In a widely expected development, the Company Law Board today approved the takeover of fraud-hit Satyam Computer Services Ltd by mid-sized outsourcer Tech Mahindra Ltd.

"Having convinced myself that the board of directors has selected a technically and financially competent and qualified strategic investor, I accept the recommendation," CLB chairman S Balasubramanian said in a statement in Mumbai.

Tech Mahindra had emerged as the highest bidder for a controlling stake in Satyam on Monday. The deal will propel Tech Mahindra into the top tier of Indian IT firms and throw a lifeline to the employees and clients of the firm that triggered India's biggest corporate scandal.

Tech Mahindra, 31-per cent owned by Britain's BT Group, will pay about Rs1,743 crore ($351 million) for a 31-per cent preferential allotment of new shares in Satyam and will make an open offer for a further 20 per cent at a cost of around Rs1117 crore.

Earlier, while seeking the CLB approval, Satyam had also sought its permission to induct four directors from Tech Mahindra, and sought more time for declaring financial results.

Three months ago, Satyam's founder and chairman B Ramalinga Raju shocked investors by saying profits had been overstated for years, putting in doubt the survival of the software services exporter, and tarnishing the shine of India's much-vaunted information technology sector. The government quickly stepped in and replaced the entire board to limit the damage.

Kiran Karnik, the chairman of the government-appointed board of Satyam, said that it is up to Tech Mahindra to decide the way forward for Satyam and it has not received any formal communication from Tech Mahindra on retaining the existing board. He also expressed satisfaction over the fast pace of the Satyam sale process.

On the restatement of results, CLB said this can be done by 31 December, including all the pending results. It also said that Tech Mahindra cannot appoint more than four members on Satyam's board and Tech Mahindra has to deposit Rs1756 crore into Satyam's account by 21 April.

According to CNBC-TV 18, the affidavit that Tech Mahindra submitted to the CLB says that the strategic takeover will be achieved by issuing over 30 crore preferential shares to Venturbay Consultants, a 100 per cent subsidiary of Tech Mahindra.

The report also names the four new board members proposed for Satyam - C P Gurnani, Vineet Nayyar and Sanjay Kalra of Tech Mahindra and Ullahas Yargop, president for the telecom and software sector of parent company Mahindra & Mahindra.