SATYAM saga: Section 388 of Companies Act invoked

7th January 2009 will hopefully go down as a special day in the history of Corporate India, just like 26th Novemeber 2008 marked a turnaround in the history of Indian politics. It was on 8th January 2008 Indian stock markets overcame 'Peak 21000' on the sensex. The clock has turned full circle since then, and exactly one year after that historic event Corporate India has woken up to the bitter reality: 'The method behind the unprecedented madness seen on our markets'. The Satyam saga continues, hopefully this would be the last time Indian investors would have been taken for a ride.

Investors across India have to unite to fight the evil designs of the unscrupulous promoters of India Inc. It is heartening to note that the Government of India has acted swiftly this time around. The govt. has used its powers under the companies act, to supersede the erstwhile Satyam Board and appointment of fresh set of directors. It is a unique case of board super cession in India under section 388 of the Companies Act, a provision which is used as a last resort. This section provides for a change of management if found guilty of fraud, malfeasance, persistent negligence or default in carrying out their obligations and functions under the law, or breach of trust. Earlier cases of CRB Capital and WH Brady had resulted in partial super cession of the board by appointment of nominee directors by the government. The govt. also enjoys powers under the companies act to amalgamate companies in national interest.

The Govt. needs to be appreciated for this timely step. It has also been followed up by the arrest of the Raju brothers under sections where bail may not be granted. Let us hope the new board will start functioning at the earliest, to restore the confidence of the vendors, shareholders and employees of Satyam Computers Ltd.