Mediation kicks off at Infosys: ET

Months after a public disagreement first broke out between software major InfosysBSE -2.83 %’ board and its founders, mediation efforts have begun to address some of the concerns, people familiar with the development told ET NOW.

The software major had appointed law firm Cyril Amarchand Mangaldas in February to receive various inputs from promoters, evaluate them and make recommendations to the Board, in an effort to uphold the standards of governance processes. The move came after Infosys founder NR Narayana Murthy raised questions on governance, particularly the high severance pay to former CFO Rajiv Bansal.

Sources close to the board ET NOW spoke to said the discussions are being led by the law firm’s managing partner Cyril Shroff himself, who met Infosys founders NR Narayana Murthy and Nandan Nilekani in recent weeks. Infosys and Mr Murthy did not offer comment to queries sent by ET NOW.

The scope of the exercise will likely cover inputs on board function, governance and importantly, the kind of information that the board can potentially share with founders without falling foul of insider trading regulations. The founder group currently owns 13% in the company. ET NOW learns that the law firm will also take inputs from other key institutional investors, before presenting its findings to the board.

According to market regulator Sebi’s rules, every listed entity needs to constitute a stakeholders relationship committee headed by a non-executive director to address grievances of shareholders and other security holders. Law and governance experts said Infosys may have chosen a law firm over this committee to talk to the founders to abide by insider trading norms.

“The stakeholder committee is usually tasked with sorting out grievances of shareholders but in this case the board may have asked a law firm to mediate to ensure it complies with Sebi’s insider trading norms, considering the promoters have a significant stake in the company,” Sandeep Parekh, founder, Finsec Law Advisors, said.

At the same time, Shriram Subramanian, founder of proxy advisory firm InGovern, said the inputs will help establish what the founders want to achieve and also gives a sense that their concerns haven’t been ignored, in a bid to avoid yet another public fallout.

Source: ET – 4 May 2017