New Delhi: Satyam Computer has declined to entertain requests by its former directors to insulate them from any loss or legal expenses associated with cases they might face.
The company has said it was prohibited from “indemnifying the former directors until they are adjudged not guilty in any proceedings.”
Satyam, which is being revived under its new owner Tech Mahindra with help from central government, said that the Ministry of Corporate Affairs has clarified that the company is prohibited from advancing defence costs to its directors and officers until they are acquitted or proved innocent.
“Certain independent directors of the company have demanded indemnification for any loss and advancement of fees and expenses associated with cases and other proceedings and investigations that may be instituted against them on the basis of the indemnification agreements entered into by them with the company,” Satyam said while disclosing its financials for the October-December 2008 quarter.
“The company has denied a request for advancement of legal costs as it is prohibited by virtue of Section 201 of the Companies Act, 1956 from indemnifying the former directors until they are adjudged not guilty in any proceedings,” it said.