BharatPe says board can still take action against Ashneer Grover

Ashneer Grover has resigned as Managing Director and Director of the board of BharatPe - operator Resilient Innovation Private Limited, according to a company spokesperson on Tuesday.

Ashneer emailed his resignation letter to every director of the BharatPe board at 12:05 AM on Tuesday (March 1).

"Ashneer Grover resigned as Managing Director and Board Director of BharatPe minutes after receiving the agenda for upcoming Board meeting that included submission of the PWC report regarding his conduct and considering actions based on it. The Board reserves the right to take action based on the report’s findings," said the BharatPe spokesperson in the statement.

"I am being forced to bid adieu to a company, of which I am a founder," Ashneer said in the email. He maintained that the board will not find a single act of impropriety against him.

"I hereby resign as the Managing Director of BharatPe, effective immediately. I also resign as a Director of the Board. I will continue as the single largest individual shareholder of the Company."

Ashneer's resignation comes after a two-month battle between the board headed by Rajnish Kumar, and the BharatPe Co-founder.

The BharatPe board, through its legal firm Shardul Amarchand Mangaldas, had on January 29th appointed advisory firm Alvarez and Marsal to advise the Board on its recommendations.

While the company never issued an official statement on BharatPe commissioning PwC, a report from PwC on Ashneer Grover's conduct will be discussed at Tuesday's board meeting.

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According to the amended articles of association of Resilient Innovations, which runs BharatPe, if a founder's employment is terminated, his rights and obligations will cease to apply.

While such a founder shall cease to be a promoter of the company, "he shall continue to have the rights attached to those shares as a shareholder," it adds.

Resilient Innovations can terminate a founder’s employment for cause with the consent of Investors representing at least the majority investor threshold, according to the amended articles of association dated September 2021.

Such a termination requires the approval of the board and the investors representing investor majority threshold, in keeping with relevant laws.

In such a situation, the restricted shares held by such Founder can be bought back by Resilient Innovations at the lower of the fair market value (FMV), or the price paid by the relevant Founder for acquisition of such Restricted Shares.

Alternately, the board can transfer the restricted shares to an employee welfare trust at the lower of the FMV or the price paid by the relevant Founder for acquisition of such Restricted Shares.

A third alternative is that BharatPe acquire from the relevant Founder "in any other manner as the Board, with the consent of Investors representing at least the Majority Investor Threshold, deems fit at the lower of the FMV or the price paid by the relevant Founder for acquisition of such Restricted Shares."

The board meeting at Resilient Innovations will be vital to understand what the board decides to do about the PwC report's findings, now that Ashneer has stepped down from the board and as Managing Director of BharatPe.