MUMBAI | HYDERABAD: Mahindra Satyam, formerly Satyam Computer Services, will delist from the New York Stock Exchange, or NYSE, after realising that it cannot meet the October 15 deadline for preparing financial statements under US accounting standards.
The news triggered a massive 26% fall in its ADRs on Friday. The domestic shares fell 6%. “Due to the late SEC filings, which are among the unfortunate results of the misdeeds of former management, we are delisting from the NYSE,” said Vineet Nayyar, chairman, Mahindra Satyam.
The company said it intends to file a Form 25, or notification of removal from listing, with the US regulator, Securities and Exchange Commission or SEC, around October 4, and anticipates the ADRs to be delisted from the NYSE on or close to October 14.
Satyam Computer Services’ promoter, Ramalinga Raju, confessed to hiding liabilities and overstating profits for many years in January 2009, a revelation that stunned investors, India Inc, the government and all regulatory agencies.
He was subsequently arrested and jailed. The government superseded the board of Satyam with its own nominees and then arranged a sale to Tech Mahindra, the IT services arm of the Mahindra & Mahindra Group.
The problems with Satyam’s financial accounts meant that the company did not publish its financial results for 2008-09 and 2009-10. The last date for publishing results for these two years under US accounting standards, or US GAAP, is October 15, according to SEC rules. On Tuesday, the company said it would publish results under Indian GAAP, but remained silent on the US GAAP numbers.
Friday’s delisting announcement is a clear indication that the company will not be able to adhere to American accounting standards in such a short time-frame.
But experts say that delisting will not solve the company’s problems.
The news triggered a massive 26% fall in its ADRs on Friday. The domestic shares fell 6%. “Due to the late SEC filings, which are among the unfortunate results of the misdeeds of former management, we are delisting from the NYSE,” said Vineet Nayyar, chairman, Mahindra Satyam.
The company said it intends to file a Form 25, or notification of removal from listing, with the US regulator, Securities and Exchange Commission or SEC, around October 4, and anticipates the ADRs to be delisted from the NYSE on or close to October 14.
Satyam Computer Services’ promoter, Ramalinga Raju, confessed to hiding liabilities and overstating profits for many years in January 2009, a revelation that stunned investors, India Inc, the government and all regulatory agencies.
He was subsequently arrested and jailed. The government superseded the board of Satyam with its own nominees and then arranged a sale to Tech Mahindra, the IT services arm of the Mahindra & Mahindra Group.
The problems with Satyam’s financial accounts meant that the company did not publish its financial results for 2008-09 and 2009-10. The last date for publishing results for these two years under US accounting standards, or US GAAP, is October 15, according to SEC rules. On Tuesday, the company said it would publish results under Indian GAAP, but remained silent on the US GAAP numbers.
Friday’s delisting announcement is a clear indication that the company will not be able to adhere to American accounting standards in such a short time-frame.
But experts say that delisting will not solve the company’s problems.
No comments:
Post a Comment