BackMCX’s shareholders move to extinguish FTIL’s voting rights
MCX Shareholders vote to transfer the 26% stake of FTIL to an escrow account prior to its sale
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Mumbai: Shareholders of Multi Commodity Exchange of India Ltd (MCX) voted on Wednesday to transfer the 26% stake of its promoter, Jignesh Shah’s Financial Technologies of India Ltd, or FTIL, to an escrow account prior to its sale and extinguish its voting rights in the exchange with immediate effect.
Through a postal ballot, shareholders approved an amendment to the articles of association of MCX, which empowered the transfer of the FTIL stake to escrow—an account held by a third party on behalf of the other two parties in a transaction. The approval extinguished FTIL’s voting rights.
The development is pursuant to orders passed by the commodities futures market regulator, the Forward Markets Commission (FMC), that found FTIL unfit to run any exchange and amended ownership rules for commodity bourses after a ₹ 5,574.34 crore payments crisis at its unit National Spot Exchange Ltd.
“The purpose of amending the articles of association of the company was to incorporate the revised norms regarding shareholding, ownership, net worth, fit and proper criteria etc. issued by FMC on May 6, 2014 which inter alia provide that the voting right of persons declared ‘not fit and proper’ shall stand extinguished," an MCX statement said.
“The FMC’s guidelines are binding on the company and each of its members and shareholders. The company has successfully passed the special resolution for amending its articles of association to give effect to the above thereby making best possible efforts to comply with FMC’s directives," it added.
FTIL did not respond to a request for comment.
The amendments come less than a week after the Bombay high court allowed MCX to proceed with the postal ballot on the resolution and declined FTIL’s plea for a stay on the new ownership rules put in place by FMC. The court added that FTIL can move court if MCX proceeded with the resolution.
FTIL hasn’t been able to meet the regulator’s order to reduce its stake in MCX from 26% to 2%.
On 6 May, FMC said in a notification that any entity found to be unfit to run a commodities exchange will have to sell its shareholding, and not hold any voting rights until its stake is sold. The new rules also set restrictions on the ownership of commodity exchanges, bringing the regulations in line with those that govern stock exchanges in the country.
It also tightened governance norms by ensuring that trading and clearing members of the exchange cannot be appointed on the governing board of any recognized commodities exchange. No foreign institutional investor can be part of the governing board of such an exchange either, it said.
Shares of MCX gained 0.6% on BSE to close at ₹ 615.65 on a day the benchmark Sensex fell 274.94 points to 25,246.25.
FTIL promoter Jignesh Shah and former MCX chief executive Shreekant Javalgekar have been arrested in connection with suspected trading irregularities at NSEL. On Wednesday, a Mumbai court reserved until 21 June an order on a bail petition by the two men.
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