The board of directors of fintech firm BharatPe may be setting the stage to remove co-founder Ashneer Grover over allegations of financial irregularities.
The move by the Board will likely leverage the company’s Articles of Association (AoA) to buy back certain restricted shares held by Grover at a lower fair market value, The Indian Express reported. A separate report by IANS, however, said that Grover is looking to exit the company while selling his 9.5 per cent stake in the company at a valuation of around $1 billion.
Advisory firm Alvarez and Marsal, which is looking into the company's internal governance, has indicated financial irregularities like payments of Rs 53.25 crore to non-existent entities during his tenure, along with irregularities in recruitment processes. The company had also onboarded PricewaterhouseCoopers, one of the Big 4 auditing firms, to look into aspects such as accounting, approval processes, expenses and hiring.
BharatPe's Articles of Association mentions the role of one of the top four accounting firms when major decisions regarding founders like this are to be finalised.
"...gross negligence or wilful misconduct by such founder, as determined by a Big 4 firm, which does not have any relation with the company, after which the board shall, through a simple majority, take a decision on such cause event based on the report shared by the appointed Big 4 firm after following principles of natural justice," the AoA reportedly says.
According to the share purchase agreement, the Board needs a certificate from one of the Big Four audit firms to reveal that financial irregularities happened. To activate the buyback clause, the company needs to fulfil 2 conditions - consent of the board, and of 51 per cent of investors.
The company was better known for its QR code aggregator app, service and surprise bank licence until an audio clip surfaced on social media with claims of Grover abusing and threatening a Kotak Mahindra Bank employee for missing out on share allotment during the IPO of FSN E-Commerce Ventures, which operates online fashion and wellness company Nykaa. The controversy resulted in Grover taking voluntary leave till March-end on January 19, with his wife following in the leave 10 days later.
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