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Three more independent directors quit Satyam

Special Correspondent

Promoters pledge shares with institutions

HYDERABAD: Three more independent directors further jolted the crisis-ridden Satyam Computer Services by resigning from the board on Monday, four days after the longest-serving member Mangalam Srinivasan quit.

Meanwhile, the company confirmed that its promoters pledged all their shares, held by the family-run SRSR Holding Pvt. Ltd., “with institutional lenders over a period of time since September 2006.” It informed the Bombay Stock Exchange: “It is possible that some of the lenders may exercise or may have exercised their option to liquidate such quantum of shares at their discretion to cover the margin shortfall. This would consequently dilute the promoters’ holding in the company.”

Hours after this announcement, Mendu Rammohan Rao, Dean of the Indian School of Business, stepped down from the board preceded by the resignation of Vinod K. Dham, regarded as the father of Pentium, and Krishna G. Palepu, professor in Harvard Business School.

This move brings down the number of directors on the board to just five. It is not known whether former Union Cabinet Secretary T. R. Prasad, who is an independent director, is likely to sail in the same boat, while another independent director V. S. Raju, former Dean of IIT-Delhi, made it “very clear” that he was not resigning. He clarified that he also came to know about the pledging of promoters’ shares “only today”.

Faced with the spate of resignations of independent directors, after it courted multiple controversies, including the move to acquire two Maytas companies, and “pledging of promoters group’s shares’, the company tried to put up a brave front to scotch market speculation that its Founder-Chairman B. Ramalinga Raju may step down.

Confirming the resignations of all the three directors in two separate statements, Mr. Raju said: “We would like to thank them for their valuable contributions, while they served on our board. Among other items that are being taken up for consideration at the board meeting scheduled on January 10, 2009, reconstitution of the board will be an important item.”

While rescheduling the meeting from December 29 to January 10, Mr. Raju announced late on Saturday that the company would dilute the promoters’ stake and appointed DSP Merrill Lynch to assist in the review of the strategy. The company also wanted to increase the size and alter the composition of the board. It is not clear whether the independent directors had resigned to pave the way for the recast of the board.

PTI reports from Delhi:

Under RoC scrutiny

The Government on Monday said it would refer the controversial $1.6-billion Satyam-Maytas failed deal to the Serious Frauds Investigation Office (SFIO) if the Registrar of Companies detects major irregularities during its investigation into the issue.

“The case is already with the Registrar of Companies (RoC). If the RoC and regional director say that the case is of serious nature, and a serious fraud has been committed, it will be referred to the SFIO,” a Corporate Affairs Ministry official said.

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