Aramco vote tests Mukesh Ambani's power

Mukesh Ambani, chairman and managing firector of Reliance Industries, gestures as he answers a question during a media interaction in New Delhi, India, June 15, 2017.

MUMBAI, Sept 29 (Reuters Breakingviews) - Reliance Industries (RELI.NS) has strongly defended its decision to appoint Saudi Aramco’s (2222.SE) chairman, Yasir Al-Rumayyan, as an independent director to its board. Shareholder proxy advisory groups have publicly and privately baulked against the move, not least because the $230 billion Indian conglomerate is still trying to close a deal first announced two years ago to sell a large chunk of its oil-to-chemicals business to the global crude giant.

Boss Mukesh Ambani and his related entities own half of Reliance, meaning he can easily push through the appointment that requires a simple majority. The regulator’s tougher rules setting a higher threshold don’t kick in until January. But both parties will be embarrassed if a significant chunk of shareholders go against the appointment. The vote will also test institutional investors willingness to face up to two powerful men: India’s top company parks a lot of surplus cash with mutual funds and other institutions, and Al-Rumayyan is also the governor of Saudi Arabia’s giant sovereign wealth fund. The ultimate size of the investor rebellion will be telling. (By Una Galani)

On Twitter

Capital Calls - More concise insights on global finance:

Mediobanca rebel dresses up in ESG colours read more

U.S. political divisions crash into debt ceiling read more

Hollywood agents feel the showbiz squeeze read more

UK $1.5 bln software buyout is fittingly cheap read more

BHP’s climate plans miss the target read more

Editing by George Hay and Karen Kwok

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.