MCA Seeks Information from L&T on Alleged ‘Governance Issues’

The Ministry of Corporate Affairs (MCA) has sought information from Larsen & Toubro on a complaint over alleged ‘corporate governance’ raised by a former employee of the conglomerate, people in the know told ET.

The MCA issued a notice to the company under section 206 of the Companies Act and also conducted an inspection at its registered office, these people said. Section 206 empowers the investigator to seek information, inspect books and conduct inquiries.

“The notice was sent in March and a physical inspection by officers was also conducted,” said one of the people. “The period under probe is between 2003 and 2008 and therefore the company has sought time. Information on books of account pertaining to L&T Welfare Co. Ltd. And L&T Employees Welfare Foundation, their filings, and other related documents have been sought,” added the official.

An email sent to L&T didn’t elicit a response till press time Tuesday.

The former employee who raised the complaint had alleged that between November 2003 and March 2008, the company deducted salaries from around 30,000 employees with the assurance of issuing them shares of L&T but instead, according to the complaint, it issued them redeemable preference shares of L&T Welfare Co. a unit of L&T, the official said.

“The move was part of its expansion exercise, but the allegations by the whistle blower is that the company issued redeemable preference shares instead of equity shares, there by defrauding them,” added the official. “The notice was sent after the prime facie probe found issues pertaining to corporate governance,” said the official. S-ET

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