If the transfer of employee based on illegal consideration than court can interfere and reversed the decision

Posted on 07 September 2012 by Apurba Ghosh

Court HIGH COURT OF BOMBAY Brief The fact of the case is the transfer of employee from one place to another place. The Petitioner/management has always a right and power to transfer the employees from one place to another, subject to contingencies and the requirement. However, this, in no way, be read to mean that the employees and workers just cannot challenge such transfer orders in any circumstances. The Court also in no way debars entertaining and/or considering such application even for interlocutory order and/or protection. It depends upon the facts and circumstances of each case. There cannot be a strict jacketed formula to say that no Court should interfere with the transfer order initiated by the management, at any point of time. The employer/employee relationship as based upon the contract, therefore, there are always so called disputes and conflicts, some time defined or some time undefined. Citation Larsen and Toubro Limited, a Company registered under the Companies Act, 1956 having its office at Powai Campus, Saki Vihar Road, Mumbai 400072 .... Petitioner Vs. 1. Antony Jokim Patekar, adult, Indian Inhabitant, residing at 202, Sarovar, Vasant Complex Coop. Hsg.Soc. Ltd., Near Kalpravruksh Building, Link Road Signal, Extn: Mahavir Nagar, Kandivali (West), Mumbai 400067. 2. The President, Industrial Court, Bandra, Mumbai 400051. .... Respondents Judgement IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE CIVIL JURISDICTION WRIT PETITION NO. 8215 OF 2012 Larsen and Toubro Limited, a Company registered under the Companies Act, 1956 having its office at Powai Campus, Saki Vihar Road, Mumbai 400072 .... Petitioner Vs. 1. Antony Jokim Patekar, adult, Indian Inhabitant, residing at 202, Sarovar, Vasant Complex Coop. Hsg.Soc. Ltd., Near Kalpravruksh Building, Link Road Signal, Extn: Mahavir Nagar, Kandivali (West), Mumbai 400067. 2. The President, Industrial Court, Bandra, Mumbai 400051. .... Respondents Mr. J. P. Cama, Senior Advocate with Ms.Madhavi DeshpandeRavuri for the petitioner. Mr.S.S.Pakale with Mr. Avinash Belge for respondent no.1. CORAM: ANOOP V. MOHTA, J. DATE: August 28, 2012 ORAL JUDGMENT: Heard finally by consent of parties. 2. The Petitioner/management has challenged the impugned interlocutory order dated 26 July 2012 passed by the learned Industrial Court, Mumbai, thereby stayed/kept in abeyance the transfer order dated 10 May 2012 issued by them, transferring Respondent no.1 to Security Department. 3. Admittedly the main complaint is still pending. The learned Industrial court by impugned order dated 26 July 2012 has allowed the Interlocutory Application filed by Respondent no.1/complainant in the following terms: “i) Application is allowed. ii) It is hereby prima facie held and declared that the Respondents have engaged in and engaging in unfair labour practice under items 3, 9 and 10 of Sch. IV of the Act. iii)The transfer order dated 10.5.2012 issued by the Respondents is kept in abeyance and the Respondents are directed to allow the Applicant to work at Powai Works on\ his earlier post as a skilled employee, pending the hearing and final disposal of the Main Complaint. iv)Costs into the cause.” 4. The Petitioner/management has always a right and power to transfer the employees from one place to another, subject to contingencies and the requirement. However, this, in no way, be read to mean that the employees and workers just cannot challenge such transfer orders in any circumstances. The Court also in no way debars entertaining and/or  considering such application even for  interlocutory order and/or protection. It depends upon the facts and circumstances of each case. There cannot be a strict jacketed formula to say that no Court should interfere with the transfer order initiated by the management, at any point of time. The employer/employee relationship as based upon the contract, therefore, there are always so called disputes and conflicts, some time defined or some time undefined. 5. The learned senior counsel appearing for the Petitioner, referring to various averments made in the Petition, including Settlement/Voluntary Retirement Scheme (VRS) and facts and circumstances of the case, pointed out that there is no question of interference by the Court in such transfer orders which was made not only against Respondent No.1 but along with other persons also. The challenge is raised by Respondent No.1. Such order, if maintained and/or retained, it will disturb the day to day affairs, including so called discipline of the management. The learned Judge ought not to have interfered with the order of transfers so passed, based upon the material, and the administrative exigency also. 6. The Courts are normally reluctant to interfere with the interlocutory order, basically to grant and/or refusal to grant stay to such transfer orders. The scope and purpose of Article 226 of the Constitution of India is quite limited. The question is whether the impugned interlocutory order is perverse and totally illegal and without any basis. 7. After hearing both the parties and after going through the record, including the pleadings so referred and relied upon by the Court, as well as, by the parties, I find that there is no perversity and/or illegality in passing the order, basically to say that the Court should interfere and reverse the order to bring the situation back to square one. 8. Normally, if the order of transfer is based upon some particular instance and of the management's policy decision, then there is no question of interference. But the case is made out, though prima facie, that such transfer is based upon various consideration other than the socalled administrative contingencies; and it has foundation of allegations of malafide, harassment, humiliation and degradation of the level of work also, the stay of such transfer orders, in the present facts and circumstances, cannot be stated to be unjust, and/or illegal. 9. Admittedly, Respondent no.1 has been in service for more than 33 years having unblemished record and is about to retire in 2014. The VRS scheme so floated, though accepted by the Union, for whatever may be the reason, Respondent No.1 was not willing to accept the same. The individual decision, even if taken rightly or wrongly, and he is insisting upon not to accept the same, irrespective of the settlement of Union, in no way, at this stage, can be stated to be illegal and/or impermissible. His individual rights and in a situation, where he is about to retire in 2014, in no way, can be stated to be deliberate act and/or any intention to destroy so called settlement. There is ample material on record and at least recorded by the Court that, though persuaded from time to time, he was not willing to accept the VRS scheme. The allegations are that these transfer orders are result of such denial. The transfer order, as noted above, not provided the specific reasons, though transferred along with other workers, yet that itself cannot be the reason that the aggrieved person  cannot challenge his individual transfer order. The challenge to such transfer orders, therefore, so raised supported by the pleadings/affidavit, prima facie has been considered by the Court in his favour. 10. The aspect of malafide, humiliation and reduction in rank read with the change in cadre, as dealt with by the learned Judge. Those reasons are recorded in paragraphs 24, 25 and 26, in the following terms. As I am not deciding the issue finally, but taking for the purpose of adjudicating this writ petition finally, in my view, the reasoning so given, in no way can be stated to be bad in law and contrary to law. “24. After going through both the transfer orders, it is explicit that the same do not show the reasons for transfer of the Applicant from the ACB Shop to the Security department. Nowhere it is mentioned that the business where the Applicant was working as a skilled employee has been closed or to come to an end. On the contrary the Applicant in clear terms mentioned in the Complaint that after his transfer one Shri Ajit Ghagare is transferred in his place. This fact is not denied by the Respondents. When Shri Ghagare is accommodated in place of the Applicant, then what was the necessity to transfer the Applicant from his working place to the security department, nowhere the same has been clarified by the Applicant much less satisfactorily. 25. Considering the pleadings at this prima facie stage and taking into consideration the documentary evidence, it clearly demonstrates that only because the Applicant has not accepted the VRS floated by the Respondents, the Applicant is being harassed by transferring him from his parent department to security department. Admittedly the Applicant was working as a skilled employee. The post of Security Guard does not fall within the grade of skilled employee. Therefore, it clearly indicates that this is humiliation by way of demoting the employee from the grade of skilled employee to the post of security guard. The Respondents have not justified why the Applicant is required to be transferred to the security department though there is provision under the settlement signed with the Bharatiya Kamgar Sena about ratiionalization, restructuring, flexibility, mobility, productivity and discipline. But nowhere it is agreed by the Union that under the said rationalization, restructuring, flexibility, mobility, productivity and discipline, the employees will be transferred to any grade irrespective of their present grade. The Union has not allowed the Respondent Company to demote any employee under the said nomenclature. No doubt the Union and the workmen agreed for mobility of the workmen within the department and between the departments in all areas of operations as and when required without any delay, as agreed and reflected on page No.7 of the settlement, but it does not mean that the workmen have agreed for demotion, Mobility of workmen is allowed within the department itself and not out of the department. The Respondents have misinterpreted the said terms of the agreement and only because the Applicant has refused to accept the VRS, forced him to work in the security department which is totally illegal and improper. 26. By transferring the Applicant who is a skilled employee to the post of security guard in the security department, the Respondents have changed  the service conditions of the Applicant. Admittedly the Respondents have not given any notice of change under section 9A of the Industrial Disputes Act, 1947. The Applicant is forced by the Respondents to accept the transfer order and to go to the transferred place. All these acts on the part of the Respondents are nothing but unfair labour practices which prima facie squarely fall under items 3, 9 and 10 of Sch. IV of the Act. Considering all these aspects on the available material, in my considered view, the Applicant succeeded in proving that the Respondents have engaged in and engaging in prima facie unfair labour practices under items 3, 9 and 10 of Sch. IV of the Act. With this, Point No.1 is answered in the affirmative.” 11. The aspects of “change of cadre”, “the transfer is on the verge of retirement” and “for want of compelling reasons”, in my view, in the present case, supports the case of Respondent No.1 rather than the management/Petitioner. The contingencies and/or administrative reasons is basic aspect, but if case is made out of malafide and harassment and no compelling reasons and compelling the workmen to do the particular lower grade work and/or asking him to work somewhere else, specially when he is on the verge of retirement; these facts and facets, supports  the case of the complainant. 12. Both the learned counsel appearing for the parties cited their respective judgments to support their rival contentions. Those judgments are distinguishable on facts itself. 13. In view of above circumstances, the Writ Petition is dismissed. However, considering the fact that the complaint itself is pending and Respondent No.1 is about to retire by 2014, it is desirable that the main complaint be decided and disposed of as expeditiously as possible and preferably within a period of three months. 14. There shall be no order as to costs. 15. The learned counsel appearing for the Petitioner makes statement that the trial Court, after passing the impugned order, has stayed the same for two weeks, and as of today, the same has been in operation, therefore, I am inclined to extend the stay as granted by the trial Court for two weeks from today. (ANOOP V. MOHTA, J.)   Labour charges cannot be disallowed in the presence of proper attendance registrar and wages account Posted on 07 September 2012 by Apurba Ghosh Court INCOME TAX APPELLATE TRIBUNAL Brief The fact of the case explained in following points “1. FOR THAT the Ld. Commissioner of Income Tax (Appeals) Jalpaiguri acted unlawfully in upholding the assessment order framed u/s. 143(3) of the Income Tax Act, 1961 by the Ld. Income Tax Officer, Ward 1, Raiganj passed in gross violation to the provision of s.143(2) of the Income Tax Act, 1961 and also infringes the Instruction No. 241/23/70 dated 23-10- 1970 issued by the’ Central Board of Direct Taxes in this respect and., such action on that behalf is ab initio void, ultra vires and ex-facie null in law. 2. FOR THAT the Ld. Commissioner of Income Tax (Appeals) Jalpaiguri acted unlawfully in upholding the alleged disallowance resorted to by the Ld. Income Tax Officer, Ward 1, Raiganj in the sum of Rs.1,01,754/- in respect of expenses claimed under “Labour Charges” on the specious ground “to curb the possibility of revenue leakage” without adducing any adverse evidence on record and his purported action on that behalf is altogether arbitrary, unwarranted and perverse. 3. FOR THAT on the facts and in the circumstances of the instant case, the Ld. Commissioner of Income Tax (Appeals) Jalpaiguri gravely erred in upholding the impugned disallowance amounting to Rs. 4,438/- in respect of “Office Expenses” on a tenuous premise of being “excessive” by the Ld. Income Tax” Citation Delta Construction C/o Shri Somnath Ghosh, Advocate Seven Brothers’ Lodge, P.O. Buroshibtala, Chinsurah Hooghly, Pin-712 105 (PAN: AACFD 1989K) (Appellant) –Vs.- ITO, Ward-1, Raiganj (Respondent) Judgement IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH: KOLKATA [Before Smt. Diva Singh, Hon’ble Judicial Member] I.T.A. No.817/Kol/2012 Assessment Year: 2008-09 Delta Construction C/o Shri Somnath Ghosh, Advocate Seven Brothers’ Lodge, P.O. Buroshibtala, Chinsurah Hooghly, Pin-712 105 (PAN: AACFD 1989K) (Appellant) –Vs.- ITO, Ward-1, Raiganj  (Respondent) Date of concluding the hearing: 22.08.2012 Date of pronouncing the Order: 22.08.2012 Appearances: For the Appellant : Shri Somnath Ghosh For the Respondent: Sri D.J. Mehta, Sr. DR O R D E R This is an appeal filed by the assessee against the order dated 15.03.2012 of Commissioner of Income Tax (Appeals), Jalpaiguri pertaining to the assessment year 2008-09 on the following grounds: “1. FOR THAT the Ld. Commissioner of Income Tax (Appeals) Jalpaiguri acted unlawfully in upholding the assessment order framed u/s. 143(3) of the Income Tax Act, 1961 by the Ld. Income Tax Officer, Ward 1, Raiganj passed in gross violation to the provision of s.143(2) of the Income Tax Act, 1961 and also infringes the Instruction No. 241/23/70 dated 23-10- 1970 issued by the’ Central Board of Direct Taxes in this respect and., such action on that behalf is ab initio void, ultra vires and ex-facie null in law. 2. FOR THAT the Ld. Commissioner of Income Tax (Appeals) Jalpaiguri acted unlawfully in upholding the alleged disallowance resorted to by the Ld. Income Tax Officer, Ward 1, Raiganj in the sum of Rs.1,01,754/- in respect of expenses claimed under “Labour Charges” on the specious ground “to curb the possibility of revenue leakage” without adducing any adverse evidence on record and his purported action on that behalf is altogether arbitrary, unwarranted and perverse. 3. FOR THAT on the facts and in the circumstances of the instant case, the Ld. Commissioner of Income Tax (Appeals) Jalpaiguri gravely erred in upholding the impugned disallowance amounting to Rs. 4,438/- in respect of “Office Expenses” on a tenuous premise of being “excessive” by the Ld. Income Tax” 2. The ld. A.R., inviting attention to the copy of the Board’s Instruction No.241/23/70 dated 23.10.1970, submitted that the assessment order is contrary to the said Instruction as the hearing in the said case closed on 3rd November, 2010 and the order was passed on 06.12.2010. Referring to the said Instruction, the ld. A.R. stated that it is stated therein that in case the orders are not passed immediately as in complicated cases or those involving the handling of voluminous materials, it may not be possible to pass an order immediately after the hearing, even in such cases the order should be passed within 14 working days from the last date of hearing. In regard to ground nos. 2 and 3, the argument was that the assessee had claimed labour charges, duly supported by Labour Attendance Register and Wages A/c. wherein the AO had the apprehension that there is bound to be a revenue leakage of 5% of the expenses. Similarly, in regard to the head office expenses, he made an ad hoc disallowance 10% of such expenses and in appeal the said additions were upheld. Referring to the submissions placed in pages 1 to 5 of the paper book, he stated that the said addition is contrary to the settled legal position. Reliance was placed upon the paper book containing submissions advanced before the CIT(A); copy of ledger account of labour charges and copy of labour attendance and wages register (pages 9 to 57 of the paper book). Copy of ledger account of office expenses (pages 58 to 60 of the paper book) etc. so as to contend that no discrepancy was pointed out by the AO which the assessee was required to explain as such the additions it was argued deserves to be deleted. 3. The ld. Sr.DR, Shri D.J. Mehta, in regard to the first ground, stated that no doubt the order was passed beyond 14 days, however, Instruction No.241/23/70 does not make the actions of the AO bad in law. Referring to ground nos.2 and 3, the ld. Sr.D.R. placed reliance upon the orders of the authorities below. However, when he was required to point out, he was, apart from the observations made by the AO, not in a position to say anything more. 4. Having heard the rival submissions and perused the materials available on record, it is seen that the AO estimated the disallowance to be made on account of the following reasons: “Assessee firm had debited expenses of Rs.20,35,085/- under the head ‘Labour charges’. In support of this expense, A/R produce labour attendance register with wages account. To curb the possibility of any revenue leakage,5% of such expenses of Rs.20,35,085/- which comes to Rs.1,01,754/- is disallowed and added to the total income of the firm. Assessee firm debited Rs.44,376/- under the head ‘office expenses’ which seems excessive considering the work done by the firm. Hence, 10% of such expenses of Rs.44,376/- which comes to Rs.4,438/- is disallowed and added to the total income of the firm.” 4.1 On perusal of the same it is seen that no reasoning or basis for making disallowance has been made apart from suspicions. The said action has been upheld by the CIT(A). On consideration of the entire facts and materials and the settled legal position, I am of the view that the said action cannot be supported in law as in the face of fully vouched and verifiable expenses, as per the claim of the assessee, which has not been rebutted by the revenue and where the assessee has maintained the Attendance Register of labourers shown the ledger account of labour charges and office expenses, which were all duly produced before the AO and also placed before us which contained the details of wages paid to and accepted by the labourers, no defect in the same has been pointed by the revenue. The action to make the ad hoc disallowance @5% qua the same and 10% in the case of office expenses on the reasoning that “to curb the possibility of revenue leakage” and “seems excessive” respectively is arbitrary which cannot be supported in law. Hence, addition so made of these disallowances by the AO, which has been upheld by the CIT(A), cannot be sustained. Accordingly, ground nos. 2 and 3 are allowed. In regard to ground no.1, which has been half-heartedly argued by the ld. A.R., the same is rejected and the department’s argument in this regard stands accepted. Therefore, the appeal of the assessee is partly allowed. 5. In the result, the appeal of the assessee is partly allowed. The said Order was pronounced in the open court on 22.08.2012 in the presence of the parties on the date of hearing itself.                                                                      Sd/-                                                               (Diva Singh)                                                            Judicial Member Dated: 22/ 08/ 2012 Copy of the order forwarded to: 1. Delta Construction, C/o Shri Somnath Ghosh, Advocate, Seven Brothers’ Lodge, P.O. Buroshibtala, Chinsurah, Hooghly, Pin-712 105 2 ITO, Ward-1, Jalpaiguri 3. CIT(A)- 4. CIT- 5. DR, Kolkata Benches, Kolkata (True Copy) By Order Assistant Registrar, I.T.A.T., Kolkata. Talukdar/Sr.P.S. Explanation 2 of section 115JB only define the meaning of tax and cannot extend the benefit of surcharge and cess paid last year Posted on 07 September 2012 by Apurba Ghosh Court INCOME TAX APPELLATE TRIBUNAL Brief In allowing credit of MAT of the previous year u/s 115JAA at `.56,05,585/-. (Pl. see Sl. No.22 of Intimation) only as against the sum of `.63,51,128/- paid as per Schedule Part B of TTI of ITR 6 of previous year resulting in not allowing the credit of MAT u/s 115 JAA at `.5,60,559/- and `.1,84,984/- being the amount of surcharge and education cess (Part B of TTI of ITR 6 of previous year) which were paid in the previous year and credit of the same has to be allowed along with the sum of `.56,05,585/- in this year for which records are available with the department. Citation M/s Richa Global Exports Pvt. Ltd., A-41, Mayapuri Indl Area, New Delhi. (Appellant) Vs. ACIT, (CPC),Vabgalore. (Respondent) Judgement IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’ NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. No.2303/Del/2012 Assessment year: 2010-2011 M/s Richa Global Exports Pvt. Ltd., A-41, Mayapuri Indl Area, New Delhi. (Appellant) Vs. ACIT, (CPC), Vabgalore.  (Respondent) PAN /GIR/No.AADCR-0255-L Appellant by: Shri KVSR Krishna, Advocate. Respondent by: Smt. Veena Joshi, DR. ORDER PER TS KAPOOR, AM: This is an appeal filed by the assessee against the order of Ld CIT(A) dated 27.2.2012. The grounds raised by the assessee are as under:- 1. That on the facts and circumstances of the case, the Ld CIT(A) has grossly erred: a) In allowing credit of MAT of the previous year u/s 115JAA at `.56,05,585/-. (Pl. see Sl. No.22 of Intimation) only as against the sum of `.63,51,128/- paid as per Schedule Part B of TTI of ITR 6 of previous year resulting in not allowing the credit of MAT u/s 115 JAA at `.5,60,559/- and `.1,84,984/- being the amount of surcharge and education cess (Part B of TTI of ITR 6 of previous year) which were paid in the previous year and credit of the same has to be allowed along with the sum of `.56,05,585/- in this year for which records are available with the department. b) For the purpose of calculating interest u/s 234B & 234C ignoring from the computation the amount of surcharge and education cess etc. under MAT of the previous year paid at `.5,60,559/- and `.1,84,984/-. c) As a result in creating/charging extra demand of `.8,74,195/- (`.8,62,225/- + `.11,970/-) while processing the return of income u/s 143(1) by doing/committing following mistakes:- Sl.No. Reporting Heads As computed Extra u/s 143(1). Amount charged 21 Tax payable for the year. 12939708 22 Credit u/s 115JAA 5605585 23 Adjusted tax liability 12939708 24 Surcharge 1293971 560559 26 EC+ Secondary & Higher Edu. Cess. 427010 184984 32 234B 207972 91002 34 234C 259199 37650 874195/- 2. That the Ld CIT(A) has erred in not accepting the assessee’s submission that tax has been defined in sec. 2(43) where tax means income tax and the same should be read with further definition of income tax given in Explanation-2 of sec. 115JB in Chapter XIIB and as such committed a mistake in not allowing the relief for surcharge and education cess while computing the tax for the year under appeal. 3. Appellant craves to add, file, modify and other ground before or at the time of hearing of appeal. 2. The brief facts of the case are that the assessee filed return electronically and received intimation order u/s 143(1) dated 15.3.2001 from ACIT, CPC, Bangalore. The assessee observed from the intimation that in allowing credit of MAT of previous year u/s 115JAA against the claim of `.63,51,128/-, the  claim was allowed only for an amount of `.56,05,585/-. Therefore, assessee noted that there was a short fall in the allowance of credit of MAT by `.7,45,543/- being the amount of surcharge and education cess amounting to `.5,60,559/- & `.1,84,984/- respectively. The assessee further observed that interest u/s 234B & 234C was calculated  ignoring from the computation, the amount of surcharge and education cess which was paid during previous year along with MAT. Therefore, the assessee filed an appeal before Ld CIT(A) and prayed that due credit of MAT including surcharge & education tax should be considered u/s 115JAA and in support relied upon Explanation 2 of section 115JB which was inserted by Finance Act, 2008 with retrospective effect from 1.4.2001. A further prayer was made for calculation of interest u/s 234B & 234C after giving proper credit of MAT including surcharge and education tax. 3. The Ld AR further submitted before Ld CIT(A) that Chapter XIIB has four sections and definition of tax is given in one section i.e. 115JAA vide explanation (2) and therefore he argued that said explanation would apply to all the four sections which are covered under Chapter-XIIB and particularly to section 115JAA. In view of the above, the Ld AR submitted that benefit of surcharge and education paid in the last year be given as part of tax credit and the amount of surcharge and education cess should not be considered as a separate levy. The Ld CIT(A) after considering the submissions made by the assessee did not agree with the assessee. The relevant portion of Ld CIT(A)’s order is reproduced below:- “I have carefully considered the intimation u/s 143(1) and the submissions made by the appellant. The provisions of section 115JAA deals with allowability of tax credit in respect of tax paid on deemed income relating to certain companies. The section allows only credit of tax paid by the company in accordance with the provisions of section 115JAA. Tax has been defined in section 2(43) to be income tax chargeable under the provisions of the Act and surcharge and education cess have not been included in the definition of tax. Wherever the legislature wanted to widen the definition of tax it has done it specifically for example in explanation 2 to section 115JB, the income tax has been specifically defined to include surcharge as well as education cess. Thus credit of surcharge and education cess are not admissible for claim of credit as per provisions of the section 115JAA.” 4. Aggrieved the assessee filed appeal before this Tribunal. 5. At the outset, the Ld AR argued that Ld CIT(A) has referred to section 2(43) for meaning of tax paid which instead should have been read together with explanation 2 to section 115JB The Ld AR further argued that definition of tax has been given in Explanation (2) to section 115JB according to which tax includes surcharge and education cess. He further argued that definition of tax u/s 115JB as per explanation 2is applicable to all four sections of Chapter-XIIB. In this respect, the Ld AR filed a compendium on orders of IT/WT by Dr. Girish Ahuja which at question No. 20.14 explain the calculation of MAT under different years which as per Ld ARincluded surcharge and education tax. He further argued that the Assessing Officer has taken a very narrow meaning of tax under MAT and in fact correct fact is that total outgo of tax including surcharge should be considered for giving credit u/s 115JAA. The Ld AR argued further that interest u/s 234B & 234C should be calculated after giving credit of MAT including surcharge and education tax. Reliance was placed in the case of CIT v. Tulsyan NEC Ltd. at 330 ITR 226. 6. On the other hand, Ld DR argued that this intimation is not manual and is an automatic from CPC wherein the calculations are done automatically through software. She further argued that section 115JAA & section 115JB talks of only income tax and no where surcharge and education tax is included for the purpose of these sections. Therefore, she argued that Ld CIT(A) has rightly rejected the appeal of the assessee. 7. We have heard the rival submissions of both the parties and have gone through the material available on record. For understanding the amount of tax credit available u/s 115JAA first of all, it is necessary to understand the meaning of income tax as contemplated by section 115JB of the Act. Section 115JB reads as under:- “Special provision for payment of tax by certain companies. 115JB. (1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2010, is less than fifteen per cent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of fifteen per cent. (2) Every assessee, being a company, shall, for the purposes of this section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1 of 1956)}” The above section clearly talks that such book profit shall be deemed to be total income of the assessee and tax payable by the assessee on such total income shall be the amount of income tax at specified rate of tax  which was 15% for the relevant year under consideration. The section does not talk about the income tax as increased by surcharge & education tax. It talks about only income tax. Wherever statute has required income tax to include surcharge and education tax, it has specifically done it like in Explanation 2 to section 115JB. Similarly Form 29B which is filed along with return of income where MAT is applicable at point 14 it states that the amount of income tax payable by the company would be 15% of col. 12 i.e. book profits, it does not state surcharge or education cess. Therefore, it emerges that MAT payable u/s 115JB is only income tax and does not include surcharge or  education cess. Therefore, if only income tax is paid under the provisions of section 115JB it is natural that tax credit u/s 115JAA will only be of income tax and not of surcharge and education cess. This point is further clarified by intimation u/s 143(1) sent to assessee wherein tax payable u/s 115JB has been calculated as only income tax and no surcharge or education cess has been included in the amount of income tax. 8. The submission of Ld AR that tax includes surcharge and education cess as per explanation 2 of section 115JB is correct to the extent that explanation 2 was inserted to clarify the meaning of tax as contemplated in clause (a) of explanation (1) with respect to calculation of book profit which is read as under:- “Explanation-1 for the purpose of this section book profit means the net profit as shown in the P&L Account for the relevant previous year prepared under sub section (2) as increased by :- a) the amount of income tax paid or payable and the provisions thereof: b) xxxxx c) xxxxx d) xxxxx e) xxxxx f) xxxxx The above explanation 1 clarifies that explanation 2 to section 115JB was inserted to define the meaning of tax (which of course includes education tax and surcharge) for the purpose of calculating book profits liable to tax u/s 115JB and it cannot be extended to sections 115JB or section 115JAA of the Act. In view of the above provisions, we are of the considered opinion that tax credit u/s 115JAA was rightly given and we do not find any reason to interfere in the order of Ld CIT(A). 9. The second ground of appeal of the assessee is regarding interest u/s 234B & 234C, it is a mandatory provision and is consequential in nature and in view of our adjudication on ground 1 above, the ground No.2 is also decided against the assessee. The case law relied upon by assessee relates to admissibility of credit of MAT tax before charging interest u/s 234B & 234C which in the present case has been done correctly. The only difference is that amount of surcharge and education tax has not been included in the amount of MAT credit which is also correct as per our discussion above relating to ground No.1. 10. In the result, the appeal filed by the assessee is dismissed. 11. Order pronounced in the open court on 31st day of August, 2012.                                               Sd/-                                Sd/-                                      (I.C. SUDHIR)              (T.S. KAPOOR)                               JUDICIAL MEMBER ACCOUNTANT MEMBER Dt.31.8.2012. HMS Copy forwarded to:- 1. The appellant 2. The respondent 3. The CIT 4. The CIT (A)-, New Delhi. 5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy. By Order (ITAT, New Delhi). Date of hearing 17.7.2012 Date of Dictation 27.8.2012 Date of Typing 28.7.2012 Date of order signed by both the Members & pronouncement. 31.8.2012 Date of order uploaded on net& sent to the Bench concerned. 31.8.2012 Tags :-

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Legal Digest from business standard 3-9-2012

LEGAL DIGEST >Rentarrears no ground forwinding up The Supreme Court has held that a winding up petition against a company would not be maintainable in a tenancy dispute in the absence of any specific finding as to the rate of rent and the period of default committed by the tenant company. In this case, Raju Jhurani vs M/s Germindia Ltd, the landlord evicted the tenant company, but claimed arrears of various dues. Since they were not paid, the landlord moved a winding up petition under the Companies Act. The Calcutta high court rejected the petition on the ground that the winding-up petition was not maintainable as there was no admitted arrears and there was no ascertained amount due in respect of which a windingup order could be passed. The Supreme Court upheld this view and dismissed the landlord’s appeal observing that “there are various       stages involved in deciding the amount of rents and the periods of default and also the amount to be ultimately calculated on account of such default and the same cannot be tried in a summary way, without adducing proper evidence. It is, therefore, necessary that such issues be heard and tried in a properly constituted suit for recovery of such dues.” >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Call forfresh tenders upheld The Supreme Court last week dismissed the appeal of Mangal Amusement Park Ltd challenging the change of land use of its land from ‘commercial’ to a ‘regular park’ in the town planning scheme of Indore and also the decision of the Madhya Pradesh government to call for fresh tenders for the land. The court ruled that the company had only alicence on the land and not a lease. Moreover, the agreement had lapsed due to expiry of time and therefore the company could not claim any right for renewal of the agreement. The court also accepted the argument of the Indore Development Authority that the company had not utilised the land fully for many years and the fixtures like the games and rides could be removed without financial loss. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Claim of refund rejected The Supreme Court has upheld the judgment of the National Consumer Commission which had rejected the claim of an allottee of a house sold by the Karnataka housing board for refund. He had agreed for registration of the sale deed showing the cost of the flat as Rs.4,31,918 although the actual cost was Rs.5,23,232. The concession was made by the housing board. The allottee then claimed refund according to the cost shown in the registered deed. Dismissing the appeal in the case, S Sreenivasa Murthy vs State of Karnataka, the court stated that “having taken advantage of the offer made by the board to get the deed registered at a price less than the actual cost of the flat, he cannot turn around and demand the refund.” MJ ANTONY

Consolidated company law questions by ca group

Index

1. Incorporation of company and matters incidental

2. Prospectus , Issue and allotment of shares or debentures

3. General meetings

4. Accounts and audit (Company auditors)

5. Directors (DIN)

6. Compromise Arrangements

7. Winding up

8. Miscellaneous

9. E-forms

10. XBRL

Incorporation of company and matters incidental

Date: 22/12/10

A company was incorporated in 15th oct 2003 but before the company  incorporation date and after name approval letter received from the roc, a land was purchased and registered in the name of the company .my query is whether this is valid transaction as company was not in existence at the time of land registration. if this is valid transaction then pl advice me with statutory provisions if any. 

Sushant 

Reply 1

The land cannot be purchased and registered in the name of non-existence entity and hence this transaction is invalid. I fail to understand how the land could have been registered in the name of the company without any board resolution authorizing some representative to execute/register the land documents on behalf of the company. 

K. Krishnamoorthy 

Reply 2

The transaction is invalid as on the date of registration there was no existence of the company.

CA Anil Musaddi

Reply 3

the company becomes a legal entity when it is incorported and its name is entered in registers of companies maintained by the ROC. An approval for name does not create a legal entity as the formation is not complete till its MOA, AOA along with subscribers details filed, verified to the satisfaction of ROC & who in turn grants a legal entity by issuing a incorporation certificate. A person is under no compulsion to register a company though he might have received a letter for approval of name. As such the agreement entered into is not legally teneble. The company should create fresh set of document on a day after the incorporation of the company. 

Jitesh Kumar Agrawal 

Reply 4

This cannot be a valid transaction. 

Basab Sarker 

Reply 5

For entering into any transaction,first condition is that there should be two person.In the instant case,the company in question was not in existence.Hence,to me the transaction is not a valid one. 

CA Arun Patodia, FCA,DISA 

 
Reply 6

It just cant be and thats simple logic as the company hasnt come into existence, so how can it enter into a trasaction, it can only be done in the names of the promoters. 

CA. Harsh Jain

Reply 7

This is an example of a preincorporation contract. Such contracts as held in Kelner vs Baxter(LR2 CP174)are not subject to ratification upon incorporation of the company .the promoter is individually laible for such contracts. However such contracts can be adopted and enforced by the company if such a contract is warranted by the terms of incorporation. The company can upon incorporation enter into a fresh contact in substitution of the contract which has been made in the personal capacity of the promoter. Upon such ratification the other party can also enforce the contract. a contract for purchase of land should logically be ratified upon incorporation. 

kalidas 

Date: 30/11/10

I had filed Forms 1,18 & 32 for incorporation of a new co. But the ROC rejected it saying "Subscribers not signed". Please anyone explain what it exactly wants. Because we had written the name & address of the promotor directors on the last page of AoA & MoA. So please guide me what to do next. 

Secondly, Do I have to pay additional stamp fee for filing Form-67? 

Rajesh Kumar 

Reply 1 

Its not so serious problem. Just get the subscribers page for MOA and AOA signed and filled and witnessed and dated. The date should be after the date of purchase of the stamp paper for declaration. And attache these with the form 67. Not additional fee is required. 

CA Anil Musaddi

Reply 2 

Writing only the name and address of the subscribers won’t do the work, all subscribers must first sign , then write Name then address then occupation this the Correct format. All promoters should write it in their own hand writing. No additional stamp fees for Form 67 but do remember only two times form are given for resubmission after that whole money paid will be forfeited. 

Harsh Vardhan Bhardwaj 

Reply 3 

While filing Form 1 for incorporation of a new Company, it is required to attached Memorandum & Articles of Association duly completed and last page of the MOA & AOA contains the details of the Subscribers to the Memorandum of Association and Articles of Associations, which needs to be filled up manually by the subscriber and has to signed manually therein. Now, you are required to check whether you have furnished the details just by typing or hand written. if the same is not hand written then please write, sign scan and upload the Form No. 1 again through checking the status of filing vide your SRN . Also, if required submit a hard copy to Registrar. Further you need not to file Form No. 18 & 32 and no payment of additional fee should arise. 

Pradeep Kumar Singh 

Reply 4  

It seems that the subscribers to the MOA and AOA have not signed on the last page where the details of subscribers have to be given. I think you have only mentioned their name and address and it has not signed by them, so you get them signed by the subscribers also and resubmit them. 

Reply 5

Dear Rajesh 

Each subscriber who agrees to take shares has also to sign on the subscriber page of memorandum and articles u need not pay any additional fees 

MOHIT BHUTERIA

Reply 6 

All the promoters who are the subscriber to the MOA & AOA are need to sign the subscribers' statement attached with the MOA & AOA by hand. 

CA Mohammad Ayub,

Reply 7

All the subscribers are required to sign and give all the details including the number of shares subscribed in the last page. They need to do the same using their own handwriting No additional stamp duty is reqd for efiling of the addendum/ rectification.

Basab Sarker

Date : 05/10/2010

Can anyone provide with the list of activities that can be incepted in company name vis -a vis its proposed capital For eg : with a capital of Rs 1,00,000/- we can have the words Traders, trading etc  in the co name. 

 A jain 

Reply 1

In my opinion there are no such laid down rules to determine the quantum of Authorized capital. However the ROC kolkata asked for auth cap of 200 lacs in case of nbfc and 5 lacs in case of construction cos. And the company having the word corporation , india, intl. Needs to have auth cap of 50 lacs

Bhagat Brij

Date: 06/08/2010

 Registered Office shifting 

What is the ROC procedure for shifting of Registered Office from Patna to Kolkata-
1) Hold an EGM & file Form-23 alongwith explanatory statement & File Form-18 eventually.
2) Is there any doc to be collected from any of the MCA? 

A. Soni 

Reply 1

Change of Office from one State to another requires full fledged application to CLB, which requires in addition to what you have mentioned a Petition, News Paper advertisement, NOC from all creditors, etc. 

CA ATUL MEHTA

Reply 2

For shifting of registered office first hold a BM and get the approval and then hold GM and get assent from members, file form 23 as special resolution. File petetion with CLB get order and then file form 21 with ROC and then file form 18 with ROC. 

yogeshkty...@rediffmail.com 

Reply 3

Mere holding EGM and filing of form 23 and form 18 will not suffice. Since it involves shifting from one state to another you will have to take approval of the CLB 

Gaurav Agarwal

Reply 4

As this involves change in registered office from one state to another, as per section 17 it will be necessary to obtain the approval of the company law Board for which petition will have to be filed in compliance with the procedure laid down. 

Kalidas 

Date: 04/08/2010

A director of a Pvt Ltd company resigned on 28th Sept 2009 i.e. 2 days before the AGM i.e. on 30/09/2009.BOD Meeting held and the resignation was accepted on the same day i.e. on 28/09/2009. No information regarding cessation of director was given in form 20B as form 32 was not filed, in fact his name was also not mentioned in the Annual Return as resigned. Form 32 could not be filed due to non availability of DIN. However the DIN-2 received by the company only on 22/7/2010 after receiving DIN by the retired director on 28/06/2010 .Now the company wants to submit his form 32. Since he has retired from the directorship on 28/09/2010 duly accepted by the board. Whether DIN-2 could be acceptable by the company when he is not a director in that company? Also can we fill the date as 28/09/2009 in Form 32 when DIN received on 22/7/2010. 

CA Jadish Khandelwal 

Reply 1

Dates are confusing.

N.D.Shreenivaas

Reply 2

The date in Red will be 28/09/2009 

Jadish Khandelwal & Co.

Date : 21/06/10

I am looking for a MOA for a company engaged in the business of networking & marketing business like Amway, RCM, etc.If any member has similar MOA, then kindly forward it. 

CA. Amit Goyal

Reply 1

You can take print out of any company's moa from www.mca.gov.in by paying just Rs. 50/- 

CA Anil Musaddi 

Date: 06/01/2010

Please let me know the process to be adhered to make some changes in AOA ( Addtion of clause of SEAL) Form and the requirement with ROC. 

CA Pawan Periwal 

Reply 1 

The procedure for amending the Articles will be as under: 

1).Board to hold meeting and recommend change in Articles subject to approval of members by special resolution.Board also to approve the convening of general meeting of members and approve notice for EGM. 

2) Notice for EGM to be sent for passing special resolution as per section 31 along with explanatory statement u/s 173 explaining the reasons for the change. 

3)After special resolution has been passed, special resolution to be filed with ROC as required u/s 192 along amended copy of Articles. 

Kalidas 

Reply 2 

1. For any change in AOA, special resolution is required to be passed. 

2. Form 23 will have to be filed online with ROC within 30 days from the date of passing of resolution. 

M L Gupta 

Reply 3 

conduct an egm by giving atleast 21 days notice for getting approval of the members for altering the AOA, and after their approval file form no.23 with the roc, attaching therein the revised AOA, extract of the resolution passed at the EGM.

premvell...@yahoo.com 

Reply 4 

Please refer to Section 16 (4). Special resolution passed at EGM/ AGM followed by filing Form 23 is necessary. 

Srikanta Dutt 

Date:23/12/2009

one of our company has changed its name within the object clause of the company .the company is involved in Infrastructure business and it is registered with the PWD.Now the PWD says the change of name leads to the change in constitution of the company and for the above reason the companyshould obtain a fresh registration with the pwd. i just want to know whether is there any provision or any case law stating that the change of name does not amount to change in constitution of the 
company. 

Ritesh Bardia (FCA) 

Reply 1

The answer is simple, but in government department like PWD one may not like to understand it. Show them provisions of the companies Act relating to names of companies particularly S. 21 and 23. S.23 (3) reads The change on name shall not affect any right or obligations of the company, or ..... You can write to PWD to make changes in regn. With PWD and substitute new name and say to do so just as the Registrar of Companies has done.. You can also put a simple question or illustration to them on line suppose I change my name from Dev Kumar Kothari to Dev KumarMaheshwari and declare such change before a Magistrate and in some news papers, I will get changed  my name with all concerned parties, including government departments, institutes like ICAI, ICWAI, ICSI etc. The person Dev Kumar Kothari is not changed merely by changing name to Dev Kumar Maheshwari, similarly ABC Ltd is not changed in any manner when its name is changed with say XYZ Ltd. You can also ask him - your wife changed name on her marriage with you, does she changed personaly? 

CA Dev Kumar Kothari 

Reply 2

It is settled law that change of name of a company does not tantamount to change in its constitution. \ Change of name does not affect the entity of the company or its continuity as the same entity. The company remains for all practical purposes the same entity with the same rights, privileges and liabilities as before. pioneer Protective Glass Fibre(p)Ltd vs.Fibre Glass Pilkington Ltd.(1986)60 Com cases707(cal DB).Courts have even allowed proceedings commenced by the company in its former name to be continued in its new name as held in Sol vex oils and fertilizers Vs Bhandari Cross fields Ltd(1978)48 Com cases260(P&H),Gur Narain Jagat Narain &co Vs. Motor &General Sales ltd.(1980)All LJ508(All)pl. also refer to Calcutta HC decision in Economic Investment Corpn.Ltd.Vs.CIT(WB)AIR1970cal389,where it was held that rights and liabilities of a company are not at all affected by the change in name of the company. 

Kalidas 

REPLY 3 

It is governed by companies Act, as long as the registration number is same he is bound to accept. 
U can move to court. 

suru 

Date: 18/10/2009

There are only two shareholders in a private limited company and They are the only directors of the company. If one of them expires before one month of due date of AGM, how can the annual return and ROC forms be filed with one director/ shareholder? What steps need to be taken? 

CA. Vimal K Lahoti 

Reply 1

1. Induction of new shareholder in place of deceased will have to be done in accordance with will or applicable inheritence law or any instruction left with the company by the deceased shareholder. 
2.The lone director has to call and hold a board meeting for induction of a new director in place of the deceased to make up numbers in required in law. 

4. That newly inducted director be given a unit of nominal share by the surviving director cum shareholder in that board meeting also to make up numbers as required in law. 
5.The board meeting has to be held immediately after the death and then there will be enough time to call AGM. 
6. It advisable to induct a person as director who already has a DIN. 

CA Dipakkumar Mitra 

Reply 2

These are abnormal situation.The lone surviving shareholder Director would appoint a person as a Director and shall file form no 2 and shall record a statement in the minute book about the abnormal situation or otherwise he shall have to make a petition before the Company Law Board. 

P.Ghoshal 

Query 2

The subscriber of MOA of a private limited has changed his name after the company was incorporated. Now he wants to put his new name in the subscribers page of MOA. Is it possible? 

 Raklakhotia 

Reply 1

From the query raised by you it is very clear and obvious that the subscriber has changed his name. If he had changed his name by publishing through the gazette of the Government, then there is no need for him to change the name in the MOA since, it is not required by law. 

Moreover, the name change has occurred after the incorporation of the company, i.e. the with the name at the time of incorporation. This leaves no room for doubt that the name was different at the time of  incorporation. 

The remedy available to the subscriber is to enclose a copy of the gazette every time when the MOA is used for any official use to any authority. 

There is no bar in having the old name in the MOA or even in any other document such as school certificates, Collage mark sheets, etc., 

CA Anand Babunath

Date: 13/12/2011
I wish to covert a Proprietorship firm into Private Limited Company.

1. Whether the procedure to be followed for registration of a Company is same as being followed in normal registration of a new company. 
2. Whether anything regarding transfer is to be mentioned in MOA. 
3. How proprietors capital to be settled. (Also to be considered from Income Tax Act aspect) 
4. What will be postion of various licenses like Trade License, Vat Registration Certificate, and RTO Certicate in case of vehicles?
CA. Anil Kumar Mittal
Reply1
In my opinion you should first convert the proprietorship firm into a partnership firm because there would be capital gain liability in case of conversion of the prop into Pvt ltd. 

CA Anil Musaddi
Reply2
There will not be any Capital Gain as long as you follow section 47(xiv), yes there will be a clause for takeover of by the company, and procedure is similar to normal company formation, Regn licenses you may require to have those amended. 
CA ATUL MEHTA

Date: 19/06/2011

Can u tell me process for made association for building maintenance Can i incorporate a sec 25 company for building maintenance 

CA Ram Sharma 

Reply 1

he formation of the association for maintenance purposes depends upon the provisions in force of the state in which the property is located. First find out whether there is any mandatory law in place for
formation of the association for maintenance of the property n question in the state concerned. 

In case the same exists u have to fall in line with that statute or otherwise u can form the association under section 25 of the companies’ act 1956. the process of which is dealt as on date similar to that of
the formation of a company limited by guaranteed 

ca sk choudhary 

Reply 2

In case the number of units / flats are not very large u can also form association of persons and submit IT Returns of such entity (AOP). This is simplest form for building maintenance 

CA Kanhaiya Goenka 

Date : 16/04/2011

Can Members guide me regarding necessity for filing Form 23 regarding appointment/remuneration payable to Wholetime Directors in a private limited company. 
Hemant Singhal 
Reply 1
Filing of Form 23 regarding appointment/reappointment/remuneration payable to Managing Director is required under Section 192 of the Companies Act, 1956, irrespective of the fact that the company is a private limited company or public limited company. 
CS. K. Krishnamoorthy 
Reply 2
Provisions of appointment/reappointment of Whole-time Director is not applicable to a Pvt Ltd Company, unless it is subsidiary of Public Company. A simple Board resolution is sufficient. 
CA B.K.CHORARIA 
Reply 3
There is no need to file form 23 in case of appointment of WTD. Requirement applies only for appointing MD. 
Kalidas 

________________________

Date: 21/11/2011

Our present name under service tax forum is “SHREE ACHHA MANAGEMENT CONSULTANCY PVT. LTD." and this need to be changed to "ACHHA MANAGEMENT CONSULTANCY PVT. LTD." Kindly tell us the procedure for name change. 

Thank You 
  
REPLY 1 

Steps involved for change in the name of a company Please find below the procedure for altering name clause of Memorandum and Articles of Association of the company: 
  
Board meeting for deciding the agenda for change in name The Board of directors of a company should first consider the need and reason for changing name of the company. Change of name for an existing 
company may be due to: 
(a) the new name is corresponding to a new business which it has proposed to undertake; 
(b) a company, which has been carrying on its business for a long time and has established a standing in the market, may decide to shorten its name and may like to be known by its abbreviated name as for example "LIC Ltd." in place of Life Insurance Corporation of India Ltd., etc. 
  
Seeking name availability for proposed new name from the ROC An application in e-Form 1A is required to be made along with necessary filing fee of Rs.1000 to the ROC for getting confirmation regarding  availability of the proposed new name. The Registrar shall intimate the applicants about the status of availability of name. 
  
Approval of members in general meeting after getting name availability confirmation from the ROC, the Board shall convene a general meeting of members for the purpose of getting member’s approval through passing special resolution u/s 21. The resolution so passed shall be subject to approval of the Central Government. (Powers have been delegated to the Registrar of Companies). As change of name of company involves amendment in Memorandum (MOA) and Articles of Association (AOA) etc., so special resolutions also required to be passed for alteration of MOA and AOA
  
Registration of Special Resolution with ROC through form-23 (Section-192) As desired by section 192 (4)(a) Company shall also file certified copy of the special resolution along with explanatory statement with ROC through form-23 within 30 days of general meeting. 
  
Filing of form-1B with ROC u/s 21 In accordance with section 21 an application in form 1B is to be made to the ROC (Powers delegated to the ROC by Central Government) for approval of change of name of the company along with requisite fee. Filing of form-1B with ROC u/s 21 In accordance with section 21 an application in form 1B is to be made to the ROC (Powers delegated to the ROC by Central Government) for approval of change of name of the company along with requisite fee.   

REPLY 2 

first confirm the availability of name with roc by filing application along with the Board resolution, and also confirm whether the name change will require alteration of objects also. after confirming the availability of name, conduct an EGM, get the approval of general body for name change, then if approved, proceed for filing form 23, form for application of change name along with necessary enclosures as required in the relevant forms, and to attach the MOA and AOA with new name. 
  
if the company is a very old company (incorporated prior to 2000), please ensure that the AOA, contains the clauses as regard to minimum paid up capital at any point of time not to be below rs.1 lakh for Pvt ltd and rs.5 lakhs for a public ltd company and a clause with regard to non acceptance of deposits from persons other than its directors, directors relatives and shareholders (for Pvt ltd company), since nowadays this is insisted by the ROC. if these are in order, the name change will be approved and a FRESH CERTIFICATE OF INCOROPORATION CONSEQUENT TO CHANGE OF NAME will be issued by ROC. then you can undergo the formalities of change of name in PAN, TAN, SERVICE TAX, SALES TAX, BANK ETC. 

REPLY 3 
1. CONVENE BOARD MEETING AND PASS RESO FOR CHANGE OF NAMES SUBJECT TO APPROVAL; FROM ROC AND MEMBERS IN EGM. 
2. FILE FORM NO 1A WITH THE MCA PARTAL. 
3. AFTER TAKING APPROVAL FROM ROC, FILE FRESH MEMO ARTICLE AND OBTAIN FRESH COI 
  
the Board was informed that (reason for change) the Company proposed to enter in to a joint venture agreement with, Ltd. For manufacturing ____ on ___________, 2011 accordingly the name of the Company had to be changed. 
The Board, after discussion, passed the following resolution:- 
“RESOLVED THAT subject to the approval of the Company in the general meeting and of the Central Government in terms of Section 21 of the Companies Act, 1956 the name of the Company be changed from “old name " to “new name ” and accordingly the name “old name ” wherever occurs be substituted by the name “new name ” 
RESOLVED FURTHER THAT anyone of the Directors, Mr. __________ be and are hereby severally authorized to apply to the Registrar of Companies, Maharashtra (ROC) for availability of changed name or such other name as may be approved by the ROC and take all other steps in this connection.” 
  
REPLY 4 

There can be two situations. Firstly, if you have complied with necessary formalities in case of change of name with ROC, then you need to comply with Service Tax procedures. Secondly, if you have not complied with ROC formalities, you need to comply with them first. 

The procedure for change in name of company for Service Tax is 

Under sub-rule (5A) which has been inserted with effect from 1-3-2006, where there is a change in any information or details furnished by an assessee in Form ST-1 at the time of obtaining registration or he intends to furnish any additional information or detail, such change or information or details shall be intimated, in writing, by the assessee, to the jurisdictional Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be, within a period of 30 days of change. 

The procedures for change in name of company with ROC is 

First confirm the availability of name with roc by filing application along with the Board resolution, and also confirm whether the name change will require alteration of objects also. 
after confirming the availability of name, conduct an EGM, get the approval of general body for name change, 
then if approved, proceed for filing FORM 23, FORM FOR APPLICATION OF CHANGE NAME ALONG WITH NECESSARY ENCLOSURES AS REQUIRED IN THE RELEVANT FORMS, and to attach the MOA and AOA with new name. 
The name change will be approved and a FRESH CERTIFICATE OF INCOROPORATION CONSEQUENT TO CHANGE OF NAME will be issued by ROC. 

Date: 12/11/2011

I have a query with respect to an Indian Company setting up a branch in USA. If you could help me with the list of registrations and permissions required in India and USA for a Private company in India to start a Branch in USAs
Bhushan 
REPLY 1 
Every state in the US has separate sets of rules for formation of a branch or representative office. It depends on the type of entity you want to incorporate. 
In India, you require the permission of the RBI for remittances above 400% of your net worth (as per the last audited balance sheet) in JVs/ WOS. 
For the rest of procedures you can see RBI Guidelines for Investments in Overseas JVs/ WOS's. 
Ravi Mundhra 
REPLY 2 
File form OBR with RBI thru your banker. Get the permission and open yr branch... 
Hemant 

Date: 19/10/2011

My query is that if a company is section 25 company limited by guarantee can company can change its Status in to limited by share capital by filing Form 5 and Fees for authorised capital 

Ca.j.p.sharma

Reply1 

Yes, it can but necessary procedures to be followed by Passing Resolution and change in Articles and MOA. 

Date: 17/09/2011

If a Pvt co. duly authorised by its articles, increases it auth capital in EGM by ordinary resolution, do it need to submit form 23 prior to submitting form 5? 

P.chandak

Reply1

Form 23 is no more required if the capital increased clause is authorised by its article.

CA RAJESH JALAN

REPLY2 

Form 23 is required only when the articles are altered. If the articles have the flexibility to increase auth capital then only Form 5 would do. No need for form 23. 

REPLY3 

Filing of Form 23 is needed in case of Special Resolution. But in case of Ordinary resolution being passed, you can directly upload form 5. 

CA. Hemant Kumar Agarwal 

Date: 09/08/2011

A pvt.ltd. Company was formed with main object 

1."to acquire and takeover a proprietorship concern namely "xyz co
2. The company also had second main object like "to manufacturer, produce, and trade. (The products dealt in by the proprietorship concern") 

Now due to some technical reason the takeover of the XYZ co. is not possible. So can the company start its business as per its second main object? Kindly send your valued suggestions. 

P.chandak 

REPLY 1 
 
A Company is constituted for carrying out several objectives. If one of the objects gets frustrated as in this case, it does not prevent the company from pursuing other objects. 

Kalidas

REPLY 2 

Let me know under which provisions in companies act, 1956 talk about sole proprietorship. It talks about only Part IX Company’s not sole proprietorship. In my opinion sole proprietorship will be treated as an individual. Hence it can form the company like individual but conversion is not possible. If anybody has different view in this regard, I welcome. Please give suggestion as I have some work to convert prop. Business into Pvt. ltd. 

CA Anil Musaddi 

Date : 08/07/2011

Please guide regarding the procedure for change of address from one state to other. 

CA Neha Rathi 

REPLY 1 

It requires application to CLB and advertisement in two newspapers one english and one local vernacular for any objection. also all NOC required form the creditors. the CLB applicaion is a paper book containing all the matters pertaining to the shift and lastly one hearing at CLB for approval. 

CA ATUL MEHTAA

REPLY 2

There is no clarity of what r u trying to change the address of yourself, any concern, registered office or what?

Be specific 

CA. Harsh Jain

Date : 21/02/2011

Liability of the shareholder in a private limited company
I need your valuable guidance/inputs on the following queries- 
What is the liability of the shareholder in a private limited company which is going into liquidation under the different Acts. Your quick response will be highly appreciated. 
Sanjeev 
Reply 1
Please refer to Section 426 of the Companies Act, 1956 ("the Act") which deals with the "liability as contributories of present and past members. 
As per Sub-section 1 of Section 426 , in the event of a company being wound up, every present and past member shall be liable t contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves, subject to the qualifications mentioned in sub-section (d) of 426(1) of the Act, i.e. in the case of a company limited by shares, no contribution shall be required from any past or present member exceeding the amount, if any, remaining unpaid on the shares in respect of which he is liable as such member. 
CS. K. Krishnamoorthy, 
Reply 2
To reply properly , I think we need to know why the company has gone into liquidation. Is there malafide intent which lead to liquidation or not. Primarily the concept of Corporate Veil - or separate legal entity would remain unless there is deliberate and malafide intent. 
Second we need to see - Is it voluntary liquidation or compulsory liquidation and how much assets are present to satisfy the claims of the External Creditors / Workers / Banks and FIs and Government and Tax Authorities and whether an official liquidator has been appointed or not. 
I think both these questions need to be answered before we dwelve into your query 
ADARSH MUNDHRA 

Date : 17/02/2011

Please suggest Main Object to be given in Form 1A for Name Approval for a company having the Words ".............INDUSTRIES LIMITED" 
ASAP, coz my form has been rejected for the first time. 
CA. Harsh Jain

Reply 1

The main object must reflect in the name of Company such as X Jute Industries Ltd if the Company proposes to take up Jute business. You have first decide the main object to be pursued by the Company after incorporation in consultation with promoters and accordingly select the name. 
CA B.K.CHORARIA  

Date : 15/02/2011

In one of my Name Approval Form 1A filed with ROC where the company name consists Industries Limited, the form has been called for re-submission saying that the name does not match with the objects listed and it has asked to refer to regulation 17 of the Companies Act 1956. 
Please advice as to what should be the Main Objects according to the word Industries, because as per my knowledge Industries means some kind of manufacturing activity and hence I had given the objects according to that, but the same hasn’t been accepted 
CA. Harsh Jain
Reply 1
Please refer to the "Guiding Instructions for deciding cases of making a name available for registration - see "Notes" to Section 20 of the Companies Act, 1956 - page no.414 of "Guide to the Companies Act, 1956        - A. Ramaiya - 16th edition. 
The Department of Corporate Affairs has evolved certain guiding principles for deciding availability of names. A name which falls within the categories mentioned therein will not generally be made available by Registrar of Companies. 
(22) - if the name includes the word "industries" or "business" unless the name is indicative of the business of the proposed company for otherwise, it serves as a lever for the Company to diversity its activities. 
From the above, it is very clear that the name of the company should reflect, as far as possible, one of the main objects for which the company is being incorporated - one should not give a general name such as "industries" or "business". Why don't you suggest a name, which is akin to the main objects of the company - the name of the product which is proposed to be manufactured such as "XYZ Polypropylene Limited" or "ABC Asbestos Limited" or "XYZ" Cement Limited" etc. etc. The name should be selected keeping in mind the main objects and it is not other way around - selecting the objects clause after selecting a name of the company. 
K. Krishnamoorthy 
Reply 2 
If the main objects cover Mfg which also has some minimum Authosrised Share capital requirement, then you will be guided to approval at ROC office itself. 
CA ATUL
Reply 3 
As per the guidelines general name like "Silk Industries" "Cotton Textile Mills" etc are not allowed. The name must be in consonance with the principal object of the Company as per S.N.9 of Form 1A.In other words there should be some indication of proposed business in the name. 
C.A. B.K.CHORARIA 
Reply 4 
You can give manufacturing activity to avail the word 'Industries' in the name of the company. For this, you need to elaborate the manufacturing activity stating different unrelated goods/products of manufacturing like textiles, cable trays, leather, rubber, plastics, mining, construction, steels, power etc. 
If the proposed company will be manufacturing a single product, then also you can avail the word 'Industries' in the name by reflecting the particular product to be manufactured in the name of the company. For example, If textiles business, then you can apply as HARSH TEXTILES INDUSTRIES LIMITED with a minimum Authorised Share Capital of Rs.1 Crore. 
J patnaik
Reply 5 
Now a day, ROC is insisting that the name of the Company should match the object of the Company. Accordingly, please choose the name with matching object clause of the company. The term Industries used is very "wide" and it does not highlight the kind of Industries you are referring. 
Ajay Kumar Tiwari

Reply 6

Industries- does not signify which kind of industry is? You need to specify the type/nature of industry e.g. metal, textile machineries, automobile, power engineering ..............so that general public and the authorities are aware in which line of business the company would be operating. 

B.G.Roy

Reply 7

I think they should sanction the name ......Industries Limited. According to their guidelines the word Industries Limited denotes a wide range of activities. Specifically in these types of cases, ROC asks for an authorised capital of Rs 1 crore and above. 

Anirban Gangopadhyay. 

Date : 15/02/2011

I want to file Form 5 for increase in share capital. 
- For amended MoA, Do I have to change the last page of the previous MoA, if the shares subscribed is the same? 
- What should be written in the space in Form 5 asking for - "The conditions (e.g. voting rights, dividend rights, winding-up rights, etc.) subject to which new shares have been issued, are as follows". 

Kumar Sen 

Reply 1

You are not required to change the subscribers clause, it will remain same....... 
You have to write in place of - "The conditions (e.g. voting rights, dividend rights, winding-up rights, etc.) 
Ranking *pari-passu* with the existing equity shares 

CS Manoj Kumar Panda 

Reply 2 

Please note that clause V of the MOA of association need to be changed on increase of authorised capital of the Company. Hence accordingly you need to incorporate this change in your MOA. However, You need not require to change the initial share subscription mentioned in the MOA. On Form 5 you need to mention the right equity share will carry ( voting right, dividend right, winding-up right whatever applicable) 

Raj Jha 

Reply 3 

1. There is no need to change the last page. In fact it can never be changed in future irrespective the change in holding . 
2. You have to mention the condition on which new shares are issues such as "parri-passu with existing shares in all respect" 

C.A. B.K.CHORARIA 

Reply 4

Dear Mr. Kumar Sen, 

1) Yes, the last page of the MOA, i.e. Clause V of the Memorandum and Capital Clause of the Articles of Association of the Company have to be amended to reflect the increased authorized capital of the Company and submitted to the concerned R.O.C. 
2) Sl. No.7 in Form no.5, the following need to be mentioned under the column "conditions":- 
"the new equity shares shall rank pari passu in all respects with the existing equity shares of the Company, including entitlement to dividend" 
In case the new shares are proposed to be issued with differential voting rights with differential dividend rights etc., these facts have to be mentioned suitably in this column. 
CS K. Krishnamoorthy, 
Reply 5 
Dear Kumar Sen, 
For filling revised MOA with Form 5 for increase in authorised capital, you need not change the subscriber’s page as it is the page containing the names of subscribers at the time of incorporation of the Company and will remain same throughout the life time of the company. 
If there is no change in the voting right, dividend rights, winding-up rights, etc, write same as rights of existing equity shares. If their is any change than change is to be given. 
Kamal Kumar Agarwal 
Reply 6
You need not have to change the last page of the moa, since the shares once subscribed is permanent. 
with regard to the next query, normally it will be 'new shares created shall rank pari passu with the existing shares' - to mention whether they are equity or preference depending upon the increase in capital whether you have increased the equity or preference capital. 
Prem

Date : 14/02/2011

What is a public issue for a Company ?
Can anyone please clarify me about whether a public company issuing Preference shares to 100 persons at different time by personally contacting them amounts to public issue? What actually considered as a public issue?

CA  A. N. Mahapatra 

Reply 1 

If personal contacts as being established to subscribe to preference shares and if such patronage is expected from 100 persons it will tantamount to a public issue. please refer to section 67 and also see provisions of sections 3(1)(iii) and the commentaries there under for clarity on the concept. 

Kalidas

Date : 28/01/2011

Is this the way Return of allotment in Form 2 will be approved ? 
The following have been asked for while approving Form 2 filed under MCA. Does the approving authority have jurisdiction to seek these type of information. Please give your views. 
Here, the money has been arranged by the Directors for the benefit of the Company./ Does Auditors certify Business Plan 

Dear Sir/ Madam, 
This is to inform you that in term of the provisions under Regulation 17 of the Companies Regulations, 1956, the above-cited Form2 dated xxx filed by xxx PRIVATE LIMITED vide SRN xxxx has been examined and marked as Pending for user clarification with the following remarks- 
-Pl clarify with details the basis of allotment of shares at such high premium 
-Pl furnish information about net asset value per share in each year ending since incorporation of the company 
-Pl furnish information about earning per share for each year since incorporation of the Company 
-Pl furnish information about rate of dividend declared per share for each year since incorporation of the company 
-Pl furnish a statement about firm business plans of the company, certified by Auditor 
-Pl furnish information about PAN card numbers of each allottee 
-Since this issue of shares is not made a public issue, pl furnish information, per allottee-wise , regarding in what manner the allottee is connected with the company 
-Particulars of the Bank Account in which the share allotment money was put by the company 

SANJEEV KUMAR PODDAR 

REPLY 1 

I have also heard of a similar case. I am unable to comprehend the powers under which the ROC is asking for these information. There is no Rule for deciding premium amount today. Further, why should the company disclose its business plans or how can an auditor certify the business plans and on what basis. Such rules, if any, should be first made applicable on public issues. 

Siddhartha Agrawal 

REPLY 2

So far in my knowledge, MCA does not have any power under Co. Act to ask for these information. Regulation 17 empowers ROC to seek clarification only. Perhaps it is the classic case of overstepping and enhancing empowerment given. 

CA. KAUSHAL JHA 

REPLY 3

WIth everything online, where else these people will find the means to raise money. Recently a professional informed me that ROC guys are seeking money to approve form 2. 
They are always innovative. They have become extra -Jurisdictional in their approach. 

Surendra joshi 

REPLY 4 

I think the approving authority is exceeding its powers. In my opinion ICSI should take up the issue with the Higher Authorities. This is a case of high handedness of the officers and discretionary attitude as lots of companies are allotting the shares without a question being asked. 

Sunil Ganeriwal 

Reply 5

This is a also a reaction of ROC to large number of companies allotting shares with very high amounts of unjustifiable premium to save fee required for increase in authorised capital. 

Satish Patodia

Date : 25/01/2011

Can a Company be incorporated with one Indian and Two NRI Directors? Is there any requirement of RBI permission for investment in the Share Capital of Company? What are the other formalities to be observed in this connection. 
C.A. B.K.CHORARIA 
Reply 1
As per press release 2005-06/142vdated 2.8.2005 there is no need to take approval for appointing a foreign national as a director. However the person concerned will have to apply and obtain DIN. As regards investment it has to be seen whether such investment is permitted under the Foreign Direct Investment scheme. 
kalidas 
Reply 2
Please note that a company may be incorporated with the directors from abroad including NRI, however for allotting shares to NRI there is a procedure involved depending upon the nature of business of proposed Indian company. There is a complete guideline in this regard. 
Should you have any queries or require any further clarification please feel free to contact us. 
Amit Kumar Saraogi 
Reply 3
Yes appoint the NRI directors 
aashique...@gmail.com 

 

Prospectus, Issue and allotment of shares or debentures

Date: 26/11/10

A private ltd company was formed on 25.06.09 with authorized capital 10 Lacs(1 lac equity shares of rs 10 each) and in the subscriber to the MOA/AOA page, no of equity shares was mentioned as 1 lac i.e. paid up capital was also rs 10 Lacs. No business carried out during the year. But the annual accounts have to be prepared .so while preparing balance sheet as on 31.03.10 whether the paid up capital to be mentioned rs 10 lacs or the minimum amt for pvt ltd co i.e. rs 1 lac. the promoters had agreed to take 1 lac shares in the subscriber to moa page but not abled to arrange funds after company formation. They were only able to provide funds of rs 1 lac in 2009-10. So please advice on the above issue with relevant provisions of the companies Act 

Sushant   

Reply 1:

You have not mentioned whether return of Attotment filed in Form 2 or not. Based on that share capital is to be disclosed in the Balance Sheet. 

CA. Asim De. 

Date : 22/10/2010

Can anyone guide me the procedure for issue of preference shares? Whether general meeting is required for issue of Convertible preference shares or if the articles so provide, it can be done by Board meeting and whether Form 2 is required to be filed? Moreover, what is the procedure for conversion of preference shares into Equity Shares if conversion is one of the options of redemption of shares? Whether EGM required or can be done in Board meeting. And since Equity shares are issued in lieu of preference shares whether Form 2 needs to be issued, if Yes, whether its issue otherwise than for cash? And also since Form 5 is required for redemption of preference shares, will it be required to be filed in case of conversion. 

R. P Modi & Co.

Reply 1

Issue of preference shares is guided by the provisions of section 80.as per present law pref share cannot be irredeemable. they will have to be redeemed  within 10 years from their issue. there is no need to take shareholders approval for such an issue.authorised share capital and company's articles should permit such an issue. There is no need to file return of allotment in form no 2. These can be converted into equity shares but such conversion will require members approval u/s 81,106.it will also come under the ambit of a compromise or arrangement u/s 391/392 and will need court approval. 

Kalidas 

Reply 2

Will the suggestion be the same if the Company is a Private Limited Company? Is Form 2 not required for issue of preference shares? will it need court approval being compromise u/s 391/392 ?

Renu Modi 

Reply 3

1 Preference Shares can be issued having redemption period of up to 20 years - 
plz refer sec 80(5A)
2 Form 2 is required to be filed 
3 it’s not a compromise / settlement coming U/s 391 / 392, so no court intervention is required 
4 Being an issue of convertible pref shares, permission of members would be 
required, if it is not a private limited co 

 PREM 

Date: 04/08/2010

Can company buyback own debenture and reissue the same?
  

 Navin Gopalika

Reply 1

On buy back of debentures, there is no bar.  It is like prepaying the loan

Pankaj Agarwal

Date: 18/11/2009

A pvt ltd co has issued bonus shares in the ratio of 1: 1 in the month of October 09. Resolutions authorizing the bonus issue have been filed with MCA. It wants to issue further bonus shares in the month of November 09. Whether it is allowed? 

Alternatively, whether resolution passed by shareholders authorizing 1 : 1 bonus issue can be modified to cover the proposed bonus issue. 

Pankaj Khara 

REPLY 1 

To my mind there is no legal bar to making a further issue of Bonus shares. However bonus issue is not permitted out of revaluation Reserve by unlisted and pvt companies. Instead of modifying resolution already filed fresh approval of members can be taken for the further issue. 

Kalidas 

Date: 21/12/2011
As per the normal accounting practice, if the debenture is to be redeemed after 5 years at a premium, then the premium is written off in 5 years in the books of accounts. What will be the case if instead of debentures, preference shares are to be redeemed after 5 years? Whether we have the flexibility of following any accounting treatment being an item of below the line?
Khushbo 

Reply1

The amount of premium will be amortized over the life of preference shares by debiting share premium account and crediting liability account 

Date: 14/12/2011
SUBJECT: Can a private limited company allot shares to one its existing shareholders at face value of Rs 10/- even when the book value is Rs 70/-?
A private limited Company – AC Rs 2 Cr ( Rs 10/- each), Issue capital – Rs 1.7 Cr (Rs. 10/- each), 

Now the Company wants to file form 2 allotting shares worth Rs 0.3 Cr to one of the Shareholder at Face value. 

WILL it attract any deeming provision in the hands of allottees under income tax act? 
Rashmi 
REPLY 1

Despite all apprehension on this topic as to inviolability of clause vii or viia of sub-sec.2 of sec 56, the expert opinion as discussed by me in recent CPE seminars is that it should not apply to fresh issue /allotment of shares by a company .it is immaterial whether the co is unlisted or listed, shares are on right basis or afresh. 
Reply 2

In my opinion, due to valuation mode prescribed for unlisted companies under Rule 11UA, Section 56 gets attracted for further issuance of equity shares. Rule 11UA links the valuation of equity shares primarily to the book value, subject to certain adjustments mentioned in the formula. 
  
In given query, Section 56 will be rightly attracted, since the issuance is only to one of the existing shareholders. 
  
However, in my opinion, Right Issue will not be impacted by Section 56.



Reply3
 
Sec 56 is attracted on transfer of shares of the closely held companies not on issuance of shares. However, Sec 56 will not be attracted on issuance of shares. 
Subject: Stamp Duty on Transfer of shares what is the stamp duty payable on transfer of shares in West Bengal? Please provide a circular/notification to confirm if possible 
Regards, 
Aditi
Reply: 1

the current Stamp Duty for share transfer is Re. 0.50 per thousand of consideration, to the best of my knowledge. 
Srikanta Dutt 
Reply: 2

As per Indian Stamp Act 1899:- 

Stamp duty on transfer of shares in a company or body corporate - It is 50 Paisa for every hundred rupees or part thereof of the value of share. [It is 75 Ps as per Article 62 of Schedule I to Stamp Act, reduced to 50 Ps per Rs 100 vide notification No. SO 198(E) dated 16.3.1976]. As per section 21, the duty has to be calculated on the basis of market price prevalent on date of instrument and not on the face value of shares 
Dheeraj Jain 

Reply3

As far as my knowledge goes this has long been revised downwards to 25 paisa per thousand. 
R K Dhaniwal

Reply4 

Incorrect. The rate is what i have stated. 

kalidas 
Reply5

as informed by Shri Kalidas ji also, the Stamp Duty on transfer of physical shares is 0.25% in WB. 
RAHUL LOSALKA 

Reply6

The Stamp Duty for Transfer of Shares is 0.25 per thousand on Consideration amount. 
RAJ KUMAR KHEMKA 

Date: 26/08/2011

ABC Ltd. 1000, 10% Redeemable Preference Shares of Rs. 100 each, fully paid up. The Company decided to redeem these Preference shares at par, by issue of 1000 equity shares of Rs. 10 each at a Premium of Rs. 90 per shares as fully paid up. 

Query 
 
Can the Premium received on fresh issued be used for finance the redemption of above said preference shares as stated. Please provide the elaborate reply with proper reasoning and references for the same 

CA Rajiv Bajaj

Reply1

Please refer to Section 80 of the Companies Act, 1956 ("the Act") in this regard. As per proviso to Section 80(1) of the Act, no such shares shall bge redeemed out of profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of the redemption. 
The proviso talks about "the proceeds of the fresh issue" which means that the premium received can be used for financing the redemption of the above said preference shares. 

CS K. Krishnamurthy 

Date: 24/08/2011 

QUERY: Date of acquisition of shares 

What will be the date of acquisition of shares in the following example?   

A purchases shares of a listed Co, off market, on 25th March 2011 vide sale bill dated 25th March 2011, and issues a cheque dated 30th March 2011.The cheque gets cleared on 29th April 2011 and the shares come to his Demat account on 30th April 2011.   

Whether the date of acquisition will be 25th march, 30th March, 29th April or 30Th April  

Arun Kedia  

REPLY: 1 

The date of acquisition will be 25th March, as the incidence of purchase arises as when the sale bill created. Payment is irrelevant for the arising of transaction as purchase or sale. 

Raju Kumar Shaw 

REPLY: 2 

Dear Arun ji, in my view the date of the invoice i.e., 25th March 2011, here is important. The date of payment of consideration and the credit to the demat account is consequential

Sajjan Kumar Kedia 

Date : 27/05/2011
Can a public limited company (unlisted) allot shares to 200 persons on five different dates, no of persons in each each allotment is less then 50, in a single financial year? 
PARAS RUTHLA
Reply 1
There is no restriction on allotment of shares in a unlisted public company and the no of allotments can be more than 50 also. you can allot the shares on a single date alos 
Raj kumar banthia
Reply 2
We cannot allot more than 50 allotment in single date it will violate 67(3) of the companies act and it will be treated as public issue and all provision like prospectus and sebi compliance will come into picture   
As per section 67 (3) of the Companies Act, 1956 if an offer is made to fifty persons it would be deemed to be public issue even if it is of domestic concern or proved that the shares or debentures are not available for subscription or purchase other than those receiving the offer. 
Thus an issue which is made by way of private placement to fifty or more people is deemed to be a public issue irrespective of whether it was offered to the public at large or to just a section of the public chosen in whatever 
manner possible and the issuer has to comply with SEBI guidelines relating to public issue of securities. 
Anup kr Luharuka 

Date : 18/04/2011
If a Shareholder of a Private Limited Company (Non-Listed Shares) transfers his shares at below par rates to his Own Family Trust, whether any Taxation complication with respect to Capital Gains may arise in this case or not. 
CA. Harsh Jain
Reply 1
There is no complication so far seller is concerned. 
Lalit Kumar Agrawalla
Reply 2
There is no complication as far as SELLER is concerned ( but there are problems to buyer ) 
CA ATUL MEHTA
Reply 3
My Question was exactly that, bcoz the shares transferred by the person is to his own family trust, so I want to know the implications of Taxes from both the sides, bcoz either side the person concerned will have to bear the burden either directly or indirectly.
CA. Harsh Jain 

Date : 22/03/2011

A Domestic Closely held Pvt Ltd co having 100 % Local Shareholding with a Property in the name of company and having Trading Business as main Objects. 
  
The Share holders of the company wants to sell off all the shares to two NRI/POIs 
  
Can this transection be entered into?, Is there any RBI perission required to enter into the transection?. 
CA ATUL MEHTA

Reply 1

1) Foreign investors can invest in Indian Companies by purchasing/acquiring existing shares from Indian shareholders ; 
2) A person resident in India can transfer by way of sale shares/convertible debentures (including transfer of subscriber's shares) of an Indian company in sectors other than financial services sector (i.e banks, NBFC, insurance, Asset restructuring companies, infrastructure companies in the securities market, viz. stock exchanges, clearing corporations, and depositories, commodity exchanges etc.) under private arrangement to a person resident outside India, subject to the following guidelines :- 
(a)    Price of shares transferred by way of sale by resident to a non-resident shall not be less than :- 
            (1)    The ruling market price, in case the shares are listed on stock exchanges     (in the present   case, not applicable) ; 
            (2)    Fair valuation of shares done by a Chartered Account as per the guidelines issued by the    erstwhile Controller of Capital Issues, in case of unlisted shares 
            The price per share arrived at should be certified by a Chartered Accountant ; 
(b)   The sale consideration in respect of the shares purchased by a person resident outside India shall be remitted to India through normal banking channels.  In case the buyer is a NRI, the payment may be made by way of debit to his NRE/FCNR(B) accounts.  However, if the shares are acquired on non-repatriation basis by NRI, the consideration shall be remitted to India through normal banking channel or paid out of funds held in NRE/FCNR(B)/NRO accounts. 

(c) Documentation: 

Besides obtaining a declaration in Form FC-TRS (in quadruplicate), the Authorized Dealer branch should arrange to obtain and keep on record the following documents:- 

            (i) Consent letter duly signed by the seller and buyer or their duly appointed agent indicating the details of transfer, i.e. number of shares to be transferred, the name of the investee company          whose shares are being transferred and the price at which shares are being transferred. In case         there is no formal sale agreement, letters exchanged to this effect may be kept on record ; 
            (ii) Certificate indicating fair value of shares from a Chartered Accountant  ; 
            (iii) Undertaking from the buyer to the effect that he is eligible to acquire shares under FDI policy             and the existing sectoral limits and priceing guidelines have been complied with; 
(d) Reporting of transfer of shares between residents and non-residents is to be done in Form FC-TRS. This form should be submitted to the AD Category - I Bank, within 60 days from the date of receipt of the amount of consideration.   The onus of submission of the form within the given timeframe would be on the transferor/transferee, resident in India. The AD Category - I Bank, would forward the same to its link office.  The link office would consolidate the forms and submit a monthly report to the Reserve Bank of India, Foreign Exchange Department, Foreign Investment Division, Central Office, Mumbai. 
Prior permission of Reserve Bank of India is not required in the present case and it comes under Automatic Route. However, Foreign Direct Investment (FDI) in Retail trading (except single brand retailing) is prohibited. 
CS. K. Krishnamoorthy 

Reply 2

Pl check Master Circular dt 01/07/2010 on Foreign Investment in India available on RBI website. 
pankaj khara 

Date : 14/02/2011

Can a newly incorporated public limited company wants to invite public deposits. As per the companies (acceptance and deposits) rules 1975 the company has to issue an advertisement stating the profits of the company before and after the provision for tax for three financial years immediately preceding the date of advertisement and a summarized financial position of the company in the two audited balance sheet immediately preceding the date of advertisement. 

singhi

Reply 1 

There is no restriction under the law which stands in the way of a newly set up company raising fixed deposits from the public as long as the necessary compliances under law are insured. The requirement of providing the profit figures for the past 3 years is intended to provide the necessary input to the investors so that they can take a informed decision to invest or otherwise based on the performance of the company in the past. 

Kalidas

Date : 21/01/2011

Whether registration with RBI is mandatory for a public ltd. Co. not accepting ‘deposits’ for receiving the ‘Certificate to commence  business’ from ROC 
 CA. Alik Purkayastha
REPLY 1

First of all I would request you to put the question cleary to this forum. 

1. have you registered your Company with the object of Investment & Finance,if yes you have to obtain Registration with the RBI. 

2. If the answer to the above is negative there is no need. 

vinitja...@gmail.com 
REPLY 2
Your question is incomplete. 
BRIJESH BHAGAT 

 

General meetings

Date:8/11/11

Pls confirm, Annual return of a company contains details of the company from AGM to AGM. In case of adjournment of AGM what would be the effective / concluding date till which the data is to be provided. Will it be the original date of AGM or will it be the date in which the adjourned meeting was concluded. 

CA Abha Jain 

Reply 1

The date of AGM always will be the date of conclusion otherwise it will be treated as no AGM held. 

Reply 2

In my opinion, the date of AGM should be the original date of the AGM as the adjourned AGM is only the continuation of the original AGM. In otherwords, the Annual Return of such Company should also be filed within 60 days from the date of the original AGM irrespective of the date of the adjourned meetings. 

K. Krishnamurthy, 

Reply 3

It should be the date of original AGM as the adjournment of the AGM would be for reasons other than the matters appearing in AR and hence AR is finalized on AGM date with book closure for the purpose also expires there 

CA ATUL MEHTA

Reply 4

There are some cases wherein it was held that if the adjourned meeting was not held within the maximum permissable time, it would be construed that no AGM has been held and the launch of prosecution is right in the light of provision of Section 166 and 210. if the date of AGM would be original meeting, then what is the consequences of the this decision. 

Vinit Jain

Reply 5

The situation referred to in the cases are that of one where the adjourned meeting was not held within the maximum permissible time limit, wherein the launch of prosecution is right.   Since the adjourned meeting has not concluded within the permissible time limit, it would be construed that no AGM has been held. But my answer to the query raised was on the assumption that the adjourned AGM was held within in the permissible time limit. In this case, the date of AGM up to which the Annual Return has to be prepared is the date of the original AGM and not the date of the adjourned meeting. 

K. Krishnamurthy 

Reply 6

In my opinion, the original date of the AGM shall be held as the 'date of AGM' provided the essentail issues such as adoption of accounts, declaration of dividend, appointment of auditors are completed by proper passing of resolutions. Other business can be done later. The provisions of Sec. 166 / 210, I believe, is complied. 

But, if such essential matters are not completed at the original AGM date, the penal provisions shall be attracted. 

Srikanta Dutt   

Reply 7

As u r saying that adjourned AGM is the continuance of the original AGM. Now the question is that unless AGM will be concluded, how can be Accounts finalized. Consequently no Annual Return shall be filed. So in the client benefit, we will take it as we have complied the the section 166 and 210 and date of filing the Annual return will counted 60days from the date of conclusion of Adjourned AGM. 

Reply 8

I fully agree with the reply of Krishnamurthy. The date of the AGM will be the original date not the adjourned date provided it was convened with proper notice and quorum was there. 

CA Aswini Kar

Reply 9

I do not agree with your views .For the benefit of clients, one cannot wrongly interpret the relevant provisions of the Companies Act, 1956 and its against professional ethics. My views can be strengthened by the fact that even if the AGM is not held within the date by which it ought to have been held, the annual return needs to be submitted within 60 days from the date by which the AGM ought to have bee held. The filing of Annual of Return has nothing to do with the finalization of accounts etc. as except the indebtness figures (on the date of AGM), no audited figures are required to be given in the annual return. 

K. Krishnamurthy 

Date : 26/08/2010

Please advise me :- 
1) whether it is compulsory to hold AGM for small Pvt. Ltd. Cos.? While filling Form 20B, they are asking whether AGM was held or not? If I write No, will the form be accepted? Or i should write yes & put a date of AGM? Please advice. 
2) How to prepare compliance certificate? Can anyone give me a sample copy of compliance certificate, which is required to be attached with Form 66? 
3) Is it necessary for co. applying for Easy Exit scheme, should file under Settlement Scheme for filing balance sheet & annual return for previous years? 

K. Kumar

Reply 1

The requirement of holding an AGM u/s166 applies to both public and pvt companies and there is no way that a private company can seek exemption from the requirement of holding an AGM. 

kalidas 

Reply 2

Sir kindly makes me clear that whether there is any definition of SMALL PVT.  COs???? 

Chunmun Kumar singh 

Reply 3

AGM is compulsory for all companies. Pls hold an AGM of the company and get the compliance certificate from a Practicing Company Secretary. If you want to defunct your company than apply for EES. 

yogeshkty...@rediffmail.com 

Reply 4

For your query no. 1: Yes. Every co. has to hold AGM, irrespective of the size. There are three conditions for holding AGM.
a) Audited Balance Sheet, P&L Account & Schedules along with Directors report are to be adopted by shareholders within six months of the closure of the accounting period. 
b) You must have AGM in every calendar year. 
c) There cannot be a gap of more than 15 months between two AGMs (except 1st AGM) 
All the three conditions must be satisfied. 
For your query no. 2: Compliance Certificate is issued by a Practising Co. Secretary. Get in touch with one and ask for the certificate, which can be attached with Form 66. It is necessary to file Form 66, wherever applicable, before filing of Form 23AC & 23ACA as it requires SRN of Form 66. 
For your query no. 3: No. You donot need to file B/S and A/R of previous year separately if you opt for Exit Scheme. Please go through the provisions, you will get the procedural aspects. 

Kaushal Jha 

Reply 5

It is indeed compulsory for the Private Limited Company to hold the AGM. . The AGM should be held within 15 months from the last AGM held. 

Nirupam Haldar 

Date: 19/11/2011
 
A company called a board meeting on 11th nov for passing quarterly accounts but meeting adjourned 4 want of quorum and now the meeting will be held on 18th being next week same time n place. In the meeting, the quarterly accounts will be (suppose) passed. 

In the above situation i would like to know that what will be the meeting date should be mentioned in quarterly accounts-11th or 18th? 

D.K.Singh 

REPLY 1 

please refer to section 288.if a meeting is adjourned for want of quorum the section has only the effect of avoiding violation of Section 285.The Accounts have to be taken as adopted only on the date when the Board in fact meets and obviously not on the date on which the meeting was supposed to be held originally. Please see Ramaiya’s commentary on page 3527 on this in 17th edition. 

REPLY 2
 
since adjournment is only a continuation of the meeting, the original date of meeting that is 11th Nov will be the concerned date on which quarterly accounts shall be deemed to have been passed if actually passed on 18th. 

CA Dibyendu Nandi 

Accounts and audit (Company auditors)

Date: 02/08/2010

I have a query as follows : Whether a SSI unit is exempt from the regulations of Cost Audit? If yes, where can I find the reference for the same? 

Raj Kumar Khetawat 

Reply 1

There are Govt Notifications about Cost Audit. The industries required to maintain the cost record rules and those shall undergo cost audit are stated therein.One can have the same from ICWA's office. 

Ashok Ghosh

Reply 2

Go to google and type 209(1)(d) 

shrik...@macpl.com

Date : 17/05/2010

Dear Mr Kalidas, 
I have been going through the various opinions and comments given by you on 
topical subjects. 
May I request you to please give your views on a matter relating to Sub 
section (1) of Section 224 of Companies Act which deals with the appointment 
and tenure of Auditors. 
The "Tenure" of the Audiditors spans from the conclusion of one AGM (Say AGM 
NO 6) to the factual conclusion of the next AGM. (Say AGM No 7) 
There is case when the next AGM No 7 was not conclded in the sense a niumber 
of agenda items were not discussed and resolved. 
But the Minutes of the AGM No 7 stated that the Meeting was "Terminated" 
while it should have stated that the AGM was "Adjourned" 
However, the AGM No 7 was again held after an year as an "Adjourned 
Meeting." The first line of the minutes of the  next meeting of AGM No 7 
stated that the "Adjourned meeting." 
The AGM No 7 was finally concluded after 6 years. 
Every time the AGM was getting adjouned before final and factual conclusion 
of the meeting after 6 years. 

The Auditors of the company continued to conduct the Audit of the Accounts 
of the subsequent Financial Years as per the provisions of the sub section 
(1) of Section 224 of the Act. There are various pronouncements regardinf 
the "tenure" of the Auditors in Mr Ramaya's Book including the Guidelines by 
The Ins. of CA 

Now the question is whether the 7th AGM was "terminated" or was 
"adjourned"since the subsequents minutes always stated that the "Adjourned A 
G Meeting" The issue is whether the letter is more important or  the spirit 
and intention as shown by the susequent events. 

 Another Issue. 

The Companies Act  was amended in 2000 and the minimum Share Capital of a 
Public company was fixed at Rs 500,000/-. 
The Company was given time to increase the Sahre Capital in case this  was 
less than Rs 500,000/-. 
A company,where regulatory agencies were involed, was trying to increase the 
Share Capital .Bu there was some dealy in raising the Share capital to the 
minimum level.. However, the company wrote to the Ministry of Corporate 
Affars seeking time and the Ministry did not send any reply as such . But 
the ROC did not Strike off the name of the Company U/S 560 of the Act. 
The published Balance Sheets,howevr,showed that the Share capital was less 
than the limit of Rs 500,000/- But the Audiors did not draw the attention of 
the shareholders in the Report  that  there was ashortfall in the Share 
Capital as they relied on the absence action on the part of the ROC. 
The question is what is the shortcoming of the Auditors and the cosequence 
thereof. 
I hope I have been able to put forward the points reasonably well. In case 
you need more facts you may give me a ring 
My M No is 98301 10453 
with kind regards 
Nirupam Haldar 

Best Regards, 
Pramod Dayal Rungta 

Dear Mr.Haldar, 

Thank you for your mail of yesterday. 

I am still trying to frame an appropriate response to the first issue raised by you with regard to the status of the adjourned meetings and therefore for the present confine myself to the second issue raised namely what would be the consequences if the statutory Auditor has failed to report to the members a company law violation by the company. 

To my mind it is incumbent on the part of the Statutory Auditor to report to the members any contravention of legal requirements by the company which have a bearing on the Accounts and transactions of the company.In this instance there has been clearly a breach in the law in so far as maintaining the minimum threshold share capital is concerned.This being a mandatory requirement,the Auditor ought to have reported to the members in his report.It forms a part of his duties u/s 227.In this connection i would also draw your attention to the Dept's press release dated 18th june,1962(reproduced in page no.2400 of Ramaiyas'16th Edition.In this release the Dept has urged the chartered  Accountants thru the ICAI that it is part of their duties to comment on all material violations of the law or sound Accounting practice as might reasonably reasonably be expected to affect directly or indirectly the fortunes of the company's Accounts.pl. also refer to the commentary by Ramaiya at page no.2406 and 2407 on the Auditor's obligation to report breach of law. 

In the instant case the question  whether the failure to report on the company's failure to adhere to the minimum capital stipulated under law constitutes a material breach of law affecting the company's fortunes  or not is a matter which is relative and debatable.Just the same in my view the Auditor has failed to perform his duty u/s 227 to the members of the company. 

regards 

kalidas 

Date : 03/05/2010

Dear All, 

An assessee have formed a company in the month of March 2009 and submitted 
the income tax return for that March 2009. The company did not get the 
accounts audited for that month and instead of that the company has prepared 
the accounts till 31st March 2010, i.e for 13 months . Now the company wants 
to get the accounts audited for the entire 13 months and want to place the 
annual accounts for that period to the shareholders. The company has not 
file the Annual Return and Balance Sheet as the 1st AGM was not held. 

My query is that can the company do so. Any problem with regard to Income 
Tax and Companies Act 

ganesh.khe...@lohiasecurities.com 

Reply:1 

Section 210(4) of the companies Act permits a company to have an accounting 
year in excess of 12 months.The Accounting year can extend upto 15months 
without necessitating any approval of an outside agency.Therefore the 
company can have an Accounting period of 13 months and accordingly close its 
books for 13 months ended 31 march 2010.For tax purposes as the company was 
incorporated in March 2009 if the company had obtained its PAN in March 
itself,to my mind a nil return ought to have been filed for Assessment year 
2009-10 because of the provisions of Section 139.For the subsequent 
year,company shud draw up Accounts for 12 months ended march10 for 
taxpirposes and file its return accordingly for AY 2010-11. 

regards 

kalidas 

Reply:2 

Dear Mr Khemka 

i think what u have done is in order the company can hold its first agm 
within 18 months from incorporation and hence if balance sheet is prepared 
for 13 months the same is in order 
For second tax return u may have to prepare financial statements for 12 
months separately. 

MOHIT BHUTERIA 

 Reply:3 

Dear Sir, 
As per the companies Act, newly formed company can file its first annual 
report and annual returns after convening its first its first AGM duly in 
accordance with the act. For convening the first AGM - For a newly floated 
company, the period can not exceed 18 months from the date of its 
incorporation (accounts can be for period of 18 months- max limit) 

Where as with respect to Income tax act, if company fails to file its IT 
return within due date as per the provisions of IT Act, it can not carry 
forward its losses(occured if any during that period- as per my view) hence 
to carry forward the losses IT return is mandatory (accounts shall be for a 
period of 12 months or less ) 

With respect to your query- there is no matching concept between IT and ROC 
filings. 

In my view the company can file the ROC returns 13 months period, even 
though it had filed the IT returns for 1 month in the initial year 

pra...@vnv.ca 

Reply:4 

Adjust profit and income for PE 31 March 2009 from the relevant figures for 
13 months ended 31.03.2010 to derive income for FY 2009-10. 

There seems no problem. however, in case for March 2009 turnover based audit 
(TAR) was required, then that should have been done. 

CA DEV KUMAR KOTHARI 

Date: 10/11/2009

Currently as per guidelines issued by ICAI on accounting of derivative contracts, the premium paid or received on unexpired option contracts are to show on balance sheet in current assets/current liabilities after providing the provision for loss if necesary. And in income tax, the provision for loss on unexpired option contracts are to be addedback. 

Now one of my client wants to show the premium paid or received on expired option contracts in profit & loss account. Their logic is whether the premium paid or received is not refundable & therefore, they wants to show the premium paid or received in profit & loss account istead of transferring the amounts in Balance sheet. 

My question is that whether the guidelines issued by ICAI on the accounting of derivative contracts is mandatory ? whether the client can do ? Any body can tell me any reference book for accounting & taxation of derivative transaction. 

CA umes kejriwal 

Reply 1

APPLICATION OF KREDENT APPROVED BY THE CENTRAL OFFICE NOW RBI, KOLKATA ISSUED LETTER TO BANKERS OF KREDENT AFTER ISSUING OF REPORT TO RBI, KOLKATA THEREAFTER COR BE ISUUED 

RK DAS 

Date : 30/12/2011
 A kind advice is required in the below mentioned case. 
 If a Chartered Accountant in practice, is an executive member of an NGO, can that Chartered Accountant be appointed as an External or internal auditor of that NGO. 
 Abdullah Mahmud 

REPLY 1

DEAR MAHMUD, 
No, because the fundamental concept of independence would jeopardize 

Ram Nath Singh 
REPLY 2

Dear querist,

the answer is no. how he can comment on the accounts of the ngo of which he himself is a part of management the independence is absent. Professional ethics as given by ICAI BAR SUCH 
AUDITING
Vinod kr.goyal 
REPLY 3

To the best of my knowledge there is no bar for a CA member to be the auditor of an association or in an entity. But if that CA is an officer or director or executive there I think better not to undertake the assignment as auditor there.

 CA VC James 

REPLY4 

No In fact auditors is an independent personality beyond the fence of any possible inclination. 
CA. Saumitra Sarkar 

Date: 25/11/2011 

My query is whether a CA firm which are a statutory auditor of a subsidiary company be the Internal auditor of a holding company?
CA Mukesh Agarwal 

REPLY 1 

Hi, 
Due to conflict of interest, statutory auditor of a Subsidiary Company can't be the Internal Auditor of the Holding Company. As the Parent Co. holds the control over the subsidiary company, so being statutory auditor of the Subsidiary, a CA firm can't act as the internal auditor of the earlier. It affects the Independence of the internal auditor. 

CA Avik Raha

REPLY 2 

It should have been written somewhere. Can you provide me the details of the same?
 
Chunmun kumar singh 

REPLY 3 

Dear all 
can anyone provide us any Clarification or circular of company affairs in this regards. I could not find any prohibition for conducting the internal audit of holding company while being a statutory auditor of a subsidiary company. 

CA Mukesh Agarwal 

REPLY 4

In my view there is legally no bar to such appointment. Subsection (4)to Section 226 provides that disqualification is visited only under the circumstances provided in subsection(3)A person who gets disqualified only under the situations provided in subsection (3) alone is disqualified from being appointed as Auditor in the subsidiary company. In the given facts of the query no disqualification has occurred under subsection (3).Besides the appointment in the other company is that of an internal auditor and not as statutory auditor. There is however a bar on appointment as internal auditor in the same company where the same person is a statutory auditor. Please see commentary on this point in page no 3063 of Ramaiya's 17th edition wherein the views of the ICAI Guidance on Handbook on auditing pronouncement With Edition regarding independence of auditors has been reproduced. Notwithstanding the above legal position as there is a scope for conflict of interest such an appointment is best avoided. 

Kalidas 

REPLY 5 

Dear all, 
why need a reference or statute. This is covered by professional ethics as given by ICAI. 

Vinod kr.goyal 

Date: 18/11/2011

I have a below mentioned query...please resolve... 

An Indian listed company earlier declared a dividend in 2004-05 out of which certain amount was lying in the Unclaimed/Unpaid dividend Account which is now according to U/S-205C of the companies Act, 1956 to be transferred to Investor Education & Protection Fund in the current year. 

A person who is not a shareholder at present but the judgment is pending before the court for the right of ownership. He intimates a letter to the company for requesting not to transfer the amt of dividend of his shares to Investor Education & Protection Fund because the right to receive the dividend is lying pending before the court. As these shares were originally held by his deceased grandfather and matter is now pending. 

Please suggest me what action is to be taken by the company in this regard? 

Either Company should transfer the said amount to I E&P F. or if not where the amount is to be kept? 

Alok Sharma 

Reply 1

The Company is bound to comply with the requirements of Section 205C regardless of the request made by the member. 

kalidas 

Reply 2

Yes - I agree with the views of Mr. Kalidas. But, if he is able to obtain a court order (interim injunction) before the due date for the transfer of such fund, restraining the company to transfer the unpaid dividend to the fund till the disposal of the case, in my opinion, the company has to abide by the order. 

I seek the views of the other colleagues on this. 

CS. K. Krishnamurthy,

Reply 3

yes,mr krishnamoorthy views is correct procedure-the company should inform accordingly to concerned person and if not complied by the party within time frame, transfer such fund as per law-

RDKAKRA,KOLKATA 

Reply 4

Since the amount has been ‘claimed’, therefore it should not be transferred to IEPF. The Act has laid down for transfer of only 'unclaimed and unpaid' amount to IEPF as per Sec.205C which reads as '
provided that no such amounts referred to in clause (a) to (d) shall form part of the fund unless such amounts have remained unclaimed and unpaid for a period of 7 years from the date they become due for
payment'. This amount can continue to be kept in the same account where it is lying now. Meanwhile the Company can ask for requisite documents as a proof that the claimant is the grandson of the original shareholder and also the documents filed before the court as a documentary proof that he would be the prospective shareholder and that there exists a relation b/w the shareholder and the claimant.

Jayshree Daga

Reply 5 

That is the only confusion in my mind whether the grandson of the deceased is deemed to be the shareholder of the company or merely by forwarding the letter to the company or other related court proceedings doesn't allow his to be the ownership rights as because the judgment is still pending before 
the court. 

The Unclaimed Dividend can only be claimed by the shareholders only i.e. having ownership rights. 
The court's injunction for such transfer may provide the better picture for the same. 

Looking forward to get the views of our other expert professional’s colleagues. 

Alok Sharma 

Reply 6

Section 206 clarifies that dividend is payable only to a person whose name is recorded in the register of members or to the order of such a person. In the instant case the claim has been made by a nonmember. Hence section 205C is applicable. 

Date: 18/11/2011

Please give advice on the following issue whether compliance of companies act is proper or not?

1. A company issued notice for AGM to be held on 29.9.2011. But could not approve the account    as the audited accounts could not be audited so they adjourned the meeting sine-die Now can the accounts be approved in the meeting in lieu of the adjourned meeting? If yes then what will be the date of AGM to be filled in then annual return, for filing 20B and 23AC/23ACA. Will it be 29.09.2011 or the date of meeting held in lieu of the adjourned meeting. 
  
2 That on repeated request since July 2011, to the Company’s statutory auditor, they did not response and did not audit the accounts of the company for the year 2010-2011, 
3 that finally the auditor placed their resignation/NOC on 31st October 2011 to the company. 
4 Now the company HAS   moved in the following manner d. 
a) Serve a shorter notice (approved by the share holders) on 31/10/2011 for EGM to be held on 1st November’2011, for appointment of New Auditor. 
b) Appointed the new auditor on 1st November’2011. 
c) Got the Accounts signed by the auditor on 2nd November’2011 
d) served a notice for AGM (to be held on 24th. November’2011) on 2nd November 2011. 
e) Filed the Income Tax Return on 16th. November’2011 
f) Preparing to Hold the AGM and Board Meeting on 24/11/2011 
g) Willing to File the Annual Return and Balance sheet with ROC on or after 24th. November’2011 
h) Thereafter the Company will file  a petition to the Company Law Board for compounding of offence for not holding the AGM within due date i.e. on 29-09-2011. 

CA SUSHIL KUMAR JAIN (CHORARIA) 

Reply1

Dear Mr.Choraria, 

I am not able to understand that at the first instance when the company ought to have sent the notice of the AGM (possibly with 21 days clear notice), they must have known that the accounts could not be audited in time and hence not able to convene the AGM within the statutory period of on or before 30th September, 2011.  Hence, where there is a question of sending the AGM notice to the shareholders and adjourn the meeting for want of audited accounts. 

Ideally, the following steps could have been taken by the Company in such a situation to take care of  the relevant provisions of the Companies Act, 1956 without any violation :- 

1) As soon as the company came to know that the accounts could not be audited in time to get it approved by the board and placed before the AGM on or before 30th September, 2011, convene a board meeting sometime in August, 2011 itself, to consider approaching the concerned Registrar of Companies to seek extension of time for holding the Annual General Meeting 

2) Make representation to the concerned ROC for the above purpose attaching a certified copy of the board resolution; 

3) Then, after getting the resignation letter/NOC from the existing statutory auditors, convene a board meeting to consider appointment of new statutory auditors, subject to the approval of shareholders at a general meeting and take a decision to convene the general meeting at a shorter notice in terms of the articles of association of the company/Section 172 of the Companies Act, 1956, as the case may be

4) Hold the general meeting (with the consent of the shareholders in terms of either the articles of association or the provisions of Section 172 of the Companies Act, 1956; 

5) Request the statutory auditors to get the unaudited accounts audited and submit their reports thereon; 

6) get the audited accounts approved by the board along with the report of the auditors and directors' thereon; 

7) convene the annual general meeting (at a shorter notice - here again following the procedures stated above) and adopt the audited accounts - this can well be completed on or before 31st December, 2011; 

8) Hopefully, by this time, you would have received the approval of the concerned ROC for holding the AGM on or before 31st December, 2011; 

9) E-file the relevant forms - 23AC/23ACA and 20B within the stipulated time with the concerned R.O.C. 

In case by 31st December, 2011, the company had not received the approval of ROC giving extension of time up to 31st December, 2011, then approach Company Law Board for compounding of the offence pursuant to Section 621A of the Companies Act, 1956. 

Simultaneously, if there was no fault on the side of the Company in providing the required explanations/information to the existing statutory auditors, the company should have taken up the matter strongly with the Institute of Chartered Accounts of India, New Delhi and the Ministry of Corporate Affairs, New Delhi about this reckless attitude of the auditors, who were appointed by the shareholders to conduct the auditing of the books of accounts of the Company.   If, for any reason, they are not satisfied, they should have resigned from the position well in time so as to allow the company to appoint new statutory auditors for getting the accounts audited well in time. 

Date: 08/11/2011

Whether a CA who is not an auditor of the company but only doing certification work can be an independent director of the company. 

R.K.Singla ca 

REPLY 1 

in my view the answer is no. Although such an arrangement is outside the scope of the definition of independent director in clause 49, the fact is that the concept of independence is vitiated by such an arrangement. In addition it will amount to the Director holding an office or place of profit in the company necessitating approvals u/s 314. 

Kalidas 

REPLY 2 

No way. Being an Auditor he cannot take up the Directorship. He should resign the certification job assignment and become a Director. 

DP GHATAK 

Date: 31/10/2011

I have a query regarding Advertising Expenses. As if a Glow Sign Board or Wall Paint used for advertising a product of a company and the expected tenure for the same is about 2 years weather as per accounting standard it is allowable to deferred the expenditure to next year on proportionate basis. 

Alok Sharma 

REPLY 1
 
Dear Alok, 

As per AS 26, deferred revenue expenditure is no longer allowed to defer and apportion except in the case of certain preliminary exp as mentioned in the said standard. Hence it has to be charged off to P&L A/c in the period of accrual. 

Dibyendu Nandi 

REPLY 2 

If the benefit derived from advertising is spread over 2-3 years the expenses can, in my opinion can be written off in 2-3 years. This is permissible. 

CA B.K.CHORARIA 

Reply 3

Given below is an extract of Para 56 of Accounting Standard 26 and refer to the highlighted portion. It is clearly mentioned that advertising expenditure cannot be deferred. 

In some cases, expenditure is incurred to provide future economic benefits to an enterprise, but no intangible asset or other asset is acquired or created that can be recognized. In these cases, the expenditure is recognized as an expense when it is incurred. 

Examples of other expenditure that is recognized as an expense when it is incurred include: 
(a) expenditure on start-up activities (start-up costs), unless this expenditure is included in the cost of an item of fixed asset under AS 10. Start-up costs may consist of preliminary expenses incurred in establishing a legal entity such as legal and secretarial costs, expenditure to open a new facility or business (pre-opening costs) or expenditures for commencing new operations or launching new products or processes (pre-operating costs); 
(b) expenditure on training activities; 
(c) expenditure on advertising and promotional activities; and 
(d) expenditure on relocating or re-organizing part or all of an enterprise. 

CA Dibyendu Nandi 

Date: 13/09/2011

One of my clients is an export company. One of the export realizations received in INR instead of USD from the Indian unit/office of the foreign buyer. What r d disclosures to be made in audit report/notes regarding the above keeping in view FEMA & AS-11. 

Sushant 

Reply1

Dear Sushant Ji 

I don’t think that there is any violation of FEMA regulations if you receive export proceeds in INR instead of foreign currency. Take care that your buyer banker's correspondent bank in India , who will receive funds in Indian Rupees in India, will only be able to issue a FIRC (Foreign Inward Remittance Certificate), which is needed as proof of export. 

Under FEMA, what is more important that the export proceeds should be received in India within Due? Appropriate notes should be given regarding the said transaction in Notes on account, which as per my view fulfill the reporting requirement of AS - 11.

Reply2

As per FEMA guidelines a exporter can accept foreign currency when he visit abroad or importer visit India from importer subject to one declaration to be submitted to bank where go docs to be submitted. And the details of USD currency should be marked in passport (exporter/importer).

You go to bank with foreign currency and export documents and declaration that currency is genuine and
received against export order/invoice. I think there is no problem to release the gr. 

Ca. Chetan p Agarwal

Date: 26/08/2011

Kindly guide on the following 
A Pvt Ltd co is formed in January 2010,

1. Can it appoint Statutory Auditor for financial year 2009-10 and 2010-11 vide single appointment letter
2. If books are finalized for 15 months from JAN 2010 to MARCH 2011 whether ITR filing for F Y 2009-10 is not required 
3. Whether first auditor is exempted from 23B? What if single appointment letter  is recd for 2009-10and 2010-11

 CA Uma Shankar Agarwal 

Reply 1

Appointment of Auditor should be made every year vide resolution and Income Tax return is to be filed according to the Govt. Financial Year only, whether you prepare books for any type of year concept, but, return should be filed for Financial Year, so 2009-10 return should be filed separately for 3 months. 

CA. Harsh Jain

REPLY 2 

In my view the following is to be taken care of: 

1. The first auditor is appointed by the Directors of the company in the Statutory meeting i.e. the First Board Meeting, to hold office till the conclusion of the first AGM. Hence he can hold office for upto 18 months from the date of company formation. So a single appointment letter is to be obtained. 

2. Even if the books of accounts are finalized for 15 months, separate accounts need to be drawn for the period ending on 31.3.2010 and ITR filing is compulsory. The financial year as defined by the Income Tax Act, says that in case of new business, it will be beginning from the date of start of business till 31st March. 

3. The first auditor shall file Form 23B and mention that he was appointed by the Board and not the AGM. He shall file the form with a single appointment letter. 

I hope my position is correct. Senior members may correct me if I am wrong. 

Siddhartha Agarwal

Date : 26/05/2011

Can any one provide check list of various activities for demerger /  splitting of business 
G Ramakrishnan 

Reply 1

Following are the suggested steps involved in case of merger of two companies (I am giving the example two public limited listed companies located in different states  getting merged):- 
1)      Finalise the date, which is normally called "Appointed Date" i.e. the date from which the scheme of merger will take into effect.    Prepare the Balance sheet as on the date of the "Appointed date" of the both the companies and based on the same, get the valuation of shares done by a recognized valuer of repute for the purpose of arriving at the share exchange ratio or swap ratio ; 
2)      Prepare a draft  "Scheme of amalgamation" giving details of both the companies, their authorized/paid up capital, objects clause, rational for merger, consideration etc. etc. and get the same approved by the board of directors of both the companies  and authorized some of the executives to do all things, deeds and matters incidental to and in connection with the amalgamation ; 
3)      Submit an application to the Stock Exchanges, where the existing shares of the both the companies are presently listed, for their  "NOC" to the "Scheme of amalgamation", pursuant to clause 24 (f) of the Listing Agreement,   at least a month before the scheme is presented to concerned Hon'ble High Courts for  approval ; 
4)      File applications, affidavit in support, seeking direction of the concerned Hon'ble High Courts for convening of the meetings of equity shareholders/secured creditors/unsecured creditors 
(the Company can request the concerned Hon'ble High Courts, for dispensation for holding the meeting of unsecured creditors giving assurance that as soon as the petition is filed with the  Courts, individual notices will be sent to all the concerned unsecured creditors inviting their objection, if any, to be sent to the High Court/or to the Advocate of the Companies concerned directly ;  (Note:  as far as Calcutta High Court concerned, there is no need to convene the meetings of creditors (secured or unsecured) ; 
5)      Get the directions of the Courts for convening the meetings of the shareholders/creditors, as the case may be ; 
6)      Publish Notice in the newspapers (both English and vernacular newspapers) about the date of convening of the meetings ; 
7)      Serve the notice (in the prescribed format, as per Companies (Court) Rules, 1959 to the all the shareholders/creditors (the notice should contain an explanatory statement and a copy of the scheme of amalgamation) keeping in  view the required time limit as per the relevant provisions of Companies Act, 1956 ; 
8)      File before the concerned High courts, the affidavit of "Service of Notice" and Publication of Notices in the Newspapers ; 
9)      Conduct the meetings of the shareholders/creditors on the specified date -  voting by poll only ; 
10)     File Chairman's report/affidavit along with the Scrutineer's report to the concerned High Courts within the specified date, pursuant to Companies  (Court) Rules, 1959 ; 
11)     File Confirmatory petition before the concerned High Courts ; 
12)     The High Courts concerned will fix the date of hearing of the petitions ; 
13)     Publish in both English and vernacular language news papers about the date of hearing of the petition, seeking objection, if any, from public concerned, to be sent to the concerned solicitor/advocate, handling the amalgamation at the respective High Courts ; 
14)     Serve a copy of the  petition (along with Form no.61) to the concerned Regional Director, Official Liquidator and Registrar of Companies ; 
15)      File, before the concerned High Courts, an affidavit of serving of petitions to Regional Director/Official Liquidator/Registrar of Companies ; 
16)      The Hon'ble High Courts will hear the petitions and based on the objections, if any, received from the public concerned and sanction the Scheme of amalgamation, as mentioned in the petition way  of an Order ; (Note:  in the case of Bombay High Courts, Delhi High Courts and other similar High Courts, there will be an order for amalgamation and simultaneous dissolution of amalgamated company whereas, for example, in the case of Calcutta High Court and Madras High Court, there will be a separate order for dissolution, after receiving report of the "Official Liquidator"  attached to the concerned  High Court, who gives his report, on the basis of report received from a firm of Chartered Accountant, appointed by the Hon'ble High Court from among the approved panel of "firm of chartered accountants" ; 
17)     Inform the concerned Stock Exchanges about the receipt of the order of the respective High courts sanctioning the Scheme of Amalgamation ; 
18)     Apply & obtain the required number of Certified copy of the orders from the concerned High Courts; 
19)      File the Certified copy of the order, in original, along with Form No.21 with the concerned Registrar of Companies, within 30 days from the date of receipt of the Certified copy of the orders ; 
20)     The "Scheme" will become operative from the date of filing of the last of the certified copy of the order by the respective companies (which is called "Effective Date"), amalgamation taking 
Effect from the "Appointed Date" ; 
21)   Intimate the concerned Stock Exchanges about the "Effective Date" of amalgamation and fixing of  "Record Date" for the purposes of arriving at the names of the shareholders, who are entitled to receive the shares of amalgamating company (i.e. transferee company) ; 
22)   Intimate the concerned stock exchanges about sending of Option letters to the concerned shareholders of the amalgamated company (i.e. "transferor company") giving an option to the shareholders to receive the shares in demat form ; 
23)   Hold Board meeting or Committee of Directors (if the authority has been delegated to such Committee) for allotment of shares to the eligible shareholders, as per the exchange ratio, mentioned in the Scheme  and inform the concerned stock exchanges about the allotment ; 
24)   Apply for " In-principle" approval from the stock exchanges, pursuant to Clause 24 (a) of the Listing agreement ; 
25)   Receive the "In-principle approval from the stock exchanges ; 
26)   File Form - 2 (Return of Allotment) with the concerned Registrar of Companies (note: in case authorized capital of the company needs to be increased, please do so - normally, the approval for such increase is taken by including the same in the Scheme of amalgamation itself) ; 
27)   File "Corporate Action" form with concerned depositories, i.e. NSDL & CDSL, in their prescribed formats ; 
28)   Despatch physical share certificates to the shareholders, who opted to receive the same in physical form ; 
29)   Receive confirmation from the concerned depositors about the crediting of shares in demat form to the shareholders, who were holding the shares of the transferor company in demat form and also to the shareholders, who were holding the shares in physical form; but opted to receive the shares in demat form ; 
30)   File application to the concerned stock exchanges for final approval for listing and trading permission, by enclosing certificates from the company's Registrars and Share Transfer Agent confirming the dispatch of physical share certificates and certificates from NSDL/CDSL on the credit of shares in electroni/demat form ; 
31)   Receive listing and trading permissions from the concerned stock exchanges ; 
32)   Inform all the outside world, sales tax department/excise department about the amalgamation requesting them to change the sales-tax/excise licences, wherever applicable ;similarly apply to the Registrar of Trademarks for change of name in the Register of Trade marks in respect of all trademarks owned by the transferor company ; 
33)   Inform the transferor company's bankers/ depository participants about the merger and change the title of the bank/demat accounts in the name of the transferee company ; 
34)   Change the "Cause title" of the relevant pending litigations filed against/by the transferor company to reflect the name of the transferee company, wherever applicable ; 
35)   Inform the concerned employees of the transferor company by issuing a fresh letter of appointment stating that their services in the previous employment will be treated as continuous for the purposes of "gratuity/superannuation" etc. 
36)   Merge the "Provident Fund Trusts" of the transferor company (in case the fund is maintained by a Private Trust, approved by the Income-tax Department) with that of the transferee company. 
The above are  the suggested steps required to be followed from the conception stage to the final amalgamation. 
CS. K. Krishnamoorthy,

Date : 28/04/2011

It seems that currently there are issues with the approval of Form 2 uploaded on the MCA Portal, especially when the allotment has been done at a premium.
CA.Dinesh K. Agarwal 
Reply 1

They have a standard questionnaire for all allotments made on premium. This questionnaire is sent once form 2 is uploaded. 

Questions are mostly relating to last 3 years profitability, networth, EPS, net asset value, business plan and details of new shareholders. They ask for business plan certifed by a auditor. 

Upload Form 67 (addendum to form 2) within 30 days with reply to queries and form 2 will be approved in next 3 working days. 

This is based on my personal experience just 10 days back. 

S.  Agarwal
Reply 2
Yes - in other words , the ROC asks for a valuation report prepared by a firm of Chartered Accountants, giving the justification for fixing the price of share. If you go thru' the amended Form No.2, such a request is already covered in the form itself. Normally, the price is worked on the basis of the following five methods, viz. Discounted Cash Flow Method, Dividend Discount Method, Capital Asset Pricing Method, Earning per share (EPS) linked to price to earning (P/E) multiple method, Net Asset Value (NAV) linked to book value multiple method & Break-up value method. Depending on the nature of the industry and business organization, price is worked out either on any one of the above six methods or weighted average of price found out thru' the above six methods. This is applicable only in case of shares of unlisted companies since valuation of shares of listed companies are governed by the SEBI regulations. This is just to ensure that the share is not over priced. 
CS. K. Krishnamurthy 
Reply 3
If you have premium which along with face value exceeds Rs. 100/- then this std. questionnaire is asked by MCA. You need to give logic behind premium charged. Premium needs to be substantiated. Excess premium without justification results into revenue loss of MCA. Hence this filter. 
I have faced this and had to approach ROC official for approval of the Form 2. 
Kaushal Jha 
Reply 4
Is it practical for the Auditors to certify the business plan of its clients? On what basis will the auditors certify the future estimates of a client's business? Is there any provision(s) under Company Law that restricts a Private Limited/Unlisted Limited company to allot shares at a premium or required to justify the premium based on last 3 years profitability, net worth, EPS, net asset value, business plan etc. 
Vikash Kr. Surana 

Date : 27/04/2011

Whether director and managing director is an employee within the meaning of section 217(2A) of the companies Act.          (Directors report -Remuneration to employees exceeding rs 24 lacs ) 
Sushant 
REPLY 1
Please also note the recent enhancement of limit u/s 217(2A) 
CA Vivek Jalan 
REPLY 2
Yes - The managing director is an employee within the meaning of Section 217 (2A) of the Companies Act, 1956. 
By the by, limit of remuneration of employees whose details have to be included, has recently been increased to Rs.5 lacs per month or Rs.60 lacs per annuum. 
CS. K. Krishnamoorthy
REPLY 3 
The department has clarified in its letter dated 11.1.1975 in their letter to Mysore Kirloskar ltd in reply to their query that the managing director is not an employee of the company for the purposes of Section 27(2A).please see Ramaiya at page no.2988 in the 17th Edition.in view of this it may not be necessary to include MD/WTD's remuneration in the statement u/s217 (2A). However there is no harm if it is given in the statement. There is another reason for justifying non inclusion.in any case as part of the Accounts it is necessary to provide a computation of Managerial remuneration which is mandatory.Providing the same information in the statement u/s217(2A) will lead to duplication. 
kalidas 
REPLY 4
A Managing Director and a Whole-time Director is an employee of the Company and his remuneration needs to be disclosed under Section 217(2A) of the Companies Act, 1956 in case the remuneration exceeds Rs. 60 lakhs (inhanced from Rs. 24 Lakhs with effect from 31st March, 2011 as notified in the Official Gazattee of India). 
A Director (who only draws his seeting fees for attending meetings of the Company) will not be considered as an employee of the Company for the purpose of Section 217(2A) of the Companies Act, 1956. 
Ravi Mundhra 
REPLY 5
In a reply to a query, the Department has expressed its view that a managing director is not an employee within the meaning of sub-section (2A) of section 217 [letter sent to Mysore Kisloskar Ltd. to their query dated 11.11.1975] (page 2086 of Part 1 of Guide to companies Act A. Ramaiya 15thedition reprint feb'2002). 
Please also note that Companies (particulars of employees) amendment rule 2011 has enhanced the limit to Rs.60 lakhs. (copy attached). 
Biswa Ranjan Pattnaik

Date : 25/04/2011

Whether CARO report is mandatory in case of limited company which has not yet started it's operation and still at pre-operative stage ?
CA Shilpa Banka 
Reply 1
CARO is mandatory in the case of Limited Company. 
PUSHPA kUMAR AGRAWAL 
Reply 2
To my best of understanding the CARO report shell be mandatory in case of a public company as well as pvt company which is a subsidiary company of public company. 
sanjeeva gupta 
Reply 3
CARO report is mandatory for all public limited company, it doesn't matter whether it has started operation or not. Only private limited company are exempt from reporting under CARO after satisfying three condition. 
nharo

Date : 29/01/2011

One of the director of the company having a monthly remuneration of Rs. 1,50,000/- per month(app). For nine month he has been posted outside India to take the companys foreign project for which he gets an extra foreign placement allowance of Rs 1,00,000/-.  This makes the total remuneration of the director to Rs 27.00 lakhs in the year. Had he been in India throughout the year his remuneration would have been 18.00 lakhs (approx). The question is whether in Annual report of the company there is a need to make the disclosure about the director and employee whose remuneration exceed Rs. 24lakhs for the year ending on 31.03.2011 . Ours is consultancy company not engaged in IT services. 
Chandan Bagaria. 

Reply 1

Section 217(2A) speaks about  disclosure of information as regards payment of  remuneration regardless of whether it is paid in or outside India. Hence amount paid abroad forming part of remuneration disclosure will be needed.In addition as the person concerned is a director approval of Board and shareholders will be needed for ratifying the increase in remuneration. 

kalidas 

Directors (DIN)

Date: 25/11/10

Dear Colleagues

A pvt ltd company was formed in Sept 2008 with three directors. 

One of the directors has still not paid amount for shares subscribed by him. 

My queries: 

1. In such a situation what are the relevant provisions under the Co Act. According  to section 274(1)(e) if a director has not paid any call in respect of shares of the company within six months, he shall be disqualified. Whether this clause will be applicable for non payment of shares subscribed by him?

2. Whether he can be removed from the directorship on this ground ? What formalities should be complied with ? 

3. In the Accounts, whether amount due from him should be accounted  for as debt receivable with corresponding credit to share capital account. 

4. Whether his name will appear as shareholder in the Annual Return with number of  shares agreed to be subscribed.  

pankaj khara 

 Reply 1:

Dear Mr. Pankaj, 

1) & 2)When the Company was incorporated in the month of September, 2008, the first AGM would have been held within September, 2009 (assuming that the first financial period was from September, 2008 to March, 2009) wherein the director (who is subscriber to the memorandum) would have come for appointment in the AGM.  If he had not paid the subscription money, he should not been considered for appointment at all at the first AGM itself. Having failed to do so, he is disqualified to act as a director pursuant to Section 274 (1)(e) of the Companies Act, 1956 ("the Act") and his office of directorship shall become vacant in terms of Sec,283 (1)(f) of the Act.  In the current AGM, he can be removed by passing an ordinary resolution. 

3) As he has not paid any money towards share subscription, the relevant  shares would not have been allotted to him.       

4) As the shares have not yet been allotted and until this is done, he will not become a shareholder/member of the Company and hence his name will not appear as a member/shareholder in the Annual Return. 

K. Krishnamoorthy, 

Date:11/11/10

Esteemed Elders & Friends, 

Could someone enlighten me on the following : 
-       A casual vacancy has been caused by the death of 1 director (out of 
only 3 directors) in a Public Ltd. Co. Does the law provide for any time 
period within which the casual vacancy has to be filled up by the Board? In 
case a time period exists, what the consequences of the Public Company 
function with only 2 Directors? 

-       Say, Form 32 is filed for the new Director. Now, is it required to 
file another Form 32 after AGM for his change of Designation from Addl. 
Director to Director. Or is it not required in the case of a Director 
appointed in case of casual vacancy? 

Regards 
CA.Dinesh K. Agarwal 

Reply 1:

Dear Mr. Dinesh Agarwal, 

The law does not specifically provide for any time limit within which the 
casual vacancy has to be filled.    However, since the current number of 
directors in the board goes below  the statutory requirement of having a 
minimum of 3(three) directors In case of Public Limited Company,  the casual 
vacancy should be filled in as early as possible, at any rate before the 
next annual general meeting of the Company as otherwise there will be a 
violation of the provisions of Section 252 of the Companies Act, 1956 ("the 
Act").    Keeping this in view, the existing two directors should 
immediately call for a board meeting  only for the purpose of filling up the 
casual vacancy caused by the death of the director pursuant to Section 262 
of the Act subject to the provisions of the Articles of the Association of 
the Company.   Alternatively, the board can appoint an additional director 
pursuant to Section 260 of the Act.     

Form no. 32 has to be filed once the casual vacancy is filled and the other 
one after he is reappointed at the AGM when the deceased director would have 
retired.     Same is the case  relating to the appointment of additional 
director.      Form no.32 has to be filed after the appointment of 
additional director and the other one after his normal appointment as a 
director at the Annual General Meeting as the positions held by such 
directors are different. 

Hope, I have been able to suitably answer your queries. 

Regards, 

K. Krishnamoorthy 

Date: 03/08/2010

Removal of NRI Director from Pvt. Co. 

I would like to have your valued opinion on removal of a NRI director from a 
private limited company with whom , the current management does not have any 
contact. The current management does not have any details of his whereabouts 
also and therefore it is not possible to obtain DIN no. for the Director 
also. 

Sunil Kumar Jain FCA 

Reply 1

Section 266A introduced by the companies(amendment)Act 2006 interalia directs that any person appointed as director in a company prior to the coming into force of the above provision should make an application for DIN in Form DIN-1within 60 days from the date of application of the Amendment Act i.e 1.11.2006.Second proviso to the said section provides that the person can hold office as director till such time he has been alloted DIN.From the above it can be inferred that any one who has not applied for a 
DIN cannot hold office as Director now.Unfortunately the consequential amendment that should have been made in Section 274 in the wake of the above provision has not been put thru leaving scope for debate.In the wake of efiling, the master data of a company will not show any person who has not filed DIN2 with the company as a Director.Therefore even if the company wants to file form 32 in this case to state that the person concerned is not a director the system will not accept it.In the circumstances the best option available is for the company's Board to make note of the fact that 
the concerned person has not provided details of his DIN to the company and 
hence as per section 266A ,he is deemed to have vacated office.a line can also be added in the Board minute that the company cannot file form 32 due to the reasons stated above.If this is done the company's bonafide in the matter would stand established. 

Kalidas 

Reply 2

Before answering the question, I am assuming that a copy of Form no.32 filed in respect of his appointment is available in the records of the Company. 

This can be achieved in either of the following ways:- 

1) Vacation of office by director: The Company would have definitely sent the notices of the board meetings to the NRI director at his address, which is registered in the records of the Company. Assuming that the said 

NRI director would not have attended the meetings for more than three consecutive meetings of the board or from all meetings of the board for a continuous period of three months, without obtaining, of course, leave of absence from the board. 

Under the above circumstances, he, automatically, vacates his office, after completion of the above period. Please refer Section 283(1)(g) of the Companies Act, 1956. The Company can file Form no.32 for vacation of the said director. Only problem is that for e-filing Form no.32 now, the said director should have DIN. For taking care of this problem, the Company should show his vacation from the office of the Directorship before 31st October, 2006 (i.e. a day before the requirement of DIN came into being). Here again, the mandatory requirement is the details of any one of the information about the director, i.e. passport number (which should be available in the records of 
the Company from the Form no.32 filed for his original appointment in the Company), PAN number or Voter ID (may not be available in this case) of the concerned NRI Director. 

How far this is feasible is the question mark as the Company would have shown the NRI director as a director in all the documents filed from 2006 onwards with the ROC concerned. 

2) The other course left to the Company is to remove the said director under Section 284 of the Companies Act, 1956. Here again, in view of the requirements of DIN for filing Form no.32, 

the only course available is to remove him before October 31, 2006 – here again, this will also subject to question mark as the said NRI director would have been shown as director in all the documents filed from 2006 onwards with the ROC concerned. 

In view of the above, it is advisable to seek the assistance of the concerned Registrar of Companies to find out a way for this predicament. 

I seek the valuable suggestions, if any, of all the other members of the Group. 

K. Krishnamoorthy, 

Date: 31/07/2010

Please let me know that why an additional director is appointed in any
company? What are possible purposes of the same? 

Abhishek Sharma 

Reply 1

An additional director u/s 260 of the Companies Act, 1956 is basically appointed
for the following reasons : 

1. He can be appointed by the Board so that he may hold office till AGM . That means when company cannot wait till an AGM , it can at least have a director as a stop gap arrangement . 

2. He is appointed for reasons other than as envisaged u/s 262 ( for causal vacancy ) or u/s 313 ( for alternate director appointment ) 

3. Where a director is needed immediately to resolve a deadlock , then an additional director may be appointed. 

Vijaya. FCA, ACS, LLB 

Reply 2

An additional Director can be appointed by the Board u/s 260 if the Company’s Articles permit, for various reasons. It may be done to fill up a vacancy in the Board, to ensure that the Board is properly constituted particularly in case of listed companies as per corporate governance requirements, to ensure that the minimum strength of Board is maintained etc.An additional director can hold office only till the next AGM and his
appointment has to be regularised at the General meeting after following the
procedure prescribed in Section 257. 

Kalidas 

Reply 3

Please ask the directors who want to appoint additional director. 

CA DEV KUMAR KOTHARI 

Date: 31/07/2010

Managerial Remuneration 

A director of pvt co drawing remuneration of Rs. 50000 PM .Whether company is required to take sple resolution u/s 314 of the companies act and file it with ROC.

PK Jain finservice...@rediffmail.com 

Reply 1

Section 314 does have application for a pvt company and if any director occupies a place or office of profit approval has to be obtained by special resolution.It may be noted that u/s 314 holding the office of managing director in the company does not tantamount to holding an office or place of profit.Therefore if the person is appointed managing director of the company and paid remuneration of Rs50000/ there shall be no application of section 314. 

Kalidas 

Reply 2

Yes, the company is required to pass spl resolution u/s 314 (1) (a) of the companies act and file it with ROC. There is no exemption for Private companies from operation of section 314.

 PREM bafana...@yahoo.com

Reply 3

The managerial remuneration clauses are applicable only on public limited companies. 

Arijit Mitra 

Reply 4

Yes becoz pvt co is not exempted 

D.N. Mishra, FCS 

Date:24/07/2010

A Private Limited Company  was incorporated in 1995.  The Company has set up a Resin Manufacturing Plant in Orissa.  For this purpose the Company obtained loans from financial institutions as well as bank.  In 1998 cyclone, the Company’s Plant was completely damaged.  The Company did not receive any grant or subsidy for the loss suffered because of the cyclone.  The grant payable to the Company was adjusted by he financial institution who had advanced loan to the Company and was also the disbursing agency.  The Company could not therefore function and the financial institution took possession of assets and sold the same for realizing a portion of its outstanding.  For recovery of the balance of outstanding loan, the financial institution has filed a money suit in the Court of Orissa.  Out of 3 Directors of the Company, 2 resigned. The Company is at present has one Director only.  This Director has obtained DIN.  He has however, not found the Form No.
 32 for resignation of the 2 Directors.  There being only 1 Director left, this Director requested the share holders to come and join at least one person as a Director, but the share holders have not responded.  In this circumstances the Company cannot function.

1)      How does the surviving Director carry on the functions of a Director ?
2)      What is the remedy for this Director ?
3)      Can he put the Company in sleep by invoking the reason Amnesty Scheme ? 

4)      Can he file Form No. 32 in his own signature intimating the resignation of the 2 Directors under the default mitigating scheme ?

5)      The Company’s accounts for the year ended 31st March, 2006 onwards have been made up but the Board of Directors meeting could not be convened and consequently the Annual General Meeting could not be convened and the accounts approved as there is only one Director. What is the remedy ? 

Will my learned friends, in legal profession, enlighten me in this respect ? 

P.J.Bhide. 

Reply1

The following course of action can be taken if the only surviving director is serious about reviving the company: 

Check the company's articles to see whether Regulation 75 in Table A can apply to it.If so this Article empowers the single director to act for the purpose of increasing the number of directors to that fixed for the purpose of the quorum.If this power can be exercised ,the Single director can hold a meeting with the express purpose of appointing directors  so that the minimum strength of the Board is formed. Once the new directors are appointed in this process ,form 32 can be filed for their appointment. Thereafter the resignations of the earlier directors can be regularised by filing their form 32. 

the reconstituted board can adopt the accounts for the earlier years and hold AGMs for adoption of accounts. 

If the company has no activity at all and there is no intention to revive it,application u/s560 can be thought of.   

regards 

kalidas 

Date:24/07/2010

A director of pvt co drawing remuneration of Rs. 50000 PM .Whether company 
is required to take sple resolution u/s 314 of the companies act and file it 
with ROC. PKJ 

Reply:1 

Section 314 does have application for a pvt company and if any director 
occupies a place or office of profit approval has to be obtained by special 
resolution.It may be noted that u/s 314 holding the office of managing 
director in the company doesnot tantamount to holding an office or place of 
profit.Therefore if the person is appointed managing director of the company 
and paid remuneration of Rs50000/ there shall be no application of section 
314. 

regards 

kalidas 

Reply:2 

yes, the company is required to pass spl resolution u/s 314 (1) (a) of the 
companies act and file it with ROC. There is no exemption for Private 
companies 
from operation of section 314. PKB 
 PREM 

Reply:3

The managerial remuneration clauses are applicable only on public limited 
companies. 

Thanks, 

Arijit Mitra 

Reply:4 

Yes becoz pvt co is not exempted 

D.N. Mishra, FCS 

Date:23/07/2010

A director of pvt co drawing remuneration of Rs. 50000 PM .Whether company is required to take sple resolution u/s 314 of the companies act and file it with ROC. PKJ

Reply1

pl. note that vide Departmental clarification in File No1(80) Cl-1/65 it has been clarified that Section 314 doesnot have application for the appointment of whole time director.The above calrification may be seen in page nos.2773 and 2774 of Ramaiya's Company law(Fifteenth Edition part(2). 

There is therefore no need to take shareholders approval u/s314 where two wholetime directors are appointed in a private company with a remuneration of Rs50000/ each. 

regards 

kalidas 

Date: 24/07/2010

Two whole time directors are drawing Rs 50000/ each. ? 

ramaswami.kali

Reply1

Section 314 does have application for a pvt company and if any director occupies a place or office of profit approval has to be obtained by special resolution.It may be noted that u/s 314 holding the office of managing director in the company doesnot tantamount to holding an office or place of profit.Therefore if the person is appointed managing director of the company and paid remuneration of Rs50000/ there shall be no application of section 314. 

>regards 
>kalidas 

Date :  30/06/2010

plz let me know is there any limit on rate of interest that can be given if
loan is taken either from director or member of the company.
Ca. Avinash Agarwal ACA

Reply

no such limit is written

-sunil saraf

Date-20/4/2010

Facts: A person is continuing as a Director in a Co. since long without having DIN. The Board of Directors want him to resign but he is not willing to sign the resignation letter even. In such a circumstance how the Board can complete the formality of Form 32 showing his resignation. 

Would appreciate a solution on this. 

Regards, 
B. K. Jhunjhunwala 

Reply:1 

The board of directors cannot wish and want a director to resign. It is the wish and matter of the director himself to decide whether to resign or not. The shareholders of the company can only remove him under 284 of the act by 
giving special notice. So far as the din no is concerned he is personally as a director is in 
default for not intimating the din no to the comapny. It is advice to proceed under section 284 to remove. 

Regards 

Pradip Agarwal 

Reply:2 

 If an existing director does not resign, he cannot be shown as resigned in Form 32. However, a director may lose his office, inter alia, in any following circumstances - If he removed from his office, pursuant to provisions of section 284 of the Companies Act, 1956; If Articles of the Association of Company provides for retirement of directors by rotation, a director may lose his office as director as and when he is liable to retire by rotation at the Annual General Meeting and the resolution providing for his reappointment is lost and some other person is appointed in his place or a resolution is passed to the effect that he will not be reappointed and casual vacancy caused due to his retirement will also not be filled-up. If he absents from three consecutive meetings of the Board of Directors or 
from all the meetings of the Board for a continuous period of three months, 
however, without obtaining leave of absence from the Board. 

CS S. K. Goyal 

 Reply:3 

Section 266A has been inserted in the companies Act 1956 by the Amendment Act 2006 effective from 1.11.2006 in terms of which it is necessary for any one holding the office of director prior to coming into force of the above provision to make an application for allotment of a DIN with the central Govt within 60 days .The second proviso to the above section states that any person who has made an application for DIN can hold the office of Director till such time he is allotted a DIN.

An inference can be drawn from the above section that any person who fails to apply for DIN within the time stipulated cannot continue as Director beyond the deadline.What makes drawing such a conclusion difficult is the fact that consequential amendments have not been made either to section 274 or to section 283 as an addition to the circumstances under which disqualification of Director is invited. If Section 266A is read in isolation a view can be taken that the Director has in jure demitted office automatically consequent upon his failure to apply for DIN. In my considered view taking such a view may be plausible considering the legislative intent associated with the introduction of the provisions in the law relating to 
DIN.

Section 266G lays down that for failure to comply with Section 266A the person concerned would be punishable with a penalty of Rs.5000/ and if the offence continues as in the subject case the penalty shall be Rs.500/ per day.

.In the circumstances the concerned person may be advised of the above consequences arising out of his failure to apply for DIN and he may be pursuaded to submit his resignation.However as rightly pointed out by others resignation cannot be forced upon him .The company could also consider the 
remedy of removal u/s284 but should be aware of the consequences of such 
action.

Kalidas

Date-19/4/2010

For better clarity and source of information, one of our clients (pvt. ltd. company) & nbsp maintain individual shareholders paid up capital account in General Ledger. There are 4 share hoders. Is there any restrication in Company Law to maintain such accounts?There is a opinion that individual shareholders' liability should not be recongnised in books of accounts and there should be only one paid up share capital account Please clarify

Regards 

Govind 

Reply-

Shareholders a/c that is account of shareholders, holding of shares in any company, is required to be maintinaed in the Register of Members and not in the books of account or general ledger. 

In case of company having few shareholders or even say large number of sharehodlers, it is not necessary to maintain separate share capital account for each sharehodler in financial books of account. The a/c to be maintained are Share capital a/c ,Share application money a/c, share allotment  money a/c, share call money a/c etc. as may be applicable in given circumstances. However, there appears no bar, if a company maintains separate account of each shareholder in books of account as well for their control. In that case the main account will be the share capital account, and within that group each sahrehodlers account will be maintained. 

However, maintaining such accounts of shareholders in financial books of account appears to be an unnecesasry exercise, because register of members of share holders have to be maintained compulsorily and one can keep a check on holding pattern from register of members only. Suppose an entry is made in Fianncial Account about transfer of shares, but not in register of members, the voting rights remains as per register of members and not as per financial account. Financial account is not a public document but register of members is a public documents in the sense that even a public member can demand inspection and / or copy of this register. 

CA DEV KUMAR KOTHARI                 CA Mrs.UMA KOTHARI 

Date:02/01/2010

For removal of uninterested and non co-operative directors,following steps shold be taken. 
1.Serve notrice of the Board meetings 
2.If he is absent for 3 consecutive meeting, then notice for expulsion should be served to him by registered post and give him suitable and enough time period for reply. 
3.Expelled him by calling a board meeting. 
4.File Form 32 with all necessary supporting papers. 

CA Uma Kothari 

Reply 1

I am in respectful disagreement with the views expressed by uma kothari on the above issue as it does not state the correct position in the law.Disqualification of director for failure to attend 3 consecutive meetings of the Board u/s283 is not attracted if the director upon receiving notice for the meeting  seeks leave of absence from the Board.Leave of absence can be sought even verbally.So the disinterested director can always block the attempt to disqualify him for not attending Board meetings by seeking leave of absence.Further it may be noted that a Director cannot be removed by the Board as per section 284.Section 284 inter alia provides that a director can be removed by ordinary resolution of members notice of which has been circulated to the members as per procedure laid down u/s 190.The director sought to be removed can also block the proposal to remove him by exercising his right of making a representation at the meeting at which he is sought to be removed.Hence removing a director is not so simple as contemplated. 

The practical way out of this predicament in the case of a private company which is not a subsidiary of a public company is to insert additional clauses in the Articles laying down the grounds under which a director shall vacate office, over and above the circumstances laid down u/s 283(1)(a)to (l) and if it is found that the director has violated any of those grounds,vacation would automatically get attracted.Reference in this context may be made to the enabling provsion contained in subsection (3)u/s 283.This subsection only applies to a pvt company. 

kalidas 

Date:29/12/2009

If anyone can clarify the following: 

A pvt ltd company has been formed in December 08 with three subscribers to 
Memo & Art of Association. They are the first directors also. 

Two directors have paid for the number of shares subscribed by them. The 
third director has not paid and also not interested in the company. But at 
the same time he is not co operating or resigning also. 

What formalities are required to remove him from the directorship ? 

pankaj khara 

Reply1

respected sir 
pass a resolution as majority of directors (2/3) are there for 
removing the directors. and file form 32 with the roc that will solve 
the things 
with regards 
karthik 

karthikeyan.p.v. 

Reply2

This refers to the query raised by Mr.pankaj Khara and the response of Mr.Karthik to the same.I am in respectful disagreement with the view expressed by Mr.Karthik that the remaining two directors should pass a resolution for the removal of the non cooperative director and file form no 32 with the ROC.I would submit that removal of a director is not so simple in that one has to go through the procedure laid down u/s 284.The section provides that the director can be removed only by members and it will neccessitate issue of special notice u/s 190.Besides the director sought to be removed will have a right of representation at the meeting.it is pertinent to also note that section 284 also applies to a pvt company.Hence to my mind removing the director is not possible without complying with section 284. 

It is pertinent to note that through the deeming provision u/s 41 a subscriber to a memorandum is deemed to have agreed ro become a member of the company and upon registration of the company,the subscriber's name will be entered in the members register.in the instant case if the person  does not take the shares he has agreed to subscribe by signing the Association clause of the memorandum,in my view the other two members can sue him for breach of contract.The other practical solution would be to remind the person of his legal obligation to take the shares and once he pays for the shares  these can be transfered to others if he doesnot wish to continue in the company.If even this does not work then the only alternative is for the other two directors to apply to the court for winding up on just and equitable grounds considering that a deadlock has been created in the management,due to the non co-operative director.in such a case the court can give appropriate orders to resolve the issue. 

kalidas 

Date: 07/10/2009

Pl tell me the procedure of `resignation by a director' where there are only 
2 directors in a Pvt Ltd company and the other director is not interested to 
accept the resignation or to appoint a new director. Even the shareholders 
are also not ready to accept the resignation. 

Some of the facts are mentioned below which can help in giving exact legal 
advice and way out for him. 

1)      He is not a signatory in any bank account 

2)      He has never signed any I T Return or ROC return or any other 
document of the company 

3)      He is not a shareholder in the company 

4)      The company is a loss making Pvt Ltd Company 

Manoj Agarwal 

Reply 1

My response to the query was purely from the point of view of the right of a director to resign from his office.obviously if only one director is left the subtratum of the company will be  lost.Effectively therfore the company will perforce have to appoint a new director so that after the resignation of the director the company  shall have the minimum number of directors. 

kalidas 

Date:16/07/2009

QUERRY 1

Can you please let me know how to file the cessation of the director of a Company due to his death when DIN of his is not yet obtained.

The problem lies with the fact that MCA portal does not accepts any cesation of director without his DIN No.. Due to death of the said Director, it is impossible to acquire his DIN.

B. L.

Reply 1.

You can try filing form 32 by putting in 99999999  (9 for 8 times) in DIN Column

Basant Dudheria 

Reply 2

I have also faced this problem. The only solution that I discovered
was to e-file for the first time without digital signature. This
resulted in the Directors' names, PANs etc. getting recorded in the
Income Tax database and registering the respective digital signatures
immediately afterwards, so that subsequently all returns may be
uploaded with digital signature.

I feel that there should be a link-up with MCA site, so that relevant
details of Form 32 may automatically get incorporated in this site.

CA. R. S. MALLICK

Reply 3

Approach ROC with the death certificate of the director, they will arrange
to generate provisional din and you will be able to file cessation due to
death.

thanks

vinitjalan@gmail.com

Reply 4

Even I faced the similar problem an year ago, we wrote a request letter to
the Director ROC, Kolkata with all the evidences and then they did the
needful.
Thanks and regards,
CA. Yash Arya

Reply 5

Similarly, we face the problem with those who resigned and would be out of reach for DIN Procedures.
What we suggest is u can have such cessation details in the next annual return with a remark for the inability to obtain DIN for the deceased director.
In addition, this matter can be taken up with the respective Registrar who may help or represent MCA on it.
We can also record the above by delivering the respective representation to the RoC on a safer side.
In an another issue like this, MCA advised us to represent the Ministry thro ICSI, pl. note.
Better solutions other than the above are welcome.

S. NAKKIRAN|

Date: 31/12/2011

We can change the particular of the director by filing DIN-4 Form. As per our view we can also change other than date of birth, father's name and Director's name by filing DIN-4, say change in permanent residential address by attaching the valid proof in this regard. 

One of our client's, DIN details is matching with PAN details but he wants to change the permanent residential address. We are filing DIN-4 form, to give effect of the same by attaching the valid proof of the residential address. When we are doing the prescrutiny of the form the message is displaying is as under: 

“The DIN-4 has been identified as potential duplicate by the system because the contents are matching with an already filed DIN-4 application form and after that the message is displaying, do you want to continue yes or no". As per our view we can file the DIN-4 form by putting the yes option
and the address of the client should be changed in MCA record 

Please advice on the following matter. 

Ruchika Agarwal 

Date: 30/12/2011

My Client has corrected his date of Birth in Pan Card by showing copy of Passport. Now his DIN data are not matching with Pan Card. 
How to proceed in the matter as they are asking for Notification published in official gazette. 
Shall affidavit before first Class judicial magistrate help?
Please advice. 
MANOJ KUMAR KOTHARY 

REPLY 1 
Please file Din 4 for Correction in the Pan Data 
CA Manoj Kumar Jain 
REPLY 2 
There is no requirement of Affidavit. If you will see the instruction Kit of Form No. DIN-4, all is explained there. 
In on-line DIN-4, appropriate box is to be selected for correction, a scanned copy of photograph of Director and self certified copy of PAN Card is too attached for change in date of Birth. But the form must be digitally certified by the CA/ CS. 
I have done the same procedure and the form din-4 approved by MCA. 
Thanking You. 
Alok Yaduka 

REPLY 3 
Dear Manoj, 
For correction in DIN - DIN4 can be filed with affidavit before first class judicial magistrate as supporting document or else, PAN or Passport copy can be filed proof. 
Regards, 
Jitendra Maheshwari 
REPLY 4 
Dear Manoj 
File DIN 4, specifically mentioning the purpose (rectification of date of birth). Attach copy of PAN card and verification letter from Director. Get the form certified and upload it. The details will automatically get updated. 
Regards 
Ashok Kumar Mishra 
REPLY 5 
File DIN 4. 
Thanks 
Dipnoan Bose, FCA 
Date: 03/12/2011

The company is Incorporated in the year 2000 and out of 8 director only six director have intimated to Company with Din 2, Still 2 Director have not Intimated to Company For there Din No with Din 2. 

Now Company want to file the F32 for Removal of Director whom Din 2 and din 3 is Still pending ? 

Plz Guide 

Shall we File Unsigned Din2 in Din3 attaching a Board Resolution that the Company unable to get the din 2 from director so filling the unsigned Din2 in the Din3. 

Manish Buchasia


Reply 1

It is better to write to MCA/ROC for initiating proceedings against the defaulting directors under relevant sections (sections relating to DIN)read with DIN Rules. The other way is to complete all formalities in respect of removal including recording of minutes, mention the fact in Annual Return along with note that Form No. 32 could not filed due to non-receipt of DIN2 etc. 

You may also file civil suit against the directors in civil court for granting mandatory injunction to sign and deliver DIN2. 

Regards, 
Sarvesh Bhardwaj,

Reply 2

In my opinion if you go by the strict interpretation of Section 266A, the concerned Directors have automatically ceased to hold office by not having applied for DIN at the time when the above Section was introduced in the statute. As per the second proviso to section 266A, every applicant who has made an application for allotment of DIN may be appointed Director in the company or hold office as a Director till such time the applicant has been allotted a DIN. 
From this an inference can be drawn that as they have not applied for DIN within the time provided they have demitted office ipso facto. 
However this view is a little contentious considering that consequent amendments in the law have not been made to either Section 274 or 283 in the wake of introduction of Section 266A. 
to my mind seeking removal of Director on this ground is not tenable. The director also has to be given the right of representation u/s 284 against the removal. 
I am attaching a copy of my published Article on issues arising out of DIN which the forum may find interesting. The article has been published in SEBI and Corporate Laws in February. 

Kalidas 

Date: 08/09/2011

When it’s permissible to have minimum 3 directors in a public limited co., why the form 1A   requires DIN of all the seven subscribers? Please give your valuable suggestions and dear Mr. P.D. RUNGTA; please raise the issue with the MCA so that the PAN can be used for the other subscribers instead of DIN who will not become directors in the company. This will save time and money and the workload of the MCA also. 

CA Anil Musaddi

Reply1

Section 12 provides that for forming a public ltd company there has to be seven subscribers. Hence the above requirement

kalidas 

Date: 17/06/2011

A was appointed Director in 1990 and form 32 was filed.He has not obtained DIN and expired in May 2011.What is the procedure for intimating ROC in the absence of DIN 

CA B.K.CHORARIA

Reply 1

As per Section 266A, the deceased has technically vacated office after the expiry of the time period with which application for DIN ought to have been filed after section 266A was introduced in the statute.. 
This being so, Form 32 cannot be filed now, as the system will not accept it in the absence of DIN. 
To establish its bonafide a letter can be sent to the ROC by the company along with copy of death certificate of deceased. 
kalidas 

Date : 03/06/2011

Is there any system to know whether the directors have filed the pan no.along with the DIN application ? If so, please let me know as our company directors are not in a position to state whether they have mentioned their pan no.or not ?

Amit Sogani 

Reply 1

In form 1A fill column 14 , give DIN you will get PAN if it is there in their system. 

CA. Pankaj Agrwal

Reply 2

Just open form 1A, fill the DIN and click pre-fill. PAN no. if given would come along. 

Kaushalendra Kumar

Date : 18/05/2011

What is the procedure for surrender of Duplicate DIN ? 
  
Arun Jain

Reply 1

You don't need to surrender . Why you have taken two separate DIN . So only keep one with you and forget about other otherwise you would be liable for the penal provisions of section 266G for non-compliance of Section 266C of the Companies act, 1956 .

CS Manoj Kumar Panda

Date : 25/01/2011

A Ltd appointed M.D. on 01-01-2010 on the remuneration as permissible under Schedule XIII . Now the Company wants to increase the remuneration of MD within Schedule XIII. Whether a resolution of the Board and approval by shareholders is sufficient. Whether any form is to be filed ? Can the remuneration be increased from a earlier date. 
  C A B.K.CHORARIA 
Reply 1

1. Board resolution is required and form 23 is to be filed within 30 days from the date of BM. 

2. An EGM or AGM has to ratify the resolution passed by the board and again form 23 will have to be filed. 

3. Form 25C has to be filed within 90 days from the date of AGM or EGM as the case may be. 

4. Remuneration may be inc retrospectively. In that case roc fees will be calculated with retrospective date. 

CA M L Gupta 
Reply 2
The requirements vary depending upon whether there is adequacy of profits or not. 
In case there is absence or inadequacy of profits, as provided in Section II in part II of Schedule XIII, the remuneration will have to approved by the remuneration committee of the Board, by the Board and finally by special resolution of shareholders. The tenure of the director cannot exceed 3 years and the company should not have defaulted in payment of interest on loans or in repayment of loans etc. In addition in the notice to the shareholders while seeking their approval by special resolution the company should set out in the notice general information as stated in clause(iv) under the proviso in Section II. 
Company should file form no 23 and form 25C. 
In case of adequacy of profits apart from Board approval ,shareholders approval has to be taken .Even in this case form 23 and 25C will be required. 
Although there is nothing in the law which prohibits increase in remuneration retrospectively it is inadvisable to do so as it throws up issues relating to TDS etc. 
Kalidas
Reply 3
1) Increase in remuneration of directors (including that of managing and/or whole time directors) does not require Central Government's approval, in cases where it is in accordance with statutory guidelines specified in Schedule XIII. Any increase can be effected by passing resolution in the Board meeting and general meeting. Increase in remuneration can be validly made by resolution of the Board of Directors, to be ratified in the next general meeting of the Company. Clause 1 of Part III of Schedule XIII does not require prior approval of the shareholders in general meeting. 
2) A Company with adequate net profits can work out a suitable remuneration package of its managerial personnel within the limit of 5% of its net profits if it has one, and 10% of its net profits if it has more than one managing/whole time director. 
3) In the event of absence or inadequacy of net profits in any financial year (i.e. where managerial remuneration exceeds 5% or 10% of net profits, as the case may be, managerial remuneration will have to be fixed in accordance with the provisions of Schedule XIII to the Act. (refer Section II of Part II of Schedule XIII) 
4) No return is required to be filed with the concerned Registrar of Companies and no further shareholders' resolution in respect of paragraph 1 of Part III will, however, be required to be passed if the proposed increase is already covered by an earlier resolution of the shareholders, i.e. the earlier resolution passed has given authority to the Board to increase the remuneration within the limits specified in Schedule XIII. 
5) The remuneration can be increased from an earlier date - there seems to be no par on this. 
6) The above conditions/provisions are not applicable to a private company unless it is a subsidiary of a public company. 

However, the following formalities have to be complied with as it relates to variation in the terms of appointment of managing director:- 

a) Form no.23 under Section 192 (refer sub-section 4(c) of Section 192) to the concerned Registrar of Companies ; 

b) An abstract of the terms of variation under Section 302 has to be circulated to the shareholders within 21 days from the date of the board meeting in which such increaser was considered and approved. 

K. Krishnamurthy 

Date : 24/01/2011

Retirement from Directorship
One of my clients is having 4 directors. One of the directors is holding the post since the DIN is not applicable. So he has no DIN, now the other directors thinking of to retire him from Directorship. But he is not co-operating them for applying his DIN. So what is the procedure to retire him from directorship? 
CA Amit Kumar Mallick 

Reply 1

As per Section 266A which was introduced with effect from 1.11.2006 any person who was appointed Director prior to coming into force of this provision is required to apply for a DIN within 60 days. Second proviso to the section states that anyone who has made an application for DIN may be appointed Director in the company or hold office 
till such the DIN has been allotted. From the above, an inference can be drawn that anyone who has not applied 
for DIN within the stipulated time or who has not been allotted DIN cannot hold office after the coming into force of the above Section. Consequential amendments should have been made to Sections 274 and 283 to make the provision complementary. That would have left no room for any controversy. In my view if Section 266 A is read independently as it should be, the Director has already vacated office by operation of law and he is ineligible to continue. The company could write to the ROC and point out that the person should not be treated as Director due to his failure to apply for DIN. The other alternative would be to come into a confrontation and propose the removal of director u/s 284 if the others have the requisite majority in the company.
kalidas 
REPLY 2
File Complain in MCA that he is no getting DIN in spite of his directorship in the Company, please ensure that he has not resigned from the Board earlier. 
Vinit ja
REPLY 3
The DIN has to be applied for coz in order for the director to retire officially Form 32 needs to be filled and even for any new appointment which cannot be done without DIN. 
Further, I think penal provisions will come into play because the Director has continued to be a director without having applied for the DIN. I think the penalty will be levied on the company and the director in this case .
CA. Harsh Jain 

Date : 07/01/2011

If only one Director is in India what happens to the minimum Board meetings to be held in India or at the registered office of company? 
CA ATUL MEHTA

Reply 1

Alternate Director has to be appointed to represent the director who is not residing in the State in which registered office of the Co. is situated subject to provisions of Section 313 of the Co Act. 
Pankaj khara 

Compromise Arrangements

Date : 29/12/10

Dear All, 

I came across a Balance Sheet of a listed Co, on which needed your valuable opinion whether the balance sheet prepared as at 31.03.2009 is correct or not, details as under : 

Three Co’s say “A”, “B” and “C” are amalgamated with another Co say “Z”, w.e.f. 01.04.2008. The amalgamation order issued by the High Court was received in Dec 2009. 

The Co “Z” is a listed Co and other Co’s are Pvt Ltd. Co’s, later on converted into Ltd Co’s before amalgamation. 

The auditors made amalgamated balance as at 31.03.2009, duly signed on 30.06.2009 and AGM was called. It was mentioned in the balance sheet that the account was prepared subject to the High Court order and shares allotted were shown under share suspense a/c, and other assets and liabilities were accordingly incorporated in the amalgamated b/s and difference was booked into amalgamation reserve a/c, based on the equity swap ratio. 

My question is 

1. Whether the balance sheet prepared as at 31.03.2009 before the high court order is legally valid. 

2. Can the same balance sheet be adopted in the AGM. 

3. Regarding the Form 20B, annual return, does the co’s have to file complete share holder list (incl share suspense list) or only standalone list. Pls note all the ROC returns are still pending to be filed. 

4. The co had however filed the ITR for F.Y. 2008-09 already based on amalgamated balance sheet, so do they have to file revise standalone ITR or what. 

5. What difference it makes if the high court had appointed an independent person to call EGM before the 30.06.2009 or after 30.06.2009, i.e. balance sheet signing date. 

Pls provide ur valuable opinion on the above balance sheet, as one of client is interested for such scheme in the F.Y. 2011-12. 

Jyoti Agarwal 

Reply 1

merger/amalgamation is not complete till the receipt of order of h.c. and filing of form 21 with r.o.c as such the entries cant be passed prior to a date of the h.c. order.though the scheme of amalgamation may contain an effective date which may be sanctioned by the h.c.,the effect has to be given in the balance sheet subsequent to the h.c.order.in the mean time the separate companies to be treated caarrying on business in trust for the amalgamated co.,and accordingly prepare their separate balance sheet and file separate i.t.retrurn. the icai guidelines on accounting for amalgamation be refferred 

 vinod kr.goyal 

Reply 2

Dear Jyoti, 

If in the high court order it is mentioned that Amalgmation is effective w.e.f 01.04.2008, then the company can file the Merged B/s. Ther is no problem. 
But in my opinion you have to go through the scheme of amalgmation and the High Court Order thoroughly. Just try to find out in the Scheme of amalgmation What is the effective date of amalgmation. And if the High Court has given its approval then 1st company has to file the separate B/s for every company and then file the Merge B/s. 

ACA Susil Kumar Mishra 

Reply 3

Dear Jyoti 

This is in complete contravention of As 14 and Sec 391 to 394 of the Companies act. amalgamtion is not effective unless certified copies of court order are filed with ROC and taken on record. 

We  shall be glad to have a closer look at the Balance sheet and notes - 
perhaps something new may come up 

MOHIT BHUTERIA 

Reply 4

As the time is a crucial factor, my personal opinion is that the company should be prepared for either of the circumstances.i.e.: 

The standalone as well as amalgamated BS should be readied. 

Reason 

1. If the Court does not approve the amalgamation, the standalone BS will be needed. 

2. If the Court approves the amalgamation, but with the prospective date, the standalone BS will be needed 

3. If the Court approves the amalgamation on and from 01.04.2008, the amalgamated BS will be needed. 

CA Milind Shah 

Date: 18/01/2010

A pvt. Ltd. Co., (manufacturing unit) wants to be take over by another pvt. Ltd. Co. with the following setups: 

The manufacturing unit should be in the same name & style, but ownership should be vested with the second pvt. Ltd. Co. 

Can this be and what are the formalities to be done in Company Departments and Income Tax Departments. What will be the I.T formalities for the manufacturing unit besides the other pvt. Ltd. Co. 

Pch consultants 

Reply 1

QueryThe change in control of the company can take place through the sale of the controlling stake in the company by the present owners to the intending buyers.This can be followed by change in the directors.In this way control of the company can change hands without involving disposal of assets.the name of the manufacturing unit can remain unchanged. 
However arising out of the above,as the company is a pvt ltd company the provisions of section 79 of the Income Tax Act will come into play and past losses of the company if any will not be available for future setoff arising out of change in control. 
Ramaswami kalidas 

Reply 2

Further to Mr Kalidas reply, Sction 79 does not include depreciation loss. So if major component of brough forwrd loss is unabsorved loss, same is not covered in 79. 

CA. MODI R R 

Reply 3

All the shares of the pvt. ltd. co. should be transferred to the second private limited co.(who is going to take over the first pvt.ltd. co.). 

1.It should be reflected in the immediate annual return with ROC. 
2.The change in shareholding pattern should be reflected in the details of shreholders column in the I.T.Return. 

Date : 02/02/2011

 need clarification with respect to the following: - 
In case Company "A" is merged with company "B" then Company "A" does not exist any more and also the name of company "A" is shown as inactive company in MCA website. 
Query is: -Can we use the name of Company "A" after certain period of time or after some compliance if required. 
Dhiraj Bagri 

Reply 1

The name of the merged company "A" can be used.   A new company can be incorporated with the name of the merged company "A" at any time after the existing company is dissolved and name is struck off from the MCA portal.     Follow all the procedures required for incorporation of a Company, such as applying to ROC for availability of name etc. 
Regards, 
K. Krishnamoorthy, Bangalore. 

Reply 2

Thanks for the reply. One more clarification required wrt the same query. 
Normally, after the company is merged with another company status of merged company (In this case "A") is shown as inactive in MCA portal. Will that mean that the name of company has been struck off or there is a time limit for the company being struck off once it is merged and shown as inactive. 
Dhiraj Bagri 

Reply 3

It is always advisable to get the status of the merged company changed from "inactive" to   "amalgamated" as otherwise, ROC keep on sending reminders to such a company and their directors for alleged non-submission of various statutory forms such as balance sheet/P&L a/c. annual return inspite of the fact that such a merged company has been dissolved without winding up consequent to merger.  Unfortunately, at present, there is no automatic system in MCA portal by which the status is changed to "amalgamated" once the e-form 21 is filed by the merged company.   As far as I remember, I did point out this anomaly to the ex-president of the Institute of Company Secretaries of India during the annual conference held in Goa a few years earlier.   Nothing seems to have happened to take up the case with the Ministry of Corporate Affairs to set right the anomaly.  Consequently, all such merged companies and their erstwhile directors,  have been receiving show-cause notices for no fault of them.    It is high time that the Institutes (both the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India should take up this case strongly with the concerned department for remedial action as lot of productive time and money is wasted on account of this anomaly. 

For this, the concerned ROC has to be approached with a copy of e-form no.21 along with a copy of the receipted challan (as a proof of having filed the form) so that he takes action in amending the status to "amalgamated". 

K. Krishnamoorthy 

Winding up

Date:9/12/10

Dear Sir 
  
please inform me if a company whose application under voluntary winding up by members is pending with Official Liquidators, can file for the New EES 2011. 
The petition with Liquidator is pending since long time for want of NOC from Sales Tax and Income Tax which are not replying to the letters sent to them by office of the Official Liquidators. 

CA ATUL MEHTA

Reply 1:

Dear sir/Member 

please note that if a company whose application under voluntary winding up by members is pending with Official Liquidators, can not avail or file for the New scheme of EES 2011.
--
Pradeep Kumar Singh 

Date: 02/08/2010

A company was incorporated in 2000.the co has not filed any returns with roc & income tax till date. Since the company is yet to begin it's commercial operations, no annual accounts also prepared. Now the company opted to take benefit of the easy exit scheme & to strike off it's name from roc.but the company owned a vacant land i.e. land was purchased in the name of co in 2000.if we prepare the balance sheet of the co as on date it will be as follows : 
Liability : 
Share capital Rs 5 lacs 
Assets :  Land at cost Rs 4 lacs 
Preliminary exp rs 1 lac (Co.formation exp) 
so whether the co can take benefit of the scheme in the above scenario.pl advice 

Sushant 

Reply 1

YOU CAN TRANSFER THE LAND TO DIRECTOR FOR CONSIDERATION & OPT FOR EXIT 
SCHEME 

CA.Anil Agarwal 

Reply 2

What is the proposed settlement for the land in books? We have to see this factor before giving yes or no. 

Dr.C.B. Thapa 

Reply 3

Upto my knowledge the basic condition of the scheme is that the company should not have any assets. In the given case, the company holds a land which has got a realisable value and hence not eligible for the ees. however you can think of disposing off the land among one or more promoters and the proceeds can also be disposed 
off at the earliest depending on further facts of your case, so that as on 
the date of filing of the application the company is not left with any 
assets. 

premvell...@yahoo.com

Reply 4

Now suppose the same company,s  has been showing status of strike off u/s 560 
and as per scheme such company can't take benefit of CLSS then what to do inthat case. 

Date : 28/05/2010

Dear Fellow Professionals 

Please advise on the following issue: 

A company is having corporate shareholders, few of which have been struck off the rolls by the ROC as per MCA site. What will be the status of the shares held by these struck off companies in the company's Statutory Register and Annual Return? 

With Best Regards 

CA. Vikash Kr. Surana

Reply

They will continue to be members. Struck off of name by ROC does nto affect assets and liabilities of companies. 

CA UMA KOTHARI

Date-30/3/2010

Company X Ltd. which is registered in Mumbai has a 100% subsidiary Company Y Ltd.,registered in Kolkata. The hon'ble High Court has approved a scheme of amalgamation and thereby sanctioned the merger of Company Y with its parent Company X with the 'appointed date' being 1-April-2009. 
Is it necessary to appoint an official liquidator for formal winding up of 
Company Y or it would automatically stand 'dissolved without winding up' u/s 394 effective 
the 'appointed date' once the court order is submitted with ROC Kolkata and 
ROC Mumbai? 

Thanks & regards, 
Jayant Chakraborty 

Reply:1 

Dear All, 

Y Company, which is registered in Kolkata, would not automatically stand 
dissolved. 

Unlike the Hon'ble High Court of Judicature at Bombay and certain other High 
Courts, in respect of the companies, under the jurisdiction of Calcutta High 
Court & Madras High Court, are required to file an application before the 
Hon'ble High Court of Calcutta/Madras respectively, for the purpose of 
winding up. While sanctioning the scheme of amalgamation, both these courts 
direct the official liquidators under their jurisdiction to give their 
report. The official liquidators submit their reports based on the reports 
obtained from the Chartered Accountants. who are appointed by the concerned 
Hon'ble High Court. Once the report is submitted to the Court concerned, the 
transferor company will file an application before the 
concerned Hon'ble High Courts for winding up. 

Regards, 

K. Krishnamoorthy, 

Assistant Vice President, Secretarial, 

United Spirits Limited, 

20/2, Vittal Mallya Road, 

Bangalore-560 001. 

Phone: 080-39856606 

Reply:2 

Dear CA.Jayant Chakraborty, 

There is no need to undergo the separate winding up procedure. Filing of HC 
Order with the RoC would open the gate of easy dissolution of the Company. 

CA.Rashmi Kundalia 
Chartered Accountant 
207-A, Krishna Apartments, 
Near Poisar Bus Depot, 
S.V.Road, 
Kandivali-West, 
Mumbai-400 067 

Cell:09323588800 

Reply:3 

It will stand automatically dissolved pursuant to legal order of Hon'ble 
High Court 

D.N. Mishra, FCS 

Reply:4 

Normally in the court's order sanctioning a scheme of amalgamation it is 
stated expressly that the transferor company shall be dissolved without 
winding up.However such an order would be passed by the court only after the 
official liquidator has upon a scrutiny of the transferor company's books of 
Accounts and statutory records,made a report to the court that the affairs 
of the transferor company have not been conducted in a manner prejudicial to 
the interests of the public.In Sugarcane growers and sakthi sugars 
shareholders Association vs.sakhti sugars ltd(2Comp LJ108)it was held that 
officail liquidators report u/s394 (1) can be obtained after the order 
sanctioning the amalgamation is passed by the court. 

In the instant case the subsidiary is merging into the parent.The official 
liquidators report as stated above will be required so that the court can 
order dissoultion of the transferor without winding up.There is therefore no 
need to go thru the winding up process subject to the above compliances 
having been ensured. 

regards 

kalidas 
   

Date : 04/04/2011

A Co wishes to strike off its name. As per Section 560 of the Companies Act,1956-it should state that its Assets and Liabilities are NIL. 
However, the Co has a paid up share capital of Rs 9,96,000/-. 
In this scenario how can the Co show that its assets and liabilities are NIL? are there any procedures to write off the sh capital or otherwise? 
Ruchira Chakraborty 

Reply 1

The Share capital of the Company shall be adjusted with carry forward loss of the company. 

Yogesh kumar tyagi

Reply 2

There should be a P&L Debit balance (loss) of equivalent amount of paid up share capital. 
In other words it should be a Zero Balance Sheet for striking out of name u/s 560. 
Abhijit Bhattacharyya 

Miscellaneous

Date:15/10/10

Query: View public docs in mca site 

Dear all 
Incase of view public docs in mca site.form 23ACA profit and loss account is not displayed even if it is uploaded and approved.are there any provisions under Companies Act that prohibits general public to view profit and loss account of a company.if yes pl send me the relevent provision details 

Sushant 

Reply:1 

there is no such provision in companies act to prohibits general public to 
view p & L account of a company 

ANAND TIWARY 

Reply:2 

Profit & Loss Account is not a public document within the provisions of the 
Companies Act 1956. 

Mukesh Kumar Agrawal

Reply:3 

Dear Sushant Ji 

Section 220 of the Companies Act, 1956 prohibits general public to 
view profit and loss account of a Private Limited Company. 

Sanghai & Co. 

Reply:4 

Kindly refer section 220. Its proviso provides that no person other than 
member of the company concerned shall be entitled to inspect or obtain 
copies of, of the profit and loss account of that company i.e. a private 
company which is not a subsidiary company and other 2 classes of companies 
given there. 

CA. Pankaj Agrwal 

Date:30/07/2010

Please clarify if demerger reserve (excess of assets over liabilities) in the hands of demerged entity is a 'Free Reserve' for the purpose of computation of investment limit u/s 372A of the Companies Act,1956 ? 

Regards, 
B. K. Jhunjhunwala 

Reply1

It is not a free reserve and has to go to "Capital Reserve".However,
if the scheme of demerger states that the excess of assets over liabilities
should go to "General Reserve" and is approved by the shareholders/creditors
and sanctioned by the concerned High Court, it can go to "General Reserve"
on the argument that ultimately, it is for the benefit of the shareholders.
There are number of live cases on this subject.

Regards, 

K. Krishnamoorthy, 

Date : 13/05/2010

Dear All 
  
I have purchased 500 shares of X Co Pvt Ltd in July 2006 @1000/- per share.The payment was adjusted through book entry.Since the Company not paying any dividend i did not send the share for transfer,Now i want to transfer the said share in my name,Please advice consideration figure in transfer deed to be fillup (5001000=5,00,000) or present book value,and share transfer stamp to be charged on 5,00,000 or Book value. 
  
  
Regards 
Jagdish Maheswari 

Reply 1:

Share transfer stamp is usually  based on market value on date of execution of transfer deed. Please see state legislation in this regard. 

CA DEV KUMAR KOTHARI  

Date : 10/03/2010

Respected Sir, 
  
I shall be grateful if any body flash some light in the below subject. 
  
1. Mr A is running a proprietorship business since 1985. 
  
2. In 1991, Mr A  form a Pvt Ltd company, (himself being one of the director)  and the main object in the memorandum was to acquire, purchase and take over as a going conern the Proprietorship Firm. 
  
3. But the Pvt Ltd Company did not take over the Proprietorship Firm and since 1991 the Pvt Ltd Company is running independently. 
  
4. Now The Pvt Ltd Company after a gap of 19 years wants to take over that firm. 
  
5. One of the director of the Company and the proprietor of the firm is same i,e  Mr A. 
  
6. What are the hurdles and solution if the  pvt ltd company take over the proprietorship firm as a going concern from 01.04.2010. 
  
7. Pl  suggest  the procedure of take over 
  
thanks 
  
CA P K Choudhury 

Reply1 :

The pvt ltd co can takeover the prop concern w e f 1-4-10 at such price as may be agreed to by the company and the proprietor having regard to the market value of the assets and business of the proprietory concern. 
J Venkateswarlu 

Reply 2:

Mr choudry best wishes   
1 First try to write what ever you want to write in a paper and read ten times  
2 if you are satisfied with the question you want to put is ok then try to publish   
3 your way of approach and wordings are are so silly that a CA should not use   
4 prop. ship cannot be a firm it will be always a concern   
5 The object cannot be to take over of the prop Concern . The MA and AA shall be always  
      prepared in conversion of prop concern to Pvt ltd and there cannot be such object    
PLEASE AVOID WRITTING SILLY USELESS AND IMMAGINARY THINGS IN THE PUBLIC IT NOT YOUR KNOWLEDGE MATTERS IT IS THE PROFESSION'.S IMMAGE MATTERS.  HUMBLE REQUEST PLEASE TRY TO FOLLOW 
  
WELL WISHER 

-prem csp

Date:13/01/2010

Querry:1 

I had applied for change of object clause for one of my client 
which happens to be a pvt. ltd. co.The same was changed in the records of 
ROC, West Bengal. Since the object clause was changed, Corporate 
Identification Number (CIN) also got changed. This means there occured a 
change in the Certificate of Incorporation also since it contains CIN. But 
the company has not been delivered fresh Certificate of Incorporation till 
date. What is the process of having the same? Pl advise. 

M L Gupta 

Reply 1

I donot know how change in the objects clause can lead to a change in name 
of the company.Change in name is possible only with the consent of the 
members subject to the approval of the central Govt.The procedure to be 
adopted for effecting a change in the objects clause and change in name are 
two seperate activities necessatitaing seperate procedures.Considering the 
above,it is not clear how change in objects clause has led to a change in 
the corporate Identification Number which ,to the best of my knowledge 
,undergoes a change only when there is either a change in name or change in 
registered office from one state to another. 

kalidas

Date: 30/12/2011
One of my clients is paying maximum Directors Remuneration as per Part-II of Schedule-XIII of the Companies Act. 
  
Apart from that it is also paying the Keyman Insurance Premium on the life of the Director. 
  
My Query is Whether the Keyman Insurance premium will be included in computation of Remuneration allowable as per Schedule-XIII which is not assignable to the Director. 
CA Ankur Maskara 
Reply1
Key man Insurance policy is not for the benefit of Director, It is for company's own benefit. So no benefit is passed to the director bcog of Keyman Insurance Policy. So it should not be considered as Remuneration. 
  
Anand 

Date: 30/12/2011

My new client is Registered Public Limited Company which has completed all the formalities of Registration and also received Certificate of Commencement of Business before coming to me. 
Now their major question is, is it necessary for them to bring a Public Issue, or they can continue their business with 7 members. 
Further, what are the formalities which need to be complied with the ROC for this newly registered company?
Please advice in this regard, because I had never worked for a Public Limited company even in Articleship and hence do not have any practical knowledge in this regard, only Theoretical Knowledge. 
Thanks & Regards 
CA. Harsh Jain M.Com. A.C.A. 
Reply1
Dear All, 
It is not necessary for public limited company to bring a public issue nor there any formalities to be completed after the granting of Certificate of commencement of business (COB). The main additional compliances to be followed by the public limited company are as given here in under: 
1. Minimum 3 directors, minimum 7 shareholders at any time. 
2. Quorum in general meeting- 5 members present in person. 
3. Compliances of Schedule XIII in respect of appt. of whole time directors/executive/managing directors. 
4. Restrictions in Managerial remuneration u/s 198 read with other applicable provisions. 
It is advised to engage a company secretary for the company law compliances of this company. 
Regards, 
Sarvesh Bhardwaj, Advocate 
Date: 24/12/2011
Can 'depreciation' be charged on an 'immovable property' held as 'Investment' in the balance sheet of a private company? Please give references of relevant Accounting Standards and provisions under the Companies Act, 1956.

Reply1

Under Tax law there is no bar to claim of depreciation as long as it is proved that the property has been used for business purposes. Accounting entries have no bearing on the treatment of an item in the tax law. 
Kalidas 
Reply 2

Dear all, 

Sec.32 which governs the depreciation mandates allowable depend on assets used for the business. First ascertain why the immovable property was shown as investment. Even then depend can be allowed if the said asset is used for the business of the assessee. This is so because numerous court cases have held that substance is important and not the form. 
Date: 23/12/2011
One of our clients wants to have controlling stake in another company. He has two options: 
i) Take 50% controlling interest in another company 
ii) Take 51% controlling stake in another company 

Please advise us the advantages and disadvantages of having both options considering Company Law and other provisions in this regard. 

Ruchika Agarwal 

Reply 1

If 50% stake alone is taken the Company acquired does not become subsidiary If 51% is acquired by another company, the acquired company becomes a subsidiary. In such a case if the company acquired is a private company and it has carried forward tax losses upon, actuation of 51% the tax losses will lapse due to application of Section 79.IIt is extremely difficult to generalize the merits and demerits in the above alternatives unless the objective behind the exercise is not known fully. 

Regards 
kalidas 

Date : 23/12/2011

Pls advice me whether lic is investment or drawings 

Reply 1

Dear member, 

it is only difference of presentation in balance sheet. You can present in either way depending upon your client requirement. 

Ram Nath Singh 

Reply 2

it is drawings since it is in the nature of contingent assets. Should be booked on cash basis of payment & receipt 

DP Ghatak 

Reply 3

our intention behind buying a lic policy is to get assured return in future coupled with minimization of risks. So it should be treated as investment. 

Alternatively we can treat it as drawings. In general we used to treat it as drawings from capital. 

Brijesh

Reply 4

Even though LIC gives u Tax Benefits, it is Drawings. 

CA. Harsh Jain

Date: 01/12/2011
Can anyone suggest me whether professional tax registration is compulsory for a private limited company. if yes then when and what is the provision for that. 

Nisha Agarwal 

Reply1
Yes, its compulsory. please log in to  www.wbcomtax.gov.in 
  
Companies registered under the Companies Act, 1956 (1 of 1956) and engaged in any profession, 
trade or calling   Rs.2500 per annum    

CA Anil Musaddi

Date: 19/11/2011

Suppose an auditor audited the accounts of a partnership firm and issued the audit report but one of the partner objected to the genuineness of the accounts and ask the auditor to change the balance sheet. But the auditor cancels the audit report under intimation to other partners. 

Now, the question is that an auditor after issuing the audit report can cancel it on the basis of objection by the other partner. 

B.K.Agarwal

Reply1

Esteemed member, 

My opinion is as follows:- 

(1) The member should have insisted to get approval of Accounts by all partners before signing of audit report which he has failed. 
(2) There is a Provision for audit report on revised accounts but there is no provision for cancellation of audit report. 

Date : 19/11/2011

Somebody who was a partner has become CFO of a listed company Can he still continue as a partner and if so is there any restrictions 

REPLY 1 

As per Regulation 190A of ICAI, a member in practice is required to seek permission of the Council in prescribed form within 30 days of joining such other office. Further, on obtaining such permission, his status will be reduced to a member in part time practice and he will not be entitled to perform attest function. 

CA Dibyendu Nandi FCA, DISA 

REPLY 2 

The position of a CFO in a listed company comes with it onerous a responsibility on the encumbent.It is a full time position. Although there is no legal bar as to continuance as partner to my mind the employer should give his consent for the incumbents continuing as partner. 

Kalidas 

Date: 16/09/2011

Is S.212 applicable to private limited companies? What are the disclosures requirements that a holding company needs to comply with.

Reply1

Hi, 

Section 212 is applicable to all holding companies (whether public or Private Ltd), having a subsidiary or subsidiaries. 

Disclosure requirement as per section 212 
The following documents prepared in accordance with the Companies Act, 1956 in respect of such subsidiary or each of such subsidiary as the case may be : 

   1. Balance sheet, profit & Loss account of the Subsidiary 
   2. BOD & Auditors Report 
   3. Statement of Holding Company Interest in the Subsidiary 

If the Financial year of the Subsidiary does not coincide with the Financial Year of Holding Co, then there are additional requirements. 

In addition to the above, any material changes in the Holding Subsidiary relationship is also to be disclosed in the Financial Statements. 

CA.Prem Pareek 

Date: 18/08/2011

I am faced with a situation and seek your guidance. 

Shareholders agreements have become a fashion or need of the hour as more and more joint ventures or partnership in disguise are being run through company form. 
in such arrangements the terms and conditions as agreed and to protect each other’s interests , a shareholders agreement is executed between promoter groups thereby keeping provision for right of first refusal, etc. 

However, i need your clarification how this agreement overrides the articles of association or the companies act. Should or can it be made a part of the articles of association i shall feel obliged if some draft share holder agreement is also provided alongwith the reply to my querry. 

VINOD KUMAR GOYAL

Reply1

In my view:  
  
  
a.) Such Shareholder agreements cannot override the Articles / Memorandum. 
b.) Should be limited to holding of shares and transfer of shares and the rights and liabilities amongst shareholders. 
c.) Cannot override provisions of Companies Act / SEBI / Income Tax Act or any law in force 
d.) Should not be involving Oppression and Mismanagement of Company Affairs / Minority Shareholders. 

Date: 30/07/2011

That Section 187C of the Companies Act, 1956 has been made redundant by the Govt. Then what is the procedure to be followed in the case of beneficiary shareholders. 

The same is required to be seen in the context of holding and 100% subsidiary companies. 

Arijit Mitra 

Reply 1

It is not redundant.  The declaration by the trustee or the registered holder who does not have beneficial interest has been done away with.  The declaration by the person who holds beneficial interest in the shares but is not the registered holder, still is mandatory.

Arvind Jhunjhunwala 

Reply 2

It is erroneous to conclude that Section 187C has no application in the Statute any more. If any person does not hold beneficial interest it is incumbent upon him to make a declaration to the Company specifying the details of the person who holds the beneficial interest. Upon receipt of such declaration the company should file Form 22B with the Registrar as per Rule 6B of the Companies (Declaration of beneficial interest in shares) Rules, 1975. 
As regards setting up a 100% subsidiary Section 49(3) provides a way out in the law. The Section allows a company to hold shares in its subsidiary in the names of nominees of the Company who will hold the shares in their names jointly with the Company to ensure that the minimum number of members is maintained in the Company. For instance if  Company A wants to make Company B its 100% Subsidiary it will hold in its name 9994 shares in B in its own name.(Assuming that the paid up capital of company B is 10000 shares of Rs 10 each. The balance six shares will be held 1 share each by persons A, B, C, D, E and F in their names as nominees of Company A jointly with Company A. The individual holders will file declarations to the effect that the beneficial interest in 1 share each held by them is with Company A. Company A upon receipt of such declaration file form no 22B with the ROC confirming its beneficial interest in the 6 shares held in the names of the individuals. This way company B will become a 100% Subsidiary of A. 

kalidas 

Date: 05/07/2011

Dear Professional Members 

Company A & B  are same Group Company & they have inter-co. transactions resulting in substantial  Dr balance in favour of Company A , whereas  Company B is  holding substantial shares of Company A  and Company B is not in a position to clear that outstanding amount. Without going through the Merger route , is it possible for Company A to give an offer for Buy -back its own shares at face value so that Company B can pay off its outstanding dues to that extent? What Sec 77A has to say about buy back of shares by a Pvt Ltd Company from any of its own Group Company   ?? 

Basically the purpose is to clear -off   long outstanding Inter-Co. balances and one of the company  not having much transactions off late to take care of outstanding payments. Want to have  a clear reply or suggestion in this regard.

CA J Nagar 

Reply 1

As per Section 77A of the Companies Act 1956 even a private company can buy back its shares but has to follow the guidelines of Central Government. Further the Company can buy back its own shares by utilizing the money only out of the following  heads: 

 1) Free Reserve 

2) The proceeds of any issue of shares or specified securities other than proceeds of an earlier issue of the same kind of shares or same kind of specified securities which are proposed to be bought back; 

3) Cash reserves of the Company. However, the money borrowed from Banks/Financial Institutions cannot be utilized for the same. 

Hence Using the Debt Amount for Buy Back is not at all permissible. 

Reply 2

At the outset let me clarify that the provisions relating to buy back do apply to a private Company.A private company has to comply with the requirements of The Private Limited Company and Unlisted Public Limited Company(Buy back of Securities)Rules 1999. 
A buy back can be financed out of: 
a)free reserves or 
b)Securities premium account or 
c)The proceeds of any shares or other securities. 
Further the buy back cannot exceed  in a financial year 25% of the company's share capital and free reserves. The above rules also provide that the buy back shall be made proportionately through private offers to the existing shareholders. A debt equity of 2:1 has to be ensured and a declaration of solvency will have to be filed with the ROC. In the given facts none of the above conditions appear to be satisifed.In the circumstances a buy back cannot be done. The other alternative would be for the company to go for a capital reduction u/s100. 
kalidas 

Date: 14/06/2011

In case of a Listed Company whether 

1) An Non-executive and independent director can be a Compliance Officer in the same company. 

2) Whether a Non-Executive Director can sign the Annual Report of the Company 

Alok KUmar Das

Reply: 1 

Whether a Non-Executive Director can sign the Annual Report of the Company- YES 

CS Mamta Binani 

Reply: 2 

A non executive director cannot be appointed as compliance officer by the board.The company secretary is usually appointed compliance officer. The accounts can be signed by an independent /non executive director. 
kalidas 

Reply: 3 

Dear Alok, 

1) If you go thru' clause no.47 of the standard Listing Agreement, you will find that only "company secretary" can be appointed as "compliance officer". Hence, in my opinion, non-executive independent director cannot be appointed as "compliance officer" ; 

2) There is no bar for non-executive director signing the audited accounts, i.e. balance sheet, profit & loss account, cash flow statement and other documents which are required to be attached along with the annual report provided he is authorized by the board of directors of the company, to sign on behalf of the board. 

CS. K. Krishnamoorthy, 

Date : 25/05/2011

A Pvt Limited Compan having 3 directors pays remuneration to each director as Rs 3,00,000 p.m.. None of them is designated as MD. Is Sec 314 not contravened and compliance is to be made or not ?
Hemant Singhal  
REPLY 1
Section 314 is applicable to all companies, private or public. 
Payment of remuneration to non-executive directors is holding of office of profit and hence attracts the provisions of Section 314 of the Companies Act, 1956. If the directors hold office of profit without the approval of shareholders and the central government, they shall be deemed to have vacated the office of directors. 
Without the approval of shareholders by a special resolution and the approval of Central Government, the payment of such remuneration is not permissible. Remuneration so paid has to be refunded to the Company forthwith by these directors and the Company cannot waive the recovery of any sum refundable to it unless permitted to do so by the Central Government. 
The solution to this problem can be as follows:- 
1) Assuming that the company will have adequate profits to pay commission (as per the provisions of Section 309 of the Companies Act, 1956) in future, payment of remuneration so paid can be treated as "Loan to directors" (as 
the provisions of Section 295 is not applicable to any loan made by a private company) to be adjusted with the future commission payable. But one has to take care of the element of TDS already deducted against such salary. The entire gross remuneration so paid will have to be treated as loan and the TDS deducted against the salary has to be foregone by such directors. 
2) The directors shall be deemed to have vacated the office of directors - I am not sure how the Company is going to remedy this non-compliance. 
I am surprised how the company has not received any show cause notice from the office of the Registrar of Companies so far. 
CS. K. Krishnamoorthy 
 
REPLY 2
Yes , any remuneration for holding any office or place of profit is taxable. Second 314 apllies to both pvt & pub cos 
Harsh Vardhan 

Date : 03/05/2011

Charge creation on Corporate Guarantee with ROC

Kindly enlighten me about whether a private limited company (say, A) giving corporate guarantee to a Co-operative Bank as security in respect of loan availed by another company (say, B) is required to file Form 8 with ROC for the purpose of creating charge on the corporate guarantee so given? 

M L Gupta

REPLY 1 

There is no requirement to file Form 8 for extending a guarantee. Extending a guarantee does not mean that the company has conceded a charge over its assets for which only form 8 has to be filed. 

kalidas 

REPLY 2 

YES. Form 8 is required to be filed with ROC for Corporate Guarantee given to Bank for extending facility by the bank to the other entity. 

CA P. K. Agarwal 

REPLY 3 

In my opinion, Corporate Guarantee is not a property and in this case filing of Form-8 with ROC is not required. 

O.P.Gupta

REPLY 4

Form 8 is to be submitted for creation or modifications of charges, as far as guarantee is concerned the same is not required to be filed with MCA. 
CA. Harsh Jain

REPLY 5 

Yes. Form 8 is to be deposited. 

Banthiar

Reply 6

What I feel that e-form-8 is generally filed by the Bank in their own interest, so that in case of winding up of the Company, they can become the 1st charge holder. In this case, form-8 is to be filed by the bank as the first charge holder and the Company B shall be the Chargee. The sanction letter provided by the bank must contain the clause of this corporate guarantee of Company A and if any agreement is made in between Company A, B and the Bank, the same must be attached as an attachment in form-8. Hence, in my opinion there is no role of Company A in the ROC compliance .
Arijit Roy
Reply 7
The creation of charge for corporate guarantee is optional because first there is no specific charge on the assets of the guarantee company . Basically it is to put on record that CG is executed and accordingly form-8 is filed with ROC .
Form 8 is filed only if the bank insists or else not to put on record that the company has executed cg in favour of bank- form 8 may be filed. Further there are many instances where form 8 have been filed with MCA for CG
C.A. N.Sundara Rajan

Date : 24/04/2011

If say 10 shareholders do not register their email id's then can the company:
1. use electronic mode for the shareholders who sent their id.
2. and send the others by other physical modes as prescribed.
…which means for one particular event, uses both the modes as mentioned above.

CS Mamta Binani

Reply 1

Yes - the circular is clear - the company can send the documents through electronic mode to those who have registered their email ids and to those who have not registered their email ids, the company can send the documents in normal mode. But one thing has not been made clear, as the posting through "certificate of posting" has been withdrawn by the Postal department which has made the MCA to make this amendment, whether such documents can be posted through ordinary post , as posting of the documents through registered post is costlier.
CS. K. Krishnamoorthy 

Reply 2

The circular is very clear. The last Para clearly says that if any member has not registered his email ID, service of documents will be by other modes of service specified in Section 53.It would be necessary to send the same documents both by hard copy as also electronically. 
Having said this corporate will welcome this initiative wholeheartedly considering the enormous cost savings .Hence nobody will object to this.However in my view the circular is not legally tenable as Section 53 is not being amended consequentially. It is a settled rule of judicial interpretation that rules/clarifications etc which are in the nature of subordinate legislation cannot be inconsistent or override the law. From this perspective as section 53 is not being amended, the circular militates against the mother Act. 
To my mind the circular suffers from infirmity and cannot stand the test of law. 
However as stated earlier  since nobody is going to object to this change  so let us all as they say" while in Rome do as the Romans do"! and take advantage of the circular.

Kalidas 

Date : 24/04/2011

Whether director and managing director is an employee within the meaning of section 217(2A) of the companies Act ? (Directors report -Remuneration to employees exceeding Rs 24 lacs ) 

Sushant 

Reply

Yes, they are employees for that the purposes of sec.2170(2A). 

Date : 31/03/2011

My client had a company in which he with his friend was director. One fraud party made his digital signature and took over the company. I have sent the matter with SRN complain to all the concerned department of ROC still no action or initiative taken. 
Please let me know what to do now ?

PAWAN AGARWAL 

Reply 1

 one FIR to be registered against the party and the new directors Then to be followed up with Police. MCA has little to do until this is done. 
Satish Patodia
Reply 2
First it is Cyber Crime and needs to be booked under sebensoxy act. You need to file an FIR and not only complain with MCA .
CA ATUL MEHTA
Reply 3
This should be an eye opener for all of us also as we as a Chartered Accountants are custodians of digital signatures of our clients and the clients does not know any ABCD of Digital signature.  In such inter rivalries, CA can also be made a party and be in trouble. 
CA. Pankaj Agarwal 
Reply 4
You may write a complaint/letter to concerned Registrar of Companies and Regional Director with documentary evidance  also director of the company may also file criminal complaint ( FIR) against the culprit person.
Yogesh Kumar Tyagi

Reply 5

A similar incident happened with one of my clients.. fortunately the thing was detected midway.. FIR with the police as well as complaint with MCA have been filed.. still waiting for action on their part though.. some 2 months have gone by!! 
CA.Dinesh Agarwal

Date : 21/01/2011

PRFERENTIAL ALLOTMENT OF SHARES IF NO TRADING TAKES PLACE
A company listed in Calcutta Stock Exchange but no trading has taken place in the past couple of years. But this company now wants to give shares on Preferential Allotment basis to its promoters. 
My question is that CA's have to give a certificate that the SEBI (DIP) GUIDELINES have been followed for calculation of correct pricing. How can I give the certificate if their is no trading. For your ease the excerpt of 
the pricing formula is: 
13.1.1.1The issue of shares on a preferential basis can be made at a price not less than the higher of the following: 

i) The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the six months preceding the relevant date; 

OR 

ii) The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the two weeks preceding the relevant date 

Please advise 
Harsh Vardhan Bhardwaj
REPLY 1
Is the company's share is not listed in any of the other stock exchanges, namely NSE/BSE?
However, in absence of non-trading for the last six years, the only other alternative left is to find out the price of the shares on Net assets value method. If the price worked out this way is less than the face value of the share, the shares should be allotted to the promoters on the face value. In the certificate, it can be mentioned that the relevant guidelines could not be followed for reasons stated above and hence, the price has been arrived at on the basis of NAV method for allotting the shares to the promoters on preferential basis. 
However, SEBI (DIP) Guidelines have since been replaced with the new guidelines namely, SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. 
CS. K. Krishnamoorthy, 
REPLY 2

The pricing has to be determined on the basis of Infrequently traded shares in the stock exchanges. 

Basically the methods of valuation adopted for valuing of shares can be categorized under the following heads: 

a) Net Assets Basis 
b) Price Earning Capacity Value 
c) Market Value Method - For listed company 
d) Discounting Future Cash Flow Method 
e) Dividend Capitalisation Method. 

Goutam 

Date : 05/01/2011

We want to incorporate a private limited company with both the directors being NRI, the object of the company is trading in commodities which will be 100%  for export purpose. Further both the directors will hold 50 % shares. 
WIll there be any RBI permission required for the same? Further any other formalities to be done at ROC other than applying for DIN of NRI directors as per the rules? 
BHARAT D. SARAWGEE

Reply 1

As per my experience atleast one of the directors has to be Indian base. 
RBI has given certain open routes for investment in shares in specific companies and it will depend whether the funds employed in buying shares is repartiable or not. It is difficult to answer this matter without having full details of the 
subject. 

Sarda Jha

Date : 03/01/2011

I came across a Balance Sheet of a listed Co, on which needed your valuable opinion whether the balance sheet prepared as at 31.03.2009 is correct or not, details as under : 
Three Co's say "A", "B" and "C" are amalgamated with another Co say "Z", w.e.f. 01.04.2008. The amalgamation order issued by the High Court was received in Dec 2009. 
The Co "Z" is a listed Co and other Co's are Pvt Ltd. Co's, later on converted into Ltd Co's before amalgamation. 
The auditors made amalgamated balance as at 31.03.2009, duly signed on 30.06.2009 and AGM was called. It was mentioned in the balance sheet that the account was prepared subject to the High Court order and shares allotted were shown under share suspense a/c, and other assets and liabilities were accordingly incorporated in the amalgamated b/s and difference was booked into amalgamation reserve a/c, based on the equity swap ratio. 
My question is 
1.   Whether the balance sheet prepared as at 31.03.2009 before the high court order is legally valid. 
2.   Can the same balance sheet be adopted in the AGM.   
3.   Regarding the Form 20B, annual return, does the co's have to file complete share holder list (incl share suspense list) or only standalone list. Pls note all the ROC returns are still pending to be filed. 
4.   The co had however filed the ITR for F.Y. 2008-09 already based on amalgamated balance sheet, so do they have to file revise standalone itr or what. 
5.   What difference it makes if the high court had appointed an independent person to call EGM before the 30.06.2009 or after 30.06.2009, i.e. balance sheet signing date. 
Pls provide ur valuable opinion on the above balance sheet, as one of client is interested for such scheme in the F.Y. 2011-12.
Jyoti Agarwal 

Reply 1

To my mind unless and until certified copies of Court order is filed with ROC, amalgamated balance sheet cannot be prepared. If the same is done and that too without court order, Auditor must qualify his report. Rather in my view he should not even certify the accounts. Till certified copies are filed , separate balance  sheet should be prepared and approved at respective AGM. 
MOHIT BHUTERIA 

Reply 2

I think my query was not clear . 
My query was, if a company's standalone balance sheet under amalgamation process is signed in around June month and High Court order of the same is received in November month i.e. after the AGM and certified copies of Court order with ROC are filed in Dec, so can a new amalgamated balance sheet be issued by the auditor after mentioning in the notes and audit report regarding the standalone balance sheet for the same period, i.e. another balance sheet of the same company with amalgamated figures can be signed at a later date i.e. after AGM making to the reference to the earlier standalone balance sheet. 
Jyoti Agarwal 

E-forms

Date : 30/10/2010

For one of my clients i have filed Form 17 in delay for satisfaction of charge in MCA portal . While making payment, in chalan a note was mentioned that consult with Company law board as charge satisfaction has been filed delayed by 1584 days. 

What should i do please reply. 

Rgds, 

CA Rabin Agarwala

Reply 1

ou have file Petition with CLB U/s 141 for condonation of delay for delay in 
filing F-17 with the appropriate bench and get the order with CLB and file F- 21 
to get this form approved 
 REGARDS, 

DHIRAJ AGARWAL, 

Reply 2

The information in the challan has apperared as becasue in the form 
you might have mentioned the actual date of closure of the account 
.While filing form -17 it is always preferable to take a No due 
certificate from the financial institution /Banks precedent to less 
than 30 days from the day of filing of form 17. 

Kailash Agarwalla

Reply 3

The statutory ttimelimit for filing form 17 having expired long ago the company should file application with CLB for condonation of delay.considering 
the inordinate delay one is not sure CLB will grant condonation. 

regards 
kalidas 

Date : 10/05/2010

Regarding regarding the company Incorporation 

Dear Team 

One of my client have filled the Form 1A for the name approval with 
authorized capital stated therein as Rs 75 Lakh and now he want to apply for 
the registration with the capital of Rs 50 Lakh but the MCA site is 
prompting the message of capital less than the authorized capital applied in 
form 1A while uploading. 

Is there any way out in this regards. 

Thanks & Regards 
CA Pawan Periwal 

Reply:1 

There may be three alternatives 
1. Fill another form 1A, with minor change in name of the company; 
2. Wait for 6 months to expire the already approved name and then submit 
form 1A 
3. approch the ROC with your explanation to reduce the auth capital and see 
if he can help you. 

thanks 

P.chandak 

Reply:2 

auth cap as mentioned in 1A cannot be reduced but can be increase at 
the time of incorporation. 

Further if you want a lower auth cap than you have to let the 60 days 
name validity expire and file a fresh form 1A 

-sanjeevpodda..@gmail.com

Reply:3 

Dear Mr. Pawan Periwal
Fresh/new Form 1A should be filed with the desired Authrised capital. If the
client wants same name , then apply with the same name after the validity
period of approved name .Validity period of name is written on the name
approval letter.
Thanks and regards,
Ca Uma Kothari 

Reply:4 

Dear Mr Periwal, 

No way, you have to file a fresh form 1 A. 

Regards 

CA Jagdish Khandelwal,Jamshedpur 

Date : 06/05/2010

Dear Team 

One of my client have filled the Form 1A for the name approval with authorized capital stated therein as Rs 75 Lakh and now he want to apply for the registration with the capital of Rs 50 Lakh but the MCA site is prompting the message of capital less than the authorized capital applied in form 1A while uploading. 

Is there any way out in this regards. 

 Thanks & Regards 
CA Pawan Periwal 

Reply :

Mr. Pawan 

As per procedure, fresh Form 1A is to be filed with revised Authorized 
Capital but there will be a practical difficulty i.e the validity of name 
availability is 60 days from the date of issue and during this period the 
same name is not available for adoption even by the person who has applied 
for the same and wants fresh availability. The correct procedure would be 
either to wait for expiry of period of 60 days and thereafter apply afresh 
for availability of the name or get the company incorporated with initial 
capital of Rs. 75.00 lacs. There is not much difference in the fee to be 
paid for registration of MOA. It will be only Rs. 1,31,000 for Rs. 75.00 
lacs and Rs. 1,06,000 for Rs. 50.00 lacs. 

Regards, 

Rakesh Bhatia 
Additional Vice President & Company Secretary 

Date: 18/11/2009

One of my client wants to file form 20B for a limited company in which details of company secretary is required but no Company Secretary is appointed by the said Company, What shall be done to file Form 20B ? 

RAJIV HARLALKA

Reply 1

In case of the Listed LIMITED Company the details of the Pratinsng CS need to be manadatorily filled up only in case where the Form No. 20B is signed by the Practising Company Secretary with the company having ANY paid up capital base, 

And in case of a Listed/ Unlisted  and Limited/ Private Limited Company having paid up more then 5 crore a CS in employment is a must and the Company have not appointed a Cs then form 20B can be filed but ROC may issue a Show Cause Notice in future and launch prosecution as they deem fit and proper, if not convienced by the reply of the company for the same. 

Mohan Ram Goenka

Date: 09/10/2009

How error in filing of form 2 and form 32 which are already filed can be rectified.If we are required to file a new form afresh how the same can be mentioned as revised form conspicuously. 

Rajesh Jain, 

Reply 1

The online form wrongly uploaded, donot pay the challan - in week days time the form automatically  will go to trash. File the rectified one and pay the challan of the rectified form only. In case payment already made, it will be a complete docemnet, can not be ammended. A revised form need to be filed. 

suru 

Date: 28/12/2011

Please guide as to how to correct PAN No error in the Form 32 already filed for appointment of Secretary.

Ajay Kumar Tiwari

Reply 1

U can refile the form no. 32.

Sarvesh Bhardwaj, Advocate, New Delhi. 

Date: 19/12/2011

Please confirm the period till which form 8 can be filed (creation of charge) without delay condonation petition with the CLB.

REPLY 1 

Within 60 DAYS 

Sanjeev Jhunjhunwala 

REPLY 2

It is within 60 days

REPLY 3 

within 60 days from the date of agreement with late fee, after 60 days move to CLB 
Om Prakash Banka 
REPLY 4 

30 day without late fine and next 30 days with late fine from the charge creation date. 
REPLY 5 

Two month from the date of creation of charge 
Amit Agarwal 
REPLY 6
Dear Abha Rajesh ji. One has to file Form No. 8 with ROC within 30 days from the date of Creation of charge with normal filing fee. And within another 30 days with additional filing fee, of course without moving CLB After that only you have to go CLB. 
 REPLY 7 
The Form 8 should normally be filed within 30 days from the date of creation of charge with normal fees 
after which it can be filed within 60 days from the date of creation of charge with additional fine which is now double of normal filing fee. After 60 days the matter has to be referred to CLB for condonation of delay 

C.A. N Sundara Rajan 
REPLY 8 

Dear Professional 
Form 8 can be filed within 60 days with late fee otherwise within 30 days from the date of agreement/pledge.  (Creation of charge) without delay condonation petition with the CLB

Pradeep Kumar Singh 

REPLY 9.

Within sixty days. (Sec 135) 

Regards 
Dibyendu Nandi 

REPLY 10 
The timeline is 30 days from execution of the Loan Documents. 

Thanks, 
Santanu Brahma 

Date: 19/12/2011

A company has appointed 3 Directors on 26/08/2011 but while filing Form 32 designation has been mentioned as director instead of additional director The company held AGM on 30/09/2011and passed resolution appointing the 3 Directors and filed form 32 and ticked box meant for " CHANGE OF DESIGNATION" Is the procedure correct? What canbe the consequences. The first form 32 has been approved and no querry rose by MCA.

CA B.K.CHORARIA 

REPLY 1

In my view the proc is correct. In past we also adopted the same practice 

Deepak Tibrewala 

REPLY 2

As per section 260 additional directors hold office only till agm. Hence it was necessary to regularize their appointment at agm, this has been done by filing form 32.there was an error in the previous filing admittedly. As the earlier form has been accepted, to my mind, there is little point in raking 
up the issue. 

kalidas

Reply3

I agree with the views expressed by the learned colleagues. Since  as per the provisions of Section 260, the directors appointed by the Board are only "additional directors", liable to hold office till the date of AGM, it would not make any difference even by mistake, the company had mentioned in the earlier forms as "director"  instead of "additional director" since this would not have changed the correct situation/position.    Since the second forms 32 have been approved, there is no point in worrying for the earlier mistake. 

Regards, 
CS. K. Krishnamurthy

Date: 25/11/2011

A person was appointed as Manager as well as Company Secretary of the Company. He resigned from both the offices with effect from same date. Details with respect to the office of Manager in pt no. 13 of Form 20B have been filled. But while filling up details under point No. 13 of Form 20B in respect of the office of the Secretary the problem that is being faced is that the date of resignation is not being accepted by the MCA portal. The portal is displaying that the date of cessation should be unique in case DIN/PAN is same in the generated block. Since that person was appointed for both the offices, PAN number will be same in both the block. Moreover, he has resigned from both the offices with effect from same date; therefore the date of resignation would also be same. In view of the above request you all to provide your opinion what shall the Company do in the present case. 

Rupa Agarwal 

Reply1

In my opinion, you can consult MCA help desk for this issue. 

Date: 17/10/2011

1. May you through light on the repercussions if Form 25 C has not been filed within the specified time limit given that the Company has made other compliances for appointment of Managing Director. 
2. Whether a Company may vary terms of contract executed with the Managing Director before expiry of tenure of contract? If yes, what is the modus operandi? 

A.K. Baid. 

Reply1

Dear Mr. Baid, 

1) Non-filing of Form 25C (e-form) within the specified time limit will not invalidate the appointment of Managing Director if other compliances as per the provisions of Section 269 of the Companies Act, 1956 read with Part I & II of Schedule XIII relating to his appointment/payment of remuneration are followed. 

In this connection please refer Department of erstwhile Company Affairs circular no.15/2002 Dt. 17-6-2002 which is reproduced below for your convenience:- 

a) Section 269 of the Companies Act, 1956 stipulates that no appointment of Managing or whole time director or a manager in a public company or a private company which is a subsidiary of a public company shall be made except with the approval of the Central Government unless such appointment is made in accordance with the conditions specified in Parts I & II of Schedule XIII to the Companies Act.  Every application seeking approval to the appointment of a managing or whole tike director or manager is required to be made to the Central Government within a period of ninety days from the date of such appointment; 

b) If an appointment is made in accordance with the conditions specified in parts I & II of Schedule XIII to the Companies Act, 1956, a return in Form no.25C is required to be filed with the concerned Registrar of Companies within 90 days from the date of such appointment. A doubt was raised as to whether filing of Form no.25C belatedly would attract the provisions of Section 637(B) (b) of the Companies Act.  The Department after careful consideration has come to the conclusion that Section 637(B) (b) of the Companies Act would not be attracted. Since Form 25C is a document, any delay in filing the same with the concerned Registrar of Companies falls within the ambit of Section 611 of the Companies Act. Therefore, in such cases Registrar of Companies concerned shall charge additional fee on Form 25C (in case of e-form 25C, such an additional fee is automatically generated at the time of making payment itself) filed belatedly at the rate standardized) 

2) Yes - variation in the terms of the appointment, including payment of remuneration can be made within the intervening period of the contract provided all the conditions of part I & II of Schedule XIII to the Companies Act are followed.   In case of excess of remuneration over the amount specified in the schedule, subject to the overall limit of 5% of net profit (in case the company has one managerial personnel) and 10% in case the  company has more than one managerial personnel) and subject to the provisions of Section 198/309 of the Companies Act, 1956; 

Steps involved in case of such variation are:- 

a) Call a board meeting to consider & approve the variation in the terms of the contract/payment of remuneration; 

b) File Form no. 23 attaching certified copy of the board resolution specifying the revised terms of the contract and circular to the shareholders the abstract of the terms of the variation pursuant to Section 302 of the Companies Act, 1956 within 21 days from the date of passing of the board resolution 

c) Convene General Meeting (or may be considered in the ensuing Annual General Meeting) and seek approval of the shareholders for such variation; 

d) File new form no.25C for such variation in the terms & conditions of the contract with the concerned Registrar of Companies; 

e) If the terms and conditions of such variation is in excess of limit specified in parts I & II of the Schedule XIII to the Companies Act, 1956, seek the approval of the shareholders in the specified e-form 25A ; 

Hope, I have been able to answer your query to your satisfaction. 

CS. K. Krishnamurthy

Reply 2

Dear Professionals

Referring to your Para 2 (d) regarding variation in remuneration within the intervening period of contract filing of FORM 25C is not required Where the remuneration of a managerial person is increased during the tenure of an appointment, there is no need to file return in Form 25C with the Registrar as under section 269(2) of the Act the said return is required to be filed only when a managerial person is appointed.  The said return shall also be filed when the appointment is renewed. 

Pradeep Kumar Singh

Reply 3

This is possible only when you had taken the approval for the scale of payment or increase in percentage per year to be made to the Managing Director in the General Meeting. If you had taken the approval of only a fixed amount then in case of increment you have to again follow the whole procedure and file form 25C. 

Raj Kumar Banthia

Date: 17/09/2011

I have a query regarding ROC filing. I have a company who’s A/R, B/S is not filed from the F.Y 2007-08 and in F.Y 2008-09 there is requirement of Form -5 and Form -2 also. But i can’t file F-5, F2 because company is in default. If i file A/R B/S without filing F-5, F2 which will be giving wrong data in B/s. So what the solution. Pls guide me.... 

Nisha Agarwal

Reply 1

FILE 61 FOR ALLOWING THE COMPANY TO FILE THE RETURN

Reply 2

Dear, 

you have to make the company status active, for that u have to file eform 61 and then u will be allowed to file eform 5 and 2 

Date: 29/08/2011

Dear Friends, hi 
My client filed form 8 with delay and then filed a petition with CLB for condonation of delay and in the CLB order dated 28.07.11 a penalty was levied by the CLB which was duly paid on 23.08.2011. Now when we r trying to upload from 21 then we found the challan of form 8 showing expired. And as per CLB order Form 21 must be filed within 30 days of date of certified copy of order which is 04.08.2011.Now times is running out and what is the remedy for the same. Under the circumstances can v upload form 8 again or not.pls advises. 

CA AJIT 

REPLY 1 

At the time of filing of form 8, there would be a note to file form 67/21 within a specified time as per regulation 17. After that the said form 8 will be expired. 

Perhaps u has not seen the given note against the said SRN and that form 8 has been expired. 

In your case u may take a chance by raising a ticket. But i think once a Challan expired, it cannot be alive again. 

In the case of it cannot be alive again; the form 8 and CLB petition thereof should be filed again. Because u have taken condonation of delay for 

The specified form 8 giving their particular SRN. 

CS SANDIP KUMAR KEJRIWAL,

REPLY 2 
 
See if v refills form 8 then the new SRN will come and SRN of previously filed form 8 ref of which is mentioned in the CLB order. Wud it not create problem. 


REPLY 3 

Did not get you whether Form 8 Challan is paid online or offline. If it is of offline payment and your client did not deposited money in Bank then Challan will expire. In such case you have to file Form 8 again. 

CA Anand Singh

Reply 4

Challan was paid offline on the very next day. But recently it came to light that MCA is showing as expired while we were trying to upload form 21.What i want to know is if we upload form 8 once again then pls info whether the present CLB order will remain effective or not.  

Date: 24/08/2011 

One of our clients has filed form 8 by the delay of 210 days and as per the requirement of the Company Law we will have to approach CLB for condonation of delay. Please help us what would be the procedure to make an application/petition to CLB for condonation of delay. 

A copy of draft application/petition would be helpful to us.

Reply 1

The Company has to file a petition with CLB (copy to concerned ROC) along with Affidavit and copy of Form 8 and challan. The fee for the same is Rs 200/-The concerned section is 141 of the companies act, 1956. The petition u/s 141 will be filed with ROC only after 24.09.2011 as per the notification issued by the MCA. 

  
CS SANDIP KUMAR KEJRIWAL

XBRL

Date: 23/12/2011

One of our clients is required to file their Annual report in XBRL format. The audited balance sheet and Profit & Loss account is in actual and notes on accounts is in thousands. As per XBRL taxonomies
the figures should be in the same format in BS & PL and Notes on accounts. 

As per our view we can give notes on accounts in thousand with foot note even balance sheet and profit and Loss account are in actual rupees. 

Please advice on the above matter. 

Ruchika Agarwal.

Reply1
Yes u can do it. 

Best Regards, 

Sumit Binani 

Date: 23/11/2011

Query: XBRL Applicability In Case of Holding & Subsidiary Company In case 
of Turnover / Paid Up Capital To: 

H Pvt. Ltd. (HOLDING) (Unlisted) Having Share Capital Of Rs. 15 Crs & Turnover is above Rs. 100 Crs. And having TWO Subsidiary 

S1 Limited (unlisted) having capital of Rs. 50 Lacs & turnover is less than Rs.100 Crs. AND also having subsidiary, A & B. 

S2 Pvt. Ltd (unlisted) having capital of Rs. 50Lacs & turnover is less than Rs.100 Crs. 

Query 

Is XBRL FILLING Applicable to H Pvt. Ltd. (HOLDING CO) Only? Is XBRL FILLING Applicable to Both Holding & Subsidiary?

Best Regards: Manish Buchasia

Reply 1 

Mr. Buchasia, MCA circular in this regard is very clear. If you go through the lines of circular, you will find that at present XBRL filing of financial documents is applicable for co. H only. 

CA. HARI RAM AGARWAL 

Reply 2 

XBRL filing is only applicable to Holding Company. In case the holding company would have been listed, it would have been applicable to its subsidiaries also irrespective of paid up cap or turnover. Also, note that for all Holding Companies who prepare consolidated as well as standalone financial statements, both needs to be filed in XBRL mode. 

Best Regards, Sumit Binani

Reply 3 

For the sake of convenience, I am reproducing below the relevant extract of General Circular no.09/2011 t. 31.03.2011, amended vide circular no.25/2011 dt.12.05.2011:- 

Coverage in Phase I: 

The following class of companies have to file the Financial Statements in XBRL form only from the year 2010-11:- (i) All Companies listed in India and their subsidiaries, having paid up capital of Rs.5 Crore and above or a turnover of Rs.100 Crore or above, excluding banking companies, insurance companies, power companies, Non-Banking Financial Companies (NBFCs) and overseas subsidiaries of these companies ; (ii) All Companies having a paid up capital of Rs. 5 Crore and above or a turnover of Rs.100 Crore or above. 

From the above, it is clear that XBRL filing is applicable as follows:- 

1) H Pvt. Limited (unlisted holding company) since it falls under the second category of companies; 

2) S-I Limited and S-2 Pvt. Limited are not covered under the circular as these companies have neither the paid up capital of Rs. 5 Crore and above nor a turnover of Rs.100 Crore or above. 

If the holding company was a listed company then the situation would have been different and in that case, both the subsidiary companies would be required to file the financial statements in XBRL form only as it would come under the first category of companies. 

CS. K. Krishnamurthy, 

Date: 10/09/2011 

A power company (manufacturing & distributing electricity), registered under the Companies act, 1956 and following schedule VI, Is XBRL applicable to it?

Abha Jain 

Reply: 1 

Specific exemptions have been given to certain category of business/companies which need different business rules and taxonomy. Banking, Insurance, NBFC & Power Cos are therefore exempt from XBRL filing this year because the current taxonomy and business rule which has been made available by MCA are keeping in view the requirements of Schedule VI. 

So if Schedule VI is applicable to a company, XBRL filing is applicable to such company even if its main objects categories it as a power company. 

Sumit Binani 

Reply: 2 

General qualify criteria laid as per Ministry’s general Circular 37/2011 dated 07.06.2011. 

Companies that are listed and all their Indian subsidiaries All companies having a paid up capital of Rs 5 crores and above All companies having a turnover of Rs 100 crores and above 

If your organization fits in any of the criteria. then XBRL fillings is compulsory. 

Sandeep Chandak 

Reply: 3 

Dear Ms. Jain 

Power Company is exempted from XBRL Mode of filing of Form 23AC & ACA till further circular of MCA. You are required to file said forms within 30th September, 2011 to avoid additional fee if your AGM had been held by July. 

Reply: 4 

MCA has clarified that if a power company draws up its accounts in accordance with Schedule VI it will be subject to XBRL filing. 

Kalidas

Reply: 5 

If the Power generating company followed Sch VI accounting The XBRL accounting is applicable to that company. 

Arup 

Reply: 6 

Is it governed by any other ACT other than Companies Act? If YES - XBRL is not applicable this year. If NO - XBRL is APPLICABLE this year, subject to the minimum criteria's specified. 

Venu