The Securities and Exchange Board of India (SEBI) has ordered PTC India Financial Services Ltd (PFS) not to make any board changes until a forensic study on charges made by three independent directors who resigned jointly from the business in January is completed.
On January 19, Kamlesh Shivji Vikamsey, Thomas Mathew T, and Santosh B Nayar, the then independent directors of PFS, a subsidiary of PTC India Ltd (PTC), resigned from the board due to concerns about governance and compliance. They sent resignation letters and other supporting papers with identical wording.
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PTC management disputed all charges after the resignations and stated an internal team would investigate the problem, but they then instructed the risk management committee (RMC) to investigate corporate governance concerns at PFS. PFS hired chartered accountants CNK & Associates LLP to perform a third-party independent forensic audit of the problems reported by the independent directors after SEBI chastised the firm for not being pleased with the action taken report.
“On the 13th of May, 2022, the firm received a message from SEBI through e-mail, in which SEBI recognised the nomination of common independent directors of PTC India to the company’s board of directors.” SEBI has also urged the firm not to change the structure or composition of its board of directors till the forensic audit by M/s CNK & Associates LLP is completed and the report by RMC of PTC India Ltd is submitted,” PFS told the stock exchanges late May 14.
PFS hired four independent directors in late March after parent PTC recommended it after the slots had been empty for more than two months. PTC and PFS both have independent directors on their boards.
Moneycontrol had exclusively reported on May 3 that both PTC and PFS will soon hold board meetings to declare financial results for the last two quarters of 2021-22, citing PTC chairman Rajib Kumar Mishra, after SEBI barred the subsidiary from holding a board meeting due to corporate governance concerns raised by former independent directors.
SEBI advised PFS not to convene a board meeting until the company’s corporate governance concerns were resolved and new independent directors were recruited. Following that, the regulator turned down at least two requests from the corporation to have a board meeting.
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In addition to SEBI, the Reserve Bank of India performed a normal audit and questioned certain executives for clarifications on the independent director’s claims. The ministry of corporate affairs has also been made aware of the issue and has requested preliminary information.