Shah: In a bind
Mumbai, June 13: The Bombay high court today allowed the Multi Commodity Exchange of India (MCX) to go ahead with a postal ballot seeking shareholders’ nod on a proposal to amend its articles of association.
The development is a setback to Jignesh Shah’s Financial Technologies (India) Ltd because if the proposal is approved by the shareholders of MCX, FTIL’s stake may be transferred to an escrow account for sale later.
The Forward Markets Commission (FMC) had in December 17, 2013 held that FTIL was not a “fit and proper person” to continue to be a shareholder of 2 per cent or more of the paid-up equity capital of MCX under the guidelines for the capital structure of commodity exchanges after five years of operations.
FTIL holds 26 per cent in MCX and its shareholding has to be now brought down to 2 per cent.
The FMC had also ruled that if any person ceases to be a “fit and proper person”, it will have to divest its shareholding.
Further, pending divestment of shares, the voting rights of such a person or entity will stand extinguished.
Following this, FTIL had challenged the FMC order that included the direction on voting rights and the possibility that MCX could transfer its stake to an escrow account.
In its hearing today, a division bench of the Bombay high court, while pointing out that the stake should have been brought down to 2 per cent, allowed MCX to go ahead with the postal ballot.
The court also ruled that if its shareholding was transferred to an escrow account, it could approach the court for relief.
MCX, in its notice to shareholders, had said that since the onus of implementation of the FMC order was on the company, it had been taking various measures to implement the order.