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Shareholders of the Multi Commodities Exchange (MCX) have rejected a proposal to exit from the securities business. The largest commodity futures exchange has five per cent equity stake in the MCX-Stock Exchange (MCX-SX) along with Jignesh Shah-promoted Financial Technologies Indian Limited (FTIL), which also has five per cent stake.
MCX had proposed to amend its memorandum of association (MoA) by deleting the words ‘securities’ and ‘ready’ from the main objectives. The move was opposed by 68 per cent of shareholders.
MCX will announce the result of the postal ballots in its filing to BSE. This means that MCX can continue to be in the stock exchange business, which is dealing with securities. The MCX also holds warrants, which it received in lieu of shares it had in the stock exchange, to meet the regulatory requirement of diluting stake. FTIL, which holds 26 per cent stake in the company, opposed the move.
Voting against the amendment for FTIL was important because it directly holds five per cent stake in MCX-SX, which it might have to dilute if the Forward Markets Commission (FMC) order declaring it “not fit” stands in the court of law, as the Securities and Exchange Board of India has also issued a show-cause notice to it regarding similar action.
Another resolution, seeking to remove a clause in the articles of association regarding a permanent director, has been approved by shareholders with 99.9 per cent voting in favour.
This clause provided for Jignesh Shah to be permanent director on the MCX board. With the new amendment no director can have a permanent seat on the exchange’s board. The move to delete this provision was following the guidelines by the Forward Markets Commission (FMC) which has disallowed permanent board seat to shareholder directors of the exchanges late last year.
