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Infosys CFO Severance pay case closure to pre-empt any class-action lawsuit: Sandeep Parekh, Finsec Law Advisors

In a chat with ET Now, Sandeep Parekh, Finsec Law Advisors , says it has only been filed and usually it takes up to a year or two for these matters to reach closure.

Edited excerpts:

The Infosys CFO severance pay case has been one of those nagging issues which from a corporate governance standpoint, perhaps the current CEO may want a clean slate to start off with…

Yes. It would be a clean slate for the new CEO, putting an end to the old chapter and also more important, there would not be triggering of any class action lawsuit because in the US class actions are very often fishing expedition. They do not have much at hand but if they get hold of even a small thing, then they will ask for more information. This is probably to pre-empt any class action lawsuits without admitting or denying guilt.

Now with the new CEO at helm, could there be an overhang in terms of sentiment on Infosys because month after month, the sentiment has been pretty wary when it comes to Infosys, first because of the management changes, then the severance package issue, what have you?

That would depend really on whether there are the outstanding issues or if this is the only one out there which will settle and secondly, we do not know whether the consent has been accepted. It has only been filed and from our experience it takes up to a year or two for these matters to reach closure.

Overall, is this perhaps the right way forward because one other aspect could have been that they could have just closed the chapter but going the official route is perhaps in a way regaining the kind of confidence that investors had in the company’s corporate governance standards?

I would say that several issues had been raised. They seem to be one of the three or four issues which are resolved already and they require further work in terms of some technical violation like in this case. We really do not know beyond the specific facts and here also they have admitted to disclosure and violations of not going through the proper committee.

I remember all the conversations and the sound bites as well as press releases. This one was pretty much marked out as the bone of contention?

Yes and the Panaya deal will be the bigger elephant in the room. Three-four separate outside agencies have given it a go ahead, we have one MD sacked for that and the new Chairman said it is all okay. We really do not know too much about it. But I am assuming that all is well in that department as well, it can be considered a closed chapter.

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