There is a tussle on between the Ministry of Corporate Affairs and the North Block over the National Spot Exchange and Financial Technologies merger. Both MCA and the Finance Ministry have been debating over the recommendations submitted by the Forwards Market Commission (FMC) on the NSEL scam, reports Malvika Jain of CNBC-TV18.
FMC, which submitted a report on NSEL scam in August, had sought for a merger between NSEL and FTIL, citing that the move would help in faster recovery of dues. NSEL has liabilities of Rs 5,600 crore. Besides, NSEL is a 100 percent subsidiary of FTIL and hence the merger would not have made much of a difference as far as the management was concerned.
While the Ministry of Corporate Affairs is against the merger, the Finance Ministry favours it. The final call on the issue will be taken by the former. Interestingly, Arun Jaitely heads both ministries.
According to sources at the Corporate Affairs Ministry, a merger under Section 396 of the Companies Act 1956, which deals with central government’s powers to merge companies, can happen only in case of public interest.
However, in the said case, the public interest is confined to FTIL shareholders, who are not in favour of the merger with NSEL, sources added. Since the merger cannot happen easily, thus MCA had sought Finance Ministry’s view.
There have been no previous instances of invoking Section 396 barring one, thus it would be interesting to see how things unfold.
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