In an addendum to the resolutions ahead of its Annual General Meeting, the Multi Commodity Exchange (MCX) on Thursday suggested the re-appointment of Joseph Massey to its board. Massey is due to retire by rotation after serving two years on the board of MCX as a non-executive director since August 2011.
The announcement came three weeks after the Forward Market Commission (FMC), market regulator for MCX, tightened norms for board appointments at commodity futures exchanges. As a result of these changes, three directors from the MCX board had to resign due to changed criteria for age and tenure of appointment. These included resignations of Venkat Chary, chairman of the board, and two independent directors - C M Maniar, and Shvetal Vakil. Before their departure, all of these board members were due for a re-appointment and the AGM agenda included resolutions to vote on their nominations.
Meanwhile, proxy advisory firm IiAS ( Institutional Investor Advisory Services) has recommended shareholders to vote against Massey's re-appointment citing his performance as a director in light of the R5,600-crore payment crisis at the National Spot Exchange (NSEL), where Massey is a director.
IiAS is of the view that due to their performance on the board of NSEL, such directors do not satisfy the ‘fit and proper’ criteria as laid down by FMC in its circular dated 12 August 2013 – which clearly stipulate that directors of commodity exchanges should have “a general reputation and record of fairness and integrity”.
“By reappointing Joseph Massey, MCX runs the risk of severely compromising its board quality,” said IiAS in an e-mail response citing failure of NSEL directors (including Massey) to keep a tab on the exchange's functioning and risk management system, and its lack of accountability post the NSEL crisis.