Coforge Flags Governance Concerns Over OP Bhatt's Report Handling

Coforge, an IT services company, has raised governance concerns regarding its outgoing chairman OP Bhatt's handling of the board evaluation report. The company alleged that Bhatt did not provide the board and the nomination and remuneration committee (NRC) with the complete findings of an internal audit report on the board evaluation process.

According to Coforge, the evaluation reports were only available with DK Singh, the independent director and head of the NRC, and Bhatt, and were not shared with other board members, including independent directors, based on Bhatt's instructions. The internal auditor observed that the manner in which the evaluation findings were presented to the NRC and the board did not cover all relevant aspects and findings.

The company stated in a filing with the BSE that the chairman's category received the lowest rating in the reports, but this finding was not disclosed or discussed before the NRC or the board by the NRC chair and the chairman of the board. Bhatt, a former State Bank of India chairman, was also a member of the NRC.

The internal audit was part of Coforge's second-quarter audit plan and examined the board evaluation exercise conducted under Bhatt's guidance. The review identified concerns over the handling of the report and alleged that certain material information related to the evaluation and chairman's performance was not fully disclosed.

The findings may have influenced Advent International, Coforge's largest shareholder, to vote against Bhatt's reappointment as an independent director and chairman for another five-year term until 2032. Advent International holds around 20% stake in Coforge after the IT services company acquired Encora for approximately $2.35 billion last year.

Bhatt, who turned 75 earlier this year, became an independent director in May 2024 and was appointed chairman in June 2024. His current term was scheduled to end in April 2027. Following the governance concerns, Bhatt has resigned as the chairman of Coforge, and the company's shares have plunged 8.67%.

The incident highlights the importance of transparency and accountability in corporate governance. The role of independent directors and the chairman is crucial in ensuring that the company is run in a fair and transparent manner. The incident also raises questions about the effectiveness of the board evaluation process and the need for greater disclosure and transparency.

In the context of Indian corporate governance, the incident is significant as it involves a prominent company and a well-known chairman. The incident may have implications for the company's reputation and its relationships with shareholders and stakeholders.

The resignation of Bhatt and the plunge in Coforge's shares are a significant development in the company's history. The incident may lead to a re-evaluation of the company's governance practices and the role of independent directors and the chairman.

In conclusion, the governance concerns raised by Coforge regarding OP Bhatt's handling of the board evaluation report are a significant issue that highlights the importance of transparency and accountability in corporate governance. The incident may have implications for the company's reputation and its relationships with shareholders and stakeholders, and may lead to a re-evaluation of the company's governance practices.