The government today announced a three-member board with finance, information technology and legal background to lead Satyam Computer Services, whose promoter is in jail for his role in inflating the profits of the Hyderabad-based software services firm.
The newly appointed directors are Deepak Parekh, chairman of HDFC, Kiran Karnik, former president of The National Association of Software and Services Companies (Nasscom) and C Achuthan, former member of Securities Exchange Board of India (Sebi) and past president of Securities Appellate Tribunal (SAT).
“The new board is expected to convene immediately within the next 24 hours to decide on the future course of action. We are confident they would give leadership to the company,” said Prem Chand Gupta, Minister for Corporate Affairs in a crowded press conference today.
As per the Companies Act, the government nominee directors have to meet within seven days after superseding the existing Satyam board. “The chairman of the board will be decided by the three members itself,” Gupta said.
The three-member board, which will meet in Hyderabad, will have powers to appoint new auditors of the company and also can name a new management, just like a normal board elected by the shareholders of a company.
The appointment of three nominee directors comes within 48 hours after the government obtained a favourable order from the Company Law Board (CLB) tribunal to supersede the existing board and have its own nominees.
CLB had allowed MCA to appoint a maximum of 10 directors in the board of Satyam, and the government is open to nominating more members in the board, Gupta said.
Asked about shareholders like US-based Lazard Asset Management LLC seeking board representation in Satyam, Gupta declined to answer except to say that all options are open.
Lazard, which had written a letter to MCA seeking board representation, held 2.15 per cent stake in Satyam Computer Services at the end of September 2008. Other large shareholders are Life Insurance Corporation of India (LIC) and India’s largest private sector engineering conglomerate, Larsen & Toubro (L&T) - which brought nearly 4 per cent equity stake in Satyam earlier this month.
The new board will decide whether to seek government’s help in terms of financial assistance, Gupta said. The interim chief executive officer (CEO) of Satyam, in a press conference, said the company is facing some liquidity constraint without elaborating further details.
Industry lobby groups have welcomed the nomination of the new board, while two of the nominated directors told a TV news channel that putting the beleaguered company back on track would be on top of the agenda.
“The first priority is to ensure continuity of business and to maintain confidence of clients,” said Kiran Karnik in an interview to NDTV Profit.
Karnik, a post-graduate from Indian Institute of Management, Ahmedabad, had not worked in any IT company before taking up the leadership for software services industry lobby group. He worked for more than two decades in Indian Space Research Organisation (ISRO) and with television channels before joining Nasscom in September 2001.
C Achuthan was the presiding officer of Securities Appellate Tribunal (SAT), which heard appeals against the orders passed by the market regulator, for six years till 2003. He was also a former member of Sebi, said Gupta.
“It is a very responsible job. I am not in a position to say anything without discussing with the other two board members. We need to put the company back on track,” Achuthan told the same television channel.
