OnMobile Global Ltd wants to leave the past behind and move on. Its investors, too, seemed to be relieved about the fact that the company’s self-admitted weakness in internal controls didn’t result in any financial loss. Shares jumped by 9% after OnMobile said it did not suffer any loss.
But investors must demand more information on what exactly went wrong with internal controls. The highlights of the company legal adviser’s review on corporate governance processes must be made public. After all, the review led to the resignation of the company’s founder and managing director.
And this is only the latest in a series of resignations. OnMobile had two chief financial officers resigning in the space of just five months. Two of its independent directors resigned earlier this year.
Responding to a query by Mint, the company refused to throw any light on the exact nature of the weaknesses in its internal processes. Its statement reads, “The special review indicated certain weaknesses in internal controls. Strong alternate controls ensured that the company did not incur any loss. Basis recommendations of the advisors, the board has initiated appropriate corrective actions.”
This is woefully inadequate and investors need to know what exactly transpired in order to take an informed investment decision. Unfortunately, the current wording of the listing agreement allows the company to be vague about the special review conducted by its legal advisers.
But investors can come together and demand more detailed information. Needless to say, this also requires intervention from the regulator and the stock exchanges to extract the required information.
Based on the information already available, it does look likely that the company’s claims of no financial loss and irregularity are true.
OnMobile recently completed a buy-back where it used 95% of the allocated funds of Rs 25 crore. It’s unlikely that a company whose funds were being siphoned off would find sufficient resources to fund a buy-back.
But, of course, this isn’t a foolproof argument. One will only know when further details are made available.
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