The Bombay High Court has refused to stay a resolution by commodity exchange MCX to amend its articles, which, if approved by its shareholders, will empower the bourse to transfer promoter Financial Technologies' shareholding in it to an escrow account and sell the same on its behalf. The court, which was hearing Financial Technologies (India) Ltd's plea against the resolution on Friday, said a delay in selling stake by the petitioner cannot be a reason for it to oppose a resolution to comply with the regulator's declaration of December 17.
However, the judge gave FTIL, which said it was in the process of divesting its 24% stake in MCX, the liberty to move court if its shares are transferred to an escrow account while its stake sale exercise is on.
The voting rights of FTIL, which holds 26% in MCX, have already been extinguished by MCX after commodity market regulator Forward Markets Commission (FMC) on December 17 declared it not 'fit and proper' to hold more than 2% stake in any commex after a Rs 5,600-crore scam hit its subsidiary National Spot Exchange Ltd (NSEL) in July last year.
FTIL had challenged FMC's order in the high court in February but failed to get a stay on it. After being informed of this, Justice SJ Vazifdar, who was hearing FTIL's plea, said, "We must proceed that the December 17 order (of FMC) is valid as on date." On Friday, FTIL's share closed 4.9% lower on the Bombay Stock Exchange at Rs 259.45, while MCX ended 2.4% lower at Rs 565.95.
Multiple commodity Exchange has sought the approval of its shareholders, including IFCI, Nabard and Blackstone, for amending the AoA through postal ballot. The results of the ballot will be declared on June 18.
FTIL filed a petition against MCX and FMC after the latter, on May 6, revamped shareholding norms for commexes, stating that an entity or a person declared not "fit and proper" by it could not hold any stake in a recognised commodity exchange.
The norms, among others, also empower exchanges to ensure FMC's orders in respect of an "unfit" shareholder are complied with. On May 9, after FMC's revised norms, MCX undertook a process of amending its articles of association, which,by a three-fourths majority of voting shareholders, empower it to transfer FTIL's shares in MCX to an escrow account, and sell the same on FTIL's behalf to comply with FMC's declaration.
The norms, among others, also empower exchanges to ensure FMC's orders in respect of an "unfit" shareholder are complied with. On May 9, after FMC's revised norms, MCX undertook a process of amending its articles of association, which,by a three-fourths majority of voting shareholders, empower it to transfer FTIL's shares in MCX to an escrow account, and sell the same on FTIL's behalf to comply with FMC's declaration.
Multiple commodity Exchange has sought the approval of its shareholders, including IFCI, Nabard and Blackstone, for amending the AoA through postal ballot. The results of the ballot will be declared on June 18.
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