Nestle India to seek shareholders’ approval every five years on royalty payouts

Nestle India has decided to seek shareholders’ approval every five years on the issue of payment of royalty to its parent company after receiving feedback from investors and proxy advisory firms. The FMCG major, at present pays the royalty at the rate of 4.5 percent of the net sales to Societe des Produits Nestle SA.

Nestlé

Nestle India to seek shareholders’ approval every five years on royalty payouts

Nestle India spokesperson in a statement said, “We received feedback from our 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.”

The statement also added, “Though the General Licensing Agreements (GLA’s) are reviewed periodically by the Audit Committee, the resolution has been modified to provide for shareholder approval every five years in accordance with applicable laws and regulations.” The resolution does not propose any revision in rates of royalty payment, the company said.

However, in a BSE filing on April 14, the company said it is modifying agenda item number 6 of the notice of annual general meeting, which pertains to royalty payments. The company’s earlier resolution had proposed payment of general license fees also known as royalty “during any financial year.”

The company’s annual general meeting is scheduled to be held on April 25, where it will seek shareholder approval on various issues including the resolution on royalty payment.

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