Ankur Shah & Associates

Time travel to CS 2014 and Origin history of CA and CS word

2011-10-13T11:18:00.002+05:30

Complimentarygift - Extract of Company Master Data of more than 59000 companies of Gujarat(RoC – Ahmedabad, Dadra & Nagar Haveli)

Link to Master Data (File Size: 10 MB)

WakeUp Call !!!

Ourthree basic demands from the Institute and Ministry of Corporate Affairs

1. If Banks, FIs, PEs, etc. appoints Nomineedirector to ensure proper use of their Money, why there should not becompulsory appointment of CS, to safeguard the money of thousands ofshareholders?

2. CS must be appointed by the Members, hemust be answerable to Members and only Members can remove him from the job(Then only CS can discharge his functions fairly).

3. CA, CWA should not be allowed to certifyE-forms, as they don’t know anything about the Company Law. They are majorthreat to Compliance system.

LastMails on the Corporate Governance - Inside Story and STP System – Reason fortriggered rate of false certification” was sent to over 15000 CS Members fromIndia by me. This time, I have target to send this mail all the CS Membersbefore the National Convention. If you don’t get the last Mail on wake up call,You can read the same from here.

Link to Last Mail

Iwould like to share here, some of the best replies received from the Members(Comments were moderated) on the last mail.

1. If CS are considered expert of Company Lawthen why CAs and ICWAs are certifying E-forms, which deals with Company law? IfCAs and ICWAs are allowed to sign the E-forms, why CS are not allowed tosign Tax Audit Report, Statutory Audit Report, Stock Verification Report,etc.?

2. Company has to pay penalty for Non-fillingof E-form 32 for Appointment of CS within 30 days, then why CA should not beliable to pay penalty for failure in filling Form 23B with the period of 30days?

3. If Ministry of Corporate Affairs is of theview that there is no need of Expert of Company Law for filling of E-forms orAppointment of CS u/s 383A matters or for any other reason, then why theParliament has established The Institute of Company Secretaries of India, whoseMembers are considered as an expert of Company Law?

Thisfight is not all about the Money and Low pay. But, It’s all about the “ThreeR(s)” of CS Community and that are Rights, Reputation and Respect.

ManyCS Members have shown their interest by Mail, Calls and SMS to be part of thismovement. Keeping in mind that approach, “Fight for Good and Eradication ofInstitute and MCA’s termites”, I have created the Group (i.e The RenaissanceGroup - Blueprint of the Future). Once you will become part of the Group, Youwill be given practical training on How to fight for your Rights, Reputationand Respects. This Group will also guide you on the problems related toConflict of Interest with Management, MCA, ICSI and any other bodies. To Jointhe Group, You have to click the following link, Fill the form and then submit.Your application will be reviewed by our Moderators and they will inform youabout approval-rejection of your application by Mail.

Click here to JoinGroup

Benefitsof Joining Group: I will send the Handbook on How to fightfor your right against Institute and MCA to Members only. Handbook topicincludes the common problems faced by him like No reply from Institute on yourqueries, even council; wrongly rejection of your e-form or putting non-sensequeries by ROC Officer; and non-support/encouragement by management and CA ofyour company, etc.

Hereis link for right to Information application as an example on how to fight withthe ROC Officer, when he knowingly rejects your e-form every time or putnon-sense queries in it.

Linkto RTI Application

Thiswill surely help. Remember one thing, If you want to get your work done inGovernment office, then there are only two methods, don’t resort on the thirdmethod.

1. If you give him money, then don’t salutehim;

2. If you salute him, then don’t give himmoney;

3. Giving the money and salute, both to theofficer (Only SLAVES adopts this method and you are not SLAVE, You are whitecollar professional, having more prestige than him in front of the generalpublic).

Moreover,In order to reveal the True picture of Corporates, Monthly instead of Bi-monthlymagazine called “Corporate Bible” will be published. First Issue will bepublished on the 1^st November instead of October, 2011. Topic -“Malpractice on allotment of shares in Promoters Quota”.

Important: Thisis the Last mail on Wake Up Call. From now onwards, I will not send any moremails to CS Members. But, I will continue this movement on my own with my Groupand colleague, who has given me support throughout the campaign.

Thisis a must read mail, not because It is last mail, but this mail will be real EYEOPENER to those CS also, who thinks that they are on such High position thatchange in rules and regulation will not affect their life. By this mail, theywill not only come to know about, how they are under rated all these years bytheir own company but also they will made aware about the future threats.

Click here to add, Corporate Bible Magazinein to Favorites List

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Time travel to Year2014 - ICSI Members situation analysis

Let’shave a look at the News Headlines of 2014

- Power Finance Corporation Limited’s Jobopening for CS - More than 1000 applications been received by the company sofar and still counting.

- ICSI’s placement camp - Rs. 36,000 Highestsalary offered to fresher cum rank holder of Institute.

- Unemployment rate reaches at its all-timehigh for CS Members- More than 10,000 CS are jobless as per the ICSI’s records.

- Election commission has received more than25,000 application from Members declaring candidacy for Central Council orRegional council – Looks like verybody wants to enjoy on Institute’s money.

- Company secretary has attempted suicide thinkingthat he is more worthy after being dead than living – His family will receivebenevolent fund help of Rs. 2,00,000.

- ICSI’s 9th International FellowshipDevelopment programme cum Euro Trip of 30 days - Estimated budget of Rs. 2.5Crore – Members will get 4 Credit Hour.

- Parliament will decide today - Whether todissolve the Institute or not.

- and so on…

Neithermy Imagination goes wild nor I am lunatic. I will show you, why this kind ofsituation will arise in the future:

Sr. No.	Particulars	2011	2010
1	CS Members	30,933	25,165
2	CS Students	1,55,680	1,11,292
3	CA Members	1,70,610	1,61,516
4	CA Students	N/A	8,74,694

(Source:Annual Reports - Wikipedia)

Ifwe calculate the growth keeping the current rate as constant, the position willbe as follows:

Sr. No.	Particulars	2014	2013
1	CS Members	43,458	38,802
2	CS Students	4,27,184	3,05,132
3	CA Members	1,97,112	1,88,325
4	CA Students	23,79,621	19,03,697

Imaginemaximum of 15 Lacs active companies will be there in 2014 (double the rate ofCurrent growth). If only CA and CS will be allowed to do practice at that timethen also there will be only 6.24 companies per professional.

Ifwe consider on and average pay of that time, It come to Maximum of Rs. 25,000per company. (This is too too much upper side calculation, because mostcompanies believe in annual filling with 1 Lac paid up capital only, NoRegister, No Minutes, nothing).

Conceptof service under one roof strikes mind of CA people. CA’s now are offering theROC work as combo offer with Statutory Audit.

Ihave not excluded in the calculation Lawyers and CWA but also excluded Half CAand CS (i.e. Students). 28 Lacs students posed the major threats to anyprofession, Even to Harvard University also. I know so many CA and CS students,who have started their own practice, though they are not become members ofInstitute.

Thereare professionals in India, who actually help these kind of students, by givingtheir Digital signature to students as gift.

Let’scome to other professionals i.e. CWA and Lawyer. CWAs are good and they mindtheir own business most of the time. So, they are not threat in any manner.But, Lawyers are major threat to us. Not because they are very large number in numbers,but they are greedy. For money, they declare Ajmal Kasab/Afzal Guru as victimand pray for his relief in court. Imaging, what can they do, If MCA allowscertification of them also in E-forms like Form 1??

Futurewill be more alike as follows:

Don’tbelieve me?? Ok, here is live example, why this will happen:

- Class 2 Digital signature concept was firstlaunched by MCA and then after few CS professionals and other have taken thefranchisee of the big companies and were selling the Digital Signatures at theprice of Rs. 1250 to Rs. 3000, then after;

- Class 2 Digital Signature concept wasintroduced by Income Tax in ITR IV, and some CA Professionals also applied forthe franchisee and prices of the Digital Signature went down to Rs. 650 to Rs.1250, then after;

- Income Tax made it compulsorily for firms,companies, etc. to file IT Return with Digital Signature only and so many CA’shave applied for the franchisee and price of Digital Signature went down to Rs.150 to Rs. 650.

Morale:Income tax made it compulsorily and CAs came into picture and they have madethe rate of Digital signature lesser than PVR Cinema’s movie ticket.

Timespan involved in this change – Approx. 1.5 year.

Yes,You understand it right within 1.5 year the market has collapsed, who is responsiblefor this?? I guess, you have your answer.

Stilldon’t believe me?? Ok, here is one more live example:

- Experts in MCA21’s seminar say that XBRLconversion price will be more than Rs. 1 Lac per company.

- In actual, current market rate of XBRLconversion is around Rs. 15000 to 25000.

- After One year, The price will went down toRs. 3500 to 7000 (Source: IRIS Software solution’s marketing officer speech onone forum – Leading company of XBRL conversion as well as service provider).

Whythis will happen, because every second professional is thinking to start hisown XBRL Conversion service.

Morale: Wake up Sid !! Wake up.. This is India. Here peopledo anything for money, from A. Raja, P. Chidambaram to Ambanis or Tata, Birla.If you will not fight for your right then you will be forgotten heroes after threeyears and the time starts now.

Onlyone thing can stop this, and that is securing your areas of services and makesit limited to CS only. Agree with me, then Let’s start first task, which willcost you Rs. 10 only, but will save your lot of money.

Hereis the Download link of RTI application, which I have designed, specifically topiss off the Ministry. This RTI application will allow only CS to certifyE-forms.

DownloadLink

Ifyou thinking that, You don’t want to appear your name before the ROC or RD andif appear they will call you to withdraw the application, then Don’t worry Chachu.I have the solution.

Writethe name of applicant as your office’s peon, driver, etc. and write down hishome address. Anybody can apply for this piece of Information.

Iwill file the RTI application, but if they will receive my application alonethey will give wrong reply (intentionally) like CS Institute. But, they willnot give wrong reply to 30,000 people.

Peopleshould not be afraid of the Government, Government should be afraid of thePeople. (V for Vendetta)

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Student’s try to drag down theCouncil under scope of RTI for misleading students by wrong advertisements

Oneof CS Students of Gujarat has written the following mail to GovernmentsInformation division on Right to Information Act, 2005 without disclosing thename of the Institute, But as we have one mutual friend and that person hasforwarded the copy of the same mail to me, I came to know about the entirething. The contents of the same are as follows:

I am Student and pursuing professional course, myinstitute is claiming after completing the said course fresh students are getting lucrativepackages. But I never seen any fresh student who is getting that much amount,so can I get some data from them through Right to Information. My Institute isa statutory body.

However,He didn’t get replied on the same from Government side and later on he left theCS Course. I couldn’t help him, as I came to know about this thing later on.

Thisis not the only one case. Thousands of students have been misguided by CouncilMembers so far. I would like to share one more case on the same.

Before3-4 months ago, ICSI Ahmedabad Chapter has published the advertisement in localnewspaper about the CS Course and Lucrative offers, students get after passingthe course, etc. as a part of the ICSI’s recent brand building programme.

Inthat Advertisement, Council Member Mr. Umesh Ved and Ahmedabad Chapter ChairmanMr. Rajesh Parekh mentioned that Fresher’s are getting salary of Rs. 3 Lacs onan average. Later on when one fresher approached Mr. Rajesh Parekh for job, hehas offered him salary of Rs. 10,000 p.m.

That’swhy, I considered Council Members advertisement as fake advertisement. Here isthe Link to the Mail sent by the Student:

Mailto NIC about RTI Application

Asthe person has instructed me, not to disclose his name in the Public, I am notwriting the name, But, If Council will set an enquiry on me for this, I will beglad enough to ask them for Disclosure of Placement Offers salary packages andSalary package offered to fresher’s, who are working under PCS or in unlistedcompanies.

FYI:ICSI has 1-2 months back issued the new poster, which says that “CS Course -Most COVETED profession available today”. I don’t understand that whetherfresher’s salary of Rs. 10,000 to 30,000 makes it most COVETED profession, thenwhat to call CA Course, whose 3 fresher members have been offered salary of Rs.70 Lacs p.a. in Placement 2010.

“CACourse - Most Most Most Most Most Most COVETED profession available today”.

TaxGuru Article on CA fresher Salary

Oneof the most famous CS Member’s view on CS fresher Salary in Delhi

Note:If anybody around you ask for the help on this kind of issue, Advise him tofile case for “Fraudulent Representation by Council and not Institute” underthe Indian Contract Act, 1872.

Wecan use one very famous statement for our GREAT GREAT GREAT COUNCIL MEMBERS ANDOFFICE BEARERS.

हाथी के दांत; दिखाने के अलग और चबाने के अलग |

Toall those CS Members, who thinks that they are on very high position in bigcompanies and considered that this Wake up call is non-sense anddoesn’t relate to them:

Youare getting salary of Rs. 50-70 Lacs after 20-30 years of service anddedication towards your company and while discharging your duties, you may havemissed so many moments with family like

i. On the day of AGM, EGM or Board Meeting,You were at the office and your family was partying at home as it your son’sbirthday;

ii. Company’s share price crashed due to changeof government policy, prosecution/scrutiny on the company, Labour strike, etc.and you have to run for office urgently though you are on vacation with yourfamily;

iii. Your wife has been admitted to Hospital andyou have to go to office urgently, because MD has called on urgent meeting todiscuss some issues and threats.

TheList is endless, I want to say, what is the meaning of that 50 Lacs salary,when the fresher CA is getting the initial start up salary of Rs. 70 Lacs? Whathave you earned from all these years donkey style hard work and doggy styleloyalty? What is the value of your dedication towards the company as comparedto fresher CA?

(Rs.70 Lacs start is just the beginning. In case of IIM’s in the first year only2-3 students get salary above Rs. 1 Crore and the numbers are increasing eachyear).

It’sadvisable to join your hands with me in this movement. I will not get benefitedby above demands, but It’s you, who will get benefited from above demands.

Lawof Supply and Demand will apply after acceptances of above demands, as No. ofCompanies are higher than No. of Members. I am pretty much sure that Fresher’s willget start salary of at least Rs. 10 Lacs.

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Origin of CharteredAccountant and Company Secretary word

CharteredAccountant: Unlike most other commonwealth countries,the word chartered does not refer to a royal charter, since India is arepublic. At the time of passing the Chartered Accountants Act, various titlesused for similar professionals in other countries were considered, such asCertified Public Accountant. However, many accountants had already acquiredmembership of the Institute of Chartered Accountants in England and Wales andother Chartered Societies of Great Britain and were practicing as CharteredAccountants. This had created some sort of brand value. This designationinherited a public impression that Chartered Accountants had betterqualifications than Registered Accountants. Hence the accountants were verystern in their stand that, the Indian accountancy professionals should bedesignated only as Chartered Accountants. After much debate in the IndianConstituent Assembly, the controversial term, chartered was accepted.When the Chartered Accountants Act, 1949 came into force on 1 July 1949, theterm Chartered Accountant superseded the title of Registered Accountant. Thisday is celebrated as Chartered Accountants day every year.

CompanySecretary: It was in 1960 that the Company Law Board started acourse in Company Secretaryship leading to the award of Government Diploma inCompany Secretaryship. As the number of students taking up the CompanySecretaryship course grew, the Government promoted on 4 October 1968, Instituteof Company Secretaries of India under Section 25 of the Companies Act, 1956 fortaking over from the Government the conduct of Company Secretaryshipexamination. The Institute of Company Secretaries of India (ICSI) has sincebeen converted into a statutory body w.e.f. 1.1.1981 under the CompanySecretaries Act, 1980.

(Source:Wikipedia)

Morale:Itwas the Wish of the Registered Accountant that they are to be designated asChartered Accountant only and they were firm in their view and that’s why eventhe assembly has to kneel down in front of their wish, But In case of CS,Institute’s proposal for change of name has been rejected by the MCA, itselfand not the assembly (now parliament) reason, Council was not firm in its approach,rather they were never firm on their approach.

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Iwould like to answer, some of the questions, which are being asked to mefrequently:

Q. What’sthe status of FIR, you are about to file against council?

A. I have visited the police station. But,they says that Indian penal code refers to those public servant, who areappointed by the State or Central government. It’s the matter of yourInstitute. We can’t touch this matter. After that I have discussed the casewith my 2-3 LLB friends. They says that I can go for Writ of Mandamus.

Q.Why do you oppose council always?

A.They are acting in such a non-sense manner, that irritates me a lot and I haveto oppose them. Moreover, In my entire life, I have never seen those guysworking for the benefit of Members or students. Some examples to it

(1) AnilMurarka’s visit of 2 days to meet CM of Kerala = Expense Rs. 37,760 and;

N.K. Jain’s Visit of 4 days to meet CM of Kerala + Mumbai Break journey = ExpenseRs. 30,511.

Istill don’t get, how expense of 2 days is higher than expense of 4 days.

Linkto download – Expense incurred by Council Members for travelling in Last 2Year

(2) Inreply to my RTI Application they have provided the expense details of everytrip but not of International Fellowship Development Programme.

Iam sure they are kidding with me because any one of the Council Member or atlast N. K. Jain remains present in any National programme (N. K. Jain is thatkind of person, who place the reimbursement voucher of Rs. 800/- also.) In thatcase, I cant digest that none from the Council or N. K. Jain or First classofficers of council went to International fellowship development programme torepresent the Institute.

(3) Inreply of my 4 RTI Applications, Sanjay Gupta signs them on the same day 29^thSeptember (i.e. last day for reply) and then courier 1 reply as on 2^ndOctober, 1 reply as on 3^rd October and 2 reply as on 5^th October.

Iam sure he thinks himself as over smart.

(4) WhenI told the Council that they are not proper authority to deal with some caseand the power has been granted to somebody else, still they decide my fate.

Idon’t know, what is wrong with them. Don’t they understand the simple English terms?

(5) Institutehas recently invited tenders on supply of TAB (Ipad, Galaxy Tab, etc.).

Idon’t understand that, ANY staff of ICSI including Council, don’t work in theoffice hours or even give reply of our emails. How do the new TABS will helpthe Members or Students? (કોના બાપની દિવાળી ???)

Q.If the current council will be dismissed as you say, Will you nominate yourselffor the next election?

A.First of all, after dismissal of the Council, I will try to amend The CompanySecretaries Act, 1982 by inserting some provisions like

(1) Rightto Recall – Provisions which will provide the facility to send the uselesscouncil members back to pavilion.

(2) MisconductRules for Council Members (Central, Regional and Chapter) – I don’t like to goto Police station every time to punish them. We shall have own set ofregulations, which penalize them in fast manner and appropriately.

(3) Termfor office shall be of maximum 2 years for any member.

(4) Provisionof 50:50 ACS and FCS members in Council - Old people have the experience butyoung have the enthusiasm and burning desire to do something and they are quitesuccessful. If you look at the top richest, top businessmen, etc they are theyoung people like Dhirubhai Ambani, Bill Gates, Mark Zuckerberg, Laxmi Mittal,etc.

Iwill nominate myself only in the case, If the candidates for the next councilwill have attitude like Manmohan Singh and not like Indira Gandhi.

Q.If the next council will not be upto your expectations, then what will you do?

A.Simple, Time’s wheel turn one more round. If they failed to prove their worthwithin 3 months of winning the election, I will make sure that they also getback to the pavilion.

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To Forgive and To Forgetapproach will cost you too much in the case of Council, Instead of that mottoYou need to concentrate on ToRemember and To Reprimand(Punishment).

Inthe Last, Right to Information Act is ब्रह्मास्त्र, Use it maximum time. Remember,this weapon has stopped the Sonia Gandhi from being Prime Minister in the past.Never under estimate its power. To learn, how to use it properly, Join my Groupor seek my Guidance.

Note:If you have ever raised your voice against Council and to suppress your voice,Council has issued show cause notice under Part IV, clause (2) of first Schedule of Misconduct for Defamation ofInstitute/Council, then Call me and seek my Guidance. You will not findany person having more knowledge than me on this, because I have received thesekind of notices and successfully won the cases also (I will not get shocked, IfI get one another show cause notice for these wake up calls).I will help you on how to defend yourselvesin these kinds of cases. I will charge Zero rupees from you and will provideyou 24*7 services.

BestRegards,

AnkurShah – 094276 33901

TheDark Knight

STP System - Reason for triggered rate of false certification and Credit hour

2011-09-25T03:09:00.001+05:30

Wake Up Call !!!

Our three basic demands from the Institute and Ministryof Corporate Affairs

(1) IfBanks, FIs, PEs, etc. appoints Nominee director to ensure proper use of theirMoney, why there should not be compulsory appointment of CS, to safeguard the moneyof thousands of shareholders?

(2) CSmust be appointed by the Members, he must be answerable to Members and onlyMembers can remove him from the job (Then only CS can discharge his functionsfairly).

(3) CA,CWA should not be allowed to certify E-forms, as they don’t know anything aboutthe Company Law. They are major threat to Compliance system.

Last Mail on the Corporate Governance - Inside Story andICSI’s successful attempt to hinder the Truth” was sent to over 5000 CS Membersfrom India by me alone. This time, I have target to send this mail to more than15000 CS Members. If you don’t get the last Mail on wake up call, You can readthe same from here.

Linkto Last Mail

I would like to share here, some of the best repliesreceived from the Members (Comments were moderated) on the last mail.

1. IfCS are considered expert of Company Law then why CAs and ICWAs are certifying E-forms,which deals with Company law? If CAs and ICWAsare allowed to sign the E-forms, why CS are not allowed to sign Tax AuditReport, Statutory Audit Report, Stock Verification Certificate, etc.?

2. Companyhas to pay penalty for Non-filling of E-form 32 for Appointment of CS within 30days, then why CA should not be liable to pay penalty for failure in fillingForm 23B with the period of 30 days?

3. IfMinistry of Corporate Affairs is of the view that there is no need of Expert ofCompany Law for filling of E-forms or Appointment of CS u/s 383A matters or forany other reason, then why the Parliament has established The Institute ofCompany Secretaries of India, whose Members are considered as an expert ofCompany Law?

Important: 2-3 CS are of theview that, I should not expose the ICSI or G. Jayaraman (CS of Satyam) in frontof the General Public. Reply to them and others who think the same, I am notexposing the ICSI, I am exposing the Council, who acts in contravention of theRules and G. Jayaraman, whose negligence in discharging duty has erodedthousands of Shareholders money.

Considered that, G. Jayaraman is ourprofessional brother, but that same brother has cheated the Thousands ofInnocent people of India. At that time our duty is not to conceal his mistakes butto kill him in front of the General public and should set out the example (Theway Nargis killed Sanjiv Dutt in Mother India movie).

Satyam Shares Prices:-

March 14, 2008 - Rs. 518 (52 week high at the time ofScam)

Januray 5, 2009 - Rs. 180

January 7, 2009 - Rs. 20

Tech Mahindra odder price: Rs. 58.90 (10%of the highest amount offered by Company)

This fight is not all about the Money andLow pay. But, It’s all about the “Three R(s)” of CS Community and thatare Rights, Reputation and Respect.

Many CS Members have shown their interestby Mail, Calls and SMS to be part of this movement. Keeping in mind thatapproach, “Fight for Good and Eradication of Institute and MCA’s termites”,I have created the Group (i.e The Renaissance Group - Blueprint of the Future).Once you will become part of the Group, You will be given practical training onHow to fight for your Rights, Reputation and Respects. This Group will alsoguide you on the problems related to Conflict of Interest with Management, MCA,ICSI and any other bodies. To Join the Group, You have to click the followinglink, Fill the form and then submit. Your application will be reviewed by ourModerators and they will inform you about approval-rejection of your applicationby Mail.

Click here to JoinGroup

Note: If you are thinking, to fight foryour rights against Institute, then please first be part of this Group.Because, If you tell Institute that, It is not working in professional manner,they will send you show cause notice for defamation of Institute. Problem is CouncilMembers don’t like to hear the Truth, It’s bitter.

Moreover, In order to reveal the Truepicture of Corporate, Bi-monthly magazine called “Corporate Bible” will bepublished by me. First Issue will be published on the 1^st October,2011. Topic - “Malpracticeon allotment of shares in Promoters Quota”.

Click here to add, Corporate Bible Magazinein to Favorites List

Please write your views, suggestions and feedback on thefollowing Links:

CAClub India

Blogger

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STP System - Reason fortriggered rate of false certification

Ministry of Corporate Affairs has first implemented the Straightthrough processing system in the Annual filling and shifted their majority ofthe burden on the professional’s shoulders. Ministry of Corporate Affairs’Annual filling Instruction kit is not clear till today, there are severalimportant things missing in it like Form 23ACA’s

i. Power and Fuel – which Manufacturing Companies are using formanufacture of goods OR Other companies are using for their vehicles/officeitems like Computer, Light, etc. OR both (because Power and fuel amount will bematerial in case of Manufacture companies only and not for other companies).

ii. InsuranceExpense – which Employee’sInsurance OR Stock OR Keyman Insurance OR Marine OR Fire OR anything else oreverything. (because IT & Factory Companies have material amount inEmployees’ Insurance amount, Export oriented companies have material amount inFire Insurance, Trading companies have material amount in Stock Insurance andso on).

iii. Rent – Which Rent paid or Rent received (Only twoperson can write the figures correctly, 1.who hasn’t applied any logic and justentered the figures of rent paid or 2. Who knows the Rule of ejusdem generis)

Ministry of Corporate Affairs might think that Annualfilling STP scheme was effective, but, I am sure they have never looked at thefilling done by the professionals. Most of the listed companies Annual returnsare defective in presenting the List of shareholders. Private companies don’tcare about filling. Those who are filling, many a times provide the false data.

Then after Ministry of Corporate Affairs implemented theSTP system in DIN also, But after a week of its implementation, we start seeingnotice on MCA website about generation of notice to professionals, who are guiltyof false certification. Ministry ofCorporate Affairs came to know that its STP system was failure in case of DINand plan to shift the responsibility on professionals’ shoulders is worthless,still they have done a daring job to introduce it in other segments like Incorporationof the Company (including Name approval), Major routine type of E-forms, etc. instead of looking into the facts of Annualfilling STP system. We can interpret this decision in Gujarati Bapu’sLanguage (વાયડીનાઓનીનકામી હોશિયારી!!).

Ministry ofCorporate Affairs’ weakness as per their Strategic plan:

i. Ineffective lawnot acting as a deterrent against corporate frauds (How it will act, If youdon’t enforce the major provisions like Appointment of Company Secretary andprovides a simplified clearance system for Non-attachment of subsidiary’sbalance sheet, Managerial remuneration, etc).

ii. Creation of large number of inoperative companies by stakeholders (Stillyou want to create more and more company in 24 or 48 Hours, instead working on re-functioningof that companies).

iii. Poor level ofethics in companies/ professionals [Have you ever think aboutMinistry’s own ethical system, Gujarat’s ROC (Highest authority of Gujarat) iscaught in Corruption case, If he is corrupt, who else will not be corrupt?].

iv. Initial Act isold which needs rapid changes in the emerging environment (We alwayshear that in this monsoon, winter, summer, etc. session it will be tabledbefore the parliament, actually when it will be tabled before?).

v. Inability totrack down and punish the companies and individuals involved inCorporate Frauds (How will you track down, if you have STP system everywhereand Reliance on professionals only).

Linkto Strategic Plan of MCA

I have applied under the Right to Information Act, 2005for the details of Forms filed by the CS, CA and CWA and marked as the “Waitingfor user clarification” and/or “Required Resubmission” for the period of oneyear, But Ministry has provided the data for only 1 day and at that time therewere 238 E-forms in Gujarat-ROC only having that status.

If at the end of 1 day these much forms are defective,then how many at the end of 1 year and how many at the end of 1 year acrossIndia???

Linkto Ministry’s reply of RTI Application

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Comparison of CA and CSas Compliance Officer in the E-form matters

Everybody says that CA Institute has great lobbying powerand by that they have not only created their place in every filed but also theyare succeeded in changing the law as well as hold the change in the law.

CA Institute has made their place in MCA E-form systemand they have held the law from changing with regard to the Tax Audit Limit ofRs. 40 Lacs. Currently it has been raised to 60 Lacs. But, If we compare the valueof 40 Lacs at the time of effecting the law and current limit of Rs. 60 Lacs,they both have very high difference.

But, I don’t agree with this, CA Institute doesn’t havegreat lobbying power, But CS Institute’s council was/is failed to convey theTruth to the Authorities.

How is it possible that, knowledge level of CA, who haslearned the Company Law (as minimum 40 marks to obtain category subject) isequal to CS, who has learned the Company Law (as maximum marks to obtaincategory subject). CA Course provide Company Law as complimentary subject foronly 1 time and CS Course provides Company Law as primary subject every year.

Linkto Subjects of both the Course

If CA shall be considered as an expert of Company Law andare authorized to sign the E-forms, after learning only 1 subject, then why CSshould not be considered as expert of Income Tax after learning that subject 2times? Why they should not be allowed to sign Tax Audit Report, Statutory AuditReport or other reports, etc?

Why Ministry of Corporate Affairs, RBI, SEBI and othersforgot their own record that all professionals have same level of knowledge andthey shall be authorized to sign also? (MCA and RBI’s reply on question about,why CAs are authorized to sign Secretarial Report?)

To all CAs: Your Institute is not great, but wehave great persons in the Council, who cares about themselves only. God forgotto gift them with one thing, namely Intelligence. Because They are suchdumb that, When one person replies to all the Council Members in writing, inlegal matter that Council has not power to decide the matter, then also, theyrepeat the same thing and again decide that very same matter in Council’s meetingand notifies to that person after one month of the decision.

*************************************

Credit Hours andProfessional Development Programme

In the year of 2007, Guidelines for Compulsory Attendance of Professional DevelopmentProgrammes for the Members has been issued by the Institute, which aims at

i. Constantly upgrade professional competence andskills.

ii. Sensitize them to new and emerging opportunitiesfor service.

iii. Assure users of professional services that theypossess adequate skills commensurate with their professional responsibilities.

iv. Improve their level of confidence to meetever-changing demands on the profession.

As per that Guideline, Members in practice has to securecertain amount of Credit Hours on year wise basis later on the same was amendedand made applicable to Members in employment too.

As per that Guideline, Credit of only that programme willbe given which has been considered as anyProfessional Development Program, Continuing Education Program or anyParticipative Certificate Program of the Institute or other bodies with whomMOU has been signed by the Institute.

Institute isorganizing the National Convention, International fellowship developmentprogramme, etc. every year and awards members with the certain amount of credithours.

But thequestion is, Are those programme satisfies the condition laid down in Section2.1 of the Guidelines or meet the objectives of the Credit hour guidelines?

Institute is organizing the International fellowshipdevelopment programme - Australia in the Month of November, 2011 and will award4 credit hours, who will attend the programme. (As per the Guidelines ofInstitute, 4 Credit Hour means learning programme of more than 4 hours but lessthan single day).

For that 4-6 hours Institute is spending approximatelyRs. 41.10 Lacs (15 Council Members * Rs. 1,65,000 (average of Australia Tour) +15 Council Members * Rs. 1,09,000 (New Zealand Tour) - Double Occupancy

For that 4-6 hours Institute is spending approximatelyRs. 51.45 Lacs (15 Council Members * Rs. 2,02,000 (average of Australia Tour) +15 Council Members * Rs. 1,41,000 (New Zealand Tour) - Single Occupancy

Institute is that much rich, that It can spend Rs.41.10 – 51.45 Lacs for 4-6 hour training programme and that on Internationalprogramme, when CS are been considered as Personal secretary by half of theIndians in their home country.

More shocking thing is that, Institute in its brochure ofInternational fellowship development programme, nowhere mentioned, when willthey hold seminar during the tour and for what time period? Their concentrationis only on sight-seeing, Food and enjoyment only.

In that scenario, how they will develop theprofessionals? How this programme qualifies for approved learning programme?

If Narendra Modi’s Sadbhavna Mission fast expense of Rs.60 crore can be considered as the Personal expenditure and not the state’sexpenditure in the Public Interest Litigation (PIL) then why this programme’sexpenditure shall not be recovered from the Council members’ own pocket?

This money can be utilized for so many good things like

1. Fillingof Writ of Mandamus against Ministry of Corporate Affairs for effecting Section383A.

2. 410study circle meeting can be held free of charge throughout the India (per SCMexpense is 50 person * Rs. 250 for half day).

3. Extragrants to needy students for coaching fees.

4. Contributionto Members benevolent fund.

The options are endless. But these options are only forthose councils, who actually care about their members. These options are notfor our council members. I forgot that they will never change. I am justwasting my time.

Linkto IFDP Brochure

Next mail topic “LucrativePackage offers by Institute - Factsheet and History of CA and CS Word”.If you don’t want to receive mails from my side any longer, please sent theMail to me with regard to that.

Best Regards,

Ankur Shah

The Dark Knight

Corporate Governance - Inside Story and ICSI's successful attempt to hinder the Truth in Satyam Scam

2011-09-11T00:16:00.000+05:30

Wake Up Call !!!

Our three basic demands from the Institute and Ministryof Corporate Affairs

(1) IfBanks, FIs, PEs, etc. appoints Nominee director to ensure proper use of theirMoney, why there should not be compulsory appointment of CS, to safeguard the moneyof thousands of shareholders?

(2) CSmust be appointed by the Members, he must be answerable to Members and onlyMembers can remove him from the job (Then only CS can discharge his functionsfairly).

(3) CA,CWA should not be allowed to certify E-forms, as they don’t know anything aboutthe Company Law. They are major threat to Compliance system.

Linkto Last Mail

I would like to share here, some of the best repliesreceived from the Members (Comments were moderated) on the last mail.

2. Companyhas to pay penalty for Non-filling of E-form 32 for Appointment of CS within 30days, then why CA should not be liable to pay penalty for failure in fillingForm 23B with the period of 30 days?

3. IfMinistry of Corporate Affairs is of the view that there is no need of Expert ofCompany Law for filling of E-forms or Appointment of CS u/s 383A matters or forany other reason, then why the Parliament has established The Institute ofCompany Secretaries of India, whose Members are considered as an expert ofCompany Law?

Satyam Shares Prices:-

March 14, 2008 - Rs. 518 (52 week high at the time ofScam)

Januray 5, 2009 - Rs. 180

January 7, 2009 - Rs. 20

Tech Mahindra odder price: Rs. 58.90 (10%of the highest amount offered by Company)

This fight is not all about the Money andLow pay. But, It’s all about the “Three R(s)” of CS Community and thatare Rights, Reputation and Respect.

Click here to JoinGroup

Click here to add, Corporate Bible Magazinein to Favorites List

Please write your views, suggestions and feedback on thefollowing Links:

CAClub India

Blogger

*************************************

STP System - Reason fortriggered rate of false certification

Ministry ofCorporate Affairs’ weakness as per their Strategic plan:

ii. Creation of large number of inoperative companies by stakeholders (Stillyou want to create more and more company in 24 or 48 Hours, instead working on re-functioningof that companies).

v. Inability totrack down and punish the companies and individuals involved inCorporate Frauds (How will you track down, if you have STP system everywhereand Reliance on professionals only).

Linkto Strategic Plan of MCA

If at the end of 1 day these much forms are defective,then how many at the end of 1 year and how many at the end of 1 year acrossIndia???

Linkto Ministry’s reply of RTI Application

*************************************

Comparison of CA and CSas Compliance Officer in the E-form matters

But, I don’t agree with this, CA Institute doesn’t havegreat lobbying power, But CS Institute’s council was/is failed to convey theTruth to the Authorities.

Linkto Subjects of both the Course

*************************************

Credit Hours andProfessional Development Programme

In the year of 2007, Guidelines for Compulsory Attendance of Professional DevelopmentProgrammes for the Members has been issued by the Institute, which aims at

i. Constantly upgrade professional competence andskills.

ii. Sensitize them to new and emerging opportunitiesfor service.

iii. Assure users of professional services that theypossess adequate skills commensurate with their professional responsibilities.

iv. Improve their level of confidence to meetever-changing demands on the profession.

As per that Guideline, Members in practice has to securecertain amount of Credit Hours on year wise basis later on the same was amendedand made applicable to Members in employment too.

Institute isorganizing the National Convention, International fellowship developmentprogramme, etc. every year and awards members with the certain amount of credithours.

But thequestion is, Are those programme satisfies the condition laid down in Section2.1 of the Guidelines or meet the objectives of the Credit hour guidelines?

In that scenario, how they will develop theprofessionals? How this programme qualifies for approved learning programme?

This money can be utilized for so many good things like

1. Fillingof Writ of Mandamus against Ministry of Corporate Affairs for effecting Section383A.

2. 410study circle meeting can be held free of charge throughout the India (per SCMexpense is 50 person * Rs. 250 for half day).

3. Extragrants to needy students for coaching fees.

4. Contributionto Members benevolent fund.

Linkto IFDP Brochure

Best Regards,

Ankur Shah

The Dark Knight

Change of Email Address

2011-04-09T13:40:00.000+05:30

Our Email address has been changed with effected from 01/03/2011 to the Following Email Address. Kindly contact on the new Email Addresses. Sorry for the inconvenience caused to you.

Sr. No.	Old Email Id	New Email Id
1	ankur@csankur.com	ankur@csankur.in
2	dsc@csankur.com	dsc@csankur.in
3	ankur.shah@csankur.com	ankur.shah@csankur.in

Conversion of Company into Firm

2009-10-11T17:14:00.001+05:30

Question
Can Private Company be coverted in the Partnership firm?

Answer
Private company can not be converted to Partnership/Propreitor ship firm.

It has only 2 options
(1) Convert it as the Public Company
(2) Convert it as the LLP

And LLP is the extended form of Partnership.
So, By converting it into LLP, you would get all the benefits of the Partnership Firm.

Plus Extra benefit of Limited Liability.

Permission of Central Government

2009-10-11T17:08:00.000+05:30

Question
If after appointing the Additional Director the limit for the directors is going to extend beyond 12. In such case is permission of Central Government is required?

Answer
Central Government permission is required.

First we elaborate the provision of Section 260 & then understand why CG approval is required.

Section 260 ADDITIONAL DIRECTORS:

Nothing in section 255, 258 or 259 shall affect any power conferred on the Board of directors by the articles to appoint additional directors:

Provided that such additional directors shall hold office only up to the date of the next annual general meeting of the company:

Provided further that the number of the directors and additional directors together shall not exceed the maximum strength fixed for the Board by the articles.
---------
Section 260 clearly says that the no. of directors & additional directors should not exceed the limit fixed by board. (see the highlited word of section 260)

So, Approval must be taken.

Pledging of Share in Lock-In Period

2009-10-11T17:04:00.000+05:30

Question
Can Prmoter pledge their share in the Lock-In Period?

Answer
Lock-in period is given so, that promoters do not sell their shares. But, If they require mony or they simply want extra money then they can pledge shares.

Sleeping Directors

2009-10-11T17:00:00.000+05:30

Question
What are the Duties and Responsibilities of Sleeping Director? How they get their salary?

Answer
There is no concept of Sleeping director under the companies act, 1956.

However, there is provision related to Independend Director (Non Executive Director) in the companies act, 1956, who gets the salary on the basis of attending the board meetings & not on the monthly basis.

Independent director is not liable for any act of the company. He is liable if, there is something wrong doone by company in the board meetings.

Section 265: Proportional System of Representation

2009-10-11T16:56:00.000+05:30

Question
Why the Company Act, 1956 provides for the Proportional Representation System for Director's Appointment?
Why the Option is Available to Public Company Only?

Answer
The Logic behind that System is as follows:

From Centuries, People are doing business in the Partnership.
After the "Company" came into the existence. That Concept also embedded into the Company Act, 1956.

I am clarifying the whole situation as a example:
Mr. A from India and Mr. B from Japan entered into the Joint Venture and Incorporated the Company. Because of the Restriction of FEMA Mr. B holds the 24% Equity share capital of the company. Mr. A holds the 76% Equity share capital of the Company.

The Business runs well for 3 years, then after because of the Misunderstanding between Mr. A & Mr. B, the conflict arises. Both of them are not ready to sell the Shares at the Market Value/Net Assets Value. Both of the person wants very high amount to sell the shares.

As, the Mr. A has 76% shareholding, He can do anything in the Company. Because he can pass Special as well as Ordinary Resolution in the company.

Because of the Conflict Mr. B's director retires by rotation in the Annual General Meeting. Though Mr. B wants to continue the Directors. They can not do so, because they have only 24% Share holding, they can not go against the Mr. A.

Now, Mr. B can not go to CLB in order to appoint the Director for Small Shareholder, because he is not small shareholder.

Mr. B can not go to CLB under Oppression & Mismanagement.Mr. B can only do one thing that is sell the shares at the price offered by Mr. A.

Mr. B can do anything in that situation except selling the shares at very less value.

But the Situation will be inverse if there is Proportional Representation System in the Company.

Proportional System means the Appointment of Director as per shareholding.

So, If the Company has 4 Directors, then Mr. A can appoint only 3 directors and 1 director will be appointed by the Mr. B.

Cummulative Vote
e.g. Suppose the Company has the Cummulative voting system then, Mr. A can appoint 3 Directors as he has 76% Voting in the company and Mr. B can appoint 1 director as he has 24% Voting in the company.

(Note: Cummulative Voting System means for each share there is 1 vote)

Single Vote
e.g. In the Single Vote system Mr. A can appoint 2 Directors and Mr. B can appoint 2 Directors.
(Note: Single Vote system means 1 person 1 vote)

The Legislator has applied this provision for Public Companies only.
Because In 95% private Companies most of the Shareholding is divided between the Brothers/Family.

And It is General Rule that Every Family has certain dispute, And If the Legislator gave the power to the Private Company also, then they will use this section for their personal benefits.

And as the Company Act, 1956 is created for the purpose of Regulisation of the Companies and not as a medium for Family wars. The legislator has not given the power to Private Companies.

Imagine the Ambani Brothers Dispute with this section.

Professional as MD/WTD

2009-10-11T16:48:00.000+05:30

Question
Can practising CA/CS/CWA can handle the post of MD or Whole Time Director in Company without surendering his Certificate of Practice.

Answer
It is not possible.
As MD/WTD shall have to carry on the routine business of the company and CS/CA/CWA can not handle the routine business of any company.

However, CA/CS/CWA can be the Independent director & chairman also.

Automatic Re-Appointment of Director

2009-10-11T16:41:00.000+05:30

Question
Section 256 Filling of Vacancies of Directors.
If a director is not appointed at the adjourned meeting then he/she shall be deemed to be reappointed.
However, there is one exceptionUnder Section 256(4) (b) (iv) is as follows:
He/She shall not be deemed to be reappointed, A Resolution, whether special or ordinary, is required for his appointment or re-appointment in virtue of any provisions of this Act.
So, What does that mean?

Answer
It simply means that provision of automatic re-appointment is not applicable to additional directors.
This provision is applicable to normal & director in casual vacancy.

For Your Information (FYI): The section 256(4) will be applicable only, if the resolution has put amongst the generaal meeting. But before the members approve/reject the same resolution, the meeting is adjourned.

Adjournment of Meeting

2009-10-11T16:29:00.000+05:30

Explanation of "Adjourned Meeting" in context of The Companies Act, 1956

Meeting can be adjourned for the following purposes only,
A duly convened Meeting should not be adjourned arbitrarily by the Chairman. The Chairman may adjourn a Meeting with the consent of the Members and shall adjourn a Meeting if so decided by the Members.

Meetings may be adjourned for want of requisite Quorum. The Chairman may adjourn a Meeting in the event of disorder or other like causes, where it becomes impossible to conduct the Meeting and complete its business.

If & if only it is impossible to complete the business in meeting, then whatever be the cause, meeting can be adjourned.

Some examples of reason:
(1) Flood, earthquake, like natural disaster
(2) members inappropriate behaviour, police investigation, death of director, etc. man made reason

(1) Only Valid Meeting can be Adjourned

Answer
The above statement is true.
Suppose there is valid meeting is going on, and the earthquake happens. So, it is impossible to complete the business, because every members will run away from the meeting spot to save their life.

(2) A Meeting can be Adjourned only if it is invalid

Answer
The above statement is true.
Suppose, there is quorum of 5 members & 6 members are present in the meeting. the chairman started the meeting as requisite quorum was present, but after 30 minutes of the meeting, it is discovered that 3 person was not the shareholder of the company.
So, the meeting will be adjourned, as it is invalid.

(3) A Valid meeting can be automatically Adjourned

Answer
The above statement is true.
Only chairman shall have power to adjourn meeting.
Now, In a valid meeting the chairman dies after 30 minutes of meeting start.

So, This is the case of automatic adjournment, Because chairman is died & nobody can announce on behalf of him in the meeting.

(4) A Valid meeting Can be Adjourned by Chairman

Answer
The above stement is true.
According to The Companies Act, 1956 Chairman shall have a right to adjourn the valid meeting.

Question
How to adjourned meeting, In which no quorum is present?
Because The Companies Act, 1956 says that Meeting can be adjourned by Chairman after taking approval from Quorum. But If there is no quorum is present, then It means NO MEETING, NO QUORUM & NO ADJOURNMENT

Answer
The Concept of NO MEETING, NO QUORUM & NO ADJOURNMENT is wrong. I would clarify this by one example.

Because if the chairman has to ask the quorum for adjournment, Then in case of No Quorum, How the Meeting will be adjourned?

Does everybody shall have to go to the home without declaring any thing or chairman shall have to declare the meeting as adjourned using his common sense?

So, even where no quorum is present the meeting is the valid Meeting.

Director Identification Number

2009-10-11T15:57:00.000+05:30

Question
Can any person cancel his DIN allotted by MCA?

Answer
DIN given to Director is such a thing which can not be issued again & again. It can be issued only once in the life time of the director.

DIN is a special kind of unique number which can not be cancelled, once allotted.

So, Director can not cancel the DIN. However, it is possible that Director does not uses DIN.

Additional Director

2009-10-11T15:51:00.000+05:30

Question
If Board of Directors of company appoints a additional director Just before the Annual General Meeting. Whether Additional Director retire in that Annual General Meeting?

Answer
Yes, The Additional Director will retire in the same Annual General Meeting.

Share Application Money

2009-10-11T15:46:00.000+05:30

Question
Suppose Company's Balance Sheet reflects that there is share application money pending allotment. As Any subscripttion received by a company against issue of share capital can be regarded as “subscribed share capital” only when the share capital is actually subscribed and allotted as well.
So, will it be correct to provide under Point13 of the Secretarial Compliance Certificate that “The Company has not issued any equity shares during the financial year.”

Answer
Company has recieved the share application money & didn't allotted the shares and Point no. 13 says about the allotments made during the year.

As company has recieved the share application money, it can not be considered as allotment.
When company in future allotes shares, At that time the Point 13 will be applicable.

Notice of Board Meeting

2009-10-11T15:39:00.000+05:30

Question
(1) The Private Limited Company shall have 4 director namely A, B, C and D. If no notice for board meeting had sent to Mr. A than what is the liabilty of rest 3 directors
(2) How Company can rectify his mistake?

Answer
Section 286 provides the provision related to board meetings notice.
If notice is not given, every officer of the company is liable for punishment upto 1000 Rs.

To rectify the mistake do this.
(1) Insert in the minutes of board meeting that, due to oversight Company could not give the notice to director
or
(1) Convience the director about the mistake made by company & insert in minutes that the director has taken the Levae of absence.

Information Memorandum

2009-10-11T15:30:00.000+05:30

Question
What is the Information Memorandum? What is the use of It?

Answer
First of all let us understand the simple meaning of the Information Memorandum : Section 60B(3) declares that ``the information memorandum and red-herring prospectus shall carry same obligations as are applicable in the case of a prospectus.''

So, It is one type of Prospectus.

Financial Companies need much more money to carry on their business and they shall have to come with IPO again & again.

So, the concept of Information Memorandum comes into existence.

Those company, which have filed the Prospectus with SEBI, and carry out the IPO and again want to come with the new IPO in the same year, they can do the same by filling the Information Memorandum only & they need not to file Prospectus again.

Information Memorandum is the Crux of the changes happended in the company after filling the Prospectus with the SEBI.

Jammu & Kashmir Company Incorporation

2009-10-11T15:26:00.001+05:30

Question
(1)What is the Procedure for the Incorporation of Company in Jammu & Kashmir, as most of the Laws are not applicable to that state of India.
(2)How to file forms with Jammu & Kashmir ROC Office?

Answer
(1) The procedure for the company Incorporation is same throught the India, as The Companies Act, 1956 is applicable to whole India including the Jammu & Kashmir.

(2)The person can file form Electronically by visiting the MCA site. One can file all e-forms from your delhi office and person shall have to courier the necessary documents, if any to Kashmir ROC office.
However, the E-forms will be processed in Kashmir ROC, though it is filled from Delhi

Allotment of Further Shares

2009-10-11T15:19:00.000+05:30

Question
(1)There are two promoters, promoting a company with a authorized share capital of Rs. 20Lacs. The two promoters are also the two directors in the company and each buys share worth Rs. 1 Lac from the authorized capital. After the company is incorporated, how can we add additional investors and issue the remaining shares?
(2)Suppose a investor could be added and one investor buys share worth Rs. 10 lacs from the authorized share capital and becomes the majority share holder. Will he/she become the director by default or there is some other procedure for the majority share holder to become the director?

Answer
1) The person can get the additional shares by applying to the company & company can allot shares to the person in the board meeting.
So, person can get additional share by way of passing board resolution. After Passing Board Resolution Company has to file E-Form 2 for Issue of Shares.

(2) In company act or any other act, there is no provision related to being director by default after incorporation or Acquiring Majority Shares.
The person has to be appointed as director in meeting.
Nobody can become by default director by way of shareholding in the company.

e.g. Suppose a person holds the entire share capital, then also it is not necessary/compulsory that, he becomes the director.

Holding & Subsidiary Company

2009-10-11T15:08:00.000+05:30

Question
Whether a Public company can be a subsidary of a private company?

Answer
Yes, Public Company can be the subsidiary of the Private Company.
Because Section 4 doesn't say that Public Company can't be the subsidiary of the Private Company.

Bonus Issue

2009-10-11T14:58:00.001+05:30

Question
(1) In Private Company, How many times bonus shares can be issued?
(2) After considering the profit, i.e AGM Date is 30/9/2009, Is it possible to issue bonus share on1/10/2009?

Answer
(1)There is no fixed Number of times for issue of bonus shares.
Company can anytime issue the Bonus shares, if the company has free reserves. Company can Issue bonus shares for N no.of times.

(2) Yes, It is possible to issue the Bonus shares as on 1/10/2009.

Question
Which date we have to see for the purpose of Calculation of Free Reserve?

Answer
The date on which the resolution is passed for Bonus Issue shall be the Deciding date for calculation of Free reserve.

Public Financial Institution of India

2009-10-11T14:49:00.001+05:30

List of Public Finacial Institution Under Section 4A of The Companies Act
1	Industrial Credit and Investment Corporation of India
2	Industrial Finance Corporation of India
3	Industrial Development Bank Of India
4	Life Insurance Corporation
5	Unit Trust of India
6	Infrastructure Development Finace Corporation
7	The Industrial Reconstruction Corporation of India
8	The General Insurance Corporation of India
9	The National Insurance Company Limited
10	The New India Assurance Company Limited
11	The Oriental Fire and General Insurance Company Limited
12	The United Fire and General Insurance Company Limited
13	Tourism Finance Corporation of India Limited
14	IFCI Venture Capital Funds Limited
15	Technology Development and Information Company of India Limited
16	Power Finance Corporation Limited
17	National Housing Bank
18	Small Industries Development Bank of India
19	Rural Electrification Corporation Ltd
20	Indian Railway Finance Corpn Ltd
21	Industrial Finance Corporation of India Ltd
22	Andhra Pradesh State Financial Corporation
23	Assam Financial Corporation
24	Bihar State Financial Corporation
25	Delhi Financial Corporation
26	Gujarat State Financial Corporation
27	Haryana Financial Corporation
28	Himachal Pradesh Financial Corporation
29	Jammu & Kashmir State Financial Corporation
30	Karnataka State Financial Corporation
31	Kerala Financial Corporation
32	Madhya Pradesh Financial Corporation
33	Maharashtra State Financial Corporation
34	Orissa State Financial Corporation
35	Punjab Financial Corporation
36	Rajasthan Financial Corporation
37	Tamilnadu Industrial Development Corporation Limited
38	Uttar Pradesh Financial Corporation
39	West Bengal Financial Corporation
40	Indian Renewable Energy Development Agency Ltd
41	North Eastern Development Finance Corpn Ltd
42	Housing & Urban Development Corpn Ltd
43	Export-Import Bank of India
44	National Bank for Agriculture & Rural Development NABARD
45	National Co-operative Development Corporation NCDC
46	National Dairy Development Board
47	Pradeshiya Industrial and Investment Corporation of UP Limited
48	Rajasthan State Industrial Development and Investment Corporation Limited
49	SICOM Limited
50	West Bengal Industrial Development Corporation Limited
51	Tamil Nadu Industrial Development Corporation Limited
52	Punjab State Industrial Development Corpn Ltd PSIDC
53	EDC Limited
54	Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd
55	Tamil Nadu Urban Finance and Infrastructure Development Corporation Limited
56	Kerala Power Finance Corporation Limited
57	Kerala State Power & Infrastructure Finance Corporation Limited

Shareholder's Right to Get the Board Meeting's Minutes

2009-10-04T23:08:00.001+05:30

Question
Can a shareholder demand the information related to company and its activities like granted permission to call AGM in other city and procceedings of meetings of Executive committee?

Answer
Shareholder can not also ask the details from the Board of Directors.

The details are the Confidential one & part of the administration.

Shareholders can not interfere in the company's administration, they can interfere only when directors behave wrongly in the company (i.e. Oppression & Mismanagement)

And these are not such kind of cases.

Issue of Bonus Share

2009-10-04T23:04:00.000+05:30

Question
In a public company’s shareholding pattern there are 10 shareholders. Is it possible to issue bonus shares to only 4 members with the consent of all members through a general meeting?

Or is it necessary to issue bonus shares to all 10 shareholders?

Answer
Company can not do like that. Comany has to issue the Bonus shares to all the shareholders.

Because In eyes of the law, Every shareholder is equal.

However, It is possible that other 6 Shareholder gave away their right to bonus shares.

The Procedure for that is as follows:
(1) Pass resolution giving the bonus shares to all.
(2) At the time of Exercising the Bonus Issue option, the other 6 Shareholder will not exercise the option (It is one kind of consent)
(3) Remaining 4 shareholder will exercise the option.

Question
Whether ROC will approve the above mentioned Procedure?

Answer
Yes, ROC will approve the same.

And The act says the Issue of Bonus Shares to the shareholders. Act has nowhere mentioned that the Person has to take the bonus shares compulsorily. It is person's own choice, whether to take the bonus shares or not.

Some person doesn't want to take the shares because of the Income Tax Management or They want to help the company indirectly.

Stamp Duty on Share Certificate

2009-10-04T22:59:00.000+05:30

Question
Stamp duty payable on share certificate is Rupee 1 for every 1000 rupees consideration amount. But What is the effective date for the calculation of Stamp Duty?

Answer
Allotment Case:
Date of Passing the resolution for allotment of shares

Transfer Case:
At the time of signing the transfer deed.

Scanned PDF Documents

2009-10-04T22:56:00.000+05:30

Let's understand, How to select the text of the scanned PDF Documents.

Do the following steps to Select the Text.

Open the PDF Document
- Hit the "Document" tab.
-- Select the "OCR Text Recognition Option".
--- Press the "Recognize text using OCR" option.

Now, It is done. You can select the Text of the Scanned PDF document.

This option is best available with the Adobe Acrobat Reader Version 8. It may not be working in the batter manner in the other version.

Currently this feature recognises the Microsoft Core Font family & some other very well known fonts. It currently doesn't cover all types of fonts.

There is no way to copy the Tables/symbols, etc. Only the Text can be copied.

Section 293A Loophole

2009-10-04T22:53:00.000+05:30

Question
Section 293A is about the contribution by Company to the Political Party. The company Law prohibits some of the companies to contribute but not to all the companies.

So, Consultant's advised the Directors to form the Political party & Give the contribution to the Director's Political party from the Company and by that way Director's can get extra money.

So, Whether the option advised by the Consultant is viable or not means Is it Practical or not?

Answer
The Option Advised by the Consultant is not viable.

Because the Procedure for forming the Political Party is so, tough that for most of the person the Option is not viable or Practical.

Look at the Procedure for forming the Political Party in India.

Procedure:
For the purpose of registration of any association or body of individual citizens of India as a political party, the association or body is required to make an application to the Election Commission of India giving therein full particulars required under sub-section(4) of Section 29A of the Representation of the People Act, 1951 and additional particulars required under the Registration of political parties (Furnishing of Additional Particulars) Order, 1992.

The application should be neatly typed on the party’s letter-head, if any, and it should be sent by registered post/presented personally to the Secretary to the Election Commission within 30 days following the date of the formation of the party. Any application made after the said period will be time-barred under the provisions of Section 29A(2)(b) of the Representation of the People Act, 1951.

Along with the application, the following documents are also required to be submitted: -
(i) A Demand Draft of Rs. 10,000/- (Rupees Ten Thousand only) on account of processing fee drawn in favour of the Under Secretary, Election Commission of India, New Delhi. It may be noted that the processing fee is non-refundable.

(ii) The memorandum/rules and bye-laws/constitution of the Party containing a specific provision as required under sub-section (5) of Section 29A of the Representation of the People Act, 1951 that “the party shall bear true faith and allegiance to the Constitution of India as by law established, and to the principles of socialism, secularism and democracy and would uphold the sovereignty, unity and integrity of India”.

This mandatory provision must be included in the text of party constitution itself as one of the clauses. As per the provision to sub-section (7) of the said Section 29A, no association or body shallbe registered as a political party unless the memorandum, rules and regulations or the constitution of such association or body conform to the above referred provision of sub-section (5) of Section 29A.

The copy of the party constitution furnished with the application should also contain detailed provisions about all aspects of the party such as criteria for membership, election of office-bearers, and important Committees, duties and powers of the office-bearers, provision regarding disciplinary action, etc, etc.

There should be a specific provision in the rules and regulations/memorandum/Constitution of the party regarding organisational elections at different levels and the periodicity of such elections and term of office of the office-bearers of the party. Besides procedure in the case of merger/dissolution of the association and procedure to be followed for amendment of the Constitution/bye-laws should be provided in the bye-laws.

The Constitution/bye-laws duly authenticated on each page by the General Secretary/President/Chairman of the party and the seal of the signatory affixed thereon.

Certified extracts from the latest electoral rolls in respect of at least 100 members of the organization (including all office-bearers/members of main decision making organs like Executive Committee/Executive Council) to show that they are registered electors. Alternatively photocopies of electoral photo identity cards of such members, duly attested by a Gazetted Officer or Notary can be submitted.

An affidavit duly signed by the President/General Secretary of the applicant party and sworn before a 1stClass Magistrate/Oath Commissioner/Notary Public to the effect that no member of the organization is a member of any other political party registered with the Commission.

Further, individual affidavits from these 100 members affirming that they are members of the association and are not members of any other political party, registered with the Commission and also stating that they are registered electors (name of the constituency where they are registered should be mentioned). These affidavits should be on Stamp Paper of atleast Rs. 2/- denomination and duly sworn before a 1stclassMagistrate/Oath Commissioner/Notary Public.

These affidavits should be from those persons in respect of whom certified extracts of electoral rolls mentioned above are being furnished.

Particulars of Bank account(s), if any, in the name of the party should be given.

Copies of the following documents are given here for information and guidance: — (a) Extract of Section 29A of the Representation of the People Act, 1951. (b) Registration of political parties (Furnishing of Additional Particulars) Order, 1992.

The Option is not viable because
(1)from where to get 100 Peoples who have Voter Id card
(2) People who are ready to sworn before the Magistrate
(3) Wants to become the member of the Party.

Because most of the people hate Political Parties & Politics and those who love the Politics want to go with the Strong parties like Congress and not with the newly formed parties.

Signing of E-form 62

2009-10-04T22:48:00.000+05:30

Question
A Govt. Liquidated Company require to file Form-62 every half year once. The Government Company has not filed the last 3 Half-Yearly Statments. After 2 statements prepared for the first year, the liquidator goes changed. So,Who will sign all the E-form 62 digitally?

Answer
Form 62 has been filed half yearly.

So, The company has made first mistake that It has not filed the 1st & 2nd half yearly statement.

Now, the 1st & 2nd half yearly statement should be filed in E-form 62 sepretally & It should be signed digitally by the 1st Liquidator.

The 3rd half yearly return should be filed by the current liquidator digitally.

Voting Power

2009-10-04T22:43:00.001+05:30

Question
The articles of ABC Limited provided that only those shareholders would be entitled to vote whose names have been there on the Register of Members for two months before the date of the meeting. X, a member, of the ABC Limited was holding 200 equity shares of the company. X transferred his shares to Y before one month from the date on which the meeting was due. The name of Y could not be entered in the Register of Members as the application of transfer of shares was pending. by the company from exercising his voting right on the ground that he has not hold his shares for specified period as provided in the articles before the date of the- meeting.

State whether X can exercise his voting right in the meeting? State also the grounds upon which X may be excluded from exercising his voting rights in the meeting of the shareholders.

Answer
First of all, let's check the Record date concept.

In every AGM, the person who holds the shares on the Recored date is entilted to vote in the AGM.

In your company, the articles decides the month & not the exact day of the recorde date, so, your articles provision is wrong. Because the provision is ambiguous.

As, which day is to be taken for the purpose of the Record date, can not be detrermind?

However, Answer to your question:
If Mr. X holds the shares on the record date, then he is eligible to vote on the AGM.

Sale of Share to Employee

2009-10-04T22:40:00.000+05:30

Question
Whether Director of Private Company can sell the shares to the Employee of the same Company?

Answer
Yes, Director can sell the shares. There is no bar on that.
Form 7C related to Transfer of shares shall have to be Submitted by the Director in the Company

Right Issue only for Public Company

2009-10-04T22:33:00.000+05:30

Question

Why Option of Right Issue is available to the Only Public Companies and not to the Private Companies?

Reason
The Roots of Right Issue came from the ancient tradition:
In Earlier times Businessmen reward to their Customers for their Loyalty and offer some Discount as a Reward.
After the "Company" word came into existence, the Tradition gets extended to the Shareholders of the Company also.

Promoter/Director offers the Shareholder of the company, Shares at the Right basis. In case of Right shares Promoter/Director offers the Shareholders shares at the Lower price than the Actual Market Price.
So, Shareholder can get benefited and stick to the Company for further Invetment in Future.

In case of Public Companies they have vey wide No. of the Shareholders, But The private Companies have very less No. of Shareholders.

With the Passage of the Time, Any company's share value will increase in the Future and At that time, By way of the Right shares Public Company can offer the Reward to the Shareholders and Offers the Right of Renunciation also.

The Reason behind the Right of Renunciation is as follows:

If the shareholder doesn't have the enough money to purchase the Shares, at that time, he can give away his "Right" to third party & can earn some income by doing that.

Almost 99% of the Private Companies sell their shares at Face value & not at the Market Value.

Because Promoter/Directors understand the Private Company as a medium to Limit the Liability & get the maximum benefit from It.

So, If the Right shares Option will be given to Private Companies, they will not apply that Rule In their company because after the application of the Option also the Right share Price will be higher than the Face Value.

So, Legislator doesn't provide the Right share Option to the Private Companies.

The largest Right Issue Offer provided by the SBI is as follows:

Market Value: Rs. 2500 Per Share
Right Share Value: Rs. 1250 Per Share
Face Value: Rs. 10 Per Share.

Now, You can Understand that the Right Share option is very fruitful to the Existing Shareholder.

Tata Consultancy Service has come out with Right Issue in 2005 also, Which was one of the Most subscribed Right Issue.

Right Issue

2009-10-04T22:25:00.000+05:30

Question
Whether Private Company can Issue Shares on the Right Basis?

Answer
No, Private Company can not Issue the Shares on Right Basis.

However, Private Company can make further allotment of Shares by other modes like Bonus Issue, Private Placement, etc.

Loan from Directors

2009-10-04T16:48:00.000+05:30

Question
Can a Private company accept loan from directors? If yes under which provisions of the Companies Act 1956? If the same fact is reflected in the signed balance sheet and shown under unsecured loans in Annual return, Does such annual return is an incorrect Annual return?

Answer
Private Company can accepts the loan from the Directors, Relatives & Freinds.
There is no bar on that.

The only bar is that private Company can not Invite the public to give deposits.

If the company has taken the loan from the Directors. Then, It is not wrong to show the loan amount, Whether it is Annual Return or any other documents.

Removal of Director

2009-10-04T16:44:00.000+05:30

Question
Mr. X is not attending Board Meeting since last two year. Company is Private limited and whole share holding is held by another two director. Mr. X doesn't has the DIN. How Company can remove Mr. X from the Directorship?

Answer
Pass in the board meeting Resolution for removing the Director.

File physical Form 32 with the ROC & attch the covering letter stating that, The company does not have any idea of Whereabout of the director.

Because the Company has no communication with directors for last 2 years. So, that company can not file the E-form.

Unsecured Debenture

2009-10-04T16:40:00.000+05:30

Question
Can an Indian company issue unsecured non convertible debentures?

Answer
The debenture’s concept becomes famous for the Investors who wants the Fixed Income & Security of their money.
&
The main provision of any debenture Issue is the Debenture trustees. Because they have to look whether Company's property is sufficient to pay off the debenture holders money.

Further, Debenture trust deed gives authority to sell the company's property. And The main provision of any debenture trust deed is the Company's property.

So, Majority of the provision of the company law can not be complied, That's why company can not issue the Unsecured debentures.

Revnue Reserve & Capital Expenditure

2009-10-04T16:37:00.000+05:30

Question
If revenue reserves were not sufficient to meet capital expenditure and directors lent money to meet such shortfall how does the company repay the debt?

Answer
The company can repay that debt in Installment or by any other payment methods from the Future revnue profits or Capital receipts. It is not compulsory that, the company has to pay from the Revnue profits/reserves only.

Because Directors money given to the company is considered as a loan, and the loan can be repaid by either Capital or revnue profits.

Registered Office Clause

2009-10-04T16:31:00.000+05:30

Question
MOA should contain the situation clause mentioning the state in which registered office of the is situated. If there is change in registered office within the same city then we have to file the ALTERED MOA along with the Confirmation of Regional Director within 2 Months if there is change in jurisdiction of ROC Can anyone please explain me what will be the alteration that will take place in MOA as only the name of state is mentioned and it is not changed?

Answer
When the Law was framed the Companies inserts the full address instead the only name of the State in the Regd. Office Clause of MOA. So, That If the full address is inserted, We need to alter the MOA.

Please bear one thing in mind that The Companies Act, 1956 is made in the year 1956. So, It has provisiom consistent at that time. After that The procedure has been changed drastically, So, that Govt. Procedural system has also gone under change. And In the E-form filling, MOA is not the Mandatory Attachment.

Depreciation Under Company Law

2009-10-04T16:23:00.000+05:30

Question
Whether it is mandatory that, company should have to calculate Depreciation as per Companies Act, 1956?

Answer
No. It is not mandatory.

Moreover Schdule XIV of the Companies Act, 1956 provide the Minimum rates. You can claim higher depriciation than also.

Date of Appointment of Director

2009-10-04T16:19:00.000+05:30

Question
In case of additional directors whose appoitments are regularised in AGM, what will be the date of appointment to be entered in the annual report of the subsequent AGM (i.e. date on which they were originally appointed as additional directors or the date of AGM in which their appointments are regularised)?

Answer
In the AGM, Only regularisation has been done.

It is one kind of Approval from Shareholder about the director, who was appointed in the Board Meeting.

So, date of appointment will be the date when he was first appointed as the Additional Director in the Board meeting.

Applicability of Scetion 297

2009-10-04T16:15:00.000+05:30

Section 297 of the Companies Act, 1956 does not apply to:

1. Giving or taking loans.

2.Contract in respect of immovable property (as it is not 'good' ).{Letter No. 9/4190-CL-X dated 27.03.1990}.

3.Contract between two public Companies.

4.Contract of employment of director or managing or whole time director.[ Circuler No.8/11/75-CL-V dated 27.03.1975]

5.Contract for employment of relative of director.

6.Contract entered into by the company with the dealer on principle to principle basis. [Circuler No. FM 8/297/56-PR dated 02-08-1956]

7.Professional services of the nature given by firms of solicitors and advocates, etc.[circuler No. 8/11/75-CL-V dated 05.06.1975]

8.Hiring of office premises on rent as the transaction is in immovable property. [Department Clarification dated 10-09-1990]