The government has approached the Company Law Board (CLB) with a request that all former directors of scam-hit Satyam Computers should be banned from becoming directors in other companies in India.
“One of the provisions in the Companies Act under section 388B(1)(a) is that if CLB finds that directors have not discharged their responsibilities properly, they can be banned from becoming directors in any other company,” said a senior official in the ministry of corporate affairs.
The request was in a petition filed January 9.
The CLB is understood to be waiting for responses to be filed by all nine directors — B Ramalinga Raju, Rama Raju, Ram Mynampati, Mangalam Srinivasan, Krishna Paleppu, Vinod Dham, M Rammohan Rao, V S Raju and T R Prasad — by February 20 on Raju's disclosures.
This development explains why many former Satyam directors have started resigning from other company boards.
Former cabinet secretary TR Prasad has already resigned from the boards of GMR Infra and Taj GVK. Professor M Rammohan Rao stepped down as Dean of the Indian School of Business, the BEL board and a government panel. Vinod Dham resigned from Sasken.