Sebi asks FTIL to issue advisory to investors on NSEL matter

Capital markets regulator Sebi today asked Financial Technologies (India) Ltd to issue an 'advisory' on matters relating to a government-proposed merger of its crisis-hit subsidiary NSEL, to help the investors take an "informed decision".
The development comes at a time when NSEL and FTIL are galvanising support from all stakeholders against the merger order, while groups supporting the merger have also launched a counter-campaign. These campaigns have been launched across traditional as well as social media platforms.
Following Sebi's direction, FTIL has issued the advisory through the two top stock exchanges, NSE and BSE, stating that "the matter is presently sub-judice", and gave an update on the draft merger order issued by the Ministry of Corporate Affairs, which was later challenged by the company.

"The investors may note that the matter is presently sub- judice. The above information is being provided to investors to help them take an informed decision," it said.
The advisory has been issued "in the interest of investors," as advised by Sebi today, it added.
This is the first case of the Corporate Affairs Ministry ordering a 'forced merger' of private entities using a clause under the Companies Act that allows the government to intervene for "essential public interest".

One media campaign against the merger is being run through NSEL Recovery Group, which alleges massive lapses on the part of the brokers of NSEL in the Rs 5,700-crore crisis that eventually led to the exchange shutting shop.

On the other hand, an entity named NSEL Investor Forum has been campaigning in support of the proposed merger while putting the blame on the exchange's promoter FTIL.
Earlier this month, FTIL also said that 99.55 per cent of its shareholders, representing 79.58 per cent stake, have objected to the proposed merger of crisis-hit NSEL with it.
In its draft order, MCA had said it was aimed at ensuring faster recovery of dues for entities hit by Rs 5,600-crore fraud at the bourse.
FTIL had further said that 100 per cent of its creditors, the entire Board of Directors and 100 per cent of its over 1,000 employees have also objected to the amalgamation. Promoters have 45.63 per cent stake in FTIL.

In a separate matter related to the FTIL-NSEL case, the Company Law Board today adjourned hearing till April 17 on a plea filed by FTIL against an MCA direction proposing removal and supersession of the company's board.