The Company Law Board on Thursday allowed government appointed board of Satyam Computer Services to issue preferential shares by amending the capital clause of Memorandum of Association, a move that paves a way for the buy-out of Satyam Computer Services Ltd. The beleaguered software firm has been in news for financial misdoings of its former founder and CEO B RamaLinga Raju and other top executives of the company.

The chairman of CLB, Mr S. Balasubramanian, said, "Since any strategic investor would like to have adequate equity shareholding which would enable the investor to constitute its own board, it would be necessary to make a preferential allotment to the said strategic investor."

The firm, with authorized capital of 80 crore shares of Rs. 2 each, becomes attraction for bidders such as L&T, SpiceCorp, and Hinduja Group following disclosure of largest ever corporate fraud.

Now, Satyam's board would pass a resolution, deemed to be in accordance with Section 81 (1A) of the Act, for allotment of shares at par or at a premium. However, the selection of prospective bidder would be done in a transparent manner, under the supervision of a retired judge of the Supreme Court or former Chief Justice of India.

Meanwhile, Dr B. K. Modi, Chairman, SpiceCorp, said, "This is a good move. The issue of 72 crore additional shares translating into about 51 per cent extended capital means that the new investor will get a level-playing-field. So it does not matter who has how much stake, currently."