Brightcom Group Chairman, CFO resign following SEBI sanctions; transition board proposed

HYDERABAD: Brightcom Group has announced the resignation of its Chairman and Managing Director, Suresh Reddy, and CFO, Narayana Raju, following an interim order from the Securities and Exchange Board of India (SEBI) in the last week over financial irregularities. The SEBI also imposed restrictions on both individuals from holding key managerial positions in any listed entity until the probe is completed on violation of regulations.

The company's board emphasized the need for regulatory compliance and decided to engage with relevant regulatory bodies to ensure that the regulations were followed during their transition period. It also proposed a transition leadership team to start a search for a new CEO and CFO and asserted that will issue a detailed press release in alignment with SEBI's order. "The communication will be truthful, professional, and consistent with the company's values," the exchange filing from Brightcom said.

It is known that the SEBI had passed a second interim order against Brightcom and 22 others for financial irregularities in the preferential allotment of warrants and shares where Suresh Reddy was also banned from accessing the securities market besides being restricted from holding directorial or key managerial positions at any company until further orders.

As Suresh Reddy held a 0.76 percent stake in Brightcom Group based on the June quarter shareholding pattern, the SEBI in its order expressed concerns that if the MD and CFO were allowed to remain in a position, they may attempt to obstruct SEBI's investigation.

The controversy surrounding Brightcom Group has also drawn attention to investor Shankar Sharma, who holds a 1.14 percent stake in the company as per the June quarter shareholding wherein the latter stated on his official X handle that reconciled remittance data worth Rs 56.5 crore had been submitted to SEBI, and any delay was due to pending bank reconciliation data from the company. He expressed hope for a swift resolution of the matter.

On the other hand, the Hyderabad-based company has faced scrutiny due to financial irregularities that have come to light and SEBI has imposed a penalty of Rs 40 lakh on six entities, including Brightcom Group, for alleged violations of disclosure and code of conduct in the June month.

It is learned that amid the developments, the shares of Brightcom Group, which had reached over Rs 100, are currently trading around the Rs 20 mark and experienced a decline in the last three trading sessions. I