PTC India Financial Services (PFS) has issued a clarification following the unexpected resignation of three Independent Directors - Seema Bahuguna, Naveen Bhushan Gupta, and PV Bharathi - on September 30. The company expressed surprise at the simultaneous resignations and the identical reasons cited by the directors.

Company's Response

PFS stated that no grievances were raised by these directors during their June 4 meeting. In fact, the company noted that the directors had appreciated the improved information flow during that meeting. The financial services firm emphasized that the Independent Directors had participated openly in all board and committee meetings without raising any concerns about difficulties in functioning.

Historical Context

The company referenced past corporate governance issues from January 2022 when three Independent Directors resigned, citing alleged violations. This led to investigations by the Securities and Exchange Board of India (SEBI). In June, SEBI passed orders against the then Non-Executive Chairman and MD & CEO. However, the Securities Appellate Tribunal quashed the order against the former Chairman in December.

Corrective Measures

PFS highlighted that several corrective steps have been taken since the 2022 incident, including:

• Reconstitution of the board
• Strengthening of compliance functions

Management's Stance

R Balaji, Managing Director & CEO of PTC India Financial Services, reaffirmed the company's commitment to maintaining high governance standards. He stated, "We remain dedicated to upholding the highest levels of corporate governance and transparency in our operations."

Recent SEBI Notice

In a related development, PTC India, the parent company of PFS, received a notice from SEBI. However, it's important to note that no penalties were imposed on the company as a result of this notice.

Conclusion

The recent mass resignation of Independent Directors has once again brought PTC India Financial Services under scrutiny. While the company expresses surprise at the resignations and maintains that no issues were previously raised, the incident highlights the ongoing challenges in corporate governance within the Indian financial sector. The SEBI notice to PTC India, although without penalties, adds another layer to the company's regulatory interactions. Stakeholders will likely be watching closely to see how PFS addresses these latest developments and works to maintain investor confidence.

PTC India Financial Services Ltd. (PFS) encountered a significant challenge as three independent directors resigned from its board on September 28, citing corporate governance concerns. The departing directors - Seema Bahuguna, Naveen Bhushan Gupta, and PV Bharathi - had joined the board in November 2022.

Reasons for Resignation

The directors expressed that recent developments at PFS had made it difficult for them to function independently. In their resignation letters, they highlighted their efforts over the past three years to address various issues within the company, including:

• Recruiting a new Managing Director
• Filling vacant board positions
• Addressing finance and audit matters
• Establishing internal controls and policies

These initiatives, according to the directors, had contributed to improving the company's compliance and overall performance. However, they did not provide specific details about the factors that ultimately led to their resignations.

Impact on Stock Performance

The news of the resignations had an immediate impact on PFS's stock performance:

Implications for PTC India Financial Services

The simultaneous resignation of three independent directors raises questions about the company's corporate governance practices and may lead to increased scrutiny from regulators and investors. It also presents a challenge for PFS to maintain investor confidence and ensure smooth operations in the wake of these departures.

The company will need to address the concerns raised by the resigning directors and take steps to strengthen its corporate governance framework. Appointing new independent directors with strong credentials will be crucial for PFS to restore faith in its board oversight and decision-making processes.

As the situation unfolds, stakeholders will be closely watching PFS's response to this development and any potential impact on the company's operations and financial performance.