Recent developments at Silverline Technologies Ltd (Silverline), one of stocks manipulated during the scam of 2001 have raised concerns about corporate governance, regulatory filing, delay in reporting the death of the company's founder and chairman and raising Rs98 crore through a preferential issue. After remaining suspended for almost 12 years, curiously, the company's suspension was revoked by the Bombay Stock Exchange (BSE) through a notification on 16 August 2024. The surprising part is that Silverline's management or board did not inform the exchange about the death of Ravi Subramanian, founder chairman, who passed away on 23 April 2024. It was only through the outcome of a board meeting on 27 August 2024 that Silverline informed BSE about Mr Subramanian's death.
A whistle-blower has sent a letter to Sundararaman Ramamurthy, managing director and chief executive officer (MD & CEO) of BSE, which the Exchange says is being looked into. When asked about the suspension revocation, BSE told Moneylife that it was done after compliance with the stipulated requirements by Silverline.
BSE's revocation of this suspension just days ago, the circumstances warrant scrutiny, particularly in light of the company's current leadership and ongoing financial strategies.
Currently, Silverline is marked as active but non-compliant. This is because the company has not submitted form INC 22A. This form is required to comply with the Union ministry of corporate affairs (MCA) regulations.
The last financial documents filed by Silverline were for the fiscal year ending 31 March 2020. The company submitted these documents using form AOC4 XBRL (an electronic format for annual accounts) and form MGT (the annual return). Since then, no additional filings have been made, raising concerns about the company's adherence to legal requirements.
According to a search report issued by company secretary, SN Ananthsubramanium & Co, a charge was registered in favour of Apex Urban Co-operative Bank for Maharashtra and Goa on 29 November 2022. This charge (ID: 100656326) relates to assets owned by Srinivasan Pattamadai Sithapathy, the managing director (MD) of Silverline, indicating that the company has financial obligations to the Bank.
A key issue that has emerged is handling information regarding the company's leadership. Ravi Subramanian, the founder and chairman of Silverline Technologies, passed away on 23 April 2024. However, as of 5 September 2024, the company's official website still lists him as the chairman and executive director.
According to BSE, the company only informed about Ravi Subramanian's death, more than four months after his passing, as part of its regulatory filing of the proceedings of its board meeting on 27 August 2024.
Amid these governance issues, the whistle-blower alleges that Mr Srinivasan, the MD, is pushing for a Rs98 crore preferential issue to raise funds for the company. This move comes as part of the board's decision during the meeting on 27 August 2024.
Source: Silverline Annual Report 2024
What is particularly alarming is how BSE accepted reports filed by Mr Srinivasan, the MD, amidst these evident compliance failures. The haste in revoking previous penalties without a thorough examination of Silverline's corporate governance practices raises significant integrity concerns.
The whistle-blower also raises questions about the appointment of directors of Silverline without compliance with the registrar of companies (RoC) or MCA. "How directors are changed by Mr Srinivasan without fulfilling RoC compliance is a question mark again. Then, who are the real directors on the board? So basically, what it tells us is that despite being non-compliant with RoC and MCA, the BSE has lifted silverline's suspension in haste without looking properly at the corporate governance!"
The spate of scandals involving the regulators of financial markets in India will scare away foreign investors from India.