor to CHIL but merely an independent director.
'At the request of the board of CHIL, opinions were obtained by KJ John & Co.... wherein I was a partner... neither the firm nor I received any fees for obtaining the opinions,' he said.
In July 2024, the insurance regulator, the Insurance Regulatory and Development Authority of India (Irdai), fined CHIL ₹1 crore and ordered it to buy back 7.57 million vested Esops at ₹45.32 apiece and cancel the remaining 15.14 million unvested options.
The InGovern report observes that over 80 per cent of CHIL Esops were allotted to Saluja — amounting to 2.5 per cent of CHIL's share capital — whose 'costs [were] ultimately borne by REL shareholders'. The grant price was less than half the ₹110 per share at which REL subsequently raised equity, which had fuelled doubts over fairness.
'Irdai issued an order holding the issuance of Esops to Saluja illegal. CHIL had filed an appeal before the Securities Appellate Tribunal under instructions from Saluja, who was then the non-executive chairperson of the board of directors of the company. Subsequent to Saluja's removal from the board, the company decided to withdraw the appeal. We offer no further comments as these issues are being examined internally,' REL said in an email response.
Last month, the Enforcement Directorate summoned Venugopal in connection with the Esop transactions. The summons were later withdrawn after protests from the legal fraternity.
Venugopal said he resigned as a partner of KJ John & Co. with effect from January 31, 2024. 'I severed all connection with the law firm and do not have any papers connected with the above-mentioned opinions with me.'
Venugopal, who resigned as an independent director of CHIL on January 10, further said the summons 'nowhere stated that I was being summoned in the capacity of [an] independent director'.
InGovern has argued that legal privilege cannot protect actions that may have facilitated regulatory breaches.
The governance firm has called for immediate disclosures of full Irdai correspondence on the Esop grant issue, legal opinions, and board minutes justifying the Esop issuance and the valuation methodology for the Esop pricing.
InGovern has further observed that the CHIL Esop matter finds no mention in REL's annual reports or shareholder communications, which it argues is a breach of market regulator Securities and Exchange Board of India's (Sebi's) disclosure norms. It has called for a Sebi probe into such disclosure lapses.