Offering a breather to the former CEO of SKS Microfinance Suresh Gurumani, the Andhra Pradesh high court on Friday asked the company to continue to him as a director on the board and seek the shareholders nod if it wants Gurumani to step down. Passing an interim order on a petition filed by a group of shareholders, Justice G Bhavani Prasad of the state high court prohibited the new managing director of the SKS Micro Finance company MR Rao from taking any major policy decision.

The court has asked the company to file its reply.However, the petitioners plea for a stay on the companys decision terminating Gurumani was turned down. The issues of provisioning, recognition of off-balance sheet transactions, the transactions with the banks and other such accounting issues are said to be attracting the attention of the RBI too.

The shareholders have informed the court that they had invested in the company believing in the expertise of Gurumani as a banker and his termination immediately after the IPO and after the investors had put in their money was unlawful. Gurumani, who was to continue as the CEO of SKS till March 2014, was terminated on October 4 by the companys board without assigning any reasons.

Meanwhile, SKS Microfinance is all set to land in a major regulatory mess. The company is now being examined for not bringing to fore the differences between the management and the professional CEO during the IPO float though a decision to take extreme action against the CEO was a writing on the wall even during the run up to the IPO. The company was issued a notice by the Securities and Exchange Board of India (Sebi) asking it to explain the reasons for terminating the CEO.

Published Date : Wednesday, Oct 13, 04:00PM IST

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