Government orders to merge NSEL to parent firm FTIL

The Central Government has passed an order to merge NSEL (National Spot Exchange Ltd.) with FTIL (Financial Technologies India Ltd)

Public interest

The order has been passed by the Ministry of Corporate Affairs. According to Section 396 of the Companies Act, 1956, the central government can order the merger of two companies if it is essential in public interest. The clause has been rarely used by the government. However, in this case, since the subsidiary is cash-strapped and has no funds to pay its dues, the government has ordered the merger. The merger with the financially viable FTIL will facilitate the recovery of dues for creditors of the NSEL.

Challenge by stakeholders

According to the law, submissions can be made to the Ministry of Corporate Affairs within 60 days of the order. The shareholders and stakeholders of FTIL are expected to file submissions with the Ministry opposing the merger. Through the merger will benefit the victims of the scam perpetrated by NSEL, it will also dilute the assets of FTIL and affect the investments of the shareholders and stakeholders of FTIL.

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Categories: Banking Current Affairs 2017Business & Economy Current Affairs 2017

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