Latest news with #KMPs
Mint
01-07-2025
- Business
- Mint
Why 125+ CFOs have resigned in Q1. Hint: it's personal
Mumbai: More than 125 chief financial officers (CFOs) have exited listed companies in the first three months of FY26 — a sharp 25% jump from a year earlier — as per disclosures made to the BSE. Some of them walked out overnight, citing a cryptic phrase, 'personal reasons'. The sudden resignation last Monday of Mastek Ltd's CFO Raghavendra Jha, barely a month into the job, is the latest in a string of such departures. In a one-line email addressed to the company's chief executive, Jha said he was putting in his papers due to personal reasons, without providing any other detail. Such exits have cast doubts about corporate governance and regulatory compliance. When a listed company's key managerial personnel, including CFOs, resign, they are required to provide a detailed reason for their departure, as per the listing obligations and disclosure requirements of market regulator Securities and Exchange Board of India (Sebi). Experts said the KMPs are merely ticking the box in terms of complying with this requirement by citing vague reasons when resigning. 'The abrupt resignation of key managerial personnel, especially CFOs, often signals deeper issues within a company," said V. Balakrishnan, a former CFO at IT services major Infosys Ltd and founder of Exfinity Ventures, a venture capital fund. 'While regulators require disclosure of resignation reasons, the frequent use of vague terms like 'personal reasons' has become a convenient cover." Balakrishnan pointed out that in several instances, irregularities at companies have surfaced shortly after such exits. For example, Ankit Jain, the former CFO of Gensol Engineering, resigned in early March citing personal reasons and pursuit of other professional avenues as the reason for his departure. A month later, Sebi released its interim order against the company and its promoters, disclosing severe lapses in governance and diversion of funds. Similarly, IndusInd Bank's former CFO Gobind Jain's resignation this January was followed in March by the bank disclosing that it had financial discrepancies of over ₹2,000 crore in its derivatives portfolio. Jain had cited personal travel to the US and pursuit of other career opportunities as the reason for his exit. 'This raises serious concerns and strengthens the case for Sebi to broaden the disclosure mandate," said Balakrishnan. 'The onus must be on the board to reconcile these stated reasons with any financial lapses discovered later, and to be held accountable for any oversight or complicity." Currently, Ankit Jain is the CFO of SB-Constantia Flexibles, a joint venture between Constantia, an Austrian firm, and SB Packagings, a Delhi-based packaging firm. To be sure, in most cases when executives resign citing personal reasons, they end up joining a different firm. The pursuit of another career is the second most-cited reason for exits. However, experts say that the ambiguity created by this term allows even cases where there are serious issues at the firm to pass under the radar. Shriram Subramanian, a corporate governance expert and managing director of proxy advisory firm InGovern, said boards need to be cognizant that they are working in the interest of shareholders. 'If there is any other reason for the resignation like fraud or disciplinary action, they should disclose as much to the exchanges instead of letting it slide as 'personal reason'," he said. Meanwhile, Mumbai-headquartered IT services company Mastek, which ended FY25 with $408.4 million in revenue and is valued at $890 million, said there were no governance concerns behind CFO Jha's resignation in just over a month of joining. Jha did not respond toMint's messages requesting comment. 'We are not happy with having two CFOs in the last six months; it creates a wrong impression," said Ashank Desai, the company's chairman. Last December, Arun Agarwal had resigned as CFO after serving in the role for just over four years. 'Mastek stands for the highest corporate governance. I can vouch for it," said Desai, who co-founded the company in 1982.
Mint
24-06-2025
- Business
- Mint
Sebi proposes tougher governance norms for market institutions
The capital markets regulator has proposed new measures, including the appointment of board members for specific roles, to strengthen governance of stock exchanges, clearing corporations and depositories. The regulator seeks to reinforce the public-interest role of the market infrastructure institutions (MIIs) over their commercial objectives, according to a consultation paper released by the Securities and Exchange Board of India (Sebi) on Tuesday. 'MIIs have seen a rapid increase in investor base and volumes, as well as a growing network of intermediaries associated with them... a significant growth in revenue and profitability, and they enjoy high profit margins,' the regulator noted in its consultation paper. The proposals focus on three key areas: Sebi recommends the mandatory appointment of two executive directors (EDs) on the boards of MIIs to oversee critical functions such as trading, clearing, settlement, compliance, risk management and investor grievance redressal. These EDs would be designated as key management personnel (KMPs) and hold comparable stature to the managing director (MD). A third ED may be appointed at the institution's discretion for business development. The paper proposes codifying the roles and responsibilities of MDs, EDs and other key officers such as the chief technology officer (CTO) and chief information security officer (CISO). Currently, these responsibilities are either distributed across departments or not formally defined in the regulations. To reduce conflicts and improve accountability, Sebi has proposed restrictions on board roles. MDs of MIIs would only be allowed to serve as non-executive directors in charitable entities or unlisted government companies not engaged in commercial activities. EDs would be allowed to sit only on the boards of MII subsidiaries. This approach mirrors similar restrictions in the banking sector. 'With the surge in retail investors, the underlying concern is that MIIs must not operate without fixed accountability of KMPs. This consultation paper is a step in that direction,' said Diviay Chadha, Partner at Singhania & Co. 'MIIs—regardless of their status under the Companies Act—will be required to amend their charter documents and board composition to comply with the final regulations.' While the proposals aim to reduce potential conflicts of interest, some experts flagged possible unintended consequences. 'This prohibition on EDs of MIIs from serving on boards of any company, except MII subsidiaries, is necessary in principle to ensure accountability,' said Akshaya Bhansali, Partner at Mindspright Legal. 'However, from a broader market perspective, it may affect the availability of independent directors for listed companies.' These proposals come at a critical time as Sebi continues to review the National Stock Exchange's (NSE) long-delayed IPO application. NSE's public listing—first proposed in 2016—has faced several regulatory hurdles. In a letter to NSE dated 28 February, Sebi responded to the exchange's IPO application by stressing that 'the culture of giving primacy to public interest over commercial interest must run deep at the operating level as well.' Bhansali, however, said, 'These governance changes should not directly influence Sebi's review of the NSE IPO. They are not targeted solely at NSE. However, unless otherwise clarified, these norms could become de facto expectations or preconditions for approval.' Public comments on the consultation paper are open until 15 July.
Economic Times
26-05-2025
- Business
- Economic Times
Sebi comes out with appointment process of senior officials at MIIs
Markets regulator Sebi on Monday came out with a process to appoint specific key officials of stock exchanges and other market institutions. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Markets regulator Sebi on Monday came out with a process to appoint specific key officials of stock exchanges and other market institutions. These measures are aimed at ensuring that MIIs ( market infrastructure institutions ) are staffed with qualified, independent key management personnel (KMPs) and directors while safeguarding market integrity through effective cooling-off policies."To strengthen the governance framework of stock exchanges, clearing corporations and depositories (collectively referred to as MIIs), it is required that the KMPs of MIIs in the crucial areas of operations, such as compliance, risk management, technology and information security are of appropriate stature and independence," Sebi said in its Sebi came out with a process for the appointment, re-appointment, termination or resignation of Key Management Personnel like the Compliance Officer, Chief Risk Officer, Chief Technology Officer and Chief Information Security the appointment process, Sebi said an external agency will identify suitable Nomination and Remuneration Committee (NRC) will review and recommend to the Governing Board of MIIs. Further, the Governing Board will make the final regards to re-appointment, termination, or resignation, Sebi said NRC will evaluate and recommend action to the Governing Board and the final decision rests with the the regulator said that KMPs should be given a fair hearing before termination."While the Governing Board of the MII sets the overall tone, a culture of prioritising efficient discharge of responsibilities towards public interest falling under Verticals 1 and 2, over commercial interest under Vertical 3 must be ingrained at the operating level as well."Along with having a capable and efficient Managing Director (MD), there is a need for KMPs of appropriate stature and ability in Vertical 1 and 2 to ensure that the MII delivers its primary mandate as a public utility infrastructure institution and a first-line regulator," Sebi the cooling-off period for KMPs moving to competitor MIIs, Sebi said that Governing Boards will decide on cooling-off periods for KMPs (including MDs) before they can join a competing regulator said that cooling-off rules for Public Interest Directors (PIDs) and Non-Independent Directors have been updated through Gazette notifications (effective 90 days after April 30, 2025).Additionally, Sebi also reviewed the process for re-appointing Public Interest Directors on the governing board of MIIs."It has been decided that in case the existing PID after completion of his first term is not considered for re-appointment by the Governing Board of the MII, the rationale for the same shall be recorded and informed to Sebi," the regulator provisions will be applicable from the 90th day from this Monday, the regulator said.
Time of India
22-05-2025
- Business
- Time of India
Q4 Loss at ₹2.3k Crore: IndusInd Trips on Lapses, Ends in Red
IndusInd Bank said it is probing key management personnel (KMP) for 'wrongful accounting practices' that could amount to fraud, as the Hinduja-promoted lender reported a net loss of ₹2,328 crore in the fourth quarter of FY25, against net profit of ₹2,349 crore a year ago. For FY25, the bank reported a 71% fall in net profit to ₹2,575 crore, as it absorbed the entire financial impact of derivatives-related accounting lapses and underreporting of microfinance bad loans, seeking to start FY26 with a clean slate. In regulatory filings on Wednesday, the bank said investigations into its accounts showed that the top management that exited the company under suspicious circumstances may have committed accounting fraud, misled the board of directors, and hid the truth from auditors to present a rosy picture. The bank said board-commissioned probes 'revealed an involvement of senior bank officials, including former KMPs, in overriding key internal controls.' They also showed 'a concealment from the board and the statutory auditors of the wrongful accounting practices adopted, over such period of time, as indicated in the… investigation/ review reports.' IndusInd said 'there is likely involvement of senior management in the matters' and that it had 'reason to believe that suspected offences involving fraud may have been committed.' The observations were part of the auditors' report filed along with the earnings of the bank. The auditors of the bank are MSKA & Associates and Chokshi & Chokshi LLP. The auditors have referred the suspected fraudulent actions of the past management to the government, which may lead to criminal prosecution. Chairman Sunil Mehta said IndusInd Bank's balance sheet remains healthy after absorbing all the negative charges, with a capital adequacy ratio of 16.24%, a provision coverage ratio of 70%, and a liquidity coverage ratio at 139% in the first half of this quarter. 'The financial impact of all the above has been fully taken in the audited financial statements for FY25. The approach toward financials has been to start FY26 on a clean slate, without carrying forward any issues,' Mehta told analysts soon after announcing the results. 'The bank has thoroughly reviewed all the lines of accounting and has taken a conservative view in some of the accounting treatments. This has reflected in a few one-offs versus the business-as-usual run rate,' he added. The chairman also said the bank will not wait for the new chief executive to join and act on the lapses, while acknowledging that these were not expected from a bank like IndusInd. He said the matter of likely fraud has been reported to the relevant government agency. 'The board has also taken a very serious view with respect to staff accountability across levels to reinforce the governance and compliance culture, and is in the process of taking action for staff accountability,' said Mehta. Erstwhile managing director and chief executive Sumant Kathpalia and deputy CEO Arun Khurana, who were designated as KMP for the period under review, resigned late last month. Mehta said IndusInd is in the process of identifying a new chief executive within the June 30 deadline stipulated by the Reserve Bank of India (RBI). The board had commissioned investigations regarding forex derivatives transactions of Rs 1,960 crore, incorrect interest income of Rs 673.8 crore and fee income of Rs 172.6 crore, apart from certain incorrect manual entries posted in the 'other assets' and 'other liabilities' of the previous year, amounting to Rs 595 crore.
Time of India
20-05-2025
- Business
- Time of India
Sebi revised norms: Sebi updates audit committee norms for MIIs
Mumbai: The Securities and Exchange Board of India (Sebi) on Monday revised norms on the composition of audit committee and internal audit mechanism at market infrastructure institutions (MIIs).The regulator said the audit committee of the MII should not have any executive director including the managing director. The auditors of the MII and the key management personnel (KMP) would have a right to be heard in the meetings of the audit committee when it considers the auditors's report but would not have the right to vote, it said . Further, whenever required, the KMPs could be invited to attend the audit committee meetings with the permission of the chair but would not have the right to vote."The terms of reference of the audit committee amongst others involves approval of related-party transactions, scrutiny of financial statements, evaluation of internal financial controls and risk management systems, etc which requires objective evaluation of the functioning and decisions of the management," Sebi also said MIIs should conduct internal audit of functions and activities at least once in a financial year. Besides, internal auditor should be an independent audit firm and report only to the audit committee.
