Within hours of Company Law Board orders, the government on Thursday appointed its nominees on the boards of Maytas Infra and Maytas Properties, the companies promoted by the kin of disgraced founder of the Satyam Computer Services B Ramalinga Raju.
Former ICAI President Ved Jain and noted tax lawyer O P Vaish have been named as new board members of Maytas Infra, a listed real estate firm, which is executing major projects worth Rs 6,800 crore (Rs 68 billion), including Hyderabad Metro Rail. Jain will be also be on the board of Maytas Properties, an unlisted real estate firm having various housing and office projects on hand.
The appointments follow two interim orders passed by CLB on petitions filed by the government for superseding the boards of the two firms to "prevent mismanagement and enable transparency in their functioning".
While partly allowing the government petitions, CLB on Thursday permitted the government to appoint four members, including a chairman, on the board of Maytas Infra and one member on the board of Maytas Properties.
Later, Corporate Affairs Minister P C Gupta said, "Two other directors, including chairman of Maytas Infra, will be appointed later."
The government had earlier ordered a probe into the affairs of the twin Maytas companies by the Serious Fraud Investigation Office (SFIO), as these entities are closely associated with Satyam.
Satyam had earlier tried to acquire the twin Maytas companies for $1.6 billion, but the deal was aborted following protest by shareholders and institutional investors.
Briefing newspersons about the orders, Gupta said the Government had moved CLB to enable change of management in these two companies to prevent mismanagement of the affairs of the companies by the existing directors.
The government, in its petitions, requested CLB to sack the boards of the two Maytas companies and permit it to appoint 10 nominees on each board.
Besides, it also requested CLB to bar the existing members of the boards from becoming directors on other companies and also to restrain them from dealing with the assets of the Maytas firms.
CLB, after hearing both sides, agreed to a new arrangement under which four nominees were appointed on the board of Maytas Infra and one on Maytas Properties.
CLB order further said the two boards would be required to furnish monthly reports on the affairs of the companies to the government as well as CLB starting April 2009.
Giving the boards full powers to deal with the affairs of the companies, CLB observed, no Government agency would initiate any civil or criminal proceedings against the nominated directors without its prior approval.
As per the CLB order, in case of Maytas Infra, the quorum of four will require the presence of at least two nominee directors and one existing director.
In case of Maytas Properties, CLB said, the quorum of the board meeting would be of three directors including one nominee director, whose vote would be mandatory on any decision.
The government, Gupta added, would continue to "take steps as necessary to enable (Maytas companies) to function in accordance with sound corporate governance principles, in the interest of all stakeholders".
The government had agreed to the directions of CLB, as it allows "government control in the conduct of affairs of the two companies, without compromising imperative of revamping the management of these companies".
Admitting the request of bankers and financial institutions, CLB made ICICI Bank, IDBI and IL&FS as parties in the Maytas Infra case.
Similarly, it also allowed five individual shareholders and Mauritius-based investment company SRS Orion to become parties to the suit pertaining to Maytas Properties.
CLB also directed all the parties to file their replies by May 31 and rejoinder by the government by July 31.