Company Law and Corporate Governance –

CIA 3

Submitted by: Aryaman Vasu

Class: 4 FIB A
Registration Number: 2023508
Date of Submission: 10th April 2022
Submitted to: Prof. Roshna Thomas
 Good Corporate Governance Practices

Infosys
Infosys is an Indian multinational information technology company that provides business
consultation, information technology, and outsourcing services. Founded in Pune, the
Company has its headquarters in Bangalore. Infosys is the second-largest Indian IT company
after Tata Consultancy Services by 2020 revenue figures, and according to Forbes Global
2000 ranking, it is the 602nd largest public Company in the world.
Founded in 1981, Infosys constituted just $250 initial capital and was founded by a group of
seven engineers in Mumbai. Infosys got its shares listed on the stock exchange in June 1993
with a trade opening of Rupees 145 per share.
Infosys was the first Indian Company to be listed on the Nasdaq stock exchange in 1999. The
share price of Infosys surged to rupees 8100 (equivalent to rupees 30000 in 2020) in 1999,
making it the costliest share on the market at that time.
Annual revenues of Infosys reached US$ 100 million in 1999, US$ 1 billion in 2004, and
US$ 10 billion in 2017.
Infosys provides software development, maintenance, and independent validation services to
companies in finance, insurance, manufacturing, and other domains. The best and most
famous product of Infosys is Finacle which is a universal banking solution with various
modules for retail and corporate banking. Other essential products and services offered by
Infosys are Next-generation Integrated AI Platform, Infosys Consulting, Cloud, Infosys
Information Platform, Infosys equinox, Engineering services, Digital Marketing, etc.
Today, Infosys is spread worldwide and has 82 sales and marketing offices and 123
development centres across the globe, with a significant presence in India, the US, China,
Australia, Japan, the Middle East, and Europe.
 Corporate Governance Practices of Infosys

Infosys is committed to defining, following, and practicing the highest level of corporate
governance across all of its business functions. Their corporate governance is a reflection of
their value system encompassing their culture, policies, and relationships with their
stakeholders. Winning with integrity is at the heart of their values-driven culture of
governance that ensures that they gain and retain the trust of stakeholders at all times.

Corporate governance practices followed by Infosys are:

1) Strong, Qualified Board of Directors and Performance evaluation: The evaluation of
the board members at Infosys is a rigorous process. It is the duty of the board governance and
compensation committee to oversee the annual performance evaluation, and this helps in
determining whether the board is functioning effectively. The evaluation of the performance
of these individuals happens annually, and the chairman of the board then shares the results
with each and every director.
2) Defining of Role and Responsibilities: The Board of Directors have around 23 duties
which they have to follow and comply with. The Board of the Company has the following
Committees-
1) Audit, Risk, and Compliance Committee
2) The Board Governance and Nomination and Compensation Committee.
3) Administrative and Shareholders’/Investors' Grievance (also referred to as "Stakeholder
Relationship Committee")
4) Strategy Committee
All of these have specific roles and responsibilities which they have to follow.

3) Setting a solid and ethical "Tone at the top" – Infosys's senior management and
especially the Chief Executive Officer (CEO), are responsible for setting a tone at the top of
integrity, ethics, and compliance on the part of all people associated with the Company, with
applicable legal requirements and with the Company's policies and standards. So far, they
have been successful in doing so.

4) Review of Corporate Governance Policies: The Corporate Governance Policies laid

down by Infosys are reviewed periodically by the Board Governance and the Remuneration
Committee. They are to be amended if they don't meet national and international standards.
Also, if the law does not permit it, they need to be changed.

5) Building good customer relations: Consumers purchase goods and services from Infosys
because they trust them. Infosys constantly keeps on working hard to improve its products
and services. The quality and the value of the products never go down as a result. The
employees at Infosys have to ensure that the products are produced at the highest level.
Building trust and faith in the customers' minds related to the Company goes a long way.
 Infosys CSR:
Infosys’ CSR Policy intends to: Strive for economic development that positively impacts
society at large with minimal resource footprint. Embrace responsibility for the Company’s
actions and encourage a positive impact through its activities to alleviate hunger, poverty and
malnutrition; to protect the environment; and to support communities, stakeholders and
society.

Focus areas

In accordance with the requirements under the Companies Act, 2013 and the rules /
regulations framed there under and circulars / clarifications issued thereunder (collectively,
“Applicable Law”), Infosys CSR activities, amongst others, will focus on:

• HUNGER, POVERTY, MALNUTRITION AND HEALTH: Eradicating extreme

hunger, poverty and malnutrition, promoting preventive healthcare and sanitation and making
available safe drinking water.

• EDUCATION: Promoting education, including special education and employment-

enhancing vocational skills, especially among children, women, the elderly and the
differently abled, and livelihood enhancement projects; monetary contributions to academic
institutions for establishing endowment funds, chairs, laboratories, etc., with the objective of
assisting students in their studies, this also includes skilling and reskilling initiatives for those
who are in need.

• RURAL DEVELOPMENT PROJECTS: Strengthening rural areas by improving

accessibility, housing, drinking water, sanitation, power and livelihoods, thereby creating
sustainable villages GENDER EQUALITY AND EMPOWERMENT OF WOMEN:
Promoting gender equality and empowering women; setting up homes, hostels and day care
centres for women and orphans; setting up old age homes and other similar facilities for
senior citizens; and adopting measures for reducing inequalities faced by socially and
economically backward groups.

• ENVIRONMENTAL SUSTAINABILITY: Ensuring environmental sustainability,

ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation
of natural resources and maintaining the quality of soil, air and water.

• NATIONAL HERITAGE, ART AND CULTURE: Protecting national heritage, art and
culture, including the restoration of buildings, sites of historical importance, and works of art;
setting up public libraries; reviving, promoting and developing traditional arts and
handicrafts.
 Corporate Scam of Listed Company

Yes Bank (Introduction)

Yes Bank was incorporated on November 21st, 2003, and was founded by three people,
namely Rana Kapoor, Ashok Kapur, and Harkirat Singh. Though Rana became the only
founder of the Bank as Harkirat Singh left the Bank at an initial stage, and Ashok Kapur died
in the 2008 terrorist attack in Mumbai, he was able to build the Bank's loan business. Yes
Bank had grown to be the 4th largest private sector bank in India at its peak. The Bank had
initially established as a customer-centric and service-driven Bank for future corporates of the
country. Yes Bank had released its Initial Public Offering and was steadily developing until
the 2008 global financial crisis. The Bank had started to focus on its operations rather
aggressively to achieve success.

Details of the case

Inability to raise the capital was one of the significant reasons for Yes Bank's financial
position declining at a sharp rate. The Bank had undergone grave governance issues and
practices, encouraging the decline. The Bank had to struggle a lot to raise the primary capital
required to stay above regulatory requirements as it had a very high level of bad loans. It is to
be noted that the Bank has more corporate customers than retail customers, and the fact that
most of the companies. The Bank gave loans to companies that were at a loss. The fact that
these companies by themselves were sinking and on the verge of bankruptcy was also a
reason that increased the lousy loan of the Bank.
In November 2019, Rana Kapoor sold his stake in the Bank after it turned out that Yes Bank
had ultimately become unbankable. Rana Kapoor was charged in a money laundering case
authorized by the CBI and is currently in the Enforcement Directorate's custody. The case
revolves around an alleged bribe of Rs 600 crore by the DHFL to the Rana Kapoor family on
a quid pro quo basis.
On March 7th, 2020, CBI registered a case for alleged cheating, fraud, and criminal
conspiracy in sanctioning of loans by YES Bank and in exchange for receiving bribes from
DHFL promoter Dheeraj and Kapil Wadhawan.

The charge sheets had also included DHFL, its promoters Wadhawans, DOIT Urban
Ventures Ltd, owned by Kapoor's daughters, as an accused in the said scam case. According
to CBI, during his tenure, Rana Kapoor had extended credit facilities to DHFL through YES
Bank and, in exchange, received enormous monetary benefits for himself and the hundreds of
companies controlled by him and his family. The Reserve Bank of India had, on March 5th,
2020, imposed a 30-day moratorium on YES Bank. According to the terms of the said
moratorium, deposit withdrawals were allowed only at Rs 50,000 per person. The central
bank has also proposed a reconstruction scheme.

Rana Kapoor V. Enforcement Directorate

Initially, the Yes Bank fraud case against Rana Kapoor was sent to a Metropolitan Magistrate
for trial. In this case, a magistrate court had rejected the pleas for the bail that were filed on
merit by the Wadhawans, the promoters of DHFL. Later on April 9th, the Wadhawans, out on
bail, along with 23 other people, had disobeyed lockdown rules and traveled after a senior
IPS officer had issued a letter allowing them to travel. The Wadhawan brothers, on April
18th, had gotten an interim relief from arrest after their lawyer pleaded that they shouldn't be
arrested in the middle of the pandemic.
The Bombay High Court had recently observed that a large amount of loss in the public funds
by the alleged account of criminal activities of Rana Kapoor's various companies should be
viewed seriously, and he was denied bail in the case.
Justice Prakash Naik noted while rejecting Kapoor's bail plea on January 25th that the offense
is serious, and there is a large amount of evidence that shows Kapoor's involvement in the
crime. The justice also noted that it is settled law that while granting bail, the Court has to
keep in mind the nature of accusations and evidence in support thereof. The justice had stated
that such a colossal loss of public funds is to be viewed seriously, and concerning the instant
case and the magnitude of the offense and the evidence on record, no bail can be made out.
The Court believed that the honest governance of banks and financial institutions is critical
for the proper functioning of the banking sector and the economy.
Kapoor is accused of entering into criminal conspiracies with Kapil Wadhawan, Director of
Dewan Housing Finance Corporation Ltd (DHFL). As mentioned before, one of the key
contentions of the case revolved around the amount that Wadhawan is said to have paid
kickbacks of Rs. Six hundred crores to Kapoor by extending a loan to DOIT Urban Ventures
(India) Pvt. Ltd. The ED contented that the loan of Rs. Six hundred crores were sanctioned by
DHFL, whereas the senior advocate appearing for Kapoor stated that the said amount was a
genuine loan and urged for a grant of bail.
However, after hearing both sides at length, the Court was of the view of the allegation that
Kapoor had deliberately used, projected, and claimed proceeds of crime as untainted by
laundering the same for personal gain after observing the position of power and authority that
he had as the MD/CEO of the YES Bank.
The averments in the bail plea also concerned his health condition of Kapoor. The Court was
informed that Kapoor's health had rapidly deteriorated while in jail. The Court noted that the
medical issue was there before his arrest and directed the jail authority to provide appropriate
medical treatment to Kapoor.

Conclusion:
The whole situation had raised quite the unrest among the people, and very rightfully so. The
massive loss of the public fund led many to lose and question the deposited safety in the
bank. The whole situation also rendered the bank with lesser deposits and to a point where it
could not raise capital. However, the RBI stated that SBI is willing to make an investment in
Yes Bank Ltd. and participate in its reconstruction scheme. Thus by sub-section (4) of section
45 of the Banking Regulation Act, 1949, the Reserve Bank of India proposed the scheme's
details for raising fresh capital for Yes Bank.
 References

1. https://www.researchgate.net/publication/338211439_The_Case_of_Yes_Bank_From
_the_Founders’_Dream_to_a_Bank_in_Distress
2. https://bankedge.in/a-case-study-on-yes-bank-the-real-story/
3. https://www.business-standard.com/article/current-affairs/yes-bank-loan-fraud-cbi-
charges-rana-kapoor-with-criminal-conspiracy-120062501509_1.html
4. https://www.business-standard.com/about/what-is-yes-bank-crisis
5. https://economictimes.indiatimes.com/news/politics-and-nation/yes-bank-fraud-case-
against-rana-kapoor-sent-to-a-metropolitan-magistrate-for-
trial/articleshow/77024669.cms?from=mdr
6. https://www.thehindu.com/news/cities/mumbai/yes-bank-fraud-case-bail-pleas-of-
wadhawan-brothers-rejected/article33532668.ece
7. https://www.barandbench.com/news/litigation/rana-kapoor-bail-rejected-bombay-
high-court-order
8. https://www.njlrii.com/2021/04/the-yes-bank-scam.html
9. https://www.infosys.com/investors/corporate-governance/documents/corporate-social-
responsibility-policy.pdf
10. https://en.wikipedia.org/wiki/Infosys
11. https://www.infosys.com/content/dam/infosys-web/en/about/corporate-
responsibility/esg-vision-2030/corporate-
governance.html#:~:text=Infosys%20has%20received%20the%20highest,far%20beyo
nd%20the%20regulatory%20requirement.
12. https://www.infosys.com/about/corporate-governance.html
13. https://www.infosys.com/investors/corporate-governance.html