Infibeam to seek shareholder nod to remove SRBC & Co as joint auditor

E-commerce company Infibeam Avenues Thursday said it will seek shareholder approval for the removal of EY-affiliate S.R.B.C & Co. LLP as one of its joint statutory auditors through a special resolution, in compliance with the order from the Corporate Affairs Ministry.

In May, Infibeam had said its board has recommended termination of S.R.B.C & Co. LLP's (Auditor) services as one of the joint statutory auditors on grounds of alleged sharing of unpublished price-sensitive information (UPSI) - a charge that S.R.B.C. had refuted.

Last month, the e-commerce company had informed that its proposal had been approved by the Corporate Affairs Ministry.

"As per the order, the Regional Director has instructed the company to re-obtain the approval of shareholders within the prescribed time limit ... In view of the same, the Board of Directors of the company again recommends the resolution for the approval of the members of the company by way of special resolution," Infibeam said in a notice for its annual general meeting scheduled to be held on July 30, 2019.

The Ahmedabad-based company, in its annual report, also detailed out the series of events that led to its move to seek removal of the auditor.

Infibeam said it had received an anonymous complaint in February, alleging that the quarterly financial results of the company have been shared with various third parties prior to the information being disclosed to the stock exchanges, by S.R.B.C & Co., LLP on several occasions.

Infibeam said it then initiated an internal preliminary investigation and based on the findings, it started discussions with the Auditor on the issue.

"...the Auditor, vide email dated April 15, 2019 had informed the company that it has undertaken an internal investigation, and had admitted that as a part of their preliminary findings, there had been a data breach, wherein financial results of the company had been shared with one of its clients, who would not qualify as an 'insider' under the PIT Regulations," Infibeam said.

It alleged that the Auditor had confirmed that certain emails with unpublished price sensitive information (UPSI) such as financial statements had been sent to personal email accounts of certain team members from their official email accounts.

Infibeam pointed to another email where the auditor had "accepted" that a member of the audit team, in February, had inadvertently marked a third-party on emails containing UPSI, that were meant for the finance team personnel only.

While the said communication were immediately deleted from the email account of such third party, "the Auditor had not brought any such incident to the attention of the company, or any regulatory authority, despite having knowledge of the same", Infibeam further alleged.

Infibeam said the occurrence of such incident, including the subsequent deletion of the said email without informing the company "clearly demonstrates a lack of internal control in the system" of the Auditor.

SRBC & Co LLP has denied any wrong doing on its part, it noted.