Sunday, December 28, 2014

Wish all the Blog Readers a Very Happy New Year 2015

If we could stop for a minute to solve real problems facing humanity, instead of imaginary problems mystified with complex mathematics and vocabulary, we may be convinced to realize that education would have been one of the most luxurious adventures of mankind. If we don't have time to read a book in the New Year 2015, at least let us read and inculcate the thoughts of this message. It may make us think, to think is to expand, to expand is to gain and the thought process goes on. If we look on the bright side of things, we shall find enough to make us cheerful and happy. The most powerful thing in life... is our thinking, which has ability to change any situation. We often make two mistakes in our search of inner peace... focusing on things we cannot change, and ignoring things we can change.
As we all know that if we give smiles, they will be returned to us; if we speak pleasant, cheerful words, they will be spoken to us again. Our own words are the bricks and mortar of the dreams we want to realize. Our words are the greatest power we have. The words we choose and their use establish the life we experience. Therefore let us live our moments for what we are, not for what we may become. Let us always find time to tell those people we love, that we love them, care for them, or whatever they mean to us in our life. Life is precious, and we need to be grateful for each day we are given. We should not have only dreams but set goals and achieve what we would otherwise dream! Let us smile in trouble that can gather strength from distress, and grow brave by reflection. Time heals all wounds, but only wisdom keeps them from reopening.
Making hundreds of friends is not a miracle. The miracle is to make a single friend like you who will stand by our side even when thousands are against us. The limitations of us are our own creation, designed to provide cover for our unwillingness to try. We should never be afraid to change our vision, set new goals, and challenge ourselves. Life is best experienced without boundaries; so let us live each day ceremoniously. In fact we are not bound to succeed, but we are bound to live by the light that we have. Let us stand with those whose stands are right, and remain with them while they are right. Let us seize the present opportunity; work with dedication and sincerity and enjoy it; this is the best reward that we can give to ourselves.  As we all came here, into this life, with our own music to play; each of us our own set of notes. Let's all play together nicely so that the world becomes a sweet music along the manuscript of life.

With these few words i wish you, your family and friends a very happy and successful year ahead.

Monday, June 30, 2014

Companies Act 2013- Lessons for Indian Corporate Sector

The Indian corporate sector is very positive since the Modi Govt. has assumed power in the center. But to maintain the positivism the Govt. has to some policy decision without delay. The current working of 2013 Companies Act and its impact on corporate world has brought some new lessons for corporate India. The views expressed by various CEOs, CFOs, company secretaries, finance and accounting professionals provide thought-provoking insights which may be useful for Indian Corporate world. We know that the 2013 Act has introduced several onerous requirements, but the companies were not provided sufficient time to prepare. As the majority of the sections and the related rules were notified during the last week of March 2014 and have an applicability date of 1 April 2014.  Moreover, a considerable number of interpretative issues and concerns continue to arise from implementation of the new Act.

The new Act empowers and strengthens shareholders’ democracy. Duties/responsibilities and liabilities of directors (including independent directors) and auditors have been significantly enhanced. Now the private companies will be subjected to several onerous requirements such as preparation of consolidated financial statements, internal financial control reporting, auditor rotation and approval of related party transactions, which were hitherto not applicable to such companies. The Act also has significantly enhanced disclosures to bring greater transparency in corporate reporting and self-governance. On many matters, requirement to obtain the Central Government’s approval has been replaced with the approval by shareholders. The Act further introduced several new concepts such as corporate social responsibility, requirement for woman director, rotation of auditors, class action suits, etc. The Modi Govt. should address the genuine concerns to keep the Indian corporate sector on track.

Recently the Earnest & Young has done a survey which has highlighted some of the very crucial points as follows: Regarding the enforcement of only 283 sections out of total 470 sections, has mixed views. The 47% participants were of the view that it would have been better to implement all the sections of the 2013 Act at one go. Immediate application of notified sections leaves companies without any time to prepare for the new requirement. Overwhelming majority (85%) participants were of the view that they need minimum three months to one year time to prepare for new requirements.

Most of the participants were agreed with the auditor’s reporting on fraud directly to the Central Government, an overwhelming majority (80%) felt that there should be materiality limit for such reporting. Reporting of immaterial frauds to the Government may impose significant additional cost and burden on all parties and yet achieve nothing. 68% participants were not in favor of applying any or all of the onerous requirements, e.g., preparation of CFS, internal financial control reporting, auditor rotation and approval of related party transactions, etc., to a private company. 44% participants felt that some of these requirements can apply to a private company, while 32% participants were of the view that all these requirements should apply to private companies. Out of companies who have decided to spend 2% amount on CSR activities, 52% companies have also identified activities or projects on which they will spend the prescribed amount. 48% companies have still not identified these activities or projects.

From participants representing companies with non-31 March year-end, 41% have already decided to comply with 31 March year-end requirement. There is an almost equal number, which has not decided its approach yet. 22% participants want to retain their current financial year (i.e., year-end other than 31 March) and would seek tribunal/ MCA approval for the same. 87% survey participants felt that minority protection will increase, if all related party transactions not meeting exemption criteria are approved by special resolution of disinterested shareholders. However, out of these participants, 26% participants felt that it may impede business activity and 17% participants were concerned that it will significantly impede business activity. Out of companies covered under CSR requirement, 55% have already decided to spend 2% amount of CSR activities. Approx. 34% companies are waiting for practices to emerge before they take a call on this matter.

Keeping in mind the said reflections the govt. should take immediate measures in notifying the remaining sections of the Companies act 2013 and overview the working of the notified sections to avoid the worrisome situation.


Source: http://www.moneycontrol.com/news, Earnest & Young Survey 2014.


Saturday, November 23, 2013

Growing Demand of Corporate Lawyers

There is a growing demand of corporate lawyers due to change in attitude of corporate sector.
The old practice of having panel lawyers is decreasing and having a full fledged legal division in a company is growing.  All the good companies generally have  variety of lawyers in corporate law. This is really a great news for those who are specialising in corporate law. It is suggested to those who are aspiring to become a successful corporste lawyers that they must get mastery in contract law, company law, banking law,  IPR, Mergers and equisitions, corporate governace , tax law, international trade law, commercial transaction law. Law of corporate finance , securities law etc.

Wednesday, December 19, 2012

Cabinet approves Amendments to the Companies Bill, 2011


The Union Cabinet today approved the proposal to make official amendments to the Companies Bill, 2011.

The Companies Bill, 2011, on its enactment, would allow the country to have a modern legislation for growth and regulation of corporate sector in India. The existing statute for regulation of companies in the country, viz. the Companies Act, 1956 had been under consideration for quite long for comprehensive revision in view of the changing economic and commercial environment nationally as well as internationally. In view of various reformatory and contemporary provisions proposed in the Companies Bill, 2011 together with omission of existing unwanted and obsolete compliance requirements, the companies in the country would be able to comply with the requirements of the proposed Companies Act in a better and more effective manner.

The Salient features of amendments approved by the Cabinet are as follows:

1. The words 'make every endeavour to' omitted from Clause 135(5). Such clause is also amended to provide that the company shall give preference to local areas where it operates, for spending amount earmarked for Corporate Social Responsibility (CSR) activities, The approach to 'implement or cite reasons for non implementation1 retained. (Amendment of Clause 135).

2. To help in curbing a major source of corporate delinquency, Clause 36 (c) amended, to also include punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities. (Amendment in Clause 36).

3. Provisions relating to audit of Government Companies by Comptroller and Auditor General of India (C&AG) modified to enable C&AG to perform such audit more effectively. {Amendment in Clauses 143(5) and (6)}.

4. Clause 186 amended to provide that the rate of interest on inter corporate loans will be the prevailing rate of interest on dated Government Securities. (Amendment in Clause 186).

5. Provisions relating to restrictions on non audit services modified to provide that such restrictions shall not apply to associate companies and further to provide for transitional period for complying with such provisions. (Amendment in Clause 144).

6. Provisions relating to separation of office of Chairman and Managing Director (MD) modified to allow, in certain cases, a class of companies having multiple business and separate divisional MDs to appoint same person as 'chairman as well as MD. (Amendment in Clause 203).

7. Provisions relating to extent of criminal liability of auditors particularly in case of partners of an audit firm reviewed to bring clarity. Further, to ensure that the liability in respect of damages paid by auditor, as per the order of the Court, (in case of conviction under Clause 147) is promptly used for payment to affected parties including tax authorities, Central Government has been empowered to specify any statutory body/authority for such purpose. (Amendments in Clause 147 and 245).

8. The limit in respect of maximum number of companies in which a person may be appointed as auditor has been proposed as twenty companies. {Amendment in Clause 141(3) (g)}.

9. Appointment of auditors for five years shall be subject to ratification by members at every Annual General Meeting (Amendment of Clause 139(1).

10. Provisions relating to voluntary rotation of auditing partner (in case of an audit firm) modified to provide that members may rotate the partner 'at such interval as may be resolved by members' in stead of 'every year' proposed in the clause earlier. {Amendment in Clause 139(3)}.

11. 'Whole-time director' has been included in the definition of the term 'key managerial personnel' {Amendment of Clause 2(51)}.

12. The term 'private placement' has been defined to bring clarity. (Amendment in Clause 42).

13. Approval of the Tribunal shall be required for consolidation and division of share capital only if the voting percentage of shareholders changes consequent on such consolidation {Amendment of Clause 61(1) (b)}.

14. Clarification included in the Bill to provide that 'Independent Directors' shall be excluded for the purpose of computing 'one third of retiring Directors'. This would bring harmonisation between provisions of Clause 149(12) and rotational norms provided in clause 152. (Amendment in Clause 152).

15. Provisions in respect of removal of difficulty modified to provide that the power to remove difficulties may be exercised by the Central Government upto 'five years' (after enactment of the legislation) in stead of earlier upto 'three years'. This is considered necessary to avoid serious hardship and dislocation since many provisions of the Bill involve transition from pre-existing arrangements to new systems. (Amendment in Clause 470).

Background:

(i) The Companies Bill, 2011 was introduced in the Lok Sabha on 14th December, 2011 and was considered by the Parliamentary Standing Committee on Finance which submitted its report to the Honourable Speaker, Lok Sabha on 26th June, 2012. The report was laid in Parliament on 13th August 2012. Keeping in view the recommendations made by such Committee it was decided to make certain modifications in the Companies Bill, 2011 through official amendments.

(ii) In view of the developments taking place nationally as well as internationally, and with the intent to modernize the structure for corporate regulation in India and also to promote the development of the Indian corporate sector through enlightened regulation and good corporate governance practices, a decision has been taken to revise the existing Companies Act, 1956 comprehensively. Various stakeholders viz Industry Chambers, Professional Institutes, Government Departments, Legal Experts and Professionals etc. were consulted in the process and accordingly, the Companies Bill 2009 was introduced in the Lok Sabha on 3rd August, 2009 which was referred to Parliamentary Standing Committee on Finance for examination and report, which submitted its report to the Parliament on 31st August, 2010.

(iii) Keeping in view the recommendations made by the Standing Committee and consultation with various Ministries/Departments etc. a revised Companies Bill, 2011 was prepared which was approved by the Cabinet on 24th November, 2011. The revised Bill was introduced in the Lok Sabha on 14th December, 2011. On introduction of the Companies Bill, 2011, the Companies Bill, 2009 was withdrawn.

(iv) The Companies Bill, 2011 was referred to the Parliamentary Standing Committee on Finance for examination and report. The Committee examined the Bill and presented its report/ recommendations to the Speaker, Lok Sabha on 26th June, 2012. The report was laid in the Parliament on 13th August, 2012. Keeping in view the recommendations made by the Committee and the inter-ministerial consultation held with concerned Ministries/Departments, it has been decided to make official amendments to the Companies Bill, 2011.


Source: 
http://pib.nic.in/newsite/ Accessed on 19th December, 1.30 PM

Thursday, November 8, 2012

The government has decided to crack the whip on fraudulent multi-level marketing companies (Ponzi)


Ponzi, that have duped hundreds of investors in the country by blocking their websites and tracking their online transactions.
Corporate Affairs Ministry, the nodal department in this regard, has decided that its investigative arm - Serious Fraud Investigation Office (SFIO) - will coordinate with Department of Information Technology and Central Economic Intelligence Bureau (CEIB) to identify suspect websites and transactions and take strict legal action.
Sources said such companies, operating from various locations within the country, have defrauded the public for amounts which could easily run into hundreds of crores.
"There are various entities (multi-level marketing) doing business in India through websites and many such entities do not have a registered office within India. Therefore, in order to prevent funds being transferred outside India, the website of major establishments doing multi-level marketing business need to be stopped through gateways by Department of Information and Technology (DIT).
"This issue will be taken up with DIT very soon and details of such companies will be provided to it for blocking the payments," an official privy to the development said.
For multi-level marketing websites operating clandestinely and conducting hidden transactions, the Ministry will ask the Financial Intelligence Unit under Finance Ministry to track and supply snoop data on them so that SFIO can take action.
The FIU is mandated to generate suspicious transaction reports based on inputs provided by banks and other financial and economic bodies.
The Ministry is mulling adding an enabling provision in the Companies Act to initiate legal action of attachment of properties of individual directors of such companies by moving the Company Law Board (CLB) in this regard.
The Ministry, during a recent meeting of the SFIO and its regional directors, mooted a plan to activate its marketing intelligence unit to keep a tab on fraudulent innovative systems developed by such companies to cheat the public and investors.
Source: http://www.indianexpress.com/news 7th Nov. 2012

Wednesday, November 7, 2012

Selected Companies are Required to File Statements in XBRL format


Final version of the MCA XBRL Validation Tool (for Financial Statements based upon new Schedule VI of the Companies Act, 1956) has been released. XBRL filings of financial statements for accounting year commencing on or after 01.04.2011 have been enabled on MCA website with effect from 14.10.2012. Stakeholders are also advised to refer to the ‘Filing Manual’ available on the XBRL portal for filing the financial statements in XBRL format.

Many organizations have been looking to the internet to bring the long-heralded promises of “better, faster, cheaper” data to organizational decision-making, and specifically to business and financial reporting. An emerging technology standard, eXtensible Business Reporting Language (XBRL), promises to web-enable the financial reporting process for both preparers and consumers.
Instead of treating financial information as a block of text, XBRL provides a computer-readable tag to identify each individual item of data. By attaching identifying tags to individual pieces of data, a business reporting document becomes “intelligent” data, allowing the exchange of business reporting data by encoding the information in a meaningful way.
Computer applications can use the XBRL data to recognize the information in an XBRL document - selecting, analyzing, storing, and exchanging it with other computers and present it in a variety of ways for users. As companies review their business reporting disclosure controls and procedures and begin to comply with new filing requirements, XBRL is becoming the chosen tool to help facilitate and restore confidence in business reporting and in turn, to communicate accurately the value of the company.
XBRL is:
·         An open technology standard for reporting and analyzing business and financial information
·         Software agnostic, or independent
·         Accounting framework neutral
XBRL is not:
·         A standardized chart of accounts
·         A way to require the reporting of specific information
·         A transaction level activity (although it can summarize general ledger transactions)
For more information, see our publication Addressing XBRL.
In recent years, XBRL has seen rapid expansion as an enabling technology around the world. XBRL is a “network innovation” which requires concerted action from a number of different stakeholders to be widely adopted. For this reason, its development has been, and continues to be, facilitated through the voluntary and collaborative efforts of key stakeholders — currently driven principally by local government and regulatory agencies, the most notable of which is US Securities and Exchange Commission (SEC) which is requiring filings in this standardized electronic format.
We hope this site will add to the public dialogue now taking place about the merits of XBRL and about the promise of XBRL specifically. To that end, we have outlined the ways we think you can benefit from adopting XBRL now for your key business-reporting processes and provided a road map that can move you toward these ends.
On 30 January 2009, the US Securities and Exchange Commission (SEC) published a final rule for the mandatory use of eXtensible Business Reporting Language (XBRL) in reporting financial information to the SEC