Mumbai, Oct. 22: The board of Multi Commodity Exchange of India (MCX) today allowed Jignesh Shah to continue as a director till the Forward Markets Commission (FMC) decided on the “fit and proper” status of the Financial Technologies (India) Ltd promoter.
The FMC, which regulates the commodity markets, had issued a show-cause notice to Shah on October 4, asking why he should be considered fit and proper to operate MCX. The notice was issued following the payment crisis at the National Spot Exchange Ltd (NSEL), which is promoted by Financial Technologies. MCX is also promoted by Financial Technologies.
The FMC had sought replies from Shah and FTIL by October 18, but Shah wanted more time. Subsequently, the regulator gave them time till October 30. Shah is the non-executive vice-chairman of MCX.
The FMC had in September directed commodity exchanges to restructure their boards as part of its efforts to improve corporate governance.
The regulator has now stipulated that 50 per cent of directors on the board of such companies must be independent and that anchor investors could have directors in proportion to their holding.
The FMC has also ruled that there should not be any permanent shareholder director on the board of the commodity exchange. MCX was asked to amend its articles of association, which makes Shah a permanent director.
The FMC’s show-cause notice and other directives had fuelled speculations that Shah might tender his resignation at today’s board meeting.
The meeting follows the resignation of MCX managing director and chief executive officer Shreekant Javalgekar last week. It is understood that a search committee has been formed to replace him.
Meanwhile, NSEL has defaulted for the tenth straight time today as it could pay only Rs 30 lakh to investors against a scheduled amount of Rs 174.72 crore.
In another development, managing director of NK Proteins Ltd, one of the biggest defaulters of NSEL, was today arrested in connection with the bourse’s Rs 5,600 crore scam.