FMC a major player in NSEL

crisis

Content

Introduction FTIL-NSEL merger not justified Who will the merger actually benefit? conclusion

Introduction

FMC (Forward Markets Commission) has played a major role in the NSEL crisis

The chairman of FMC, Ramesh Abhishek, had first passed an order declaring Financial Technologies India Ltd (FTIL), not fit and proper

As a result all other regulators used this order as a base to ensure other exits of FTIL

This draft order for merger of NSEL with FTIL, proposed by the Ministry of Corporate Affairs (MCA) on the sole recommendation of the FMC sets a dangerous precedent

FMC was pressing for the merger of NSEL with FTIL even though the case was still sub juice

FTIL-NSEL merger not justified NSEL was a limited liability company

Section 396 of the Companies Act states merger of two public limited companies

Government has sought to force-merge two private entities by applying a section which is actually meant for Public Sector Enterprises

Merger should ideally happen only if both parties agree for Amalgamation, but it is clearly not the case here

Who will the merger actually benefit?

FMC’s recommendation of the merger seems to be one sided

Proposed merger of NSEL with FTIL will in fact erode the entire net worth of FTIL

It will also harm the 63000 shareholders, lift the corporate veil & set a dangerous precedent

This merger is clearly not in public interest

FMC's recommendation of merger will also not help in repayment of dues of trading clients of NSEL

Dues have to be repaid by 24 defaulting companies, & not NSEL which merely provided a platform for trading

conclusion

FMC has all the powers to take any action deemed appropriate against defaulters & brokers

FMC chairman however turns a blind eye to them

FMC has always been chasing FTIL only

It is high time that FMC starts chasing other parties like brokers

They should also peruse defaulters to whom the money trail has been traced to instead of concentrating only on FTIL