BackFTIL opposes FMC proposal of merger with NSEL
Firm says that under Companies Act, the govt can merge two companies only if such merger is essential in the public interest
Premium
Mumbai: Financial Technologies India Ltd (FTIL) has opposed the recommendation of the Forward Markets Commission (FMC) of merging the company with National Spot Exchange Ltd (NSEL), which is engulfed in a ₹ 5,574.35 crore fraud.
In a letter to the stock exchanges, the Jignesh Shah-led company said that under Companies Act, the government can merge two companies only if such merger is essential in the public interest.
“The interest of the 13,000 clients of the brokers who traded on NSEL platform for higher returns cannot be termed as ‘public interest’ when 66% of the entire outstanding amount is being claimed by just 6% of the trading clients," it says.
On 18 August, FMC wrote to the ministry of corporate affairs (MCA) to consider merging FTIL with NSEL “in public interest so that the human/financial resources of FTIL are also directed towards facilitating speedy recovery of dues from the defaulters at NSEL."
FMC is of the view that the manpower and financial strength of NSEL has been depleted and so is “financially and physically incapable of effecting any substantial recovery from the defaulting members."
If the dues of the trading clients are considered as public interest, the interests of more than 60,000 public shareholders of FTIL are equally important public interest, says the two-page letter by company secretary Hariraj Chouhan.
FTIL has also questioned the liability of NSEL to meet the alleged dues of the clients as the same has been challenged in four civil suits filed in the Bombay high court.
“While investigations and various legal proceedings are pending where the actual facts are yet to be established, any action based on FMC’s recommendations towards merging NSEL with FTIL...will irreparably prejudice and harm FTIL and its over 60,000 shareholders, 1,000+ employees, lenders and other stakeholders," it said.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
