The PTC India Ltd board has set up a sub-committee comprising three directors to look into alleged irregularities in the appointment of its chairman and managing director, after the capital market regulator SEBI questioned the process of the appointment of Rajib Kumar Mishra for the top job, three people close to the development told Moneycontrol.
Moneycontrol had exclusively reported on June 27 that the Securities and Exchange Board of India (SEBI) had sent a letter to Mishra and the company secretary on June 22, asking about possible irregularities in the appointment, and about corporate governance issues in PTC and its subsidiary PTC India Financial Services (PFS).
“The board has taken cognisance of the letter from SEBI. The company will continue to cooperate and reply to SEBI. In view of this, the board felt that a sub-committee should be formed to look into the facts relating to this matter,” a source close to the development said.
According to sources, the board includes two independent directors — Jayant Dasgupta and Rashmi Verma — and one nominee director, Rajiv Ranjan Jha. Jha represents one of the state-run promoters, Power Finance Corporation, where he is director (projects).
A detailed query sent to PTC India CMD Mishra and the three directors who are in the sub-committee remained unanswered at the time of publishing.
PTC has been mired in controversy since January 2022, when three of the independent directors of its subsidiary PFS resigned citing corporate governance lapses.
PTC under the lens too
Like PFS, parent PTC saw four of its six non-executive independent directors resign from the board in December 2022. The independent directors — Sushama Nath, Jayant Gokhale, Subhash S Mundra, and Preeti Saran — resigned raising concerns over governance issues and the “cavalier attitude” of the management towards independent directors.
Following earlier directions of SEBI in 2022, the PTC Risk Management Committee (RMC) was tasked with looking into the issues raised by PFS’ resigning independent directors. PTC’s independent directors (who resigned) had alleged that the RMC did not adhere to the norms of corporate governance.
PTC’s independent directors at the time also alleged that RMC’s recommendations were not implemented and that the parent company did not take any corrective action, and added that board meetings were called at short notice, which made it difficult for independent directors to attend, and left them with no option but to miss it at times. These resignation letters were uploaded on the website of the bourses, and the company has in the past denied these allegations.
SEBI is now believed to be questioning PTC India and Mishra on why the company did not prioritise the appointment of new independent directors after four resigned, which meant that the composition of the board was not per the SEBI (Listing Obligations and Disclosure Requirements) Regulations. Sources said that SEBI is also asking why PTC India prioritised the appointment of the CMD with an inadequate number of independent directors.
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, [last amended on January 10, 2020], states that if the chairman of a company occupies a management position on the board of directors, at least half the board of the listed entity shall comprise independent directors.
Mishra took over as acting chairman in November 2021, after Deepak Amitabh quit from the position. He was made CMD in March this year, despite facing regulatory issues for his role as non-executive chairman of PFS.
SEBI is believed to have taken cognisance of a letter from a minority shareholder that alleged that the selection process for the role of CMD was heavily influenced by Mishra, and only two candidates were interviewed for the post. Moneycontrol has reviewed a copy of the letter, which is marked to SEBI and the heads of the state run-companies NTPC, Power Grid Corporation of India, PFC, and NHPC. Each of these PSUs own 4.05 percent stake in PTC.
“There was an issue relating to the chair of the NRC (Nomination and Remuneration Committee) being changed mid-way during the appointment process and the ED-HR suddenly being cut out from the process. The regulator and the sub-committee of the board will be looking into it,” a third source said.
PFS probe still on
Separately, Mishra and PTC are also under the scanner for alleged lapses in corporate governance at the latter’s non-banking financial services subsidiary PFS. The PFS matter is being probed by SEBI, Reserve Bank of India (RBI), and the Ministry of Corporate Affairs (MCA), after three of its independent directors resigned in January 2022. They cited lapses in corporate governance, including bypassing the board in certain decisions, changing the terms and conditions of loans, and failing to inform independent directors about important matters.
SEBI has issued a show-cause notice in May to Mishra, who is also the non-executive chairman of PFS, and PFS Managing Director and Chief Executive Officer Pawan Singh, in this connection.
The MCA’s Registrar of Companies has found PFS and Singh in violation of The Companies Act, 2013, and penalised both entities in three separate adjudication orders. Singh was sent on leave last month after a directive from the RBI.
“SEBI is following due process, questioning both Mishra and Singh,” one of the sources mentioned above said.
Ends
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