HC bars SKS new CEO from taking major decisions

The court, in its interim order yesterday, noted that since Gurumani continues to be a director of the company, he can take every possible action to protect the interests of every person concerned as a member of the Board of Directors. The High Court Bench of Justice G Bhavani Prasad passed the order on a petition filed by a shareholder of SKS Microfinance against the sacking of Gurumani.

SKS is the country's largest microfinance company, which gives small loans to entrepreneurs, and only two months raised Rs 1,653 crore through an initial public offer. SKS Microfinance has already answered a separate query from market regulator Sebi into the events leading to the sacking of Gurumani.

Justice Bhavani Prasad, however, rejected the plea by the petitioner to stay Gurumani's dismissal. The court also asked the company to hold general meeting to obtain the shareholders' consent on directorship.

A spokesperson of SKS Microfinance said they will decide the date of conducting EGM on Monday or Tuesday. The petitioner in her complaint alleged that SKS violated corporate governance by terminating Gurumani as MD as only shareholders can terminate the MD since they have approved the appointment.

On October 4, the board of the Hyderabad-based company had terminated the services of Gurumani four years ahead of its expiry and named Rao as his successor. Gurumani had a five-year contract from April 1, 2009 to expire on March 31, 2014. The company in its notification to stock exchanges did not attribute any reason to his termination.