Government issues draft order for merger of NSEL with FTIL
21 October 2014
The government has issued a draft order for the merger of scam-hit National Spot Exchange Ltd (NSEL) with its parent Financial Technologies India Ltd (FTIL), which will be incorporated as a new company.
In its order, the ministry of corporate affairs said it was satisfied that to ''leverage the combined assets, capital and reserves of the two companies for achieving economies of scale, efficiency in administration, gainful settlement of rights and liabilities of stakeholders and creditors, consolidate business and ensure co-ordination in policy, it is essential that Financial Technologies (India) Ltd and the National Spot Exchange Limited should be merged into a single company.''
Financial Technologies, in a notice to the stock exchanges, confirmed that it has received a communication from the Government. "The company is taking appropriate steps in the matter in consultation with the legal counsel of the company," it said.
An inspection of the books of account of NSEL and FTIL had brought out non-compliance of the various provisions of the Companies Act, the ministry said in a website release, adding, it is further observed that the management of the affairs of NSEL were being controlled and directed by FTIL and its key managerial persons.
A three-member committee consisting of Justice VC Daga (Retired Judge of the Bombay High Court), J Solomon (practicing solicitor) and Yogesh Thar (practicing chartered accountant from Bansi Mehta & Company), constituted by the Bombay High Court had undertaken a forensic audit of the two defaulting companies.
The government has also carefully considered the Forward Market Commission's (FMC) proposal the Department of Economic Affairs' (CEA) considered opinion that to leverage the combined assets, capital and reserves for efficient administration and satisfactory settlement of rights and liabilities of stakeholders and creditors of NSEL, ''It will be essential in the public interest to amalgamate NSEL with FTIL''
FTIL had a paid-up share capital of Rs92,104,112 consisting of 46,052,056 equity shares of Rs2 each as of 31 March 2014, as per information filed with the National Stock Exchange Limited.
National Spot Exchange, which is a subsidiary of FTIL, on the other hand, had a paid-up share capital of Rs45 crore consisting of 45,000,000 equity shares of Rs10 each as of 31 March 2014.
As per the ministry's order, all the 44,999,895 fully-paid shares of Rs10 each in National Spot Exchange Limited, which are now held in the name of FTIL will stand cancelled.
In the case of shares outstanding, the persons holding the shares will be informed of the cancellation of existing stock in the dissolved company and the details of the shares that would be allotted to them.
The entire business and undertaking of NSEL and FTIL, including all the properties, movable and immovable and other assets, leases, tenancy rights, advances of monies of all kind, book debts, outstanding monies, recoverable claims, agreements, industrial and other licences and permits, recoverable claims, agreements, motgages and guarantees, etc will be merged.