Sebi keeping close watch on Infosys developments

As the firm remains embroiled in differences between its founders & the top management

As IT giant Infosys remains embroiled in differences between its founders and the top management, markets regulator Sebi is keeping a "close watch" on all the developments with a "special focus" to ensure that minority investors' interest is safeguarded.

Infosys has become the latest major corporate to attract regulatory attention for alleged corporate governance lapses being played out in public after Tatas, United Spirits and Ricoh India, among others.

"Sebi is keeping a close watch on the developments at Infosys and has asked stock exchanges to seek clarifications on various media reports relating to the company, its founders and top management team," a senior official said.

"It is a worrying trend that issues relating to corporate governance and intra-corporate disputes and differences are being played out in the open and through unconfirmed media reports at a number of corporates that have enjoyed bellwether — like status in their sectors.

"We have been keeping a close watch on developments relating to all such companies with a primary focus to ensure that the minority shareholders' interest is not hurt, while we are also conscious of the interest of institutional investors," he said.

The official further said: "These are among the companies that have always been considered to be professionally run and have always attracted significant interest from foreign investors as well and there are concerns that such negative developments may impact India's position as a favoured investment destination."

The regulator, he added, is in touch with the stock exchanges to examine the responses submitted by Infosys to the clarificatory notices issued to it and would seek details directly from the company if required thereafter.

Sebi will also take into account the views of proxy advisory firms and various institutional investors to understand the issue and before making any direct intervention in the matter.

While Infosys and its top management led by CEO Vishal Sikka have presented a brave face saying all was well with the company and there has been no corporate governance or any other lapses, there have been reports that the founders of the IT giant are not happy with the current leadership team.

Some former Infosys executives have also raised questions about the way the company is being run currently, as also about the pay packages of some people including severance deals given to a few.

In January, Sebi had informed its board in detail about the action taken by it in a number of matters including corporate governance matters in various companies including those of Tata Group, where Cyrus Mistry was removed as chairman leading to a public fight with the board and Ratan Tata, who was brought in as interim chairman.

Besides, Sebi's board was also apprised of the action taken in cases involving United Spirits Ltd, Ricoh India Ltd, NDTV Ltd, as also issues relating to non-compete fees in the proposed merger of Max Life Insurance and HDFC Standard Life.

"It was also informed to the board that Sebi has taken up the matter with Tata companies on the allegations of insider trading," the official said.

After examining the matter, Sebi will decide whether any action is required in Infosys matter as well, he added.