Software major Infosys, which saw widening differences between its promoters and board on a number of issues, has likely reached a truce on the crucial aspect of capital allocation, people familiar with the development told ET NOW.
In a crucial move, the board of Infosys today recommended the adoption of new Articles of Association of the company to conform with the Companies Act of 2013 and has sought shareholder approval via postal ballot. This is seen as a precursor to a buyback, because the current Articles of Association of the company doesn’t have a provision for a buyback written into it.
People ET NOW spoke to further said that the promoter group, led by NR Narayana Murthy will not oppose a share buyback when it is announced by the board. The founders currently hold nearly 13% in the company and are still classified as promoters.
The size of the buyback is likely to be over $2.5 billion and will be announced in April, once the results of the postal ballot is released.
This will be the first buyback in the company’s history and comes day after similar moves by its rivals Cognizant and TCS, as pressure mounts on IT companies to return cash to shareholders in an increasingly difficult demand environment.
Infosys CEO Vishal Sikka, said in a recent conference call with analysts that the company looks at capital allocation constantly and that no options are off the table.
Infosys founder NR Narayana Murthy recently raised governance concerns at the company he founded over three decades back on a number of issues- unusually high severance pay for its former CFO Rajiv Bansal and high compensation for its CEO Vishal Sikka.