Brightcom Group CMD M. Suresh Reddy and CFO S. L. Narayana Raju have resigned from their post, the company said following a board meeting on Sunday.
Their resignation follows the Securities and Exchange Board of India (SEBI) in an interim order on August 22 barring both from holding any position of a director or key managerial personnel in any listed company or its subsidiaries until further orders. The regulator had passed the interim order after investigations prima facie, following complaints, indicated irregularities in preferential allotments by Brightcom Group.
An investigation by the regulator earlier had found instances of “accounting irregularities mis-statements in the financial statements of the company”.
On August 23, the Enforcement Directorate carried out searches at the locations of Brightcom Group. The ED’s action followed the investigations conducted by the SEBI regarding impairment of assets worth more than ₹867 crore by the Group through its subsidiaries abroad. The searches were conducted at the residences of Mr. Reddy, Mr. Raju, office and residence of company’s auditor P. Murali Mohana Rao under the provisions of the Foreign Exchange Management Act, the ED said on Saturday.
On Sunday after the board meeting, in a filing with the stock exchange, Brightcom Group said the Board “received and acknowledged [the] resignation letters” and proposed a transition leadership team with the responsibility of overseeing the leadership transition process. The Board also approved the commencement of a search for an CEO and an CFO to ensure the smooth continuation of essential operations.
The Board acknowledged the need for regulatory compliance. Steps will be taken to engage with relevant regulatory bodies and ensure compliance with all applicable regulations during this transition period, the filing said.