Four independent directors of Binny Ltd have resolved their issues with the market regulator, without admitting or denying the findings outlined in showcause notices served to each of them.
Collectively, they have paid over Rs 42 lakh as settlement fees. Three of the directors—Justice (Retd.) S Jagadeesan, T Manisriram, and Dr DVR Prakash Rao—have each paid Rs 11.05 lakh, while the fourth director, T Radhakrishnan, has paid Rs 9.42 lakh.
The market regulator is investigating the textile company for potential misappropriation of funds exceeding Rs 850 crore. In August 2023, the Supreme Court rejected the company’s plea to halt the showcause notice issued by the regulator. This decision followed a similar dismissal by the Bombay High Court, which refused the company’s request to halt the regulator’s inquiry and accept their settlement proposal.
In the recent settlement agreements concerning the independent directors, the Securities and Exchange Board of India (Sebi) referenced the allegations outlined in the showcause notices issued to the directors. These allegations included the failure of the independent directors to exercise due diligence, especially regarding related party transactions, and their alleged failure to act independently in the interest of shareholders while representing the management. The notices also accused them of neglecting their duties as members of the Audit Committee.
All four independent directors submitted their settlement applications on the same date, February 27, 2023. Following discussions with the Internal Committee of SEBI on September 01, 2023, the directors submitted revised settlement terms via emails dated September 22, 2023. The High Powered Advisory Committee reviewed the proposed terms during its meeting on November 2, 2023, and recommended the settlement amount for each director.
The Panel of Whole Time Members of SEBI approved the committee’s recommendation on December 15, 2023, and SEBI communicated the decision to the applicants on December 22, 2023. The directors confirmed remittance of the settlement amount via emails dated January 22, 2024, which SEBI acknowledged receipt of.
