The Hindu Business Line : Centre’s action a first of its kind for listed entity, say experts

New Delhi, Jan 11 The Centre’s move to sack the beleaguered Satyam Computer Services Board and constitute another with its own nominees is being seen as a first of its kind against listed entities.

Corporate observers and company law experts aver that rarely had Government in the past gone to the extent of disbanding the board of any listed company and appointing a board with Government nominees.

“Very rarely and possibly for the first time the Government has taken an action of this magnitude. The enormity of the situation in the Satyam case may have prompted the Government to terminate an existing board and appoint a new one with its nominees,” Mr Ashok Haldia, past Secretary of ICAI, told Business Line.

He said that there had been instances of the Government appointing additional directors to boards of companies, after moving the Company Law Board.

However, Mr Haldia noted that, in his career spanning decades, he had not come across any measure of such magnitude against a listed company as the one taken in the case of Satyam.

Many corporate observers endorsed the Centre’s action to restrain the three directors of Satyam from functioning as directors and appoint Government nominees. They held that such an intervention was commendable and quite swift as the Centre had moved the CLB in less than 72 hours after the financial fraud became public.

The fraud came to light on January 7 and the Centre moved the CLB on Friday (January 9).

More Stories on : Economic Offences | Satyam Computer Services Ltd

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