KOTAK TO STEER IL&FS

Government-appointed board to elect a new chairman before October 8

The NCLT on Monday allowed the government to take complete control of debt-laden IL&FS that had defaulted on its debt obligation multiple times causing volatility in the markets. This is the third time in less than 10 years where the government have been forced to step in and supersede the board of a listed firm.

The Mumbai bench of the NCLT approved sixmember board comprising Uday Kotak, MD of Kotak Mahindra bank, Vineet Nayyar and Malini Shanker, retired IAS officers, G.N. Bajpai, former Sebi chairman and G.C. Chaturvedi, chairman of ICICI Bank and Nand Kishore, a veteran auditor.

The new board has been given time till October 8 to meet and elect a new chairman.

In a surprise move on Monday, the ministry of corporate affairs filed a special petition under section 241 and 242 of the Companies Act, 2013 seeking a change in the management of the company arguing that the present crisis could adversely impact the entire financial sector.

Coming down heavily on the management, the government counsel argued that Ravi Parthasarathy, along with CEOs and CFOs, were painting a rosy picture deliberately despite knowing the truth. “Fresh funds will be infused into the company when the new board comes up with a revival plan. We have identified a few people who have credibility,” said Sanjay Shorey, joint legal director in the ministry of corporate affairs.

He further informed the tribunal that the SFIO had already initiated a probe into the matter.

The defaults had triggered heavy redemption from mutual fund debt schemes over the past few weeks.

The crisis also led to widespread risk aversion towards the entire nonbank finance companies (NBFCs), knocking down their share prices that wiped out thousands of crores of investors wealth in just 2-3 trading sessions.