ARE YOU AN INDEPENDENT DIRECTOR? – BE CAREFUL YOU CAN BE BOOKED BY SEBI EVEN AFTER A DECADE FOR SERIOUS LAPSES IN FINANCIAL OVERSIGHT AND GOVERNANCE

 ARE YOU AN INDEPENDENT DIRECTOR? – 

BE CAREFUL YOU CAN BE BOOKED BY SEBI EVEN AFTER A DECADE FOR SERIOUS LAPSES IN FINANCIAL OVERSIGHT AND GOVERNANCE 

SEBI IMPOSED PENALTIES ON ERSTWHILE INDEPENDENT DIRECTORS OF BRIGHTCOM GROUP LTD FOR SERIOUS LAPSES IN FINANCIAL OVERSIGHT AND GOVERNANCE 

SEBI held that Allam Raghunath and Subrato Saha, both former independent/non-executive directors of Brightcom group ltd, failed in their oversight duties in relation to the company’s financials. 

CHARGES AGAINST COMPANY AND ITS INDEPENDENT DIRECTORS  

Between FY2014–15 and FY2019–20, Brightcom allegedly: 

 
- Inflated profits by ₹1,280 crore 

 
-Misclassified ₹868 crore in losses under “Other Comprehensive Income” 

 
- Failed to account for a ₹411 crore impairment loss from a failed acquisition 

 
- Capitalized ₹504 crore in R&D expenses, overstating profitability 

The regulator imposed a penalty of ₹30 lakh on Raghunath and ₹5 lakh on Saha under Section 15HB of the SEBI Ac 

Raghunath was also found to have submitted false declarations annually claiming he met the independence criteria, whereas in reality his daughter was employed by a subsidiary, putting his independence in doubt. 

As chairman of the audit committee, Raghunath was held to have greater responsibility to probe and question material irregularities, yet he had not done so. 

Liability of independent directors 
This case underscores that independent directors are not mere figureheads; they are expected to exercise due diligence and independent judgment in monitoring financial statements and corporate governance. A failure in oversight—even without direct involvement in accounting entries—can attract liability. 

Market integrity & deterrence 
By penalizing non-executive directors (in addition to executive management), SEBI signals that lapses in governance will be taken seriously, strengthening accountability at multiple levels. 

WAKE-UP CALL 

This case is a wake-up call for boards across India to strengthen governance frameworks and ensure transparent disclosures. 

R V SECKAR , FCS, LLB 79047 19295