After suing the former management team,promoter and auditors of the erstwhile Satyam Computers and seeking damages for perpetrating fraud,Mahindra Satyam now wants to reward the government-appointed nominee directors for the commendable work done by them.
The company has proposed to pay a commission of Rs 12 lakh per annum to the government-appointed nominee directors proportionate to their tenure for the years 2009-10 and 2010-11.
The proposal,however,faces an unlikely hurdle the government. The Ministry of Corporate Affairs (MCA),the nodal ministry that took charge of the situation arising out of the confessions of Satyams promoter B Ramalinga Raju has said the commission,if at all be paid,should be deposited in the central treasury.
Satyam Computer Services Limited (SCSL) had earlier moved a petition before the Company Law Board (CLB) seeking approval for payment of commission in appreciation to the phenomenal efforts of the government nominee directors and other non-executive directors in making SCSL turnaround from the crisis. The companys Board had agreed to the proposal last year.
The company had approached MCA with its proposal and was told to move the CLB for approval.
The CLB had asked the ministry to take the decision on payment of commission and communicate its stand.
Even as the CLB judgment is awaited on the matter,the ministry has argued that the nominee directors are not employees of the company and also do not qualify as directors who should be paid the commission.
Moreover,the commission if paid would establish employer-employee relationship and defeat the concept of nominee director. Any remuneration accruing to them should be paid to the government as it has sovereign rights to take the decision on the payment of commission,the ministry said.
The company did not pay any remuneration to the directors till November 2009. Since December 9,2009,it paid Rs 20,000 for attending each board or committee meeting.
The MCA had in 2009 superseded the existing board of the company and appointed six nominee directors Deepak S Parekh,Kiran S Karnik,C Achuthan,T N Manoharan,Tarun Das and SB Mainak on the Board. It withdrew four directors in July 2009 and two directors C Achuthan and TN Manoharan were asked by the CLB to continue and monitoring the progress of the company.
According to the proposal while Manoharan and Achuthan are entitled to Rs 12 lakh for each year,others would be paid Rs 3,55,068.49 for their term. However,Achuthan,former presiding officer of the Securities Appellate Tribunal,passed away last year.
The petition commended the directors for negotiating with bankers and arranging finances even in the absence of financial statements and for the efforts taken as a result of which,key customers retained confidence in the company. The nominee directors also cooridinated with regulators and ministries for more time to meet compliance requirements and with the US SEC to protect interest of stakeholders in the company.