Shares of Infosys fell as much as 16% today to 645.35 on BSE in early trade today after the Indian software services exporter said it had received whistleblower complaints against company's executives, alleging "unethical practices". The whistleblower complaints have been placed before the audit committee as per the company’s practice and will be dealt with in accordance with the company’s whistleblowers policy, Infosys said in a statement.
To ensure independence in these investigations, the CEO and CFO have been recused from this matter, said chairman Nandan Nilekani in a statement to stock exchanges. Infosys will provide a summary of the investigations results at an "appropriate time" he said, adding that the board is committed to uphold highest standard of corporate governance and protect the interests of all stakeholders.
The audit committee of Infosys has also retained law firm of Shardul Amarchand Mangaldas & Co to conduct an independent investigation.
The complaints follow a strong quarterly earnings performance by Infosys, which raised the lower end of its annual revenue forecast on upbeat demand for its digital services.
Overnight, ADRs of Infosys fell 12% on US stock exchange. Indian markets were closed on Monday for a holiday.
Harit Shah, research analyst at Reliance Securities, said, "While we await developments on the board investigation, given that it is so widely held, it is very likely that some investors will vote with their feet and sell at least some of their holdings. The market is very unforgiving of companies that have corporate governance issues and while it would not be fair to directly jump to conclusions, this issue appears quite ugly at least on the surface."
Reliance Securities has a hold rating on Infosys. (With Agency Inputs)