Companies Bill,2009 - What is New?

" Companies Bill,2009 - What is New?"


2008 Bill Introduced in LokSabha on 23rd Oct. 2008

2009 Bill INTRODUCED IN LOK SABHA ON 3rd AUGUST 2009

The Bill proposes to have 426 Clauses and 28 CHAPTERS (against 658 section in the Companies Act,1956)

No. of welcome changes

Several New Concepts/Ideas Introduced

It will replace the Companies Act,1956

All Powers of High Court Transferred to Proposed NCLT

Penalties and Punishments are huge


Major Changes

1. All restrictions on Managerial remuneration removed

2. Related Party Disclosure - Disclosure Only . No need for Government approval.

3. OPC (One Person Company) introduced

4. Company prohibited to accept Deposits. However, the Company can accept deposit from the Members.

5. Concept of Key Management Personnel (KMP) Introduced

6. Company should have a Chief Financial Officer ( CFO)

7. Registered Valuers

8. Secretarial Standards

9. Auditing Standards

10. Duties of directors

11. Auditor cannot undertake certain services

12. Dormant Company

13. Independent Directors

14. Board meeting and Notices

15. Importance of Annual return

16. Revival and rehabilitation of sick companies

17. Special Courts

18. Adjudication of Penalties





Few Important Definitions



Financial Year – 1st April to 31st March

“Chief Financial Officer” means a person appointed as the Chief Financial Officer of a company

“relative” with reference to any individual means the spouse, brother, sister and all lineal ascendants and descendants of such individual related to him either by marriage or adoption;


“small company” means a company, other than a public company,—
(i) whose paid-up share capital does not exceed such amount as may be prescribed and the prescribed amount shall not be more than five crore rupees; or
(ii) whose turnover as per its last profit and loss account does not exceed such amount as may be prescribed and the prescribed amount shall not be more than twenty crore rupees:


“key managerial personnel”, in relation to a company, means —

(i) the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;

(ii) the Company Secretary; and

(iii) the Chief Financial Officer;






CHAPTER II
INCORPORATION OF COMPANIES
(Clause 3 to 21)

1. One person company (OPC) - Clause 3

It has only one member. Memorandum of a One Person Company shall indicate the name of the person who shall, in the event of the subscriber’s death, disability or otherwise, become the member of the company.

It shall be the duty of the member of a One Person Company to intimate the Registrar the change, if any, in the name of the person.

It will have name of OPC Ltd at the end.

It gives corporate status for the single promoter

Once the Bill is enacted, the existing sole proprietor firms can convert themselves to OPCs with the benefits of limited liability and minimal compliance.

Separate corporate entity that recognizes a promoter to do the business in a big way.

Single entrepreneur can manage his business on his own. So, the key difference between OPC and sole proprietorship is the way liabilities are treated. For instance, in an OPC the promoter’s liability is limited in the event of a default or legal issues. On the other hand, in sole proprietorships, the liability has not been restricted and extends to the individual and his or her entire assets.

Decision

One person can take a decision without waiting for other director’s consent and can be avoided wasting time and energy convincing other directors.

So many other countries already having this kind of one Person Company.

This is one of the welcome changes proposed in the bill.



2. Incorporation of companies.

All monies payable by any member to the company under the memorandum or articles (By subscribing MOA &AOA at the time of incorporation) shall be a debt due from him to the company.

Subscribers of the MOA have to make the money within 180 days unless Registrar got the power to remove the company from the register.

Any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than five thousand rupees but which may extend to one lakh rupees, or with both.

Even after incorporation, the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as first directors of the company, the persons making declaration shall each be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.

3. Commencement of business - clause 10

No need to obtain Certificate of Commencement of Business. Declaration has to be filed with in 180 days. Registrar may remove the name of the company from the register if the company is not carrying on business or operations and has not filed the declaration.

The company shall furnish to the Registrar verification of its registered office within fifteen days of its incorporation in such manner as may be prescribed.





4. Alteration of memorandum -clause 12

Change of registered office from one State to another State only requires Central Government's approval.

5. Alteration of articles - clause 13

Conversion

(a) a private company into a public company or a One Person Company, or

(b) a public company into a private company or a One Person Company, or

(c) a One Person Company into a public company or a private company:

any alteration having the effect of conversion of a public company into a private company or a One Person Company shall not take effect except with the approval of the Tribunal which shall make such order as it may deem fit.


CHAPTER III
PROSPECTUS AND ALLOTMENT OF SECURITIES
( Clause 22 to 36)


6. Action to be taken by affected persons - clause 32

Class action is possible in case of misstatement in the prospectus.

A suit may be filed or any other action may be taken by any person, group of persons or any association of persons affected by any misleading statement or the inclusion or omission of any matter in the prospectus.

Penalties and punishments are huge in case of misstatement in the prospectus. Civil and criminal liabilities for the promoters.





7. Global Depository Receipt (GDR) - clause 36

A company may, after passing a special resolution in its general meeting, issue depository receipts to be dealt with in depository mode in any foreign country in such manner, and subject to such conditions, as may be prescribed.


Private company need not file return of allotment – 34(5)


CHAPTER IV
SHARE CAPITAL AND DEBENTURES
Clause 37 to 65)

8. Kinds of share capital - clause 37

Only Two kinds of Capital i.e Equity and Preference.

There is no equity shares with differential rights or non-voting equity shares allowed under section 86 of the companies Act,1956.

9. Prohibition on issue of shares at a discount - clause 47

A company shall not issue shares at a discount. Any share issued by a company at a discounted price shall be void. However, Sweat Equity shares can be issued at a discount subject to the rules.


10. Issue and redemption of preference shares - clause 49

This clause authorizes infrastructural projects to issue preference shares redeemable after a period exceeding 20 years.

11. Debentures - clause 64

The clause provides that a company shall not issue prospectus to more than 500 persons without appointing a debenture trustee.






CHAPTER V
ACCEPTANCE OF DEPOSITS BY COMPANIES
(Clause 66 to 68)

12. Prohibition on acceptance of public deposits - clause 66

Company prohibited accepting Deposits from the Public. However, the Company can accept deposit from the Members.

There is no restriction to invite and accept debentures including unsecured debetures.

Existing deposits shall be repaid within one year from the date commencement of this act or from the date on which such payments are due, whichever is earlier.

Default

In addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees and every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both.

CHAPTER VI
REGISTRATION OF CHARGES
(Clause 69 to 77)

13. Registration of Charges -clause 69 &70

Charge should be filed with in 30 days. It can be filed with in 300 days from the date of creation with an additional fee.

If the company fails to register the charge within the period , charge holder may apply to the Registrar for registration of the charge along with the instrument created for the charge, in such form and manner as may be prescribed and the Registrar may, on such application, within fourteen days after giving notice to the company, allow such registration on payment of such fee and additional fee as may be prescribed:

Provided that where registration is effected on application of the person in whose favour the charge is created, that person shall be entitled to recover from the company the amount of any fee or additional fee paid by him to the Registrar for the purpose of registration of charge.

CHAPTER VII
MANAGEMENT AND ADMINISTRATION
( Clause 78 – 109)

14. Annual return – Clause 82

Scope of Annual return widened.

It includes meetings of members or Board and its various committees along with attendance details; remuneration of directors and key managerial personnel; penalties or punishment imposed on the company, its directors or officers and details of compounding of offences; matters related to certification of compliances, disclosures; and such other matters as may be prescribed.

It should be signed both by a director and the Company Secretary, or where there is no Company Secretary, by a Company Secretary in whole-time practice:

If the company having such paid-up capital and turnover as may be prescribed, or a company whose shares are listed on a recognised stock exchange, shall also be signed by a Company Secretary in whole-time practice .

One Person Company and small company, the annual return shall be signed by the Company Secretary, or where there is no Company Secretary, by one director of the company.

An extract of the annual return in such form as may be prescribed shall form part of the Board’s Report.

Where a Company Secretary in whole-time practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, such Company Secretary shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.


15. Annual General Meeting - Clause 85

OPC need not hold an annual general meeting.

First AGM Should be within 9 months from the close of financial year and subsequent AGM should be within 6 months from the close of financial year.

AGM cannot be held on National Holiday. ( Public Holiday in 1956 Act)

Notice of meeting 21 clear days

Notice should be given to the director also

Explanatory statement required for all special business

No Statutory meeting and statutory report required

16. Voting through electronic means - clause 97

Unless the articles provide otherwise, a member may exercise his vote at a general meeting by electronic means subject to rules.

17. Postal ballot - clause 99

Presently, postal ballot procedures only for listed company and specified purpose.

Now, it has been proposed to be extended under the Bill to every company for businesses as may be notified by the Central Government to be transacted only by postal ballot.


18. Report on Annual General Meeting - clause 109

Every Listed companies are required to prepare and file a report on convening, holding and conducting annual general meeting every year within 30 days of its conclusion.





CHAPTER VIII
DECLARATION AND PAYMENT OF DIVIDEND
Clause 110-115)

19 Declaration of Dividend

Dividend can be declared only from the current year profits

Inadequacy or absence of profits in any financial year, the company proposes to declare dividend out of the accumulated profits earned by it in the previous financial year or years and transferred by it to the reserves, such declaration shall be made by a resolution passed at a meeting of the Board with the consent of all the directors and the approval of the financial institutions whose term loans are subsisting, and thereafter in accordance with a special resolution passed by the shareholders at an annual general meeting.


Unpaid dividend can be claimed any time from the IEPF

CHAPTER IX
ACCOUNTS OF COMPANIES
(Clauses 116 to 122)

20. Books of account, etc, to be kept by company - Clause 116

Keeping books of account in electronic mode is authorized. The persons responsible are the CEO/ CFO/ Whole-time director in charge of finance, or any other officer charged by the Board to see to the keeping of the said books. Preservation of such books is 8 years.

21. Annual report - Clause 120

Annual reports including Board's report and its contents have been enlarged. The Board's report should contain following new items like

1. Annual return
2. number of board's meetings held
3. Declaration by independent directors
4. Particulars of inter-corporate loans and investments made
5. Particulars of related party transactions etc


CHAPTER X
AUDIT AND AUDITORS
Clauses 123 to 131


22. Appointments of Auditors - 123

First Auditor should appointed by the Board with one month from the date of incorporation Company unless shareholders have appoint. The company shall inform the auditor concerned of his appointment, and also file a notice of such appointment with the Registrar within fifteen days of the meeting in which the auditor is appointed.

Where at any annual general meeting, no auditor is appointed or re-appointed, the existing auditor shall continue to be the auditor of the company.

23. Auditors - Remuneration to be fixed in the AGM

Every auditor shall comply with the Auditing Standards to be notified by the Central Government. In the meanwhile until such notification, standards specified by ICAI shall be deemed to be the Auditing Standards to be complied with.

24. Disqualifications of auditors – 124(3)

None of the following persons shall be eligible for appointment as an auditor of a company, namely:—

(a) a body corporate;

(b) an officer or employee of the company;

(c) a person who is a partner, or who is in the employment, of an officer or employee of the company;

(d) a person who, or his relative or partner—

(i) is holding any security of the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company, of value in terms of such percentage as may be prescribed;

(ii) is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company; or

(iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, for such amount as may be prescribed;

(e) a person or a firm who has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company of such nature as may be prescribed;

(f) a person whose relative is in the employment of the company as a director or key managerial personnel;

(g) a person who is in employment elsewhere or a person or firm who holds appointment as an auditor in companies exceeding such number as may be prescribed on the date of his appointment.


25. Auditor not to render certain services - clause 127

• accounting and book-keeping services;

• internal audit;

• designing and implementation of any financial information system;

• actuarial services;

• investment advisory services;

• investment banking services;

• rendering of outsourced financial services; and

• management services.

If the auditor renders any of the above services, he shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees:

Provided that where it is proved that an auditor has knowingly or wilfully contravened any of the provisions of the aforesaid sections, he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees, or with both.

CHAPTER 11
APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
Clauses 132 to 153

26. Company to have Board of directors· clause 132

Every company shall have a Board of directors. Only individuals can become directors

At least one of the directors should be a person ordinarily resident in India, that is, one who stayed in India for a total of 182 days in a calendar year.


27. Independent director - clause 132

Every listed public company having such amount of paid-up share capital as may be prescribed shall have at the least one-third of the total number of directors as independent directors. The Central Government may prescribe the minimum number of independent directors in case of other public companies and subsidiaries of any public company.


28. Duties of Directors - clause147

New provision in the Bill

1. A director of a company shall act in accordance with the articles.
2. He shall act in good faith in order to promote the objects of the company for the benefit of members as a whole ,and in best interests of the company
3. He shall exercise his duties with due and reasonable care, skill and diligence.
4. He shall not involve in a situation in which he may be have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.

5. He shall not achieve or attempt to achieve any undue gain or advantage either to himself or his relatives ,partners or associates

6. He shall not assign his office and any assignment so made shall be void.


Still it can be clearly specified.

Government is also thinking to introduce knowledge test for the directors like KRA, KPA


29. Resignation of director - clause 149

As compared to the existing companies act, this is absolutely makes clarity.

A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and intimate the Registrar in such manner and in such form as may be prescribed and shall also place the fact of such resignation in the subsequent general meeting held by the company:

Provided that a director may also forward a copy of his resignation to the Registrar in the manner as may be prescribed.

The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later.

CHAPTER 12I
MEETINGS OF BOARD AND ITS POWERS
(Clauses 154 to 173)

30. Board Meetings - clause 154

After the Incorporation, every company shall hold its first Board meeting within 30 days.

In year 4 Board meetings and time cap between two board meetings should not exceed 120 days.

Participation through video-conferencing or such other electronic means, is possible subject to rules.

Every Board meeting requires a 7 day notice in writing or by electronic means.

To transact urgent business, a Board meeting may be called
at shorter notice subject to the condition that at least one independent director, if any, is present at the meeting.

If such an independent director is absent, the decisions taken at such a Board meeting become effective only on their circulation to all the directors and ratification by at least one independent director.

Circular resolutions passed should be noted at a subsequent Board meeting and thus made part of the minutes of such a meeting.


31. Restrictions on Board’s Power - clause 160

The restrictions contained in section 293 of the Companies Act1956 retained. But the consent of general meeting required is by special resolution and not ordinary resolution. It is for all the Companies.


32. Loan to directors -clause 163

Exempted for MD/ WD

Subject to applicability of all employees or Scheme approved by the members by passing special resolution.

Need some more restrictions.

33. Related party transactions - clause 166

Surely, this one of the welcome step. Shareholders are authorized to decide related party transactions.

The contracts and arrangements with the related party:

- sale, purchase or supply of any goods and services

- selling or otherwise disposing of or buying property of any kind

- leasing property of any kind

- availing or rendering of any services

- appointment of any agents for purchase or sale of goods, materials or services or property

- appointment to any office or place of profit in the company or its subsidiary

underwriting the subscription of any securities or derivatives thereof of the company.

companies having the prescribed paid up capital should obtain prior members' approval by a special resolution.

This clause will not apply if the transaction made on arms’ length basis.



34. Prohibition of insider trading of securities by the directors or KMP - 172


CHAPTER 13
APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
Clauses 174 to 178)


Appointment of managing director, whole-time director or manager

No company shall appoint or continue the employment of any person as its key managerial personnel who is below the age of twenty-one years or has attained the age of seventy years:

Provided that appointment of a person who has attained the age of seventy years may be made by passing a special resolution;

Board can appoint MD with the consent of all the directors present tat the meeting subject the approval of the members at the ensuing general meeting


35. Remuneration of managerial personnel – Clause 175

There is no restriction for Remuneration. Shareholders should approve the remuneration recommended by the Board of directors.

A managing or whole-time director or a manager of a company may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the company or partly by monthly payment and partly by the percentage of net profits.

Shareholders can decide the remuneration. Government will not interfere in this matter.

This is also one of the welcome changes proposed in the bill.

Clause 176

A director who is neither a whole-time director nor a managing director of a company may be paid remuneration in the form of —

(a) fee for attending meetings of the Board or committees thereof in accordance with the articles; and

(b) profit-related commission with the prior approval of members by a special resolution

36. Appointment of key managerial personnel - Clause 178

Every company belonging to such class or description of companies as may be prescribed shall have whole-time key managerial personnel.

“key managerial personnel”, in relation to a company, means —

(i) the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;

(ii) the Company Secretary; and

(iii) the Chief Financial Officer;


A Company Secretary is a KMP along with the Managing Director, the Chief Executive Officer and the Chief Financial Officer.

Whole-time key managerial personnel shall not hold office in more than one company at the same time

37. Application to Tribunal of relief in cases of the oppression and mismanagement - clause 212

Section 397 of 1956 Act has been retained in the Bill.


CHAPTER XV
COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS
Clauses 201 to 211)

38. Merger or amalgamation of certain companies. – 204

Merger or Amalgamation of Two Small Companies or between a holding company and its wholly-owned subsidiary company is made easier.

- Scheme to be prepared
- Notice for any objections
- Scheme should be approved by the members by a special resolution
- Scheme should be approved by three-fourths in value of the creditors
- transferee company shall file a copy of the scheme with the Registrar and the Official Liquidator.
- if the Registrar or the Official Liquidator has no objections or comments to the scheme, the Registrar shall register the same and issue a confirmation thereof to the companies.
- If the Official Liquidator has any objections or comments, he may communicate the same in writing to the Registrar within a period of thirty day
- If scheme is not in public interest or in interest of the creditors or any objections received, registrar may file an application before the Tribunal.
- Tribunal Order and order shall be communicated to the Registrar


A foreign company may merge or amalgamate into a company registered under this Act or vice versa



39. Class Action - clause 216

According to this clause, one or more members or class of members or creditors may file an application before the Tribunal on behalf of the whole of their class alleging that the affairs of a company are being conducted in a manner prejudicial to its interests or the interests of the members or creditors, and to seek necessary remedies


CHAPTER 17I
REGISTERED VALUERS
Clause 218 to 223)

40. Registered valuers

New clauses in the Bill and also new opportunity for the professional.

Valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or net worth of a company or its assets, it shall be valued by a person registered as a valuer under this chapter.

Any Chartered Accountant, Cost and Works Accountant, Company Secretary or other persons possessing such qualifications as may be prescribed may apply to the Central Government in the prescribed form for being registered as a valuer under this section

Provided that no company or body corporate shall be eligible to apply.


CHAPTER 18
REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER
Clauses 224 to 228)

41. Power of Registrar to remove name of a company from register.

- If the company has failed to commence its business within one year of its incorporation
- If the subscribers have not paid money with in 180 days or if the company has not filed declaration within 180 days
- If the company is not carrying on any business or operation for a period of one year and has not made any application within such period for obtaining the status of a dormant company


Registrar will send the notice to all the directors of his intention to remove the name of the company from the register.

Company can voluntarily by passing a special resolution or consent of seventy-five per cent of the members in terms of share capital may also file an application Registrar for removing the name of the company from the register.

However, application cannot be made certain circumstances like

in the previous three months, the company—

(a) has changed its name;

(b) has traded or otherwise carried on business;

(c) has made a disposal of any properties

(d) has engaged in any other activity

(e) has made an application to the Tribunal for the sanctioning of a compromise or arrangement

CHAPTER 19
REVIVAL AND REHABILITATION OF SICK COMPANIES
(Clauses 229 to 244)

42. Revival and rehabilitation of sick companies - clause 229

1. Application to Tribunal to declare as Sick Company

Where on a demand by the secured creditors of a company representing fifty per cent. or more of its outstanding amount of debt, the company has failed to pay the debt within thirty days of the service of the notice of demand or to secure or compound it to the reasonable satisfaction of the creditors, any secured creditor may file an application to the Tribunal in the prescribed manner along with the relevant evidence for such default, non-repayment or failure to offer security or compound it, for a determination that the company be declared as a sick company..





2. Tribunal Decision

Within 60 days of filing such an application, the Tribunal is bound to determine whether the company is sick or not. The Tribunal's order against the said application of the creditors will hold good for 120 days.

3. Application for revival and rehabilitation

Upon determination of sick company , any secured creditor of the company may file a third application before the Tribunal for company's revival and rehabilitation measures.

4. Appointment of interim administrator

Thereupon follow the appointment of interim Company Administrator / Company Administrator from the panel kept by the Central Government for preparation of a scheme of revival and rehabilitation of the company for Tribunal's sanction.

5. Committee of Creditors

The interim administrator shall appoint a committee of creditors with such number of members as he may determine, but not exceeding seven, and as far as possible a representative each of every class of creditors should be represented in that committee

6. Order of Tribunal.

If the Tribunal sanctions the scheme, it will be implemented or if it is not approved the company is ordered to be wound up.

CHAPTER 20
WINDING UP

( Clauses 245 to 340)

43. Company liquidators and their appointments - clause 250

The provisional liquidator or the Company Liquidator, as the case may be, shall be appointed from a panel maintained by the Central Government consisting of the names of chartered accountants, advocates, company secretaries, cost and works accountants or firms or bodies corporate having such chartered accountants, advocates, company secretaries, cost and works accountants and such other professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten years’ experience in company matters and such other qualifications as may be prescribed.

44. Appointment of Official Liquidator – Clause – 334

Winding up of companies by the Tribunal, the Central Government may appoint as many Official Liquidators as it may consider necessary and may also appoint Joint, Deputy orAssistant Official Liquidators to assist him in discharge of his functions.

CHAPTER 27

45. Special Courts - clause 396

All offences under this Act shall be triable only by the special court .

For the purpose of providing speedy trial of offences under this Act, by notification, establish as many special courts as may be necessary by the Central Government.

A special court shall consist of a single judge who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court

46. Punishment in case of repeated default -Clause 410

In case of repeated defaults , fine will be twice but prison term remains same.

47 . Adjudication of penalties – 413

The Central Government will appoint adjudicating officers for adjudging penalty under the provisions of this Act.

Registrar may be authorized or some person can be appointed not below the rank of registrar as adjudicating officers

The Adjudicating Officer may, by an order impose the penalty on the company and the officer who is in default stating any non-compliance or any default under the relevant provision of the Act.

The Adjudicating Officer shall, before imposing any penalty, give a reasonable opportunity of being heard to such company and the officer who is in default
Any person aggrieved by an order made by the adjudicating officer may prefer an appeal to the Regional Director.

Appeal shall be filed within sixty days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person.

48. Dormant company – clause 414

New provision in the Bill

If there is No significant accounting transaction or an inactive company may make an application to the Registrar to obtain the status of Dormant Company.

The Registrar shall maintain a register of dormant companies

In case of a company which has not filed financial statements or annual returns for two financial years consecutively, the Registrar shall issue a notice to that company and enter the name of such company in the register maintained for dormant companies.

A dormant company shall have such minimum number of directors, file such documents and pay such annual fee as may be prescribed to the Registrar to retain its dormant status in the register and may become an active company on an application made in this behalf

The Registrar shall strike off the name of a dormant company from the register of dormant companies, which has failed to comply with the requirements of this section

Conclusion

As compared to the existing companies act, positively there are some new concepts have been proposed. Central government’s intentions to strengthen shareholder democracy are welcome step. Need some corrections.

by
CA Akshat Vithalani
Learn with fun
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Interview with CA Sunil talati and CA DDRathi in CNBC The Firm

Anchor: I should also mention here that we had two other members, who were going to join us at this panel Uttam Prakash Agarwal, President of ICAI and OP Vaish, Government Nominee at the ICAI counsel. Unfortunately Mr Agarwal disapproved of the fact that we had another counsel member here on this discussion and decided to leave the discussion seconds before we started.

Uttam Prakash Agrawal, President, ICAI said, “When the President is already with you I do not want that any other council member should be in the discussion. It is our protocol of our Institute, only the President go to the media. I will not be able to continue. If there are other people, its ok but from my own council, I can not. I can not break the rules as a President, other colleague may break the rules and regulations, I can not break as a President. Let other people take the enjoyment on a media level, I cannot. DD Rathi is there I have no problem. He is an outsider; I have no problem but two gentlemen are already in my council. Talati is my good friend, he knows everything. He will give you whatever you want, he is an expert. But on the screen we cannot sit together that is our protocol of the Institute. I am not participating. “

Anchor: Mr OP Vaish then little angered by the comments Mr Agarwal made and not wanting to be part of any controversy also stood up and left just seconds before we started this discussion. Unfortunately the two of them are not here. Mr Agarwal, I was hoping would defend his institute against the many allegations I have. But he is not here to do that, that task now falls upon DD Rathi and Sunil Talati.

Here is a verbatim transcript of an exclusive interview with DD Rathi and Sunil Talati on CNBC-TV18. Also watch the accompanying video.

  

Q: It has been a really difficult year for the ICAI. What is going on?

Rathi: I take Satyam and Booth capturing as one-off incidence. I am not worried that Satyam happened because not a matter of merely the institute. It is a question of very well organised fraud.

Q: There are symptoms of the malaise that has afflicted ICAI. The inability to redress these situations and the fact that the system has become so political, you now have Booth capturing. This sounds like a political election?

Rathi: Really speaking Satyam fraud institute or no institute, I do not think it could have been avoided. CAs and auditors are not meant for detecting these kinds of frauds. I am saying that when I am not a part of practising fraternity so I must have little more confidence in what I say. But they are one-off incidence. Similarly, booth capturing, it maybe stupid act of one stupid individual, it cannot tarnish the image of great organisation like Institute of CA. But I see more and more challenges coming in FY11, when you will see lot of new regulations coming in like new accounting standards like International Financial Reporting Standards (IFRS).

Q: Is the ICAI equipped to deal with all of that?

Rathi: I think you are better person to respond to that question. But I am a CA with almost over 40 years of experience may not be in practise but of course in the industry and I strongly believe that what a little I could achieve is because of my qualification as a CA and as a member of the institute. I am very much attached to this profession but like anyone else I also feel sorry not because of these two incidence, which took place but a constantly lowering standard of the institute.

Q: Some candidates spent sums of as high as Rs 1 crore in election canvassing or campaigning. What is this, is this crisis of leadership, has this system become so political that we need to re-invent this system of appointing council members? What is going wrong?

Talati: I would put it as a mixed bag. These are aberrations, either you take Satyam or the last instance of Booth Capturing. Institute or any fraternity of chartered accountants should not be blamed for Satyam, it is a total failure of corporate governance and nobody is answering that. We have immediately taken action on that member and got him removed from all the committees. The disciplinary proceedings have started. There is a system which we have to follow, that is going on and not only media and the whole fraternity and citizens of India know that strict action will be taken.

Q: In annual report, there are almost three pages devoted to the yoga camp and to the orientation camp held this year and one small paragraph devoted to Satyam. If this is the importance in your annual report of what is one of the biggest incidents of fraud in corporate India and the way ICAI is dealing with it, this is a very sorry way of redressing this system?

Talati: I appreciate that and that what is the President’s purgative. One particular leader or leadership may or may act in a particular way.

Q:  Are you saying it’s a crisis of leadership in this specific instance and not a systemic issue?

Talati: I would say this is a joint responsibility of the entire council.

Q: I have a set of questions that I was going to put to the President of the council. I have spoken to dozens of members of the council and CAs in the last three days and the allegations I hear against the President range from trivia, to absurd to very serious. For instance he asked for the President’s photograph to be put up in every branch Chairman and regional council Chairman’s office and this was put out by a circular. He made a public comment about ICICI’s Bank audit regarding mortgage situations, which was then retracted. A decanting note that came out then from the ICAI against the NACAS’s decision on Forex accounting, that was a serious descanting note because all of corporate India was confused is to why ICAI was taking a contrasting position to what NACAS had put out. I am told that the President and VP are at such loggerheads that they don’t talk to each other any more, just evidence of politics that has entered this institute. I am also told that lakhs of rupees were spent in this jubilee year on yoga camp and a cricket match and like I pointed out all we know of the Satyam report is that it is yet to reach fruition that is one small paragraph?

Talati: The issue of spending lakhs of rupees is one issue and let us not go into a family dispute that arises within the family. The question is of good governance. What is good governance? We have the healthiest of the tradition that council on the fist day gives majority of the powers to the President. In good faith these resolutions are passed and powers are wasted with the President. If one or more presidents are not coming up to the expectations of the fraternity or the council as you pointed out. But that is all in this year 2009 and we are here to correct all those.

Q: So you are saying these problems are only pertinent to this year 2009, this loss of quality only happened this year?

Talati: I won’t put it as a loss of quality. This is a different approach, different attitude and different working style.

Q: Mr Rathi is saying about declining standards?

Talati: I totally agree that yes, a highest ethical standard must be followed by every single CA

Q: Is that being followed?

Talati: I am really sorry to say but yes it is not being followed the way public perception is there.

Q: One more question about government nominees. There are eight on the council and they are meant to be there for an oversight, they barely even attend meetings and when they do that is for about 15-20 minutes. They are too busy with their jobs to be able to pay attention. Mr OP Vaish had admitted that to me on phone one day saying that the problem is we are not getting the participation that we need from government nominees and so there is no oversight, do you agree?

Talati: Yes and all of them are not in a position to attend fully and that is where the issue has to be addressed by them more than by us. When they are appointed with good faith by government it is their primary duty to attend.

Q: The next point that I am going to come to is the fact that there is just too much conflict in this entire situation. Would you be comfortable if Securities and Exchange Board of India (SEBI) was run by a broker? If the Chairperson of SEBI was a broker and not Mr Bhave or Mr Damodaran has been the instances in the past, where they are actually public service officials, officials appointed by the government. Would you have that much confidence in SEBI if it was run by a broker? If not which I suspect your answer is going to be Mr Rathi then why should we have confidence in a regulator that is run by the very same fraternity members that it proposes to regulate – Chartered Accountants?

Rathi: The system has worked even before I was born. From that day the system is working or maybe just about the time I was born. Fifty nine years of working, few years of not working up to that standard that doesn’t mean the system is bad. But yes there are key issues, which need to be addressed. Let me clarify, I do not endorse or deny what you said in your opening statement. But I would say if true and I repeat the word ‘if true’ then it is a very sad situation. But I do not know whether it is true or not.

Q: What the booth capturing?

Rathi: Not the booth capturing. The expenses you read out.   

 

Talati: What I am trying to say is if you are focusing only on 2009 events and ignoring what has happened from 1949 to 2008 – it’s highly unfortunate.

Q: How are we concerned with the quality of regulation 15 years ago?

Talati: There is no question of conflict of interest. Chartered accountants are the best people to govern this and the time has proved; the regulators, the challenges have proved.
 
Q: Would you be confident in a SEBI that is run by a broker?

Talati: It is not a question of what SEBI is doing.

Q: Would you be confident in a market regulator that is run by one of the market participants?

Talati: If a perfect, valid gentleman is a broker and is head of SEBI, I would have not even slightest of the objection. That’s what has been happening all throughout an institute. Best of the professionals from the country are representing the institute.

Rathi: Let us turn it to a more productive side. Whichever maybe the system xyz, ultimately it all boils down to a question of good governance, best ethics and right people being in the place. Merely if you think that you change the regulator and everything will be set right, I will differ with you very respectfully. I feel sad that institute who is in power in my opinion in any case is drastically curtailed. They are not the only one who set accounting standards, they are not the only one who set auditing standards. They have participation but their role is getting diluted and it doesn’t make me happy. The fault could of the institute of council members or somebody else.

Q: Whose fault is then? What is the problem there, if the problem is not conflict what is the problem?

Rathi: What is a council; the members are not the only constituents. Firstly, you have the council members who are to be elected. I think there has to be a quality of a council member.

Q: It was a question I was going to put to Mr Uttam Prakash Agrawal, I am going to now put it to you all.

Rathi: I am not a substitute.

Q: You brought up quality of the professional. CB Bhave, M Damodaran, look at the Insurance Regulatory and Development Authority (IRDA) regulators, they all have long track records of public service, government service all of that. What is the track record of any kind of regulatory service that any of these ICAI Presidents have? They are just practising chartered accountants. In fact the term of one year Vice President and one year is President means that they all very know before they become Vice President and President that they have only two years in a regulatory position, post which they are going to go back to private practise. I am told by many council members included that much of their time is spend furthering their own private interest because they are going to go back to private practise?

Talati: I would just not tolerate this remark. Let me clarify very clearly most of the council member elected are sacrificing their family life, they are sacrificing their professional practise. I am the sufferer; I know how much I have suffered. You are sighting exceptions as a set standard. Let me tell you in journalism – we have yellow journalism, all TV or all media are not bad. So, one particular person or group of people doing something not to the satisfaction of many cannot be blamed on the institution as a whole.

Rathi: How do you improve the quality of council? As I mention one is the council member itself – it has to be a high quality. One of the qualities of course rightly or wrongly has to be popular among the members because he gets elected, he doesn’t get selected. If you add a selection process then all rank holders will automatically become the council members. But let’s recognise that after all individuals set the standards, individual set the rules.

Q: Do we have quality members according to you right now? What do we need to do to ensure we have quality members?

Rathi: We could make the judgement but let me tell you how we can improve the process. Secondly, let us not spare the Electoral College itself. I cited to you one famous quote that “Citizens of the country get the type of government they deserve”. Similarly, the CA members will get the type of council members they deserve.

Talati: I very much appreciate.

Q: But why should India Inc or why should the investing community suffer the consequences of poor electoral choices of chartered accountants?

Talati: Let me say in a happy note that elections have been just over and fraternity this time have been conscious.

Rathi: Let’s talk of electoral reforms which we need.

Q: I understand there is a position of a CEO, which has in many over the past many years seen a diminishing of powers. Is one possible option to be that you return the council and its leadership the President and the Vice President to simply and advisory role and strengthen the CEOs role, allow the CEO to be someone who comes in from the outside who not necessarily is a chartered accountant and he is the person who then sets the long term agenda for this institute who ensure that there is unbiased regulatory work going on?

Rathi: Let us strike a balance between the things. What we are trying to say that 26 elected members will perform poorly as compared to one executive. It will be difficult for me to agree to that. I am not out of 26 and I do not want the position of that one person either. Let me give my independent frank opinion, you need to reform the election process. You need to refine or you need to balance the position of secretary, which you call it CEO I call it secretary position and have a balance between the two. You definitely need a strong secretary, who must have the courage of conviction to stand up and say that look if this expenditure being incurred is wrong it is wrong. He must rise to the occasion and say that. But merely by replacing the council, all the powers going into one executive it is replacing by one smaller evil by bigger evil. I do not know, I do not have a reply because we have not tried that system.

Q: Are you in favour of separating the regulatory role from the role of training, educating and qualifying chartered accountants? Do you believe that the ICAI needs to have two separate roles as is the case in many countries, where the body itself does not regulate its own profession?

Rathi: Some is many, many is many. We are just thinking of replacing one system.

Q: I am asking, I am not saying we should.

 

Rathi: I do not think you should.  

  

Talati: We are the second largest in the world except two countries nobody has such a divided role - Regulator’s function for the members for the students.

Q: What can we do to improve this system? Even if your anguish is that right now most of the problems lay on the door step of one or two individuals – what do we do to improve the system? For instance I am told that the President can be elected even by a very few number of votes because of the preferential voting system. Does that system need to come to a correction?

Rathi: No. Actually do not elect president of the institute merely elect the Vice President of the institute.

Q: What difference is it going to make?

Rathi: It is going to make a difference because a Vice President should not be ensured perhaps or begin with a President. Think about it. Time has changed, the world has changed, you have enough number of reforms, which you can make.

We have an old system, when we did not have computers you know that a member can only vote at a designate booth, why he can vote anywhere, now we do not have problems on that.

Q: How is it going to ensure better quality of people being elected?

Rathi: A lot of the senior people on the days of election they travel – what you are trying to tell me and I defer with you. Let me take that chance today that if you have problem in your finger instead of treating it through antibiotic please chop off your hand, we can’t do that.

Q: How deeply set in the corruption?

Talati: It is for the fraternity now to wake up and see yes everybody votes and selects the best of the council. Recently elections are over. I am confident that this council should be one of the best council.

Q: On what basis are you hoping that this would be a good council when this same process is at work in electing this council and has been at work? In the last two years electing the earlier leaders who you are unhappy with?

Talati: I am very happy that you are asking this. I am telling you confidently that the message has gone loud and clear that if we are remaining inactive that is what the democracy say that more damages are done by literate people by remaining inactive rather than illiterate people doing wrong.

Q: So you do not think anything needs to change?

Talati: Only thing the approach attitude and the extent that they are have found shortfall.

Q: Approach and attitude has to come from within?

Rathi: Let me come back to you, merely by changing the regulatory rule what are you going to achieve.

Q: I am not, I am asking you, do you agree or believe that it has to change- Mr Talati is saying very clearly that nothing needs to change except the attitude.

Rathi: Not attitude. The whole process has to be reformed. I am always against reservation but look at the participation of members in industry. I blame myself partly for that is zero.

Q: Actually that is a good thing because I am not really sure, we had various corporate representatives while they were still serving their corporate jobs as part of the council or otherwise as part of the governing body whether that would lead to biasness in any form or allegations of biasness because that just creates one more layer of opacity- you do not need interest groups as part of the governing council in any fashion?

Talati: I would say that yes institute is the appropriate and perfect body. Council election and election of Vice President is time tested, repeatedly discussed and decided in council 10 times, in my nine year tenure and we all feel that this system is fine. If at sometime, some people or some good governance is missing it is right time to be awakening.

Q: So you are saying that leadership of the last few years is an aberration, the call is already gone out to the fraternity to elect better leaders. Are you hopeful of change starting with this new council that is being elected which we will know of in January?

Talati: Absolutely, February 5.

Rathi: Simple. I think the process is the regulations, the rules all that are time tested. The problem has been with implementation and modifying them in line with the changing times. I think council has to rise to the occasion, rise above their own personal interest, if any I do not want to go into debate that they have or they do not have and look towards development of the professional, look towards bringing back the profile the professional had few years back and enrich it.

Regards,
CA. Akshat
Learn With Fun
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An excellent and Great Love Story of Narayana Murthy (Infosys Founder) and Sudha (From Sudha's Autobiography)

An Inspiring Love story,, its worth, Read it !!

Love Story of Narayana Murthy (Infosys Founder) and Sudha (From Sudha's Autobiography)

It was in Pune that I met Narayan Murty through my friend Prasanna who is now the Wipro chief, who was also training in Telco(TataMotors). Most of the books that Prasanna lent me had Murty's name on them which meant that I had a preconceived image of the man. Contrary to expectation, Murty was shy,bespectacled and an introvert. When he invited us for dinner. I was a bit taken aback as I thought the young man was making a very fast move. I refused since I was the only girl in the group. But Murty was relentless and we all decided to meet for dinner the next day at 7.30 p.m .. at Green Fields hotel on the Main Road ,Pune.

The next day I went there at 7' o ! clock since I had to go to the tailor near the hotel. And what do I see? Mr. Murty waiting in front of the hotel and it was only seven. Till today, Murty maintains that I had mentioned (consciously!) that I would be going to the tailor at 7 so that I could meet him... And I maintain that I did not say any such thing consciously or unconsciously because I did not think of Murty as anything other than a friend at that stage. We have agreed to disagree on this matter.

Soon, we became friends. Our conversations were filled with Murty's experiences abroad and the books that he has read. My friends insisted that Murty as trying to impress me because he was interested in me. I kept denying it till one fine day, after dinner Murty said, I want to tell you something. I knew this   as it. It was coming. He said, I am 5'4" tall. I come from a lower middle class family. I can never become rich in my life an! d I can never give you any riches. You are beautiful, bright, and intelligent and you can get anyone you want. But will you marry me? I asked Murty to give me some time for an answer. My father didn't want me to marry a wannabe politician, (a communist at that) who didn't have a steady job and wanted to build an orphanage...

When I went to Hubli I told my parents about Murty and his proposal. My mother was positive since Murty was also from Karnataka, seemed intelligent and comes from a good family. But my father asked: What's his job, his salary, his qualifications etc? Murty was working as a research assistant and was earning less than me. He was willing to go dutch with me on our outings. My parents agreed to meet Murty in Pune on a particular day at10 a. m sharp. Murty did not turn up. How can I trust a man to take care of my daughter if he cannot keep an appointment, asked my father.

At 12noon Murty turned up in a bright red shirt! He had gone on work to Bombay , was stuck in a traffic jam on the ghats, so he hired a taxi(though it was very expensive for him) to meet his would-be father-in-law. Father was unimpressed. My father asked him what he wanted to become in life.

Mur thy said he wanted to become a politician in the communist party and wanted to open an orphanage. My father gave his verdict. NO. I don't want my daughter to marry somebody who wants to become a communist and then open an orphanage when he himself didn't have money to support his family.

Ironically, today, I have opened many orphanages   something, which Murty wanted to do 25 years ago. By this time I realized I had developed a liking towards Murty which could only be termed as love. I wanted to marry Murty because he is an honest man. He proposed to me highlighting the negatives in his life.. I promised my father that I will not marry Murty without his blessings though at the same time, I cannot marry anybody else. My father said he would agree if Murty promised to take up a steady job. But Murty refused saying he will not do things in life because somebody wanted him to. So, I was caught between the two most important people in my life.

The stalemate continued for three years during which our courtship took us to every restaurant and cinema hall in Pune. In those days, Murty was always broke. Moreover, he didn't earn much to manage. Ironically today, he manages Infosys Technologies Ltd., one of the world's most reputed companies. He always owed me money. We used to go for dinner and he would say, I don't have money with me, you pay my share, I will return it to you later. For three years I maintained a book on Murty's debt to me.. No, he never returned the money and I finally tore it up after my wedding.

The amount was a little over Rs 4000. During this interim period Murty quit his job as research assistant and started his own software business. Now, I had to pay his salary too! Towards the late 70s computers were entering India in a big way.

During the fag end of 1977 Murty decided to take up a job as General Manager at Patni computers in Bombay .. But before he joined the company he wanted to marry me since he was to go on training to the US after joining. My father gave in as he was happy Murty had a decent job, now.

WE WERE MARRIED IN MURTY'S HOUSE IN BANGALORE ON FEBRUARY 10, 1978 WITH ONLY OUR TWO FAMILIES PRESENT.I GOT MY FIRST SILK SARI. THE WEDDING EXPENSES CAME TO ONLY RS 800 (US $17) WITH MURTY AND I POOLING IN RS 400 EACH..

I went to the US with Murty after marriage. Murty encouraged me to see America on my own because I loved travelling. I toured America for three months on backpack and had interesting experiences which will remain fresh in my mind forever. Like the time when the New York police took me into custody because they thought I was an Italian trafficking drugs in Harlem . Or the time when I spent the night at the bottom of the Grand Canyon with an old couple. Murty panicked because he couldn't get a response from my hotel room even at midnight. He thought I was either killed or kidnapped.

IN 1981 MURTY WANTED TO START INFOSYS. HE HAD A VISION AND ZERO CAPITAL...initially I was very apprehensive about Murty getting into business. We did not have any business background ... Moreover we were living a comfortable life in Bombay with a regular pay check and I didn't want to rock the boat. But Murty was passionate about creating good quality software. I decided to support him. Typical of Murty, he just had a dream and no money. So I gave him Rs 10,000 which I had saved for a rainy day, without his knowledge and told him, This is all I have. Take it. I give you three years sabbatical leave. I will take care of the
financial needs of our house. You go and chase your dreams without any worry. But you
have only three years!

Murty and his six colleagues started Infosys in 1981,with enormous interest and hard work. In 1982 I left Telco and moved to Pune with Murty. We bought a small house on loan which also became the Infosys office. I was a clerk-cum-cook-cum-programmer. I also took up a job as Senior Systems Analyst with Walchand group of Industries to support the house.

In 1983 Infosys got their first client, MICO, in Bangalore . Murty moved to Bangalore and stayed with his mother while I went to Hubli to deliver my second child, Rohan. Ten days after my son was born, Murty left for the US on project work. I saw him only after a year, as I was unable to join Murty in the US because my son had infantile eczema, an allergy to vaccinations. So for more than a year I did not step outside our home for fear of my son contracting an infection. It was only after Rohan got all his vaccinations that I came to Bangalore where we rented a small house in Jayanagar and rented another house as Infosys headquarters. My father
presented Murty a scooter to commute. I once again became a cook, programmer, clerk,
secretary, office assistant et al. Nandan Nilekani (MD of Infosys) and his wife Rohini stayed with us. While Rohini babysat my son, I wrote programs for Infosys. There was no car, no phone, and just two kids and a bunch of us working hard, juggling our lives and having fun while Infosys was taking shape. It was not only me but also the wives of other partners too who gave their unstinted support. We all knew that our men were trying to build something good.

It was like a big joint family,taking care and looking out for one another. I still remember Sudha Gopalakrishna looking after my daughter Akshata with all care and love while Kumari Shibulal cooked for all of us. Murty made it very clear that it would either be me or him working at Infosys. Never the two of us together... I was involved with Infosys initially.

Nandan Nilekani suggested I should be on the Board but Murty said he did not want a husband and wife team at Infosys. I was shocked since I had the relevant experience and technical qualifications. He said, Sudha if you want to work with Infosys, I will withdraw, happily. I was pained to know that I will not be involved in the company my husband was building and that I would have to give up a job that I am qualified to do and love doing.

It took me a couple of days to grasp the reason behind Murty's request..I realized that to make Infosys a success one had to give one's 100 percent. One had to be focussed on it alone with no other distractions. If the two of us had to give 100 percent to Infosys then what would happen to our home and our children? One of us had to take care of our home while the other took care of Infosys.

I opted to be a homemaker, after all Infosys was Murty's dream. It was a big sacrifice but it was one that had to be made. Even today, Murty says, Sudha, I stepped on your career to make mine. You are responsible for my success.

That's the Power of Love.

Every man needs a woman to motivate him and to give him a reason to live....   

Cheques can be written in Regional language now...

BANKS ARE INSTRUCTED TO ACCEPT CHEQUES WRITTEN IN REGIONAL LANGUAGES

NOV 26, 2009                  


Reserve Bank of India (RBI) vide its Master Circular dated July 1, 2009 has advised all Scheduled Commercial Banks (excluding Regional Rural Banks) that all cheque forms would be printed in Hindi and English. The customer may, however, write cheques in Hindi, English or in the concerned regional language.

This information was given by Minister of State for Finance, Shri Namo Narain Meena in written reply to a question raised in Rajya Sabha today.

E-mails not private any more

Mumbai -- The police can now read your e-mails without prior permission from the home department. The Parliament recently cleared an amendment to the Information Technology (IT) Act, allowing the police to intercept or decrypt online information without seeking the home department's nod.

Rising instances of cyber crime have prompted the move aimed at cutting red tape. The amendment empowers the inspector general of police to permit interception or decoding information in cyber space in an emergency. This will help speedy detection of cyber crimes like phishing or sending offensive messages and in tracking terrorists who operate using the Internet.

Advocate I.P. Bagaria said the amendment was necessary. "Every citizen has a right to privacy. However, this cannot be at the cost of the state or country," he said. The secretary in-charge of the state home department should be informed about the interception within three days of tracking.

The secretary - the final sanctioning authority - has to grant permission within seven days. Once the sanction has been obtained, it has to be placed before the Review Committee within two months. Senior advocate Amit Desai said this period should be reduced. "Otherwise there are chances of misuse of these powers."

The police had to earlier take permission from the additional chief secretary, home or, in an emergency, the joint secretary. "Liberalisation of interception is required when the world is dealing with terrorism," said senior police officer-turned-lawyer Y.P. Singh.

Cyber expert Vijay Mukhi said there should be a mechanism to check misuse.

Pre- conditions for using the designation Chartered Accountant

Pre- conditions for using the designation Chartered Accountant

Section 7 of the Chartered Accountants Act 1949 empowers only a person who has been enrolled as a member of the Institute of Chartered Accountants of India to use the designation of Chartered Accountant along with his name.



In other words, it is clarified that a person who has passed the Final Examination completed the prescribed period of Articleship and a course on General Management and Communication Skills and has enrolled himself as an Associate member of the ICAI and continues to keep the membership alive through yearly payment of prescribed fees in only entitled to use the designation of Chartered Accountant along his name and also use the desinatory letters as CA. as prefix to his name.

A person who has passed the Final Examination of the Institute and complied with other requirements or not but has enrolled himself as a member of the Institute is not entitled to use the designation of Chartered Accountant nor the designatory letters as CA. as a prefix to his name.

Non members of ICAI who are using the designation as Charted Accountant or designatory letters as CA. as a prefix to their names are advised, in their own interest to desist from using these designatory letters failing which suitable steps against them in accordance with the provisions of the Chartered Accountants Act, 1949 and Regulations framed there under will be initiated without prejudice to any other penal action under the law in force for the time being

Song from the heart of Chartered Accountant

Song by the heart of all CAs

Saari Umar Hum
Mar Mar ke jee liye
Ek pal to ab humein
Jeene Do Jeene do

Saari Umr Hum
Mar Mar ke jee liye
Ek pal to ab humein
Jeene Do Jeene do
Saari Umr Hum
Mar Mar ke jee liye
Ek pal to ab humein
Jeene Do Jeene do

Na Na NA
Na Na NA

Na Na NA
Na Na NA


Give me some Sunshine
give me some rain
Give me another chance
wana grow up once again

Give me some Sunshine
give me some rain
Give me another chance
wana grow up once again


Kandhon ko kitabon
Ke bojh ne jhukaya
Rishvat dena to khud
Papa ne sikhya
99% marks laaoge to
ghadi varna chadi

Likh likh pada
hatheli par

Alpha beta gamma ka chaala
Concentrated H2so4
Ne Poora Poora bachpan jala daala


Bachpan to gaya
Jawani bhi gayi
Ek pal To ab humein
Jeen Do jeene do
Bachpan to gaya
Jawani bhi gayi
Ek pal To ab humein
Jeen Do jeene do

Saari Umr Hum
Mar Mar ke jee liye
Ek pal to ab humein
Jeene Do Jeene do
Na Na NA
Na Na NA

Na Na NA
Na Na NA


Give me some Sunshine
give me some rain
Give me another chance
wana grow up once again

Give me some Sunshine
give me some rain
Give me another chance
wana grow up once again


Na Na NA
Na Na NA
Na Na NA

Real Estate Investment TRust

Concept of REIT
A real estate investment trust (REIT) is a company that buys, develops, manages, and/or sells real estate such as skyscrapers, shopping malls, apartment complexes, office buildings, or housing developments. Rather than investing directly in real estate, investors of REITs invest in a professionally managed portfolio of real estate. REITs trade on the major exchanges, just like stocks. REITs make money from rental income, profits from the sale of the property, and other services provided to tenants. REITs also receive special tax considerations; they do not pay taxes as long as they pay out at least 90 percent of their net income to their investors..
Basic REIT Structure



How does a company qualify as a REIT
In order for a company to qualify as a REIT, it must comply with certain provisions within the Internal Revenue Code. As required by the Tax Code, a REIT must:

• Be structured as corporation, trust, or association
• Be managed by a board of directors or trustees
• Have the shares that are fully transferable
• Be taxable as a domestic corporation
• Not be a financial institution or an insurance company
• Be jointly owned by 100 persons or more
• Pay dividends of at least 90% of the REIT's taxable income
• No more than 50% of the shares can be held by five or fewer individuals during the last half of each taxable year
• At least 75% of total assets must be invested in real estate
• Derive at least 75% of gross income from rents or mortgage interest
• No more than 20% of its assets may consist of stocks in taxable REIT subsidiaries.

Terms used in the context of REIT

1. Adjusted Funds From Operations (AFFO) - It is a computation made by analysts and investors to measure a real estate company's cash flow generated by operations. It is calculated by subtracting from Funds from Operations (FFO) both recurring expenditures that are capitalized by the REIT and then amortized, but which are necessary to maintain a REIT's properties and its revenue stream (e.g., new carpeting and drapes in apartment units, leasing expenses and tenant improvement allowances) and "straight-lining" of rents. This calculation also is called Cash Available for Distribution (CAD) or Funds Available for Distribution (FAD).
    
2. Capitalization Rate - The capitalization rate (or "cap" rate) for a property is determined by dividing the property's net operating income by its purchase price. Generally, high cap rates indicate higher returns and greater perceived risk.
    
3. Cash (or Funds) Available for Distribution - Cash (or Funds) available for distribution (CAD or FAD) is a measure of a REIT's ability to generate cash and to distribute dividends to its shareholders.
    
4. Cost of Capital - The cost to a company of raising capital in the form of equity or debt. The cost of equity capital generally is considered to include both the dividend rate as well as the expected equity growth either by higher dividends or growth in stock prices. The cost of debt capital is merely the interest expense on the debt incurred.
    
5. EBITDA - Earnings before interest, taxes, depreciation and amortization. This measure is sometimes referred to as Net Operating Income (NOI).
    
6. Equity Market Cap - The market value of all outstanding common stock of a company.
    
7. Funds From Operations (FFO) - The most commonly accepted and reported measure of REIT operating performance. Equal to a REIT's net income, excluding gains or losses from sales of property, and adding back real estate depreciation.
    
8. Leverage - The amount of debt in relation to either equity capital or total capital.
    
9. Net Asset Value (NAV) - The net "market value" of all a company's assets, including but not limited to its properties, after subtracting all its liabilities and obligations.
    
10. Positive Spread Investing (PSI) - The ability to raise funds (both equity and debt) at a cost significantly less than the initial returns that can be obtained on real estate transactions.
     
11. Securitization - Securitization is the process of financing a pool of similar but unrelated financial assets (usually loans or o

Review on APKGK

Ajab Prem Ki Corny Kahani!

Movie: Ajab Prem Ki Ghazab Kahani

Cast: Ranbir Kapoor, Katrina Kaif, Upen Patel

Director: Rajkumar Santoshi Pick any love triangle, toss it with hackneyed humour and garnish with hip-shaking music. Voila! You have a masala potboiler. Rajkumar Santoshi seems to have used the same recipe for Ajab Prem Ki Ghazab Kahani. Only, his rendition causes serious indigestion!

The script is ridiculous and its probably for the best. Our popcorn-loving audience has gotten used to funny no-brainers. No wonder movies like All the Best and Wanted max the box office, so does Ajab Prem…

The movie has been shot in the picturesque hill-station Ooty. Prem (Ranbir Kapoor) along with his quirky bunch of friends runs a certain ‘happy club’ which aims at uniting lovers. When a new girl Jenny (Katrina Kaif) moves into the small town, Prem instantly falls in love with her but can’t get himself to express it. As Prem and Jenny become friends, he tries his level best to prove his love without actually spelling it out. While he’s at it, Jenny’s foster-parents want her to get married to a wealthy Christian boy. Much against her will, they take her to Goa for the marriage.

When Prem learns about this, he rushes to rescue his lady love. A teary-eyed Jenny is relieved to see Prem, who must bail her out of the forced marriage and reunite her with her actual loverboy, Rahul! In true ‘happy club’ spirit, a heart-broken Ranbir agrees. All this, and we’ve only cruised the first half of the film. The second half introduces many new characters including Rahul (Upen Patel), his father - a politician contesting the elections, and an underworld don. Several confusing events thrown in, the maze ends with Jenny developing love for Prem and waving goodbye to Rahul. Ajab, indeed!

Katrina is meant to play eye-candy and she does it with ease. Her stammering act in the film hams. Watching Upen and Katrina struggle with Hindi together is hilarious! Clearly, Ranbir Kapoor is the saving grace of the film. His work is fresh and energetic. The little jig he does in a party scene, is super cute! Bachna Ae Haseeno may have bombed but his rocking performances in Wake Up Sid and APKGK have made him the new king of Bollywood. The supporting cast of APKGK also deserves applause. Darshan Jariwala (Prem’s dad), Smita Jaykar (Prem’s mom), Navneet Nishan (Jenny’s mom), and Govind Namdeo (Rahul’s dad) are a laugh riot!

The movie has some entertaining moments and a special appearance, I’m not going to tell  It is very funny - in parts. APKGK is for you only if you enjoy corny comedy or have a crush on Ranbir Kapoor.

Satyam case: Clean chit to PwC

Accountancy regulator Institute of Chartered Accountants of India (ICAI has withdrawn disciplinary proceeding against auditing firm PricewaterhouseCoopers, allegedly involved in the Satyam [ Get Quote ] scam.
Earlier on Wednesday, the Delhi [ Images ]-based franchise of PwC had approached the Delhi high court seeking quashing of proceedings initiated against it by the government in the aftermath of Satyam scam.
It pleaded before the court that the government proceedings were illegal as they have no connection with the Bangalore-based franchise which had audited Satyam accounts.
"There are six franchises of the international audit firm in the country and they are not related to each other in any way. We have nothing to do with the Bangalore firm which had audited Satyam accounts.
"So there doesn't arise any cause of action against us in the aftermath of the Satyam scam," senior advocate Mukul Rohatgi, appearing for the Delhi-firm, pleaded.
He submitted that the proceeding against it should be quashed immediately. Justice Sanjeev Khanna after hearing his arguments asked the government counsel to take instructions from the Centre and inform the court.


Source: Rediff Business

online registration of TIN

October 30, 2009

Dear Members,

We have been informed by National Securities Depository Ltd. (NSDL) that they have introduced two new features in TIN this week.

1.      Online registration of TAN

A facility to register TAN online is available on the TIN website (www.tin-nsdl.com). The Income Tax Department requires all deductors to register their TANs online. Authenticated access (through user ID and password) will be provided to registered deductors. Registration is free.  

An acknowledgment number will be displayed on successful registration. This acknowledgment number is to be kept securely. In future user id / password will be provided to the deductors who have successfully registered.

On login, the following will be available to the deductors-

                    i.            view of the status of all statements filed;

                  ii.           download of consolidated quarterly e-TDS / TCS statement for  preparation of correction statement; and

                iii.           other functionalities related to quarterly TDS /TCS statement.

Guidelines for TAN Registration

General

1. TAN registration should be done online at the website of the Tax Information Network www.tin-nsdl.com.
2. Fields marked with (*) are mandatory.
3. Select the values from the drop down wherever provided.
4. Register all active TANs.

Details of Deductor

1. Mention details of deductor (TAN).
2. Select appropriate deductor category from the dropdown.
3. Mention PAN of deductor. Mention “PANNOTREQD”, in case PAN is not available i.e. deductor is not required to have PAN as per the statute.
4. PAO Code and DDO Code are mandatory for deductor category “Central Government”.
5. If PAO Code is not available then mention value “PAOCDNOTAVBL”.
6. If DDO Code is not available then mention value “DDOCDNOTAVBL”.
7. For PAO Registration number, mention registration number allotted, if any, by Central Record Keeping Agency (CRA) under New Pension Scheme (NPS).
8. For DDO Registration number, mention registration number allotted, if any, by Central Record Keeping Agency (CRA) under New Pension Scheme (NPS).

Contact Details of Deductor

1. Mention demographic details of deductor (TAN) i.e. complete address and contact details.
2. Provide valid email id and telephone no. / mobile no.
3. Provide details of responsible person and designation.

Statement Details

1. Mention details of any regular e-TDS / TCS quarterly statement accepted in TIN on or after April 01, 2008.
2. Check the status of e-TDS / TCS statement at the Quarterly Statement Status available at the TIN website by entering the TAN and Provisional Receipt Number of the statement before providing statement details.
3. For entering statement details you may refer the Provisional Receipt issued at the time of acceptance of the e-TDS / TCS statement.

Generation of Acknowledgement

1. After filling up the information, click “submit”. On submission of details if system shows any errors, rectify and re-submit the form.
2. A confirmation screen with all the data filled by the user will be displayed. The same can be either confirmed or edited.
3. On confirmation, an acknowledgement number will be displayed.
4. Print the acknowledgment and preserve the same for future use.
5. For future correspondence mention the TAN registration number provided by TIN along with the TAN.
6. You can re-generate the “Acknowledgement for TAN Registration” by registering again

2.    Taxpayers can now view details of paid refund in their Annual Tax Statement    (Form  26AS)

Taxpayers who have registered to view Form 26AS online can view details of paid refund in their Form 26AS from F.Y. 2009-10 (A.Y. 2010-11) onwards. Refunds received during the selected A.Y. will be displayed in Form 26AS. For instance, refunds pertaining to A.Y. 2005-06 which are received in F.Y. 2009-10 (A.Y. 2010-11) will be displayed in Form 26AS for F.Y. 2009-10 (A.Y. 2010-11).

The following details related to refund will be displayed:

• A.Y. for which refund is paid
• Mode of payment i.e. ECS, paper (refund cheque), etc.
• Amount of refund
• Date of payment

Taxpayers can register online at the TIN website to view Form 26AS.

Section 66A not a Charging Section – Tax paid by reverse charge eligible as input credit if service is an input service

COMMISSIONER (LTU), Mumbai raised an issue with the Ministry that the list of duties/taxes mentioned under Rule 3 of the CENVAT Credit Rules, 2004 covers only section 66 of the Finance Act, 1994 and does not mention section 66A of the Finance Act, 1994. Since Section 66A refers to payment by recipient of service imported from abroad, under reverse charge mechanism, in the absence of a specific mention of this Section in Rule 3, any credit of such tax paid would be illegal.

It was further mentioned that CERA has objected to the clarification issued by the Board vide letter F.No.BI/4/2006-TRU dated 19th April, 2006 wherein it was clarified that if such imported service is used as input for providing any taxable output service, the service tax paid thereon can be taken as input credit, in the absence of a specific mention of section 66A in Rule 3.

The Ministry examined this matter and it is clarified that the provisions under section 66A state that in case service is provided from abroad and received in India such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of Chapter V of the Finance Act, 1994 would apply. Therefore, it is clear that section 66A is not a charging section by itself. It only creates a legal fiction to deem import of service as provision of service within India so that the provisions of Chapter V of the Finance Act, 1994 can be applied. Section 66 remains the charging section even for import of services.

In view of this, it is clear that there is no mistake or omission in the relevant provisions of the CENVAT Credit Rules, 2004 and credit of service tax paid on imported services should be allowed if they are in the nature of input services. It is further advised that the CERA objection on the subject should be replied accordingly.

Such an important clarification explaining the clear position of law by the Ministry/Board is indeed commendable. But why is it that the Ministry/Board does not give up the habit of hiding such important clarifications from the stakeholders. Is it not incumbent on the Ministry/Board to make this clarification public?

Further, does the Ministry/Board think that this issue is only confined to Mumbai and has no relevance for the service recipients in the rest of the country? While a copy of this clarification is marked to the Director General, Service Tax for informing the field formations, what about the service recipients who are at the receiving end across the country?