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Infosys: No prima facie evidence to support allegations of whistleblower group

Our Bureau Bengaluru | Updated on November 04, 2019 Published on November 04, 2019

The stock price of Infosys crashed and all kinds of rumours were doing the rounds on social media.   -  Reuters

Company rules out disclosure under SEBI regulations

Infosys has said there is no prima facie evidence to corroborate any of the allegations made in the whistleblower group's complaint.

In a statement to the NSE, Infosys said the Audit Committee had retained the services of the law firm Shardul Amarchand Mangaldas & Co. to investigate the matter. Moreover, even before the appointment of the independent investigator, the Audit Committee began consultations with independent internal auditors Ernst & Young. The independent internal auditors were given the mandate to review certain processes on the basis of the allegations in the Anonymous Complaints.

The company has not received any supporting evidence to substantiate the allegations. Two of the Anonymous Complaints were received on September 30, 2019. On October 16, 2019, the company was made aware of a letter that referred to a September 30, 2019 complaint purportedly written to the Office of the Whistleblower Protection Program, Washington D.C.

Also read: Why Infosys insider trading allegation may be baseless

In statements to the stock exchanges on October 21, 2019 and October 22, 2019, the company had said the Anonymous Complaints were placed before the Audit Committee on October 10, 2019 and the non-executive members of the board on October 11, 2019, in accordance with the whistleblower practice of the company.

Disclosure under SEBI regulations

For an event/ information to warrant disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, read with SEBI Circular CIR/CFD/CMD/4/2015 dated September 9, 2015 (“LODR Regulations”), unless such event/ information is specifically listed as a deemed material event, the event/ information needs to be disclosed only if determined by a company to be material.

The Company’s Policy for Determining Materiality for Disclosures inter-alia requires for the determination of ‘materiality’ on a case-to-case basis, depending on the specific facts and circumstances relating to the information/ event, and further based on an application of the qualitative and quantitative criteria mentioned therein.

Additionally, pursuant to the circulars dated July 6, 2018, issued by the stock exchanges, all listed companies have an obligation to disclose material information/ event as soon as it becomes ‘credible Page 2 of 2 and concrete’ and an anonymous letter with certain allegations and no supporting evidence cannot be regarded as being credible or concrete.

Unless an event/ information is deemed ‘material’ under the LODR Regulations, or determined as ‘material’ by the company, it is not obliged to disclose the same under Regulation 30 of the LODR Regulations. Anonymous Complaints do not fall within the purview of deemed material events under LODR Regulations. Further, given the circumstances at this stage, where there is a complete absence of prima facie evidence and the Anonymous Complaints are still under investigation, the company is not in a position to determine the concreteness, credibility and materiality of the anonymous complaints. In light of the above, no disclosure under Regulation 30 of the LODR Regulations is required to be made.

Published on November 04, 2019
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