A country’s economic growth primarily depends on its corporate ruling body. And when it doesn’t stand by its own ideologies, one can’t expect much. What happened in February 2016 when the Ministry of Corporate Affairs ordered the merger of NSEL with its parent body, FTIL, ironically holds against the ministry’s own circular dated April 20, 2011.
This hypocrisy is baffling and the move stands on an extremely irrational justification that the merger is in public interest, when it’s clear that 63000 FTIL shareholders will be wrongly burdened. Aren’t they a part of the public and are their interests somehow less important?
A book titled- The Target Book, that I’m currently reading, clearly elaborates all this and the repercussions it will have on corporate India. Written by ShantanuGuha Ray, the book also points out that the forced merger violates the concept of limited liability, which was put in practice to keep the shareholders from suffering in cases like this. By breaching it, MCA has made shareholders liable much beyond they should legally be.
So the question remains, whose interest does the merger serve? We’ve ticked off both NSEL and FTIL shareholders and also discovered that it shouldn’t go ahead on legal terms.
And we’re also not taking into accord how foreign companies will become skeptic after noticing how easy executive overreach is in our country. It will hamper all the efforts done so far to work on PM Modi’s ‘Make in India’ campaign, which FTIL promoter and business magnate Jignesh Shah was working towards even before its official announcement.