Corporate Affairs Ministry to ascertain whether Financial Tech violated norms: report
The Ministry of Corporate Affairs is looking to ascertain whether Jignesh Shah-led Financial Technologies India Ltd (FTIL) violated laws, especially with respect to carrying out its duties as a holding company, according to sources.
Financial Technologies-promoted National Spot Exchange Ltd (NSEL) is grappling with a crisis involding payments worth Rs 5,600 crore.
Besides these entities, the continuing crisis has also sparked off a series of regulatory interventions that has thrown spotlight on the group's various other ventures, including MCX, MCX-SX and IEX.
The ministry has found "gross violations" by FTIL's board on corporate governance matters, among others, they said.
Although the ministry has completed its report on FTIL, it has sought views of the Law Ministry and other agencies before taking a final call.
Earlier this month, capital market regulator Securities and Exchange Board of India (Sebi) ruled that FTIL is not a "fit and proper person to acquire or hold any equity share or any instrument that provides for entitlement for equity shares or rights over equity shares at any future date, in a recognised stock exchange or clearing corporation".
The order would be applicable for both direct and indirect holdings of FTIL in stock exchanges and clearing corporations.
Meanwhile, an inspection of NSEL books by the ministry had found that the exchange's board failed to perform its duties towards shareholders, in violation of regulations.
The interim report of inspection, carried out by the Registrar of Companies (RoC), Mumbai, had found corporate governance failure at multiple levels, including lack of transparency, integrity, compliance and ethics.
Besides finding discrepancies in the minutes of board meetings, it was also found that the board did not discuss the bourse's compliance with various rules such as those related to admission of new members.
The inspection of books of NSEL was ordered under Section 209 A of the Companies Act.