DOES FORCED MERGER
OF NSEL-FTIL TAKE INTO
ACCOUNT PUBLIC
INTEREST OF ONLY
TRADING CLIENTS?
Catalogue
Is Public Interest defined under the Section 396
of the Companies Act?
Public interest disregarded
When Can Two Companies Merge?
Trading Clients Are Not Investors
Shareholders Interest Is Crucial
Is Public Interest defined under the
Section 396 of the Companies Act?
While determining “public interest”, interest of all the
concerned should be taken into account in a transparent
manner
Public Interest is not defined under the Section 396 of the
Companies Act, 1956 (Act)
It should not appeal/safeguard only to certain class of
public to the prejudice of others
Public interest disregarded
Forced Merger completely disregards the interest of more
than 63,000 public shareholders of FTIL
1000+ employees of FTIL, lenders, vendors & other
stakeholders of FTIL are ignored to allegedly protect the
interest of 781 HNI, sophisticated Trading Clients, who
account for 66% of the total outstanding
When Can Two Companies
Merge?
Under the Companies Act, the Central Government can
merge two companies only if such merger is "essential in the
public interest“
The interest of the 13,000 clients of the brokers who traded
on NSEL platform for higher returns cannot be termed as
“public interest”
Bombay High Court, in its order dated 22 August 2014 has
questioned whether these Trading Clients are ‘genuine
investors’
Trading Clients Are Not
Investors
Trading clients are neither creditors of NSEL
nor did they invest in FDs/Debentures in NSEL
No “interest” was paid to Trading Clients by
NSEL and hence they are not investors as
they wrongly call themselves
Shareholders Interest Is Crucial
The interests of more than 63,000+ public shareholders of
FTIL are equally important and construe “public interest”
The Draft Order of MCA, dated 21.10.2014, proposing
merger of NSEL with FTIL under the pretext of public interest
is not legally tenable