In a decision that could snowball into another court battle, the board of directors of Multi Commodity Exchange of India Ltd had on Friday capped FTILs voting rights at 2% with immediate effect. It said that any holding of FTIL in excess of 2% will not be considered while voting on any resolution. Currently, FTIL has 26% stake in MCX.
The MCX board decision was based on the FMC order that found FTIL unfit to be the anchor shareholder of any commodity exchange and directed the listed entity to bring down its stake in MCX to 2%.
But FTIL says the FMC order is sub judice and that the MCX board does not have any power to issue such directions to FTIL. It also says that any inconsistent action would be dealt with in a court of law.
A stock exchange announcement by MCX late on Friday said, ...with effect from the date of the order of the FMC, they (FTIL) could not any longer hold 2% or more of the equity share capital of the MCX. As the order of the FMC is an order of a civil court under the provisions of Section 4A of the FCR Act, both the FTIL and the exchange are duty bound to comply with that order.
Accordingly, the exchange would once again call upon FTIL immediately to divest the shares in excess of the said 2%. Besides, FTIL is being informed that in view of the order of the FMC, with immediate effect, any voting in excess of the said percentage by them would not be taken into consideration, it added.
The FMC order is sub judice before the Bombay High Court... the board of any listed company does not have power, either under law or under equity, to issue directions contained in letter from MCX, said a statement issued by FTIL on Saturday.
It further added that directing FTIL to open an escrow account is untenable in law. The MCX board should be aware of its own duties and legal obligations and any action that is inconsistent with law will meet with an appropriate legal response to protect the interests of its shareholders, it added.
Meanwhile, the MCX board has also decided to approach the appropriate authorities to seek suitable directions as may be necessary for implementing the FMC order. Interestingly, the board of MCX, on December 26, 2013, had advised FTIL to reduce its stake in the exchange from 26% to 2% within a month.