Ca final may 2014 law helpline

Dear Sir, Approval of CG is not required in case of Additional director. But, he is counted in determining the maximum no.of directors as specified in AOA. My doubt is if max.no.of directors as per AOA is 12 and Board is at the descretion to appoint an Addl.director. Is it allowed, as no CG approval is reqd? Pls reply. Thanks in advance.

Hello ,Gajendra ji

Generally CG approval not required for appt of additional director (sec260) .But total number of  director including additional director should not exceed the maximun number as per the Articles.

In the given case company wants to amend the AOA and increase the no of directors to 13 .Here sec 259 applies and hence CG approval  is needed. BOD cannot appoint additional directors beyond limit of articles except as per sec 259 .So CG approval is needed in mentioned case.

BYE TC !!

 

Thank u very much sir.

very good initiative Pratik sir!! 

PLz check my FB page for BOARD MEETING NOTES and past 10 term questions on same with audio files.Enjoy

https://www.facebook.com/pages/CA-GUIDE/267311140095928

HI friends plz check my notes on inter-corporate loans and investments u/s 372A .

Check my facebook page for audio and suggested answers on the above topics .Scroll down you will find other useful links as well.

https://www.facebook.com/pages/CA-GUIDE/267311140095928

All d best !! 

CA Pratik Jain.

Hi Pratik,

I am the one called you from Bahrain. I received your mail and understand the position. I wish you for your continuous support to student community.

 

Thanks a lot sultan ji .may god guide all of  us towards the higher purpose.

Whether the auditor be liable for the loss caused by valuation of stock in balance sheet? This question is from May 2014 rtp Q2(b) and also suggesteds ofnNov 2007. The institutes answer says he won't be liable and they have quoted two caselaws But as per SA on written representation and also as per sec 227 of the companies act, an auditor can't merely depend on the letter provided by the management, he should verify and cross verify all that has been given in writing and as per question he would have understood that the stock is overvalued merely by looking at the valuation of opening stock and during the year purchases. Then shouldn't The auditor be held liable? Thank you so much!

Hello Jinal .

This question is based on very old case of Kingston Mill Co .The crux  of the matter is that an auditor is a watchdog not a bloodhound i.e you cannot expect the auditor to detect each and every fraud .The responsibilty of maintaining proper stock records lies with the management .In given case the manger for years fudged the stock journal resulting in overvaluation of stock .If the auditor has applied reasonable audit procedures and performed his duty dillegently he cannot be expected to detect all frauds committed by management.

Sec 227 nowhere states that auditor must doubt everything said by management .As per SEc 227 "according to the explanations given to him, the said accounts give the information required by this Act in the manner so required and give a true and fair view- "

  SA 580  does say that management `s representation is no substitute for adopting normal audit procedures regarding verification and valuation of inventories.

But in the given case the values of yarn and fabric were highly fluctuating and auditors relied on stock summary which in turn was based on fudged stock records.

Breach of duty or negligence depends upon fact and circumstances of the case.Must add it is a decided case law ,ICAI RTP doesnot explain the background of case in that detail.It just makes you feel auditor didnt do enough!! .Held  no breach of duty of auditor.

 

 CA Pratik Jain.

Dear sir Please answer the following questions as I am in doubt regarding that:

Q.1. Can a director disqualified u/s 274(1)(g) reappointed again as director in the same defaulting Public Co.?

Q.2. In ABC Ltd., Mr. A was named in the list of first directors. He however, died before he could assume office. How can the problem regarding the appointment of a director be solved in this case?

Q.3. The AGM of a Co. was held in Nov. 2011. The company did not hold any General Meeting in 2012. R,S,T are the directors liable to retire at the general meeting. Can they continue in office?

 

Dear Anurag ,

Here you go :

1. As per ICAI suggested answers - Director disqualified u/s 274(1)(g) can continue in defaulting company and be re- appointed as well in the defaulting co .The disqualification is  attracted in other pubilic companies(i.e other than defaulting co)

NOTE: I dont agree with this view but ICAI`s interpretation we all have to follow bcoz paper is checked by them only.

2.The problem due to  death of Mr A(named 1 st director) can be solved in following manner:

a) THe subscribers to MOA should convene a meeting for the appointment of Directors.

b)Unless AOA provide otherwise , the subscribers entitled to call the meeting may do so .

c) However if all the subscribers agree on the person to be appointed as director no need to call above meeting.

3. Retiring directors cannot continue beyond the last day AGM was ought to be held .It is their responsibilty to ensure AGM is conducted timely. They cannot take advantage of their own default and continue in office.

hope it helps!!

CA Pratik Jain.

 

 

Thanks sir for your reply. Would you please tell me that in the 3rd q. what would be the last date to hold office of director?

last date for AGM is generally 30th september (6 months from end of FY). In ur question it is 30 september 2011.there is scope for extension of 3 months by registrar but ur question doesnot indicate so.

Respected sir Please answer the following doubtful questions:- Q.1. Is the following provision of FEMA,1999 omitted: Rules in Current Account Transactions Transactions Permissible with approval of CG (Rule 4 read with Schedule II) Remittances under technical collaboration agreements where payment of royalty exceeds 5% on local sales and 8% on exports and lump sum payment exceeds US $ 2 Million. I have read in an author book that this provision is deleted vide Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2010 (Notification No. GSR 382(E) dated May 05,2010 but it is not deleted according to Study Mat. Edition January 2013. Please clarify. Q.2.There is a provision that CG approval is required under FEMA for remittance for membership of P & L Club. Please elaborate this point. Q.3. Are the following transactions for which drawal of foreign exchange prohibited (Rule 3 read with Schedule I) • Payment for travel to Nepal and/or Bhutan • Any transaction with a person resident in Nepal or Bhutan Please reply soon.