Ministry of Corporate Affairs seeks law min advice to act against Financial Technologies

The Ministry of Corporate Affairs (MCA) has sought the law ministry's opinion on the course of action to be taken against Financial Technologies IndiaBSE 1.40 % after an inspection found the company of violating regulations, a senior MCA official said. An inspection of the Jignesh Shah-promoted company by the Registrar of Companies found alleged violation of the Companies Act as well as lack of transparency and compliance and ethical issues in its operations. The registrar has submitted its findings to the MCA, recommending prosecution of the company. 

"The MCA has found serious violations of the Companies Act. Final decision on action would be taken after the law ministry's view," the official told ET. The inspection was conducted after National Spot Exchange, a commodity spot exchange founded by Financial Technologies, got embroiled in a Rs 5,600-crore payment crisis. The exchange could not meet its payment commitments after the government accused it of trading irregularities and ordered it to stop trading activities. Financial TechnologiesBSE 1.40 % is also the promoter of the Multi-Commodity Exchange of India and MCX Stock Exchange. 

The MCA has also sought comments from market regulator Securities and Exchange Board of India on the affairs at the company. Sebi is probing wide fluctuations in the share prices of Financial Technologies and Multi-Commodity Exchange following the Forwards Markets Commission's decision to get a forensic audit of Financial Technologies and its companies. 

The MCA could also charge the National Spot Exchange for, what the official said, misleading and false disclosures to the Registrar of Companies and launch criminal proceedings under the companies law which carries penalty of imprisonment of up to two years and fine for the people found responsible. It has already circulated the registrar's report to the Forwards Market Commission and the finance ministry for their views. (Economic Times)