Some minority shareholders of Financial Technologies have raised objections to the proposed merger of scam-hit National Spot Exchange Ltd with the company.
To ensure faster recovery of dues for entities hit by the Rs 5,600-crore (Rs 56-billion) fraud at NSEL, the government last month ordered the merger of the bourse with its parent firm Financial Technologies (India) Ltd.
This is also the first time that the Corporate Affairs Ministry ordered a forced merger of private entities using a provision in the Companies Act that allows the government to intervene for ‘essential public interest’.
Sources said the ministry has received objections from some minority shareholders on the proposed amalgamation.
Specific details were not immediately available.
The payment crisis at NSEL came to light in July 2013 and the decision to merge it with FTIL has been taken as the bourse is ‘not left with any viable, sustainable business
while FTIL has necessary resources to facilitate speedy recovery of dues’.
The proposal would have a final shape after taking into account submissions or objections made by the shareholders and creditors of the two companies.
Comments have been sought from them till December 20.
NSEL's entire business, properties and liabilities, among others, would be transferred to FTIL after the merger, as per the draft order issued on October 21.
According to it, FTIL has not furnished any explanation as to what steps have been taken by NSEL or by FTIL itself as a parent company to honour the commitment of assuring safety and risk-free trading to the members and clients of the exchange.
NSEL does not have the resources, financial or human, or the organisational capability to successfully recover the dues pending for over a year, the draft order had said.
On the rationale of merger, it had said the government is of the considered opinion that the leverage combined assets, capital and reserves for efficient administration and satisfactory settlement of rights and liabilities of stakeholders and creditors of NSEL would be in 'essential public interest'.
The ministry had also said that FTIL cannot be allowed to confine its responsibility and concern only for the small investors alone and it has to shoulder full responsibility for the outstanding dues at NSEL.
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