MCX board members sought Shah's resignation in an attempt to insulate the commodity futures exchange from the ongoing settlement crisis at the NSEL. Shah, however, countered the demand for his resignation as a permanent director on the board of MCX saying the Forward Markets Commission (FMC) had granted him two more weeks to reply to a show cause notice questioning the 'fit and proper' status of Financial Technologies India Ltd (FTIL), Shah and two more ex-directors of the MCX.
Jignesh Shah and Joseph Massey had to step down from the board of MCX-SX earlier this month. Recent changes in regulation also mandate that no shareholder director can occupy a board seat as a permanent director without a re-appointment, suggesting that Shah would need to be re-appointed if he has to stay on the board.
The other two individuals that also are facing scrutiny regarding their 'fit and proper' status have already in the recent past left the MCX board. Joseph Massey, a retiring director, withdrew his consent for re-appointment before the annual general meeting of the company on September 30,2013. On Saturday, Shrikant Javalgekar, submitted his resignation as MD and CEO of the company.
According to sources, the MCX board approved appointment of three shareholder directors including P Paramasivam of Corporation Bank, Sanjay Agarwal of bank of Baroda and KN Raghunathan of UBI .
Recently, FMC approved the appointment of two new independent directors G Anantharaman and Pravir Vohra on the MCX board, taking the total number of independent directors to six.
Eight board members of the exchange have left the board in the last one-and-a- half month due to tighter norms prescribed by the FMC in the aftermath of the R5,600-crore settlement scam at NSEL. Six board members resigned early in August 2013, with four members including Venkat Chary, then chairman of the board, vacating the post due to FMC's guidelines on age and term limits.
FTIL, which holds 26% in MCX, currently has two representatives on the board. In the light of the recent changes in regulation, the number of representatives needs to be brought down in proportion to their shareholding, which, in this case, will allow one FTIL representative on the board.
Separately, the board also formed a five-member oversight committee with Pravir Vora as the chairperson. Deputy MD Praveen Singhal will continue to oversee functions of an MD till a new appointment is made.