Mobile value added services firm OnMobile Global's stock was up almost 8% in intra-day trade even as the company announced that promoter, CEO and MD Arvind Rao has resigned from the company. Today's spike in the share price erased the losses that the company had made in the last few days.
The company' stock price was trading at Rs 36.30 per share, up 8% from the previous close of Rs 33.60 on the Bombay Stock Exchange.
Yesterday, the board in a late evening meeting accepted Rao's resignation. The company also accepted the review completed by legal advisors, Amarchand Mangaldas & Suresh A. Shroff, Advocates duly supported by KPMG. "While the review has identified some weaknesses, strong alternate controls have ensured that the Company did not suffer any loss. Recognising that these weaknesses took place during his tenure, Arvind Rao, has submitted his resignation from the position as Managing Director and CEO with immediate effect and the Board has accepted the same," said the company statement.
When asked what were the weaknesses that the review had found in the processes, the company in an email statement said: "As part of its ongoing efforts to strengthen the corporate governance mechanism, the company initiates special reviews of various transactions. Basis these reviews, the board recommends appropriate corrective actions."
The company's stock had been battered on the BSE and NSE as news report, on June 28, claimed that Rao may be on a probe for misappropriation of funds. Despite the company denial on the misappropriation of funds, OnMobile's stock priced tanked the next day. The company's stock on June 28, tanked almost 17% to Rs 33.2 per share. Stocks on Friday, June 29, was down 8.12% to Rs 30.55 per share.
Moreover, institutional investors like Smallcap World Fund and Birla Sunlife Trustee started sellling their holding in the company.
