Government creates a board for Satyam

Government creates a board for Satyam
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First Published: Mon, Jan 12 2009. 01 50 AM IST
Updated: Mon, Jan 12 2009. 01 50 AM IST
New delhi: The Union government on Sunday announced creation of a new board for Satyam Computer Services comprising Deepak Parekh, chairman Housing Development Finance Corporation Ltd or HDFC, Kiran Karnik, former president of NASSCOM and C Achuthan former member of the Securities & Exchange Board of India or Sebi. This makes a team of experts from banking, IT and law backgrounds.
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“The board, which will be independent, is expected to meet in the next 24 hours and decide further course of action. The Board’s first priority would clearly be to restore the company’s credibility, customer confidence and employee morale as also to safeguard the interest of investors and other stakeholders,” Prem Chand Gupta, minister for corporate affairs told media persons on Sunday.
The minister added that the ministry of corporate affairs or MCA will continue to examine the documents of Satyam and the ministry is working in close coordination with Sebi and the Andhra Pradesh government on the issue.
‘The ministry had earlier ordered inspection of books of eight companies of the Satyam group under section 209 A of the Companies Act (1956), and a team of officers despatched from the ministry has already started work,” said the minister. The Registrar of Companies or RoC, Hyderabad has already seized documents of Satyam from various premises.
The government has given a mandate of appointing upto ten directors nominated by the government, and Gupta said, the next lot of directors will be appointed by these three members once they convene the first meeting. Gupta, did not specify as to which of these members will chair the board.
He also did not comment on the fate of Ram Mynampati, Satyam’s interim chief executive officer CEO. “The new Board will take a call on this,” added Gupta. Mynampati, who was the chief operating officer or COO was made the interim CEO last week when chairman B Ramalinga Raju resigned.
The Board of directors of Satyam was suspended on 9 Jan by an order of the government.
Gupta did not give a time frame for completing inspection by MCA and the government addressing grievances of 3,00,000 odd shareholders who have invested their money in Satyam. he also said the new Board will address the issue of investors as also employees of Satyam.
Gupta also reserved his comments on participation of others stakeholders such as ICICI Prudential and the FII, US’s Lazard Asset Management, in the new board of Satyam as also on the possible buyout or liquidation of the company.
“We are of the view that Satyam, which is one of the major IT companies of the country has many strengths. Its business as also the professional and technical capacity available the company have great value,” said Gupta. He added it is important to ensure the continuity of the company in the interest of its shareholders, employees and other stakeholders including clients across the world.
Gupta also said that MCA has not moved the CLB asking for a new set of external auditors for Satyam.
He also said the US Security Exchange Commission or SEC is in touch with Sebi on Satyam issue.
This is the second case where MCA is handling a case where investors at large are affected. MCA in early 2000 initiated action on Delhi-based Morepen Laboratories, raised money through fixed deposits from 75,000 investors but defaulted on payments. The case came up before the Company Law Board (CLB), which ordered Morepen to repay the money. After Morepen didn’t honour the CLB order, the case was referred to the judiciary and is now before the Supreme Court.
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First Published: Mon, Jan 12 2009. 01 50 AM IST