State-run trading firm MMTC has moved the Company Law Board (CLB) against a stake sale by its co-promoter, Indiabulls, in the Indian Commodity Exchange (ICEX) to Reliance Exchangenext, alleging that the deal was “illegal” — a charge denied by all three parties.
Indiabulls and MMTC were the main promoters of ICEX, with 40 per cent and 26 per cent holdings, respectively, when the exchange was set up in 2008. Indiabulls later sold 26 per cent stake from its holding to Reliance Exchangenext (R-Next), which is part of the Anil Ambani-led Reliance Group.
MMTC has requested the CLB to declare sale of stake by Indiabulls Financial Services to R-Next as “null and void” and direct a “reversal of transfer” of these shares. When asked, ICEX, Indiabulls and R-Next asserted all the rules were followed in the deal and necessary approvals taken. A senior Indiabulls official asserted that the shares were transferred to R-Next in compliance with the shareholder agreement.
An Indiabulls company official said: MMTC was given more than two months to exercise their ‘Right of first refusal’ and ‘Tag along right’ according to the shareholders agreement. At no stage till Indiabulls got the approval from regulators did MMTC raise an iota of objection to the transaction. Nor did they exercise their ROFR or Tag along rights.
Rajnikant Patel, R-Next director and ICEX’s CEO and president, also said, “R-Next has acquired 26 per cent stake in ICEX in accordance with applicable laws and after obtaining requisite regulatory approval.”
In the petition, MMTC has requested the CLB to declare the appointment of Rajnikant Patel and R D Barman, two nominees of R-Next on the board of ICEX, as “invalid”. MMTC has submitted that there was a lock-in period of three years on stake sale as per ICEX’s article of association and alleged that the transaction was against FMC guidelines.