Asks Ministry to move Company Law Board
The Registrar of Companies has found total corporate governance failure at the crisis-ridden National Spot Exchange Ltd.
“There was utter lack of transparency, integrity, competence, compliance with law and ethics,” an interim report of the RoC said.
The report, submitted after an inspection of NSEL, also highlighted 15 instances of company law violations besides the fact that Brand India has been tarnished by several irregularities.
The Corporate Affairs Ministry may approach the Company Law Board seeking supersession of the NSEL Board, the report recommended.
“The Ministry may seek appropriate relief from CLB to protect public interest and safeguard the interest of those dealing with NSEL,” it said.
The Ministry will have to file a petition before the CLB seeking to either displace the current Board or appoint external persons as was done in the case of Satyam Computer, S. Balasubramanian, former Chairman of Company Law Board, told Business Line.
If the Ministry knocks the CLB doors on the NSEL matter, then the situation could be similar to the one at Satyam Computer when the Government moved in to appoint (on behalf of the CLB) external persons to run the company.
While the Ministry was lauded for moving in fast in the Satyam Computer issue, things are different this time round.
The speed was certainly missing, probably because the entity involved was not a listed one, say corporate observers.
The inspection has revealed several irregularities including failure of the NSEL Board in performing its fiduciary duties towards shareholders.
The board of directors has not bothered about the functioning of the exchange (spot). Business of the company was not carried according to prudent commercial practices/public interest, the report said.