Bengaluru-based information technology services firm Infosys has paid Rs 6 lakh in compounding fines to the Registrar of Companies (RoC), Karnataka, to settle the case pertaining to former chief financial officer Rajiv Bansal's severance pay, the company said in a disclosure to the stock exchanges.
Late last year, the company had moved the RoC to settle the case, which related to the severance pay that the company had agreed to give the former CFO even though it was not part of the firm’s remuneration policy.
Infosys had maintained that this was a legacy issue and it wanted to put the case to rest.
There were two separate issues in the case. First, Infosys did not seek prior permission from government bodies, whether it was the RoC or the Securities and Exchange Board of India (Sebi), to dole out the severance pay. The second issue was not coming up with disclosures once the payments were made.
The fine amount involved Rs 1.5 lakh for each of these two offences. Additionally, the current and former managers associated with the case have been fined Rs 25,000 each for their alleged offence of not going by the law, the company said.
The country’s second largest information technology (IT) exporter submitted applications with the RoC, Karnataka, under Section 441 of the Companies Act, 2013, for the compounding of certain alleged offences that pertained to matters relating to the severance agreement executed with the former CFO of the company in October 2015.
According to Infosys, in these applications, in order to settle the issue, the company made multiple submissions, including those setting forth their good faith belief on compliance with relevant provisions of the Act and having acted in an honest, reasonable and diligent manner and in the best interests of the company and its shareholders, without any intent to avoid or act in breach of any obligations under the Act.
Early last year, Infosys paid Rs 39 lakh as a fine to the markets regulator to close the case after Sebi found that the payment was not in accordance with Infosys’ remuneration policy.
The high severance pay had raised eyebrows in the company known for paying modest salaries to most of its senior executives. Infosys co-founder NR Narayana Murthy had termed this severance payment “hush money”.
Bansal resigned from the company in October 2015. Later, a whistleblower alleged that the IT major overpaid for the Israeli software company Panaya’s acquisition carried out under chief executive Vishal Sikka, resulting in him leaving the company. While Infosys did not disclose the details of the investigations, it said that it did not find any discrepancies in the deal.