AGM of Listed entity – mockery by CS A Rengarajan
Introduction: As per Companies Act, 1956, it is necessary to obtain shareholders consent for their books of accounts i.e. financial transactions of all companies. This involves discussion among shareholders before voting. The Adoption ofAccounts prohibited under postal ballot method. Conducting Annual General Meeting is routine work every year. In closely held companies, they conduct the AGM among the shareholders and all resolutions will be passed. Listed companies are governed stock exchange listing agreement compliance and general public are invested in the shares of the company. The Listed companies are to disclose corporate governance requirement under clause 49 of Listing Agreement. They are conducting Annual General meeting by sending notice to their shareholders and to conduct the proceedings.
One person one Folio: In Physical mode, One person has got multiple folios through creation of ab, ac, ad, ae, etc and the concept of one share one folio. Each folio got one share will be alloted and person holding the same in the joint name as per above method.. They can create large number ofshareholders/members through physical mode. Even in demat mode, single folio single share can be obtained. Many listed companies, the single shareholding around minimum of 3000 shareholders. For example in Wipro current year annual report specifically reports that 4130 shareholders are having single share.
Printing of Balance sheets
A person can hold only one share and it will give big problem to the company to send a copy of balance sheet as well as postal charges. The corporate has to make uphill task to over come this kind ofshareholding patterns. For printing balance sheets it costs around Rs.150/- whereas the holding of one share is Rs.2/- ( the market value is higher in some cases)
AGM Preparation: The Secretary of the company make necessary arrangement to smooth conduct ofthe meeting including sending notices to the shareholders, to take necessary arrangement for venue .
During the Meeting: First start of the meeting, the chairman to be invited to preside over the meeting. Once Chairman comes to dais, he will see proper quorum was present. After that Secretary will read Auditors Report and Before taking up accounts adoption, the questions to be raised by the members. Then the resolutions will be taken up for voting and shareholders vote for and against of the resolution. There is no doubt all resolution will be passed and it is considered as ritual rather than realistic one. The Minority shareholders are those fragmented shares will not be in a position to prevail the company to stop passing the resolutions.. But in recent days, minority prevails over the majority shares and their activism has already started i.e. institutional shareholders who are holding shares in concert.
Distribution of sweet boxes
After the AGM, the distribution of sweet boxes begun.
There is no provision in the Companies Act, 1956 to prohibit the companies to give gifts/sweet boxes to their shareholders. This has done to please them and vote in favour of the company. However SEBI has directed the listedentities not to entertain gifts to their shareholders. In one company recently held AGM, there are only 200 shareholders are present whereas 9000 sweet boxes are distributed. The person holding one share also entitled for sweet boxes. The cost of one sweet box comes around Rs.70/- but he is holding share cost is Rs.2/-
Discount coupons: Discount Coupon to buy their products e.g RELIANCE sent along with Dividend Warrant or Copy of Annual Accounts.Few companies are sending discount coupons. No Gift please even distributing company products should be prohibited because only share holders attend the meeting can avail it whereas the discount coupon would reach all share holders wherever they reside. In this case no discrimination among shareholders
Conclusion: The Solution for this malady lies with SEBI The regulatory authority should not be watching this fun for ever. Better late than never, SEBI should issue a circular IMMEDIATELY prohibiting issue of Gifts of any kind Articles , Samples of the products of the Company or ASSOCIATE Company Sweet packets or Snacks . The Circular should state that only a cup of tea / coffee / or soft drinks is only should be given and nothing more.
Will SEBI will take any steps in this regard?--
Friday, August 13, 2010
AGMof Listed entity
AGM of Listed entity – mockery by CS A Rengarajan
Introduction: As per Companies Act, 1956, it is necessary to obtain shareholders consent for their books of accounts i.e. financial transactions of all companies. This involves discussion among shareholders before voting. The Adoption ofAccounts prohibited under postal ballot method. Conducting Annual General Meeting is routine work every year. In closely held companies, they conduct the AGM among the shareholders and all resolutions will be passed. Listed companies are governed stock exchange listing agreement compliance and general public are invested in the shares of the company. The Listed companies are to disclose corporate governance requirement under clause 49 of Listing Agreement. They are conducting Annual General meeting by sending notice to their shareholders and to conduct the proceedings.
One person one Folio: In Physical mode, One person has got multiple folios through creation of ab, ac, ad, ae, etc and the concept of one share one folio. Each folio got one share will be alloted and person holding the same in the joint name as per above method.. They can create large number ofshareholders/members through physical mode. Even in demat mode, single folio single share can be obtained. Many listed companies, the single shareholding around minimum of 3000 shareholders. For example in Wipro current year annual report specifically reports that 4130 shareholders are having single share.
Printing of Balance sheets
A person can hold only one share and it will give big problem to the company to send a copy of balance sheet as well as postal charges. The corporate has to make uphill task to over come this kind ofshareholding patterns. For printing balance sheets it costs around Rs.150/- whereas the holding of one share is Rs.2/- ( the market value is higher in some cases)
AGM Preparation: The Secretary of the company make necessary arrangement to smooth conduct ofthe meeting including sending notices to the shareholders, to take necessary arrangement for venue .
During the Meeting: First start of the meeting, the chairman to be invited to preside over the meeting. Once Chairman comes to dais, he will see proper quorum was present. After that Secretary will read Auditors Report and Before taking up accounts adoption, the questions to be raised by the members. Then the resolutions will be taken up for voting and shareholders vote for and against of the resolution. There is no doubt all resolution will be passed and it is considered as ritual rather than realistic one. The Minority shareholders are those fragmented shares will not be in a position to prevail the company to stop passing the resolutions.. But in recent days, minority prevails over the majority shares and their activism has already started i.e. institutional shareholders who are holding shares in concert.
Distribution of sweet boxes
After the AGM, the distribution of sweet boxes begun.
There is no provision in the Companies Act, 1956 to prohibit the companies to give gifts/sweet boxes to their shareholders. This has done to please them and vote in favour of the company. However SEBI has directed the listedentities not to entertain gifts to their shareholders. In one company recently held AGM, there are only 200 shareholders are present whereas 9000 sweet boxes are distributed. The person holding one share also entitled for sweet boxes. The cost of one sweet box comes around Rs.70/- but he is holding share cost is Rs.2/-
Discount coupons: Discount Coupon to buy their products e.g RELIANCE sent along with Dividend Warrant or Copy of Annual Accounts.Few companies are sending discount coupons. No Gift please even distributing company products should be prohibited because only share holders attend the meeting can avail it whereas the discount coupon would reach all share holders wherever they reside. In this case no discrimination among shareholders
Conclusion: The Solution for this malady lies with SEBI The regulatory authority should not be watching this fun for ever. Better late than never, SEBI should issue a circular IMMEDIATELY prohibiting issue of Gifts of any kind Articles , Samples of the products of the Company or ASSOCIATE Company Sweet packets or Snacks . The Circular should state that only a cup of tea / coffee / or soft drinks is only should be given and nothing more.
Will SEBI will take any steps in this regard?--
Introduction: As per Companies Act, 1956, it is necessary to obtain shareholders consent for their books of accounts i.e. financial transactions of all companies. This involves discussion among shareholders before voting. The Adoption ofAccounts prohibited under postal ballot method. Conducting Annual General Meeting is routine work every year. In closely held companies, they conduct the AGM among the shareholders and all resolutions will be passed. Listed companies are governed stock exchange listing agreement compliance and general public are invested in the shares of the company. The Listed companies are to disclose corporate governance requirement under clause 49 of Listing Agreement. They are conducting Annual General meeting by sending notice to their shareholders and to conduct the proceedings.
One person one Folio: In Physical mode, One person has got multiple folios through creation of ab, ac, ad, ae, etc and the concept of one share one folio. Each folio got one share will be alloted and person holding the same in the joint name as per above method.. They can create large number ofshareholders/members through physical mode. Even in demat mode, single folio single share can be obtained. Many listed companies, the single shareholding around minimum of 3000 shareholders. For example in Wipro current year annual report specifically reports that 4130 shareholders are having single share.
Printing of Balance sheets
A person can hold only one share and it will give big problem to the company to send a copy of balance sheet as well as postal charges. The corporate has to make uphill task to over come this kind ofshareholding patterns. For printing balance sheets it costs around Rs.150/- whereas the holding of one share is Rs.2/- ( the market value is higher in some cases)
AGM Preparation: The Secretary of the company make necessary arrangement to smooth conduct ofthe meeting including sending notices to the shareholders, to take necessary arrangement for venue .
During the Meeting: First start of the meeting, the chairman to be invited to preside over the meeting. Once Chairman comes to dais, he will see proper quorum was present. After that Secretary will read Auditors Report and Before taking up accounts adoption, the questions to be raised by the members. Then the resolutions will be taken up for voting and shareholders vote for and against of the resolution. There is no doubt all resolution will be passed and it is considered as ritual rather than realistic one. The Minority shareholders are those fragmented shares will not be in a position to prevail the company to stop passing the resolutions.. But in recent days, minority prevails over the majority shares and their activism has already started i.e. institutional shareholders who are holding shares in concert.
Distribution of sweet boxes
After the AGM, the distribution of sweet boxes begun.
There is no provision in the Companies Act, 1956 to prohibit the companies to give gifts/sweet boxes to their shareholders. This has done to please them and vote in favour of the company. However SEBI has directed the listedentities not to entertain gifts to their shareholders. In one company recently held AGM, there are only 200 shareholders are present whereas 9000 sweet boxes are distributed. The person holding one share also entitled for sweet boxes. The cost of one sweet box comes around Rs.70/- but he is holding share cost is Rs.2/-
Discount coupons: Discount Coupon to buy their products e.g RELIANCE sent along with Dividend Warrant or Copy of Annual Accounts.Few companies are sending discount coupons. No Gift please even distributing company products should be prohibited because only share holders attend the meeting can avail it whereas the discount coupon would reach all share holders wherever they reside. In this case no discrimination among shareholders
Conclusion: The Solution for this malady lies with SEBI The regulatory authority should not be watching this fun for ever. Better late than never, SEBI should issue a circular IMMEDIATELY prohibiting issue of Gifts of any kind Articles , Samples of the products of the Company or ASSOCIATE Company Sweet packets or Snacks . The Circular should state that only a cup of tea / coffee / or soft drinks is only should be given and nothing more.
Will SEBI will take any steps in this regard?--
SEZ update from Hindu business line
Investment-linked sops to SEZ developers proposed
Our Bureau
New Delhi, Aug 10
The Finance Ministry said on Tuesday that the Direct Taxes Code (DTC) proposes to substitute the currently available profit-linked incentives with investment-linked deductions for specified sectors including developers of Special Economic Zones (SEZ).
This is because profit-linked sops are inherently inefficient and regressive as it could lead to money laundering and shifting of profits to the exempted activity, the Minister of State for Finance, Mr S.S. Palanimanickam, said in a written reply in Rajya Sabha.
The revised DTC draft also seeks to protect the profit-linked deduction for the unexpired period only for those SEZ units beginning operations before March 31, 2011, he said. The DTC is expected to come into force from April 1, 2011.
Since profit is the basis for exemption in all profit-linked incentives, there is no incentive for investment and upgradation during the period of tax holiday, the Minister said. Such profit-linked incentives also lead to significant loss of revenue and encourage rent-seeking behaviour, he said.
Investment-linked incentives are better directed instruments since they are performance based and target the incentive specifically to the capital investment, the Minister said.
Therefore, the Code moots the substitution of profit-linked sops with investment-linked deductions for specified sectors including SEZ developers, he said.
However, the DTC proposes a provision for profit-linked deduction currently available to developers of SEZs for the unexpired period only for all SEZs that are notified on or before the commencement of DTC, he said.
The DTC also moots a provision for an investment-linked deduction for all SEZ developers notified on or after the commencement of the DTC. Besides, it seeks to levy Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) on SEZ developers. The DTC draft also specifies that there will not be any tax benefits for SEZ units set up on or after the date of commencement of the DTC, adding that SEZ units will also attract MAT.
The special tax benefits enjoyed by SEZ units include: Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units; total Income-Tax exemption on export income for SEZ units for the first five years, 50 per cent exemption for the next 5 years thereafter and 50 per cent of the ploughed back export profit for next five years; exemption from MAT as well as permission for external commercial borrowing by SEZ units up to $500 million in a year without any maturity restriction through recognised banking channels.
Besides, SEZ developers are exempted from customs/excise duties for development of SEZs for authorised operations approved by the Board of Approvals; I-Tax exemption on income derived from the business of development of SEZs in a block of 10 years in 15 years; exemption from MAT and DDT.
More Stories on : Infrastructure Taxation
Our Bureau
New Delhi, Aug 10
The Finance Ministry said on Tuesday that the Direct Taxes Code (DTC) proposes to substitute the currently available profit-linked incentives with investment-linked deductions for specified sectors including developers of Special Economic Zones (SEZ).
This is because profit-linked sops are inherently inefficient and regressive as it could lead to money laundering and shifting of profits to the exempted activity, the Minister of State for Finance, Mr S.S. Palanimanickam, said in a written reply in Rajya Sabha.
The revised DTC draft also seeks to protect the profit-linked deduction for the unexpired period only for those SEZ units beginning operations before March 31, 2011, he said. The DTC is expected to come into force from April 1, 2011.
Since profit is the basis for exemption in all profit-linked incentives, there is no incentive for investment and upgradation during the period of tax holiday, the Minister said. Such profit-linked incentives also lead to significant loss of revenue and encourage rent-seeking behaviour, he said.
Investment-linked incentives are better directed instruments since they are performance based and target the incentive specifically to the capital investment, the Minister said.
Therefore, the Code moots the substitution of profit-linked sops with investment-linked deductions for specified sectors including SEZ developers, he said.
However, the DTC proposes a provision for profit-linked deduction currently available to developers of SEZs for the unexpired period only for all SEZs that are notified on or before the commencement of DTC, he said.
The DTC also moots a provision for an investment-linked deduction for all SEZ developers notified on or after the commencement of the DTC. Besides, it seeks to levy Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) on SEZ developers. The DTC draft also specifies that there will not be any tax benefits for SEZ units set up on or after the date of commencement of the DTC, adding that SEZ units will also attract MAT.
The special tax benefits enjoyed by SEZ units include: Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units; total Income-Tax exemption on export income for SEZ units for the first five years, 50 per cent exemption for the next 5 years thereafter and 50 per cent of the ploughed back export profit for next five years; exemption from MAT as well as permission for external commercial borrowing by SEZ units up to $500 million in a year without any maturity restriction through recognised banking channels.
Besides, SEZ developers are exempted from customs/excise duties for development of SEZs for authorised operations approved by the Board of Approvals; I-Tax exemption on income derived from the business of development of SEZs in a block of 10 years in 15 years; exemption from MAT and DDT.
More Stories on : Infrastructure Taxation
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