BREATHER FOR INDEPENDENT DIRECTORS

JOE C MATHEW New Delhi, 16 August

The ministry of corporate affairs (MCA) has asked its field officers —registrars of companies and official liquidators —to exclude independent directors and government nominees while initiating prosecution measures against company directors for violation of the Companies Act.The MCA clarification comes in the backdrop of several instances in which its field officers framed charges against all the directors of a company for violations, despite the Act exempting certain directors from penal action as they were not directly involved in day-to-day management.
In a recent circular, the MCA spelled out the types of directors who should not be held responsible in such cases. These include independent directors in listed companies and government nominees in public sector undertakings, public sector financial institutions, financial institutions and banks.
The issue of independent directors facing charges of irregularities in companies had earlier drawn a heated debate in the case of investment banker Nimesh Kampani. He had faced charges in a case related to irregularities in Nagarjuna Finance. Kampani was an independent director in the company and was said to have quit before the company defaulted on depositors’ money in 2002.
Special directors appointed by the Board for Industrial and Financial Reconstruction (BIFR) will also not incur any obligation or liability for anything done or omitted in good faith and in discharge of duties.
While managing directors and persons amongst officers and employees who have been given specific responsibilities by the company board or managing director can be booked for violations, the ministry wants extra care to be taken that directors including nonexecutive directors, officers and employees not connected with the responsibility are not considered delinquent.
“No such director shall be held liable for any act of omission or commission which constitutes a breach or violation of any provision of the Companies Act, 1956, and which occurred without his knowledge attributable through the board process and without his consent or connivance or where he has acted diligently in the board process,” the circular said.












Ministry says govt nominees too can’t be blamed for violationsINDEPENDENTdirectors in listed companies and government nominees in public sector undertakings, public sector financial institutions, other financial institutions and banks won’t be booked for Companies Act violations IN MANYinstances, charges were framed against all the directors of a company, despite the Act exempting certain directors from penal action as they were not directly involved in day-to-day management SPECIALdirectors appointed by BIFR will not face charges for omissions done in good faith and in discharge of duties OFFICIALSasked to take prosecution measures only in case of genuine violations ISSUE of independent directors being hauled up came into the limelight when Nimesh Kampani faced charges for irregularities in Nagarujna Finance. He was an independent director and had quit before an alleged defaultWHOSE FAULT IS IT ANYWAY?

Good News: Now all Students can view their Answer Sheet: Supreme Court

In a landmark judgement which would be thanked by the Student Fraternity across India, Supreme Court on 9 th August 2011 has announced that any Student aggrieved by the marks awarded to him/her in the Exams can now make an application and have a look at how the marks have been awarded. All Students irrespective of whether in School, College or pursuing Professional Qualification like CA/IAS/MBA

can now file an application under RTI and the Institute conducting the Exams would be under an obligation to reveal to the Student his answer sheet and the manner in which he has been awarded marks.

Even Students appearing for Class X and Class XII Boards would now be able to view their answer sheets as Supreme Court has now ordered for disclosure of Answer Sheets for those students making an application under the RTI Act.

Passing the path-breaking order that will be lapped up by students, but may cause consternation among the teaching fraternity, a bench of Justices R V Raveendran and A K Patnaik dismissed a bunch of appeals filed by the Central Board of Secondary Education, West Bengal Board of Secondary Education, Institute of Chartered Accountants of India (ICAI), University of Calcutta, West Bengal Central School Services Commission and Assam Public Services Commission who had challenged the Judgement of the High Court. The petitioners had challenged rulings by different information commissioners under the RTI Act directing them to show the answer-sheets to the students.

The basic contention of all these education boards, Calcutta University and ICAI was that there was a fiduciary relationship between the examiner and the board, and hence it was not proper to show the answer-sheet to the student. CBSE had claimed exemption from the ambit of RTI Act. The Supreme Court held that evaluated answer-sheets were covered under the definition of “information” under the RTI Act, 2005 and reiterated the duty of the public authority to allow maximum disclosure as envisaged by the RTI. Explaining the scope of the ‘fiduciary relationship’ of the agency holding the examination, the Bench held that bodies conducting examinations could not retain evaluated answer sheets in any fiduciary capacity and contend that they would not disclose the same. Welcoming the judgment, the National Campaign for People’s Right to Information, said: “The NCPRI believes this ruling would positively affect the transparency rights of lakhs of students of all kinds across the country including examinations conducted by school boards, universities and public service commissions CAT 2011 New Format iCATs replicate 2 70 min sections. Experience the most realistic mocks www.TestFunda.comThe move will help make the education system more transparent and administrators more accountable, said Sobha Mishra, head of education at industry lobby Ficci. “If someone sat for an exam, he should not be denied the right to see his answer paper once the result is out. No institute or exam-conducting body should ever resist such disclosure,” she said. The verdict will benefit lakhs of students appearing for various examinations, including CA Exams conducted by the ICAI, as it gives a student the right to inspect answer-sheets by just applying to the relevant university, council, board or commission.

Background of the Case This case had reached the Supreme Court from high court which in its earlier judgment had permitted a student, Pritam Rooj, to inspect his answer sheets. Rooj was a student of mathematics in the Presidency College. 

In 2006, when he sat for the first part of degree examination he secured 52 percent marks. In the second year he got 208 out of 400 marks and got just 28 marks out of 100 in the fifth paper. Upon seeking re-evaluation, his marks increased by four in the fifth paper. He contended that his poor marks stood in the way of his getting admission in post-graduation course and applied to inspect his mark sheet under the RTI law which was rejected. The university said that the answer sheets of an examinee cannot be shared. He then approached the High Court and the High Court announced in the favour the Student. Calcutta

University challenged the order of the High Court and approached the Supreme Court and the Supreme Court on 9 th August 2011 upheld the judgement of the high court and ordered Answer sheets to be disclosed

under RTI.

Steps for Registration of Section 25 Companies under Companies Act 1956

Steps for Registration of a Section 25 Company

Step-1

Apply in Form No. 1A to concerned ROC, for availability of name in order of preference (without addition to its name of the word "Limited" or the words "Private Limited").

Step-2

Prepare Memorandum & Articles of Association.

Step-3

Make an application in E form 24A online to the Concerned Regional Director for issue of license under Section 25 of the Companies Act, 1956. The application should be accompanied by: -

·         Three Copies of MoA & AoA of the proposed Company.

·         A declaration confirming the application by CA / CS / Advocate on prescribed Stamp Paper.

·         Three copies of list of names, descriptions, addresses & occupation of the promoters as well as the members of Board of Directors of the proposed Company.

·         A statement showing details of assets & liabilities of the Association as on date with the application.

·         An estimate of future annual income & expenditure of the proposed company, specifying the source of income & object of expenditure.

·         A statement giving brief description of work, if any, already done by the association.

·         A statement specifying briefly the grounds on which the application is made.

·         A declaration in prescribed form on non-judicial stamp paper by each person making an application.

·         A letter of authority.

·         Payment of prescribed fees.

Step-4

Notice pursuant to regulation 11 of the Companies Regulation, 1956 shall be published within one week before or after the admission of the application in one or more newspapers (one in English and other in vernacular local newspaper).

Step-5

Simultaneously furnish the copy of application with all its enclosure and accompanying papers to the concerned Registrar of Companies.

Step-6

The Concerned RoC do the scrutiny of the information of Directors and Promotors of the Proposed company and sent a Scrutiny report to the concerned RD within 15 days of the receipt of such application. The concerned ROC also gets the draft MOA & AOA vetted and then list outs the modifications considered necessary and forwards the same to RD within fifteen days of receipt of the copy. He may normally advise RD to grant license to the proposed company or not.

Step-7

The concerned ROC may consult for the views of District Magistrate of the state within whose jurisdiction the registered office of the proposed company is to be located. Copy sent to RD and reply is generally directly received by ROC from DM.

Step-8

In case, the considerations for issue of license are more important, the RD may consult the State Government too. The RD may also consult the ministries concern and determine, if any, objections received.

Step-9

On receipt of the above papers, the RD gets the MOA & AOA and other papers generally scrutinized.

Step-10

Having received all the necessary views from the ROC, DM, State Government, the RD will take the decision for grant of license to the application or not. (Generally the license is granted within 30 days from the date of filing of application with the RD).

Step-11

Departmental instruction shall be strictly followed. The license may be revoked, with Company's right to be heard.

Step-12

After obtaining the license the MOA & AOA be printed as approved.

Step-13

File the necessary papers with ROC for registration along with filing fees (maximum filing fees payable is Rs.5000/-) and also produce the license granted by the RD. The Stamp duty is also chargeable in some states these days.

Step-14

The ROC on making necessary scrutiny and correction will issue the certificate of incorporation.

Check List for registering a company under Section 25

Step No.	Particulars of Action/ Documents Required	Processing Period
1	Apply in Form No. 1A to concerned ROC, for availability of name in order of preference. Info required: - § Full name & residential address of each of promoters. § ames of the proposed Company in order of their preference (without addition to its name of the word "Limited" or the words "Private Limited"). § Proposed main object of the proposed Company (shall be one as depicted u/s 25 of the Companies Act, 1956). Mention that the proposed Company is to be formed under provisions of Sec. 25 of the Companies Act, 1956	3 - 4 working days
2	After the name is approved, prepare Memorandum & Articles of Association; preferably get it vetted by ROC / RD. Keep in mind that the MOA & AOA are drawn in consonance with provisions of the Sec. 25 & other applicable provisions of the Companies Act, 1956.	3 - 4 working days
3	Make an application with to the Concerned Regional Director for issue of license under Section 25 of the Companies Act, 1956 with all the requisite enclosure as given under:- § Three Copies of MOA & AOA of the proposed Company § A declaration confirming the application by CA / CS / Advocate on prescribed Stamp Paper. § Three copies of list of names, descriptions, addresses & occupation of the promoters as well as the members of Board of Directors of the proposed Company. § A statement showing details of assets & liabilities of the Association as on date with the application. § An estimate of future annual income & expenditure of the proposed company, specifying the source of income & object of expenditure. § A statement giving brief description of work, if any, already done by the association. § A statement specifying briefly the grounds on which the application is made. § A declaration in prescribed form on non-judicial stamp paper by each person making an application. § A letter of authority. § Copy of notice pursuant to regulation 11 of the Companies Regulation, 1956.	8 - 10 working days (depending upon the preparation of documents, availability of each of the promoters and publication of notice in newspaper)
4	Simultaneously furnish the copy of application with all its enclosure and accompanying papers to the concerned Registrar of Companies.
5	On receipt of the above papers, the RD gets the MOA & AOA and other papers generally scrutinized, the RD will take the decision for grant of license to the application or not.	30 - 45 working days
6	On receipt of the license from RD, file the necessary papers with ROC for registration along with filing fees & forms. The ROC on making necessary scrutiny and correction will issue the certificate of incorporation.	8 - 10 working days

Registration of Foreign Companies in India/ How to Register Foreign Company in India

OREIGN COMPANY REGISTRATION IN INDIA

 The Following is the procedure to register the foreign companies in India:

Step -1

Deliver to the Registrar of Companies, Delhi and Haryana, New Delhi and also to the Registrar of Companies of the State or Union Territory in which the company has its principal place of business, [Section 597(1) and (2)] the following documents within thirty days from the establishment of the place of business.

·         Form No.44 duly filled in;

·         A certified true copy of the Memorandum and Articles of Association or charter or statute or any other instrument which constitutes or defines the constitution of the company;

·         If the instrument mentioned above is not in English language, then give a translation of it in English language which must be certified by the following persons:-

§  If the translation is made outside India, then it shall be authenticated by the signature and seal, if any, of the official having custody of the original or of a Notary (Public) of the  country  where the company is incorporated;

§  If the translation is made within India, then by an advocate, attorney or pleader of any High Court or by an affidavit of some person who has an adequate knowledge of both the language in the opinion of the Registrar.

Step-2

Get the form mentioned above signed by the person resident in India authorized to accept notice of service on behalf of the foreign company, limited companies cannot be accepted as authorized person.

Step 3

If your company is incorporated outside India by a Royal Charter or any special Act of Parliament of that country, where it is incorporated, and then just gives a notice to the concerned Registrar of Companies for his information on its establishing a place of business in India. You need not file the form mentioned under item 1above.

Step- 4

Pay the filing fee of Rs.200/- either by way of receipted treasury challan or by cash only to the Registrar of Companies, Delhi and Haryana, New Delhi.

Step-5

If the filing fee is paid by way of  treasury challan, then pay through treasury chalan prepared in triplicate and paid into any of the specified branches of the Punjab National Bank  for credit under the head,”104—Other General Economic Services—Joint Stock Companies—Registration of Joint Stock Companies”. Two copies of the treasury challan will be given back to the depositor out of which the original copy should be attached to the Form mentioned in item 1(i).

Step-6

If the filing fee is paid through demand draft, then draw it in favour of the Registrar of Companies,  Delhi and Haryana, New Delhi and payable at New Delhi.

Step-7

Along with the documents delivered to the Registrar of Companies,  Delhi and Haryana, New Delhi, attach the receipted treasury challan or the  demand draft for the payment of the requisite filing fee mentioned above.