Context:
A Founder of a bellwether IT company, raised issues regarding an acquisition made by the company. His complaints led to the company’s Board and management claiming that there was nothing wrong in the decision. Continuous questioning by the Founder led to the company making a strange regulatory filing. Could both sets of protagonists have handled this matter better?

• Vide an email in July, 2017, one of the founders of an IT company had asked the Board of the Company to publish the reports relating to the acquisition of one company. This included 3 investigation reports by 3 law firms, and the independent valuation of the Company. He also raised issues relating to whether any employee or his/her relative had benefitted from the deal, and whether the reported objections of the then-CFO had been addressed.
• The Co-Chairman of the Company replied to the email declining to publish the reports stating that there was no evidence of any wrongdoing by the Company in the said acquisition.
• Vide another email in August, 2017, the Founder reiterated his concerns, and raised some additional issues on Corporate Governance. He added that the points raised in his earlier email were based on a whistleblower complaint, which were available in public, wherein the Chief of Legal, Chair of Board, Chair of Audit Committee, Chair of Remuneration Committee, all Independent Directors (except 3 of them), the CEO, 2 of the law firms, and the auditors being involved in some manner or the other.
• He felt that it would have been appropriate for the Board to put the 3 investigation reports and the valuation report on the website of the Company, and provide a point-by-point denial of the whistleblower accusations fully supported by data and facts. He felt that the whistleblower had made serious allegations, and just a top-level press release would not be sufficient.
• The MD and CEO resigned in August, 2017, and the company blamed the Founder’s “assault” as the primary reason for this. They stated that the Founder’s letter contained factual inaccuracies, already-disproved rumours, and statements extracted out of context from his conversations with Board members.
• The Founder denied this. He stated that he just wanted answers to the questions posed by him as a shareholder. He however did not attend the AGMs held in 2017 and 2018.
• The Company had, in a filing to US Securities and Exchange Commission (SEC) in 2016-17, classified activist shareholders among its many risk factors that could negatively affect its business and stock price. The Company had said that “Responding to actions by activist shareholders can divert the attention of our Board of Directors, management and our employees and disrupt our operations. Such activities could interfere with our ability to execute our strategic plan. This may also require us to incur significant legal fees and public relations costs. The perceived uncertainties as to our future direction could affect client and investor sentiment, resulting in volatility in the price of our securities.”