Brightcom Group's Chairman and Managing Director Suresh Reddy and CFO Narayana Raju have resigned, the company said in an exchange filing. The development comes after an interim order from the market regulator Securities and Exchange Board of India (SEBI) last week, which said that Reddy and Raju should be restrained from holding key managerial positions in any listed entity.

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Brightcom's board also acknowledged the need for regulatory compliance. It will take steps to engage with the relevant regulatory bodies and ensure compliance with all applicable regulations during the transition period.

A transition leadership team has been proposed by the board, which has also approved the commencement of a search for a new CEO and CFO to ensure the continuation of essential operations.

The company said that it will also prepare and issue a detailed press release about the departure of Reddy and Raju in alignment with SEBI's interim order. "The communication will be truthful, professional, and consistent with the company's values," the exchange filing from Brightcom said.

SEBI passed a second interim order against the Brightcom Group and 22 others last week, including Suresh Reddy and Narayana Raju for prima facie irregularities in the preferential allotment of warrants and shares between financial years 2020 and 2021.

While Reddy and Raju were barred from holding directorial or key managerial positions at any listed company or their subsidiaries until further orders, Reddy was also banned from accessing the securities market.

Based on the June quarter shareholding pattern, Reddy held a 0.76 percent stake in the company under his name.

"There is a real apprehension that , if allowed to continue to be at the helm of affairs, may make every effort to derail SEBI’s investigation to unravel the truth in this matter by further forging and fabricating records and misleading SEBI," the order said.

The controversy also put the spotlight on investor Shankar Sharma who still holds a 1.14 percent stake in the company as per the June quarter shareholding.

On his official X handle last week, Sharma said that all reconciled remittance data worth Rs 56.5 crore was submitted to SEBI and that the delay was due to bank reconciliation data pending from the company. "We look forward to early closure of the matter," he said.

The Hyderabad-based company has been in the eye of a storm ever since its accounting irregularities have come to the fore.

In June, Sebi imposed a penalty of Rs 40 lakh on six entities, including the group, over alleged disclosure and code of conduct violations.

After making a peak of over Rs 100, shares of the Brightcom Group are languishing around the Rs 20 mark. The stock has been in a 5 percent lower circuit over the last three trading sessions.

First Published:Aug 28, 2023 4:40 AM IST