Rough stage faced by FTIL because of government actions

The Economic Atheneum

Company Law Board, a quasi-judicial body is all set to announce judgment on a petition filed by the Ministry of Corporate Affairs (MCA) to take over and replace the existing Board of FTIL. Management, trading clients and lenders of Financial Technologies India Ltd (FTIL) are also waiting for their judgment which was postponed on May 15 to June 30. The ministry had filed the petition asking CLB to allow the government to appoint its own nominees on the board of FTIL, the parent of scam-hit commodity exchange NSEL, in order to “prevent further acts of fraud, misfeasance, and breach of trust”.

This move by MCA has raised some unsettling questions. Is the government trying to supercede the company board (using section 397 of the Companies Act, 1956) so that it would not face any opposition while merging the company with NSEL under section 396 of the Companies Act? Does the…

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