Sebi likely to accept Infosys consent plea in Rajiv Bansal case

The Securities and Exchange Board of India (Sebi) is likely to accept information technology major Infosys’ consent plea to settle charges of disclosure lapses pertaining to the severance package paid to former chief financial officer (CFO) Rajiv Bansal.

According to sources, the matter involves “minor disclosure lapses”, which, according to Sebi rules, could attract a penalty of a mere Rs 800,000.

The consent process had reached an advanced stage, and the regulator could issue an order announcing a consent settlement within a month, said a person privy to the development.

Infosys filed the consent application with the market regulator in December. The company had informed the stock exchanges that it had submitted a settlement agreement “based on an undertaking that the applicant will neither admit nor deny the findings of fact or conclusion of law”.

Sources said Sebi examined the procedural aspect of the consent application and said that it could be consented since it involved serious violation of securities laws. The matter was currently with Sebi’s high-powered advisory committee (HPAC), which could increase the penalty depending on its findings, said the person cited above.

Under the consent framework, a Sebi officer, after receiving an application, examines certain aspects of the case and makes observation. Accordingly, the application goes to the HPAC, which considers the merits of the case after analysing all the facts and circumstances. Further, the panel provides its suggestions on whether the application should be accepted. Thereafter, a panel of two whole-time members considers the recommendations and pass an order.

Typically, an entity that files for consent quotes the terms and settlement amount.

However, Infosys' filing with the stock exchanges did not mention if it had submitted settlement terms to the regulator.

The matter pertains to the Rs 173.8 million severance pay to Bansal in October 2015 after he was sacked over differences with then chief executive Vishal Sikka over the acquisition of Israeli technology firm Panaya for $200 million.

Sikka had not taken approval of the nomination and remuneration committee (NRC) and the audit committee of the Infosys board for the package to Bansal, which led to questions being raised about the company’s disclosure norms. This also led to Infosys founder NR Narayana Murthy accusing then chairman R Seshasayee of failing in governance norms and seeking his replacement.

The public spat led to Sikka and Seshasayee quitting Infosys in August 2017 and the return of co-founder Nandan Nilekani at the helm. With the consent plea, Infosys is looking to put an end to a two-year saga that saw a major management and board churn. Infosys is also fighting an arbitration case that Bansal initiated in April after the firm stopped paying him severance pay. Bansal invoked his right to an arbitration tribunal, in which former Supreme Court Judge RV Raveendran is the arbitrator. In January, Infosys filed a counter-claim of over Rs 1 billion for alleged breach of confidentiality.

The deal with Bansal had led to speculations that there could be wrongdoing in the acquisition with an anonymous whistleblower writing to the Infosys board and market regulators calling for an investigation into the deal.