In a recent shocking move, all the independent directors at PTC India Financial Services Limited (PFS), an infrastructure financing company, have resigned from the company. Kamlesh Vikamsey, Thomas Mathew T. and Santosh Nayar resigned with immediate effect on Wednesday, citing corporate governance issues.
PFS is a registered NBFC—a Non-Banking Financial Company— and falls under the jurisdiction of the RBI which acts as its regulatory body. This may be the first time in the BFSI sector that all the independent directors are leaving together, and it has created ripples across the company and its performance. Shares of PTC India Financial Services (PFS) crashed as much as 19.49 per cent on Thursday, a day after PFS revealed the three resignations.
"We are in receipt of resignations from three independent directors mentioning some reasons. The matter will be addressed at the board level and subsequent update will be communicated to all the stakeholders appropriately," the company stated in a notification to stock exchanges on Thursday.
What makes the resignation even more noteworthy is that the directors all cited issues of mismanagement and ‘instances of serious lapses of governance and compliance.’ One of the directors went on to state how the quality of information being shared by the company to its board has been poor and hindered the functioning of the board. In his resignation letter, he mentioned how the appointment of Mr Ratnesh as director of finance was done without the proper processes, noting that “the current chairman and MD apparently did not take any steps to enable the functioning of Mr Ratnesh as Director (Finance) & CFO and subsequently seems to have taken a unilateral decision to put the joining of Mr Ratnesh on hold, even without informing the board about such decision or the rationale, therefore, leave alone taking the prior consent of the Board for such a major decision.”
While the resignation of directors is commonplace in the business world, three independent directors leaving together, citing issues of mismanagement and lapses in corporate governance, points to deeper problems in management and company culture that PFS might have to explain to its stakeholders.