When the government goes out of the way to justify corporate decisions overriding its own laws, the dread of executive tyranny gets invoked, as in the NSEL case.What’s absolutely shocking is the proposed merger order of the defunct NSEL and FTIL passed by the MCA on grounds assumed to be best known only to its higher levels.
A book that I’m currently reading, very well explains this as it uncovers all the aspects of the NSEL crisis of 2013. The book is written by renowned author, Shantanu Guha Ray and is titled The Target Book. It was only after I read it that I realized how a few powerful people actually orchestrated the crisis.
One major aspect of the injustice done to NSEL and its parent company, FTIL, was the unreasonable orders by the government and market regulators, the forced merger for instance. There is no way the merger works as a solution. One, it’s an unrighteous burden of Rs 5,600 crore on around 63,000 FTIL shareholders who pinned their hopes on the company that gave India its prized commodity exchange MCX, and was the first of its kind to perpetuate commodity software in India.
Two, the merger breaches all known principles of limited liability which risks India’s hold on its FDI channels as foreign investors, realized the prospects of growth in India, definitely do not see this positively.
Three, it’s becoming clear with SEBI investigations making a head way that colluding brokers at NSEL could pull it off by way of resources like client code modification, channelizing black money, false assurances and much more, which puts serious questions on our regulatory radar.
As a lot of months have already been consumed by investigations headed nowhere and executive mishandling; now is the time for MCA to redeem itself as India’s corporate regulatory body with the ability to invoke rational decisions that actually stem from ‘public interest’ and not the other way round.
For more information check The Target Book Reviews.