HLL to slash number of directors to a dozen

Consumer products major Hindustan Lever Ltd plans to cut the provision for maximum number of directors in the company to 12. The articles of association of the company provides for a maximum of 18 directors.

HLL also plans to enhance the remuneration of its independent non-executive directors.

A special resolution to be passed at its forthcoming annual general meeting on June 24 proposes that non-executive directors be paid a commission not exceeding one per cent of the net profit of the company in any financial year or Rs 60 lakh (Rs 6 million) in aggregate, whichever is lower.

The company at present has five non-wholetime directors on its board, and they are currently paid Rs 500,000 a year as commission on profit apart from normal sitting fees.

The company had raised the provision for maximum number of directors to 18 in 1996 with the approval of the Centre, in view of the proposed amalgamation of Brooke Bond Lipton India Ltd.

With the reorganisation of the company in the last 10 years, it now has only two managing directors and two wholetime directors.

"In the changed circumstances, the company believes that the norm for maximum of 12 directors contemplated by Section 259 of the Companies Act 1956 is more than adequate to provide a fair balance of independent non-wholetime directors and wholetime/managing directors of the board," HLL said in the AGM notice sent to its shareholders.

The board will consider a revision of remuneration of its independent non-executive directors keeping in mind their changing roles and level of involvement in the supervision and control of the firm.

"While there is no immediate plans to enhance the remuneration of the existing independent non-executive directors, an enhanced limit is proposed to take care of future revisions bearing in mind that the resolution will be valid for a period of five years commencing January 1 2006," the notice said.

HLL will also consider allotment of 2,268 shares of Rs 1 each to third-party shareholders on amalgamation of its subsidiaries International Fisheries Ltd and TOC Disinfectants Ltd.

Though the two subsidiaries are nearly fully owned, a small number of shares of International Fisheries and roughly one per cent of issued and subscribed capital of TOC Disinfectants are currently held and registered by third-party shareholders.

The scheme of amalgamation to be entered into between HLL and these companies requires issue and allotment of 2,268 shares of HLL to third-party shareholders of International Fisheries and TOCDL, the HLL notice said.

The HLL board will also consider delisting of its equity shares from the Chennai, Delhi, Kolkata, Cochin, Bangalore, Ahmedabad and Guwahati stock exchanges due to low volume of trading on them.

A resolution seeking the election of Harish Manwani as director of the company is also on the cards. Manwani was appointed as additional director by the board at a meeting held in April.

It is the intention of the board to appoint Manwani as the non-executive chairman of the company in succession to M S Banga, with effect from July, the company notice said.