Mumbai: A ginger group of shareholders of mortgage financier HDFC - who together hold about 23 per cent of the total voting stock - sent a shockwave through the financial world when they voted against Deepak S. Parekh's continuation as a director beyond October 2019.

Parekh (74), who was persuaded by his uncle and financial sector doyen H.T. Parekh to chuck up his job at Chase Manhattan Bank and join HDFC when it was formed in 1978 in a senior management position, has steered the fortunes of the HDFC group for well over three decades.

He turned HDFC into the country's largest housing finance company, built HDFC Bank into a formidable and well-respected bank, and earlier this month oversaw the IPO of HDFC Asset Management Company.

So, the significant vote against him at HDFC's annual general meeting on Monday has come as a rude shock.

The lender had sought shareholders' approval for the `continuation of directorship of Parekh during his tenure of re-appointment as a non-executive director of the corporation on attaining the age of seventy five years on October 18, 2019'.

The need for this vote arose after the Securities and Exchange Board of India (Sebi) in its March 28 board meeting accepted several recommendations of the Uday Kotak committee to tighten corporate governance standards for listed companies in India.

The Kotak panel, which had submitted its report last October, had suggested that a person who attains the age of 75 years can continue as a director in a listed company (as a non-executive director) only after that entity has taken the approval of its shareholders by way of a special resolution. Sebi decided that this provision would come into effect from April 1, 2019, prompting the HDFC vote on the special resolution relating to Deepak Parekh.

In its AGM notice, the HDFC management had recommended to the shareholders that Parekh's re-appointment as a non-executive director and, his continuation as a director beyond October 18 next year when he turns 75, was necessary in order to reap the benefits of his continuous guidance.

While 1.01 billion shares (77.4 per cent) were voted in favour of the resolution, a very substantial 296.1 million shares (or 22.6 per cent) went against him.

HDFC sources said the vote against Parekh was engineered by global proxy advisory firms whose advice is often scrupulously followed by overseas pension funds and other foreign investors.

A break-up of the voting pattern of the public shareholders showed that almost 25 per cent of the institutional shareholders voted against with 75.14 per cent voting in favour.

In the public non-institutional category, the votes polled in favour of the resolution stood at 99.999 per cent, thus showing that individual shareholders continue to repose their faith in Parekh.

Foreign portfolio investors own 72.89 per cent of HDFC's stock.

Shriram Subramanian, founder of corporate governance research and advisory firm InGovern, said the desire to have a younger board could be one reason why certain shareholders had voted against Parekh.

But that did not explain why the same voters voted overwhelmingly backed former Tata Steel managing director J.J. Irani who is 82 years old - and had stepped down from the boards of all Tata group companies in 2011 when he turned 75.

As many as 94.58 per cent shareholders voted in favour of Irani.

In its annual report for 2017-18, HDFC had announced that it intended to move two other special resolutions seeking the continuation of two other ageing directors - former RBI governor Bimal Jalan and chartered accountant B.S. Mehta. However, these two resolutions were not moved as Jalan and Mehta opted to resign from the board before the voting took place.

The HDFC shareholders also approved the re-appointment of Keki Mistry as the managing director (designated as vice chairman and chief executive officer) for a period of three years. Mistry got 99.51 per cent votes of shareholders. His re-appointment was made through an ordinary resolution.

Parekh became a whole-time director of HDFC in 1985 and, subsequently, appointed as the managing director of the corporation (designated as chairman') in 1993. He retired as the MD on December 31, 2009.

In an interview with The Telegraph in November 2010, Parekh had said: "Age is only a number" when asked to comment on growing criticism of his ageing board of directors.

He had then said: "Age is an attitude issue. If you participate, contribute, if your mind is active, if you are all there, it does not matter if you are 50 years old or 70 years. We have the benefit of their wisdom and experience."