Former SBI chief O P Bhatt has stepped down as Chairman of Coforge Ltd following a contentious internal audit and a failed shareholder vote for his reappointment.
- O P Bhatt resigned as Chairman and Independent Director of Coforge Ltd with immediate effect.
- An internal audit flagged non-disclosure of material information regarding the Board Evaluation Report.
- Shareholders, including major investor Advent Funds, voted against his reappointment as an independent director.
In a sudden leadership shake-up, Om Prakash Bhatt, the veteran banker and former State Bank of India chairman, has resigned from the board of Coforge Ltd. The resignation, effective immediately, marks a tumultuous end to his tenure at the AI-native engineering services giant, which currently boasts a market capitalization of approximately Rs 81,800 crore.
The immediate catalyst for the exit appears to be an internal audit review conducted during the second quarter. The audit focused on the Board Evaluation Exercise, a governance mechanism designed to assess the performance of the board and individual directors. According to company disclosures, the audit revealed that critical information regarding the evaluation—specifically details concerning the chairman's own performance—was not fully disclosed to the board when the final report was presented.
Why This Matters
BozokMedia analysis shows that this is not merely a clerical error but a significant breakdown in corporate governance. When the head of the board is accused of filtering the very report meant to evaluate leadership, it creates a crisis of transparency. The timing suggests a convergence of internal regulatory pressure and external shareholder dissatisfaction, leaving the board with little choice but to seek a leadership change to maintain investor confidence.
Beyond the audit, a deeper conflict with shareholders has surfaced. At the 34th Annual General Meeting on August 24, a special resolution for Bhatt's reappointment failed to secure the necessary 75% majority. While institutional investors were moderately supportive, public shareholders voted overwhelmingly against him—with a staggering 99.9% rejection rate in that category.
The failure to secure a shareholder mandate, coupled with audit red flags, typically makes a director's position untenable in a publicly listed entity.
The role of Advent International, a private-equity firm with significant indirect holdings through AI Altius Parent (Cayman) Limited, was pivotal. Their opposition to Bhatt's reappointment signaled a shift in the strategic direction or a lack of confidence in the existing governance structure following Coforge's acquisition of Encora.
In his resignation letter, Bhatt maintained that he acted in "good faith" and sought to discharge his duties objectively. He argued that continuing his role amidst disagreements over the evaluation process would hinder the board's effective functioning. Notably, his letter omitted any mention of the shareholder vote, focusing instead on the procedural dispute.
| Factor | Internal Audit Finding | Shareholder Vote Result |
|---|---|---|
| Core Issue | Non-disclosure of performance data | Lack of majority support (65.47%) |
| Impact | Questioned integrity of BER | Blocked reappointment beyond 2027 |
| Primary Opponent | Internal Audit Team | Public Shareholders & Advent Funds |
Frequently Asked Questions
Q1: Why did O P Bhatt resign from Coforge?
He resigned due to disagreements following an internal audit that questioned the handling of the Board Evaluation Report and after failing to get enough shareholder votes for reappointment.
Q2: Who is the major shareholder that opposed his reappointment?
Advent International (via AI Altius Parent) was one of the key institutional entities that voted against his continuation on the board.
