The Ministry of Company Affairs (MCA) has given Satyam Computer Services a week’s time to provide all the information on the December 16 board meeting that took a resolution to buy Maytas Properties and Maytas Infra for $1.6 billion.
Though the proposed deal was called off within hours after it was announced, it raised concerns of corporate governance, attracting the attention of the Union Government.
The MCA directed the RoC office in Andhra Pradesh to carry out the probe. Sources told Business Line that the office sent an order to Satyam’s corporate office on Monday (December 22), seeking the complete information on the board meeting. The RoC report will be ready by January 10.
Interestingly, the purview of Registrar of Companies (RoC, Ministry of Company Affairs) generally doesn’t include issues related to board meetings and resolutions the boards pass. Companies are required to submit this information to SEBI and not to the RoC, which mandates corporates to submit only periodic financial announcements.
But the RoC has reportedly invoked a Section in the Companies Act that it does not exercise often. The Section 234 gives the RoC power “to call for information or explanation” he thinks required for the probe.
The MCA hopes that the company would respond to help the smooth conduct of the probe.
Meanwhile, a Satyam spokesperson told Business Line that the company had received the RoC notice. “We have received it as expected. We will respond to it as required,” the spokesperson said.
The MCA order is learnt to have called for information on Sections 372A, 299, 300, 301 and 108A of the Companies Act. These sections look into whether companies followed good corporate governance practices while taking important decisions.
“When they take a decision to invest, they have to follow certain procedures. Whether they conformed to these sections is the crux of the issue. The RoC would look into whether the Satyam board complied with these Sections,” sources said.
“It can’t take a decision that goes against public policy and shareholders’ interest,” they said.
Source: The Hindi Business Line
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