Behind Chitra Ramakrishna’s honorable exit from NSE

The resignations created a dilemma for the 11 board members who gathered at the exchange’s corporate office in Mumbai’s Bandra Kurla Complex that day. Should they accept his resignation or go ahead and sack him?

Although he had made up his mind to terminate his services, the board decided to accept Ramakrishna’s resignation based on the advice of law firm Shardul Amarchand Mangaldas, said three people requesting anonymity.

The board’s plan to sack Ramakrishna began with the grim discovery during a forensic audit that even after sacking Anand Subramaniam, Ramakrishna’s confidante, whom he had hired with relative obscurity, and promoted to the position of chief operating officer. did, he continued to share confidential company information with him. Subramaniam was let go by the NSE on 21 October 2016, and Ramakrishna was warned against sharing company information with outsiders, including his former deputy.

“Was sharing information with an outsider a reason for sacking the CEO? Yes. He (Chitra Ramakrishna) had lost faith in the board. But he tendered his resignation, and while the legal advice was to accept the resignation, the board did not want to initiate a fresh process of sacking him,” said one of the three people cited above.

On why the board lost confidence in Ramakrishna, another executive said: “It was during a board meeting in September that the board again gave him a three-year business plan and a succession for CEO and KMP (key management). Was asked to submit the plan. Personnel). And she was always vague.”

An email sent to Shardul Shroff, executive chairman, Shardul Amarchand Mangaldas, did not elicit any response. Text messages to Subramaniam and Ramakrishna also remained unanswered. The chairman of the board at the time, Ashok Chawla, declined to comment.

Incidents that unfolded nearly five years ago are in the limelight after an order by the Securities and Exchange Board of India (SEBI) earlier this month accused Ramakrishna of sharing privileged information with a man identified only as a Himalayan Yogi. was fined for.

The market regulator also criticized the exchange’s board for failing in its fiduciary duties.

The board of NSE was reconstituted in 2016 with Chawla as chairman, with seven members. According to three officials, the restructuring was led by the then Finance Minister Arun Jaitley and then SEBI chairman UK Sinha.

As of December 2015, the board of NSE was headed by Chairman SB Mathur, Vice Presidents Ravi Narayan and Ramakrishna. Representatives of the investors General Atlantic and Premji Invest Abhay Havaldar and Prakash Parthasarathy were the other two directors. Apart from Narayan, Ramakrishna, Havaldar and Parthasarathi, all the remaining members were replaced with new faces.

Subramaniam, who joined the exchange as an advisor in April 2013, was not a member of the board, but as of September 2016, attended most of these board meetings as a special invitee, as did the three officials cited earlier. According to two.

In the summer of 2016, Ramakrishna proposed to demerge all 10 subsidiaries of NSE (nine in India and one overseas) and place them under one holding company. Subramaniam, the then group operating officer and advisor to the CEO, was proposed as the chairman of this holding company.

“The board rejected the offer,” said the second executive. “This structure was being suggested so that Subramaniam could avoid oversight of the board”.

The third executive said, “Chitra told us that he (Subramaniam) was an advocate for them and hence used to be a special invitee to board meetings. Soon, we barred him (Subramaniam) from attending board meetings.” Gave.”

The trigger for the newly reconstituted board was a letter from SEBI to bar Subramaniam from attending board meetings and initiate a review of his appointment and remuneration. On 15 September, the NSE board met to discuss SEBI’s September 9 letter, which wanted the exchange to place its letter before the board and examine whether there were irregularities in the re-designation of Subramaniam, a key strategic Joined as a consultant. April 2013 and became the Group Operations Officer two years later. Subramaniam’s remuneration increased during this period. 1.68 Cr to 4.2 crore annually.

The board scrambled to set up an inquiry panel headed by its Nomination and Remuneration Committee (NRC) chairman Dinesh Kanabar.

Based on the NRC’s findings, at 4 pm on October 21, the NSE board called Ramakrishna and asked him to “terminate” Subramaniam’s contract and “take him out” from the building.

“The Board asked Chitra to terminate the services of Anand, as it had appointed him as CEO and to ensure that he does not take any assets of NSE, and to ensure that his resignation is taken up and the matter is closed,” said. first executive.

A shocked Ramakrishna went to Subramaniam’s cabin, spoke for a few minutes and in less than 30 minutes, Subramaniam walked out of the NSE headquarters.

Four days later, on September 19, NSE received another letter from SEBI. This time the market regulator wanted the exchange to conduct a forensic audit on the algorithmic trading scandal or co-location scandal. NSE entrusts Deloitte and EY to audit. It was as part of EY’s forensic audit that the board found that Ramakrishna continued to share information over email since Subramaniam’s ouster on October 21.

“Once Chitra exited, we appointed an interim CEO and later, Vikram (Limay), a full-time CEO and a compliance officer,” said the third executive. “Now, where is the question of the board not doing its job. Fiduciary duty? On the question of not recording our discussions, please understand that no board in any company records or records all discussions, but only actions.” So, when Anand was dropped, we recorded that, and when Chitra resigned, we kept that too on record”.