When Bathrooms Matter More Than Boardrooms! Was the Demerger Plan a Precursor to Divorce?
Imagine the plight of a corporate chieftain and his wife living in a house with as few as 30 bathrooms that need to be shared between them and their two daughters! It is a confounding state to be in, not being sure which door to open when the critical moment arrives to seek relief!
 
A proper inter se arrangement drawn up by the best law firm to lay down the ‘right of first use’ for each member with adequate safeguards and carve-outs for emergency situations when the assigned bathroom is just too slippery for use would ordinarily be seen as a civic way to keep the lid on any avoidable fight and fisticuff in this predicament.
 
Yet, it is not easy to ensure hygienic compatibility on such a prickly subject at all times, thereby bringing in the need for a suitable clause for dispute resolution.
 
A panel of three arbitrators with its seat in Singapore should make for a foolproof system that stays good even when the flush gets too leaky in one of the 30!
 
A normal day would mean the happy co-existence of the four residents, each having enjoyed the undisputed use of the exclusively assigned space and sitting around the breakfast table smelling of the best soap and shampoo.
 
A discursive discussion on how much interim dividend should be declared to meet the expenses for redoing the bathroom décor, which was last done as long back as two years ago, sums up how life is led by these!
 
But there could be the odd days when the one that failed to get due resolution, despite a longish stay at the potty, gets a little edgy and trouble rears its ugly head to disturb the peace and quiet of the place where momentous decisions on mergers and acquisitions have been made with little noise or fuss!
 
While an altercation with not too many impolite words exchanged may pass for an unhappy interruption to a cosy conversation, exceeding the norms of due civility may make for a tense situation where emotions can take over and ugly spats ensue.
 
Keeping such unkempt situations under control needs the calmness that comes only with performing an hour of transcendental meditation daily, reading the right theological literature advocating moderation in fights, and the ability to let go!
 
Meditation and theology are like a band-aid for a fracture when primal human nature takes over. With the businessmen being constantly preached to let the animal spirits bubble in them, they have very little discernment of when, and how much it should!
 
It is an inauspicious day in the calendar of the company that the four own 48% in that an altercation around the wrong member stepping into the wrong closet spurred words that quickly deformed into deeds and blows!
 
That day, the lady decided that it was enough and that she should safeguard her person and that the ties of marriage mattered little when the better half thought the bathroom took precedence over the family bonds.
 
The next step was to formally get the court to pronounce that the couple was no longer required to share the bathrooms but could chart their destiny.
 
The more difficult question arose when the husband had to pay a price for breaking the alliance, which was no different than ending prematurely a business contract.
 
The lady sought three-fourths of the estate of the husband, which would be over 30% of the company in question. Would the husband transfer the shares or pledge it and raise a loan to settle in cash? This is the real million-dollar question.
 
The lady has pooped at the suggestion of a family trust that the man suggested to take care of the maintenance of all the parties.
  
Or will the dispute wind its way to the highest court like many other family fights? Will all the legal expenses be booked in the company?
 
What role would the board of the company have in this situation? It is no petty shop but a company with a large number of public shareholders with a not insignificant market cap.
 
Did the governance fail in the first place in the board not constituting a bathroom subcommittee with at least one independent director being part of it?
 
How much of the stench in the bathroom seeps into the boardroom may depend on many factors, but should the companies flag this as a risk factor in the statutory board report?
 
Note: Those who are intrigued by this narration may find the answer in the Moneylife article dated 22 November 2023.
 
(Ranganathan V  is a CA and CS. He has over 43 years of experience in the corporate sector and in consultancy. For 17 years, he worked as Director and Partner in Ernst & Young LLP and three years as senior advisor post-retirement handling the task of building the Chennai and Hyderabad practice of E&Y in tax and regulatory space. Currently, he serves as an independent director on the board of four companies)
Comments
nsrinivas
3 months ago
Oh! Insurmountable problems faced by those plagued with plenty of bathrooms.. I'd settle anyday for a modest 3BR flat with 3 toilets to share.....
Kamal Garg
3 months ago
Ha ha. Mazaa aa gaya.
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