The Company Law Board on Tuesday barred the scam-ridden Financial Technologies India (FTIL) from selling the company's assets till September 2. The court, which was hearing the government's petition to supersede the FTIL board, said there will be status quo on the sale of property and assets.
The corporate affairs ministry had moved the board seeking the removal and supersession of the FTIL board under Section 397 of the Companies Act, 1956. In its petition, the government also wanted that Jignesh Shah promoted FTIL be restrained from disposing of its assets on the grounds that it would defeat the purpose of the merger with National Spot Exchange Ltd (NSEL).
The government has alleged that the current board of FTIL is trying to scuttle attempts made to carry out amalgamation between FTIL and NSEL. The government's lawyer said the sale of FTIL assets will defeat the purpose of merger with NSEL. The corporate affairs ministry is also likely to issue the final order on the proposed merger of crisis-hit NSEL with its holding company FTIL by July end after evaluating objections to the plan.
The ministry is currently reviewing and considering more than 19,000 objections received from FTIL shareholders and related parties against the merger.
The final order has to be presented in the Bombay High Court and will come into effect two weeks after submission so that affected parties get an opportunity to pursue legal redress.
The Forward Markets Commission, the commodity markets regulator, had proposed the merger late last year as demanded by investors, following a Rs 5,600 crore payment crisis at the exchange.
The combination will be done under Section 396 of the Companies Act, 1956, which says the central government can order the merger of two companies if it is essential in public interest. The ministry has already decided the share-swap ratio for the proposed merger.
Three fully paid-up equity shares of Rs 2 each of FTIL will be issued for eight fully paid-up equity shares Rs 10 each of NSEL. The calculation is based on the valuation of assets and liabilities of the merging companies.