Jignesh Shah-led Financial Technologies (India) Ltd is the promoter of National Spot Exchange Ltd (NSEL) and following the Rs 5,600 crore payment crisis at the bourse, these entities alongwith those related to them have come under the scanner of multiple agencies for various violations.
Sources said the ministry has found "gross violations" by FTIL board on corporate governance matters and is looking at the issue of 'fit and proper' status of directors, among others.
The promoters of NSEL are found to have violated the provisions of the Companies Act.
While the ministry has completed its report on FTIL, it is awaiting the views from the Law Ministry and other agencies before taking a final decision. Clarifications have also been sought from Securities and Exchange Board of India (Sebi) as well Forward Markets Commission (FMC), they added.
An inspection of NSEL books by the Ministry had found that the exchange's board failed to perform its duties towards shareholders in violation of regulations.
The interim report of inspection, carried out by the Registrar of Companies (RoC), Mumbai, had found corporate governance failure at multiple levels, including lack of transparency, integrity, compliance and ethics.
Besides finding discrepancies in the minutes of board meetings, it was also found that the board did not discuss the exchange's compliance with various rules such as those related to admission of new members.
Many of the NSEL directors, including Jignesh Shah and Joseph Massey, were holding common directorship in group companies of FTIL and they cannot claim to be not aware about happenings at the exchange, sources had said.
The inspection of books of NSEL was ordered under Section 209 A of the Companies Act.
Sebi is also probing corporate governance lapses at FTIL and Multi Commodity Exchange of India Ltd (MCX), the two listed entities of the group.
It has been investigating fluctuation in the share prices of the two entities and role of certain brokers ever since the NSEL crisis broke out in August last, the latest round of probe stems from an FMC ordered audit carried out by consultancy PwC, according to sources.