FMCG major Nestle wishes to seek shareholders’ approval every five years for royalty payment to its Swiss parent firm Societe des Produits Nestle SA, after receiving their feedback over the issue.
In a modified ordinary resolution notice dated March 12, 2019 Nestle India told its shareholders that said that now it will seek approval from its shareholders every five years over the royalty payment.
Respecting the feedback received and the commitment of the company to high standards of corporate governance including shareholder rights, approval of members shall be sought every 5 (five) years in compliance with the applicable laws and regulations, told Nestle India to the bourses in an addendum notice this week.
Nestle India, which is going to convene its general meeting on April 25, had earlier proposed payment of general licence fees (royalty) of 4.5 per cent of the net sales to its licensor , during any financial year.
A media report said it was opposed by several minority shareholders and proxy advisory firms, contending that the move was against good corporate governance norms.
As reported by CNBC TV-18, a Nestle India Spokesperson said they received feedback from the shareholders and other stakeholders on the resolution pertaining to royalty payment and as a responsible corporate citizen with high standards of corporate governance modified the resolution.
He added that the resolution did not propose any revision in the royalty rate. Nestle India follows January-December fiscal calender and had reported a revenue of Rs 11,292.27 crore in 2018.
The company which has great foothold in the FMCG sector, has some powerful brands like Maggi, Nescafe, Kitkat etc under its league.
