Infosys board meeting under Sebi scanner

After spurt in share trade, regulator seeks details about meet in which Murthy's return was decided

The Securities and Exchange Board of India (Sebi) has asked Infosys for details about a June 1 board meeting where the decision to appoint N R Narayana Murthy as executive chairman was taken.

The capital market regulator sought the information on the series of events in the run-up to the meeting, the outcome of which drove up Infosys shares up by nine per cent on the next trading day (June 3).  

Sebi had also asked Infosys about the list of people who were privy to the agenda of the board meeting, said a source. The regulator is looking into the reasons for the price rise and spurt in activity in the stock a day before the event (May 31) when sentiment in shares of other software exporters and the broader market was weak.

In response to an email query by Business Standard on the matter, Infosys said, “Sebi has sought certain clarifications from us relating to the board meeting held on June 1 and we have provided the same. We will fully co-operate with Sebi and provide all necessary information in this matter.”

On May 31 (the day before the board meeting), roughly 24 million shares of Infosys, worth Rs 575 crore, were traded on both the exchanges against a three-month daily average of 14.5 million shares, worth about Rs 365 crore. The stock had advanced 2.7 per cent on May 31 when the Sensex fell 2.3 per cent and the BSE IT index gained 0.4 per cent.

Brokers said the surge in volumes on that day was driven by a few large deals in the last hour of trading session.

Talks to bring Murthy back from retirement to Infosys were initiated on May 4. This was revealed by Murthy during a press briefing on June 1, soon after the board met to decide on his re-entry. Murthy said he was approached by the outgoing chairman, K V Kamath, on May 4 when he returned to Bangalore from a foreign trip.

Investors and analysts cheered Murthy’s return, as Infosys’ earnings have disappointed Dalal Street in the last two years. The re-entry has heightened hopes of Infosys regaining its past glory.