Govt nominees on Maytas boards

6 Mar 2009 ET Bureau

NEW DELHI: Acting on a Company Law Board (CLB) ruling, the government on Thursday named two nominees to the boards of Maytas Infra and Maytas.

Properties, the realty companies run by the family of Satyam Computer Service’s tainted founder B Ramalinga Raju.

CLB had asked the government to appoint four directors on the board of Maytas Infra and one on the board of Maytas Properties. Hours later, corporate affairs minister Prem Chand Gupta announced that former president of Institute of Chartered Accountants of India (ICAI) Ved Jain and corporate lawyer OP Vaish would be two of its nominees on the board of Maytas Infra, a listed entity. Mr Jain will also be on the board of Maytas Properties.

“Our priority would be to see that all the stakeholders benefit. I do not doubt the bonafides of the present directors (of Maytas Infra). I think they would also work for the benefit of the stakeholders,” Mr Vaish told reporters immediately after his appointment.

Lids came off the Satyam scam on January 7 after founder B Ramalinga Raju admitted to cooking the books for years. Maytas Infra and Maytas Properties came under a cloud after an initial probe into the Satyam scam showed a link between the tainted IT firm and the two companies. On December 16, Satyam’s then board had unsuccessfully tried to acquire the two firms for $1.6 billion, a move scrapped after an unprecedented rebellion by the shareholders.

CLB has granted immunity to the new directors from any civil or criminal action as the Maytas firms are being probed by a slew of agencies including the Serious Fraud Investigation Office (SFIO).

The CLB ruling requires every Maytas Infra board meeting to have at least four directors, with a minimum of two government nominees in attendance. Besides, every board decision would need to be okayed by the new directors. One of the government nominees will act as the chairman of Maytas Infra, which has three directors including the son of Satyam’s disgraced chairman Ramalinga Raju.

For Maytas Properties, the quorum for board meetings has been fixed at three. This includes the government director, who also has to give an affirmative vote to any new proposals. The CLB chairman has directed the newly constituted board to convene a meeting within 10 days to discuss the implementation of projects in its kitty.

The CLB order came on two separate petitions filed by the government to disband the boards of the Maytas’ companies. Even as the government wanted to supersede the boards, it failed to convince the CLB of any collusion between the management of those companies and that of Satyam’s.

The CLB, during the hearing, had suggested the appointment of new directors, in addition to the existing ones, a proposition to which the two companies agreed. The government, which then objected to the CLB’s plea, later agreed to its suggestion.

“After considering all aspects, the government had agreed to an arrangement that allows government control in the conduct of affairs of the two companies (Maytas Infra and Maytas Properties) without compromising with the imperative of revamping the management of these companies,” the minister of corporate affairs Prem Chand Gupta said. The government will take steps to enable the two companies to function in accordance with sound corporate governance principles, he added.

Maytas Infra has expressed satisfaction on the CLB’s order. CA Sundaram, a senior advocate who represented the company, said the CLB has vindicated the company’s stand that the existing management has not done anything wrong and the board should therefore not be superseded.