Final call on NSEL-FTIL merger likely in July

NEW DELHI: The government is likely to issue the final order on the proposed merger of crisishit National Spot Exchange Ltd (NSEL) with its holding company Financial Technologies (India) Ltd in July after evaluating objections to the plan. The Ministry of Corporate Affairs is reviewing and considering more than 19,000 objections received from FTIL shareholders and related parties against the merger.
“We needed more time and resources to review thousands of objections and suggestions received. It’s a mammoth task and we hope to finish it by June end, after which the final order will be passed,” a senior government official said, declining to be identified.

The final order has to be presented in the Bombay High Court and will come into effect two weeks after submission so that affected parties get an opportunity to pursue legal redress.

The Forward Markets Commission, the regulator, proposed the merger in December 2013 after a Rs 5,600 crore payment crisis following counter-party payment defaults on the commodity exchange’s trading platform.

The combination will be done under Section 396 of the Companies Act, 1956, which says the central government can order the merger of two companies if it is essential in public interest.

The ministry has already decided the share-swap ratio for the proposed merger. Three fully paid-up equity shares of Rs 2 each of FTIL will be issued for eight fully paid-up equity shares of Rs 10 each of NSEL. The calculation is based on the valuation of assets and liabilities of the merging companies. The government, in its assessment order, analysed the share prices of NSEL and FTIL and came to a fair value of Rs 77 and Rs 208 each, respectively.

Meanwhile, the Company Law Board will hear the government’s petition to supersede the FTIL board on June 30. The ministry had moved the CLB seeking the removal and supersession of the FTIL board under Section 397 of the Companies Act, 1956, claiming it has lost faith in the board.