 "Did FTIL violate holding company norms?")
Jignesh Shah
Besides these firms, the continuing crisis has also sparked a series of regulatory interventions that has thrown a spotlight on the group’s other ventures, including MCX, MCX-SX and IEX.
Sources said the ministry was looking to ascertain whether FTIL as a holding company mismanaged the affairs of the subsidiary. The ministry has found “gross violations” by the FTIL board of directors on corporate governance, among others.
Although the Ministry has completed its report on FTIL, it has sought views of the Law Ministry and other agencies before taking a final call.
Earlier this month, the capital market regulator Sebi ruled that FTIL is not a "fit and proper person to acquire or hold any equity share or any instrument that provides for entitlement for equity shares or rights over equity shares at any future date, in a recognised stock exchange or clearing corporation."
The order would be applicable for both direct and indirect holdings of FTIL in stock exchanges and clearing corporations.
Meanwhile, an inspection of NSEL books by the Ministry had found that the exchange's board failed to perform its duties towards shareholders, in violation of regulations.
The interim report of inspection, carried out by the Registrar of Companies (RoC), Mumbai, had found corporate governance failure at multiple levels, including lack of transparency, integrity, compliance and ethics.
Besides finding discrepancies in the minutes of board meetings, it was also found that the board did not discuss the exchange's compliance with various rules such as those related to admission of new members.
The inspection of books of NSEL was ordered under Section 209 A of the Companies Act.