Financial Technologies India Ltd (FTIL) has asked its shareholders to oppose the proposed ‘forced’ merger of scam-hit subsidiary National Spot Exchange Ltd (NSEL) with itself, according to a letter addressed by the company to the shareholders.
In October last year, the Ministry of Corporate Affairs had issued a draft order to merge NSEL with its parent firm FTIL to ensure faster recovery of dues for entities hit by the Rs 5,600-crore fraud.
“… we request you as a responsible owner of your company to send to the Ministry of Corporate Affairs, your genuine, bonafide and reasoned objections to the draft order,” FTIL chairman Venkat Chary said in a letter to shareholders.
“You (shareholders) too are entitled to object to the forced amalgamation of NSEL with your company by exercising your right of opposition…,” he said. Chary is also an independent non-executive director of FTIL.
The government, however, has said the order would be finalised only after it considers feedback from stakeholders and the public.
The market regulator Forward Markets Commission (FMC), and some investors affected by the fraud at NSEL which came into light in July 2013, had recommended the proposed merger.
FTIL has about Rs 2,000 crore cash and Rs 475 crore in debt, after it was forced to sell its stake in MCX, MCX-SX and SMX, among others, the letter showed.
Earlier this month, FTIL challenged the draft order in the Bombay High Court. The court however ordered status quo and said that it will look into the case after the order is passed by the government.
NSEL is promoted by Financial Technologies (India) Ltd, which is backed by Blackstone and CVCI. Once the merger is completed, NSEL’s entire business, properties but most importantly its liabilities, among others, will get transferred to FTIL.
On Thursday, FTIL’s shares closed at Rs 172.50, down 1.91 per cent on BSE in a weak Mumbai market.