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practical issues - views please

sonia (student) (59 Points)

01 February 2011  

 

dear all


I request you all to share your views on these


(1).we know that when dividend is declared we have to open dividend account for depositing and paying such dividend to all relevant shareholders. is it compulsory that for that purpose a new bank account must be opened or is it enough to deposit the dividend amount in existing company's  bank account and pay divident through that account?


(2). in certain cases unanimous board resolutions are required. is unanimous of total strength of BoD or total number of directors present at the concerned meeting


(3). in calculating debt equity ratio should we consider issued or alled-up or paid up equity. i hope we should not consider authorised capital right?


(4). for listing purposes public shareholding must be 10%/25% as the case may be. for this purpose is public shareholding means shareholding of retail individual investors. i mean that they should be only non-institutioinal investors.
are there any institutional investors who too falls within the meaning of public shareholding? if so on what grounds they fall under public shareholding even after being institutional investors?


(5). are there any grounds where a pvt ltd company becomes pub ltd co if its turnover crosses certain limits or its shareholding in pub ltd co crosses certain limits, then it becomes pub ltd co?


(6). is there any express or implied provision under any law that the min number of directors required for pvt or pub ltd company should be executive directos/whole time directors?


(7). i do say that except equity capital, all other capital which includes preference share capital would be considered as debt capital and the provisions relating to raising of debt capital should be complied with. further if they are raised from foreign sources, then should comply with ECB provisions. is this right?


(8). would division of shares adversely affects the EPS of the company(that means causing dilution in EPS).
because the no of outstanding shares increases, which inturn decreases the EPS.
reverse to this is buyback, which increases the EPS

(9). for certain key words in the name of the company like asia or india etc with or without brackes then certain amount of min capital should be maintained
but under CA1956 if a foreign company establishes a company in india then its name must contain the words "india' within the brackes prior to pvt ltd or ltd.
example: ABC (india) pvt ltd/ ltd .
in such case should such company too must maintain the min capital as over and above min capital of 1lac or 5 lac as the case may be?

 
(10). how could "siemens" etc be registered without mentioning objects in its name or the words 'india" within its brackets? is there any exception?

(11). can LLP pay dividend to its partners?


(12). regd office in one state and where as corporate office and/or head office in some other state --- in such cases can i presume that they are maintaining their registers and returns at a place other than the place of registered office. is that right?


(13). if names appearing on share certificates and the names appearing in RoM are diffrent then which shall prevail? which means which one shall be primafacie considered as  valid? this is because
once it is decided which one is primafacie valid, then the burden to proove otherwise will shift to other party.

(14). if for any matters while conducting the secretarial audit or any other audit which could not be ascertained from the registers or records
or any other documentary evidence then can we take cerrtificate or declaration from the concerned company or individual of the company?.
can we take such certificae or declaration on just white paper/letterhead with the signature of that company/individual or should we take on non-judicial stamp paper of some appropriate value. if the stamp paper is required then the value of such stamp paper?

(15). is it compulsory that a listed company after listing whenever it issues any further securities (be it equity or non-equity) to otherthan public then it must list them too?

 

i request all the learned members of this forum to share your views


thanks and regards

Sonia

 

 

 

 



 6 Replies

CA Sandeep Kumar (Audit Assistant) (804 Points)
Replied 01 February 2011

Oh My God!! So many questions, i appreciate the way the issues are being raised by you. Following are answers which i know to some extent, others, i think other members will reply..

1-- Separate Dividend account is necessary

2-- both cases are there.. in few cases, unanimous approval of directors present and there is a case wherin approval of all directors are necessary..

3--for debt-equity ration- paid up capital to be considered, not authorised

4--I do not the answer

5--Private ltd company will remain so irrespective of huge turnover or share capital amount

6--No, nothng like that. but if a company has such directors, law recognises them as MD/etc irrespective of their designation in the company, i.e., even if a company has a ordinary director, if certain conditions satisfied, he is the MD as recognised by law.

7--I am not sure

8--division of shares, EPS may decrease, but is only disclosure requirement, EPS wil be restated for earlier year for comparison, net effect is same to shareholer, wrt buy back, yes EPS will increase

9--no, but i am not sure

10--therotically ''name, object, pvt/public'' is the sequence, but i am not sure in case raised by you

11- not aware of LLP provisions, it is similar to partnership provisions though

12--it is to be kept at registered office

13--how can it be different, in case of transfer, company on production of documents from transferor/transferee will record the same and issue fresh certificate, not able to understand the question

14--not aware of secretarial audit

15--not aware of listing process

 

sorry i could answer only few questions. I request you to contact other senior members, say jayshree s iyer madam, she would be able to answer the questions in a better manner. Good questions, comprehensive, happy learning..

Jaideep (Service) (1363 Points)
Replied 02 February 2011

(1).we know that when dividend is declared we have to open dividend account for depositing and paying such dividend to all relevant shareholders. is it compulsory that for that purpose a new bank account must be opened or is it enough to deposit the dividend amount in existing company's  bank account and pay divident through that account?

Seaprate Account.

(2). in certain cases unanimous board resolutions are required. is unanimous of total strength of BoD or total number of directors present at the concerned meeting

Number of directors present at the concerned meeting.



(3). in calculating debt equity ratio should we consider issued or alled-up or paid up equity. i hope we should not consider authorised capital right?

Obiviously, paid-up capital.


(4). for listing purposes public shareholding must be 10%/25% as the case may be. for this purpose is public shareholding means shareholding of retail individual investors. i mean that they should be only non-institutioinal investors.
are there any institutional investors who too falls within the meaning of public shareholding? if so on what grounds they fall under public shareholding even after being institutional investors?

Nope... Please refer ICDR. “non institutional investor” means an investor other than a retail individual investor and
qualified institutional buyer


(5). are there any grounds where a pvt ltd company becomes pub ltd co if its turnover crosses certain limits or its shareholding in pub ltd co crosses certain limits, then it becomes pub ltd co?

No such grounds.


(6). is there any express or implied provision under any law that the min number of directors required for pvt or pub ltd company should be executive directos/whole time directors?

No such provisions for private company, Public Company having a paid-up share capital of such sum as may be prescribed shall need to appoint a managing or whole-time director or a manager.

Refer section 269 of Companies Act.

(7). i do say that except equity capital, all other capital which includes preference share capital would be considered as debt capital and the provisions relating to raising of debt capital should be complied with.

It depends upon their redemption time, I am correct its should be considerd as debt if its redemption fall within 5 years.

further if they are raised from foreign sources, then should comply with ECB provisions. is this right?

YES.


(8). would division of shares adversely affects the EPS of the company(that means causing dilution in EPS).
because the no of outstanding shares increases, which inturn decreases the EPS.
reverse to this is buyback, which increases the EPS

Division of share will decrease EPS, however net effect will remain same. Normally company go for division for bringing in liquidity in trading of shares.

Buy-back will increase EPS, assuming normal circumstances.

(9). for certain key words in the name of the company like asia or india etc with or without brackes then certain amount of min capital should be maintained
but under CA1956 if a foreign company establishes a company in india then its name must contain the words "india' within the brackes prior to pvt ltd or ltd.
example: ABC (india) pvt ltd/ ltd .
in such case should such company too must maintain the min capital as over and above min capital of 1lac or 5 lac as the case may be?

Not required.
 
(10). how could "siemens" etc be registered without mentioning objects in its name or the words 'india" within its brackets? is there any exception?

May be, incorporated before amendment. you can see HUL.


(11). can LLP pay dividend to its partners?

Yes.


(12). regd office in one state and where as corporate office and/or head office in some other state --- in such cases can i presume that they are maintaining their registers and returns at a place other than the place of registered office. is that right?

No...we can not assume that, may company is maintaining statutory registers at Regd Office, also there are provisions in CA,1956 to shift them at other places.

(13). if names appearing on share certificates and the names appearing in RoM are diffrent then which shall prevail? which means which one shall be primafacie considered as  valid? this is because
once it is decided which one is primafacie valid, then the burden to proove otherwise will shift to other party.

Normally not possible, It can be a clerical error, however if done Name on register of members will prevail. It will be taken as evidence,

(14). if for any matters while conducting the secretarial audit or any other audit which could not be ascertained from the registers or records
or any other documentary evidence then can we take cerrtificate or declaration from the concerned company or individual of the company?.
can we take such certificae or declaration on just white paper/letterhead with the signature of that company/individual or should we take on non-judicial stamp paper of some appropriate value. if the stamp paper is required then the value of such stamp paper?

Depends upon situations, If taken on stamp paper it will be similar to undertaking which can not be later denied, I understand same is the thing if we are taking it on normal paper or letter head, still it will have more legal consequences.

(15). is it compulsory that a listed company after listing whenever it issues any further securities (be it equity or non-equity) to otherthan public then it must list them too?

Equity - Compulsory - need to check, I think it is covered.

Non-equity - not required.

 

At last completed, good exercise, replies are very short as there are too many queries, for any further explanation,,,,,,plz specify.

enjoyed..............

Regards

Jaideep Pandya

1 Like

SANTOSH SHAH (Company Secretary) (749 Points)
Replied 03 February 2011

Hi Sonia

 

I thank for the questions raised by you, and thank for Mr.Jaideep and Sunny for the answers.

It was a good learning.

 

regards

 

Santosh Shah :-)

SHWETA SHARMA (company secretary) (45 Points)
Replied 17 November 2011

please ans this

sunil is a company secretary in practice. he has accepted the assignment of secretarial audit of XYZ limited for the f.y. 2010. he received the notice of his assignment on 15th april, 2010 and t=signed the auditreport on 30th june, 2010. it is noticed that sunil ceased to be a company secretary in practice from 1st june, 2010. examine the validity of the report signed by him.

SHWETA SHARMA (company secretary) (45 Points)
Replied 17 November 2011

please ans this

sunil is a company secretary in practice. he has accepted the assignment of secretarial audit of XYZ limited for the f.y. 2010. he received the notice of his assignment on 15th april, 2010 and t=signed the auditreport on 30th june, 2010. it is noticed that sunil ceased to be a company secretary in practice from 1st june, 2010. examine the validity of the report signed by him.

indrani (CS) (37 Points)
Replied 06 January 2012

Hi,

To my understanding the audit report is not valid.

 

Thanks,

Indrani


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