Rough stage faced by FTIL because of government

actions

Agenda

ACTIONS TAKEN BY GOVERNMENT

QUESTIONS RAISED BY MCACLEAN-CHIT TO CULPRITSRESTRICTED INVESTIGATIONEOW OFFICER ASSERTED TO

MEDIA

ACTIONS TAKEN BY GOVERNMENT

Company Law Board (CLB) is ready to make judgment to take over and replace existing Board of FTIL.

Ministry of Corporate Affairs (MCA) filed a petition against FTIL to replace the FTIL Board

Board of FTIL are also waiting for their judgment which was postponed on May 15 to June 30.

QUESTIONS RAISED BY MCA

This move by MCA raised some unsettling questions-•Is the government trying to super cede the company board using section 397 of the Companies Act, 1956 so that it would not face any opposition while merging the company with NSEL under section 396 of the Companies Act?•Does the government’s argument before the CLB that the current board of FTIL is trying to “scuttle any attempts made to carry out amalgamation between FTIL and NSEL” hold water, especially when it is FTIL board’s prerogative and right to reject the arbitrary and tyrannical merger?

CLEAN-CHIT TO CULPRITS

• Defaulters and Brokers involved in money swindling commotion on NSEL platforms.

• No investigations have been made into the serious allegations that the brokers ran funding schemes by lending huge money to their trading clients.

• Trading Clients PAN cards were used surreptitiously by brokers and skip KYC (know-your-customer) norms.

RESTRICTED INVESTIGATION

• Even after the arrest of three top brokerage officials, the scope of investigation is yet to be expanded to include issues related to money-laundering.

Geojit Comtrade’s whole-time director CP Krishnan,

Anand Rathi Commodities

managing director Amit

Rathi

India InfoLine Commodities vice president Chintan Modi

EOW OFFICER ASSERTED TO MEDIA

• When examined, fictitious payments were shown by brokers in book of accounts presenting sale of commodities.

• Investigators also found large scale market capturing practices by unique client code modification by brokers and illegal dealings through clients accounts without the latter’s knowledge and consent.

• The investigation was under Rajvardhan Sinha, the then additional commissioner of police (EOW).

Conclusion • On March 1, the board of FTIL passed a

resolution to strongly oppose the MCA petition, claiming that it was a “clear attempt by the ministry to render it ineffective and in fact, defeat FTIL’s challenge and opposition to the proposed amalgamation of NSEL with FTIL.”

• Immediately, MCA moved CLB seeking extraordinary powers under Section 397 to supercede FTIL’s board by removing its existing members and appointing government nominees.

• The investigative agencies have already attached assets worth more than Rs. 5,600 Crore that is believed to have lost in the scam.

• It should be noted that FTIL had appointed a newly elected Board in late 2014; promoter Jignesh Shah and some other related members had stepped down making way for professionals across domains.

• Wanton government action of this sort is appalling. The ministry has paid little or no regard at all to the thousands of stakeholders of FTIL. Such as blatant and arbitrary knee jerk reaction would have a ripple effect on the corporate fabric of this nation.

Thank you