1. Forced merger of NSEL-FTIL
will corrode investors’
sureness

2. Contents
• Introduction
• What MCA Plan For FTIL-NSEL Merger?
• So why is only FTIL being targeted under Sec 396?
• Conclusion

3. Introduction
• The National Spot Exchange (NSEL) Ltd alleged
payment crisis of Rs 5,600 came to light on July 31,
2013.
• When exchange suspended trading in all its contracts
• NSEL proposed a payout plan on August 14, 2013,
but the commodity spot exchange had not been able
to make a single successful payout till date

4. What MCA Plan For FTIL-NSEL Merger?
• On Oct 21, 2014, MCA proposed an amalgamation of
NSEL and FTIL by invoking Sec 369
• FTIL & NSEL merger was recommended by the
commodities market regulator FMC
• This was done without issuing final order
• MCA moved Co Law Board 2 supersede FTIL assailed
Draft Order before Bombay High Court.
• High Court has given Government time until 30, Oct’
2015 to pass a final order on proposed amalgamation
of NSEL
Continue……

5. • Forced amalgamation of FTIL & NSEL will erode
confidence of the investor community
• MCA’s proposal to supersede FTIL Board is most likely
to create choose in India’s corporate landscape.
• Forced amalgamation on plea of “public interest”
with room for ambiguities will drag down India’s rank
NSEL
• Prime minister’s Campaign “Make in India” will be
adversely affected by forced amalgamation as it will
destroy concept of ltd liability

6. SowhyisonlyFTILbeingtargetedunderSec396?
• Section 396 of the Companies Act has never been used by the government to merge two
companies and use assets of one company to pay for the liabilities of the other.
• Forceful amalgamation of FTIL and FTIL constitutes expropriation of property rights of FTIL
and its shareholders.
• Prerequisite of “essential public interest” for exercise of power under Sec 396 is absent, as
interests of 63,000 shareholders of FTIL have been ignored vis-a-vis (in relation to) the
interests of the 13,000 trading clients of the NSEL
• No private company Has even been forced to merger with another independent company.
• Again, the forced amalgamation of two private sector companies is discriminatory and ignores
the MCA’s own circular dated April 20, 2011.
• Significantly, while hearing the case, the Bombay High Court has allowed the FMC to be a
party to the case.
• The High Court has also allowed the FTIL shareholders to be party to the case who
unanimously (99.55%) voted against the amalgamation of the NSEL with the FTIL.

7. Conclusion
• FMC had all the powers to take any action
deemed appropriate against defaulters and
brokers, but the FMC chairman turns a blind eye
to them
• FMC has always been chasing only FTIL
• It is high time that FMC starts chasing other
parties like brokers and also defaulters to whom
the money trail has been traced to, instead of
concentrating only on FTIL

8. Thank You