New Delhi: FMCG major Nestle India on Wednesday said it will continue to pay royalty to its parent company at the existing rate of 4.5 per cent of net sales, after a proposal to increase it was rejected by shareholders.
Nestlé India said that the company's board in its meeting has approved the decision of the Société des Produits Nestlé S.A. (Licensor) to continue paying the normal license fee (royalty) at the existing rate of 4.5 per cent and recommended to the members of the Company for their approval. a statement.
In April this year, Nestle India's board had approved increasing royalty payments to its parent company by 0.15 per cent per annum for the next five years, taking it to 5.25 per cent of net sales.
It had proposed to implement the increase from July 1, 2024.Subsequently, it had sought approval from its shareholders in the form of a general resolution through postal ballot.
However, shareholders rejected the proposal last month, with 57.18 per cent of the total votes against the ordinary proposal and 42.82 per cent in favour.
Due to lack of required majority in favor of the proposal, the ordinary proposal could not be passed. Only the independent directors voted and the executive directors recused themselves.
“The Board...on the recommendation of the Audit Committee...approved the continuation of the payment by the Company to Société des Produits Nestlé SA of the general license fee (royalty) at the current rate of 4.5 per cent, exclusive of taxes."Net sales of products sold by the company as per the terms and conditions of the existing general license agreements with the licensor, Nestle India said in a regulatory filing.
Further, it has been recommended for the approval of the members of the company through an ordinary resolution in the 65th AGM.
"The above approval of the members will be sought every five years in compliance with applicable laws and regulations by the company while adhering to high standards of corporate governance including shareholder rights," the company said.
Additionally, the Board approved the appointment of Siddharth Kumar Birla as Independent Non-Executive Director of the company.
Birla's appointment is effective for a period of five years from June 12, 2024.
Nestlé India said that the company's board in its meeting has approved the decision of the Société des Produits Nestlé S.A. (Licensor) to continue paying the normal license fee (royalty) at the existing rate of 4.5 per cent and recommended to the members of the Company for their approval. a statement.
In April this year, Nestle India's board had approved increasing royalty payments to its parent company by 0.15 per cent per annum for the next five years, taking it to 5.25 per cent of net sales.
It had proposed to implement the increase from July 1, 2024.Subsequently, it had sought approval from its shareholders in the form of a general resolution through postal ballot.
However, shareholders rejected the proposal last month, with 57.18 per cent of the total votes against the ordinary proposal and 42.82 per cent in favour.
Due to lack of required majority in favor of the proposal, the ordinary proposal could not be passed. Only the independent directors voted and the executive directors recused themselves.
“The Board...on the recommendation of the Audit Committee...approved the continuation of the payment by the Company to Société des Produits Nestlé SA of the general license fee (royalty) at the current rate of 4.5 per cent, exclusive of taxes."Net sales of products sold by the company as per the terms and conditions of the existing general license agreements with the licensor, Nestle India said in a regulatory filing.
Further, it has been recommended for the approval of the members of the company through an ordinary resolution in the 65th AGM.
"The above approval of the members will be sought every five years in compliance with applicable laws and regulations by the company while adhering to high standards of corporate governance including shareholder rights," the company said.
Additionally, the Board approved the appointment of Siddharth Kumar Birla as Independent Non-Executive Director of the company.
Birla's appointment is effective for a period of five years from June 12, 2024.
