HC bars FTIL from disbursing dividend, hiking directors' pay

MUMBAI: In a setback to promoters of Financial Technologies India ( FTIL), the Bombay High Court has directed the company not to disburse dividend to shareholders till the court decides on the plea filed by a group of investors who were among those who lost money after the FTIL-promoted National Spot Exchange defaulted in 2013.

FTIL is promoted by Jignesh Shah led La-Fin Financial Services. The promoter group owned 45.63% equity, of which 26.75% is with La-fin while Shah directly held a little over 10% shares as on June 30, 2015. Other significant non-promoter shareholders include private equity house Blackstone and Ravi Sheth and Bharat Sheth -the promoters of Great Eastern Shipping.

The investor group had moved the court to recover collectively over Rs 5,500 crore which they lost after the spot exchange collapsed in 2013.

On Wednesday, Justice SJ Kathawala, while passing an order said, "FTIL shall not distribute any dividend amongst its shareholders andor pay any remuneration at the increased rate to its managing directordirectors senior employees." "FTIL shall also not deposit any amount in compliance with Section 123 sub-clause (iv) of the Companies Act, 1956," said the order. The court will hear the case further on October 5.

The order was passed in response to a petition filed by LJ Tanna Shares & Securities.

Jignesh Shah-promoted FTIL's annual meeting was held in Chennai. According to company's announcement to the exchange, the meeting's agenda included declaring final dividend, among other things. Shah had spent over three months in jail in connection with the fraud at NSEL.

Many aggrieved investors are favouring a merger of NSEL with FTIL, hoping the move would enable them to salvage their money.Earlier, the court had directed the government to decide on the merger by October 30.

On Wednesday , FTIL shares closed 0.89% lower at Rs 111.70 on BSE.