Ahead of the Company Law Board hearing on supersession of Maytas Infra board, financial institutions, IL&FS and IFCI, which between them hold a 51 per cent stake in the company, demanded on Wednesday representation on the board of the Raju family-promoted firm.
"We cannot be treated in the same manner as L&T since we hold much more. Typically, financial institutions earn a berth on a company's board if it holds 10 per cent or more stake," said a senior executive of one of the two financial institutions.
In the case of Satyam Computer Services, L&T had acquired 8 per cent stake after the company's founder B Ramalinga Raju admitted to fraud, and had demanded representation on the company's board. The plea, however, did not find support.
The promoters of Maytas had pledged shares with the two institutions and Sicom to raise funds. Since the promoters could not pay the margin or provide fresh shares, IL&FS and IFCI invoked the pledge and now hold 34 per cent and 17 per cent, respectively.
Both the players tried to sell the shares in the market but could not do so as the 5 per cent lower circuit filter came into play after Raju's admission on January 7. Subsequently, they decided to transfer the ownership of the shares.
Sources at the institutions also said that repeated attempts to contact the Maytas management failed to elicit a response.
"Some of the addresses were also wrong. So, we approached the government seeking intervention," said an executive.
While Maytas has decided to contest the Centre's decision to supercede the boards of Maytas' firms, an IFCI spokesperson said, "The company must have a management that has credibility. The existing management ceased to command credibility after the developments at Satyam."
IL&FS and IFCI have suggested that the new management, if the government's proposal to supercede the board is approved by the CLB, will need to reassess the accounts, look into the assets and liabilities of the company, also find out if money had been siphoned off from Satyam and if funds need to be paid back to the IT company.
While the government has the option to appoint a new board comprising its nominees, the financial institutions said that they have a long experience in dealing with troubled companies and could handle the restructuring of the company. "It is for the government to decide but not just shareholders like us but even lenders should be given board responsibility along with some independent directors," a company executive said.
"The medium term objective should be to set the house in order and reassess the books. After that you can think of roping in a strategic investor or let the new management run the company," another source added.