In the wake of
government’s proposal to revamp FTIL board following its order to merge NSEL with
FTIL last week, the business community at large cedes it to be starkly
unsavoury. The move has been debated on various media mouthpieces calling it
unwarranted or “a bad precedent.” It
has been countered by FTIL maintaining all the while that all efforts
pertaining to recovery are being diligently escalated. Also, FTIL is a
healthily functional company with the strength of over 1000 employees and over
60,000 shareholders; therefore, persecuting FTIL will be prejudiced and
uncalled-for, for expediting recovery from the defaulters.
The outcry has
gone unheard, and the merger proposed by Forward Market Commission (FMC) is
believed to culminate, making all those who haven’t invested for it bear the brunt
of liability. The massively voiced standpoint ‘why to foist one’s liability on
the other’ has gone unheeded. The merger will not only have a tumbling impact
on the tradition of limited liability - mainly, on the corporate India, but it
will also discourage investors from investing in various portfolios, impacting
the economy adversely. It is also viewed as the nosedive of defaulters to the
extent of duping trading clients is being ignored, besides disregarding FTIL’s
diligent recovery efforts.
What’s more thwarting
is that there’s no charge against the company itself, with no trace of fund
squandering even to the promoters, yet the move has been initiated. Needless to
say, the sanctity of the bourse and markets is being imperilled, setting a
wrong precedent. On various occasions during the proceeds of the case, Bombay
HC’s observation on some portraying as traders, being sceptical about their
legitimacy as traders has been emphasised time and again, which has also been
utterly condoned.
More precisely,
Limited Liability of a parent company determines the amount of money and
resources the company has invested in its subsidiary company; this emerges as
the straightforward norm of modern financial officialdom, which is seen as
being “violated and forsaken” and, principally, believed to send wrong
indication to present and future investors. Thus, it will have a surging effect
on the economy, as the ‘limited liability’ model is an indispensable offshoot
to propel entrepreneurship and investment.
It
is commonly viewed that a small section of trading clients claiming their
money may not constitute a vast majority of people, thus the parity of ‘public
interest’ action is far from being apt to the Companies Act provision,
especially, in this scenario. The protection of public interest mechanism is
equally workable across-the-board; therefore, safeguarding interests of parent
company’s shareholders, employees and stakeholders at large is as much
essential, which is being overlooked. As a result, to protect a handful of
brokers of the crisis-hit NSEL, staking a colossal cluster of 60,000 investors
and over 1000 employees of FTIL, is simply based on a decision of the
bureaucracy. How far it is wise to substitute FTIL’s stakeholders’ liabilities
and interests for NSEL’s, needs a relook, and a popular perspective.
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