The government on Thursday nominated two independent directors on the board of Maytas Infra, after the company law board (CLB) turned down the government’s petition to supersede the company’s board, and asked it to appoint four independent directors. The two directors appointed are Ved Jain, former president of the Institute of Chartered Accountants of India, and corporate lawyer O P Vaish.

CLB also rejected the government’s request to supersede the board of Maytas properties and asked it to appoint a director. Accordingly, Jain has also been appointed on this company’s board.

"The order is a positive development for Maytas Infra. The government wanted superseding of the present board, but CLB has in effect rejected it because there was no proof of mismanagement or fraud committed. Maytas Infra was always in consent to appointment of independent directors and Chairman to the board. In fact, it was looking for suitable independent directors to fill the board. Hence, we welcome the move."

Both the Maytas companies have been promoted by the Satyam founder, Ramalinga Raju’s family.

“After considering all aspects, the government had agreed to an arrangement that allows government control in the conduct of the affairs of the two companies, without compromising the imperative of revamping their management,” corporate affairs minister Prem Chand Gupta told reporters.

He said two other directors would soon be appointed on the Maytas Infra board; one of them would be chairman. This would give the government sufficient control of the company’s board. The minister said this was an interim arrangement, and if required, the government could move another petition before CLB to supersede the board.

The quorum for a board meeting of Maytas Infra will require the presence of at least two of the nominee directors. Any decision will require their affirmative vote. In the case of Maytas Properties also the only government-nominated member will have to be present at the meetings of the board whose decisions will require his consent.

The strength of Maytas Infra’s board was halved to three after the resignations of three members in the past couple of months. The three directors are B Teja Raju (whole-time director and

vice-chairman), R P Raju (independent director) and B Narasimha Rao (additional director).

The CLB order said the two boards should furnish to the government monthly reports on the affairs of the companies, preferably in the first week of every month beginning April. It said no government agency should initiate any criminal or punitive action against these nominee directors without the prior approval of CLB.

CLB admitted the applications of the financial institutions, ICICI Bank,

IDBI and IL&FS. While IDBI and ICICI Bank have extended loan to Maytas

Infra, IL&FS has a significant stake in the company after the promoters pledged their shares with it. Maytas will now have to reply by May 31 and a rejoinder can be filed by July 31.

A Maytas Infra spokesperson refused to comment on the CLB order, saying the company would respond only after receiving a copy of the order.

The scrip of Maytas Infra lost 4.04 per cent, or Rs 1.45, to end at Rs 34.45 at the Bombay Stock Exchange on Thursday. Intra-day, the stock hit a low of Rs 34.15.

“The stock was hammered after government nominees were appointed on the board to form a majority,” said Suresh Paramar, associate vice-president, institutional sales for equity of a domestic broking house.

The government had moved CLB on February 17, seeking to dissolve the present management of Maytas Infra and Maytas Properties and appoint government nominees on their boards. The move came after the serious frauds investigation office found a “nexus” between Satyam and the two group companies.