Learn Last Minute for Company Secretary Exams:Service tax,VAT,Company law,Secretarial Practice,Financial Management,Securities law,Due diligence,Corporate Governance,Drafting,Economic

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from the makers of OnlyThisMuch including:

Service Tax & VAT Company Law/Company Secretarial Practice Financial Management Securities Law/Due Diligence & Governance Corporate Restructuring Indirect Taxes Acts under General Laws, Economic, Labour laws & Drafting

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This booklet is offered free of cost and exclusively to select Company Secretary students in India. This booklet cannot be sold by any party nor displayed in any bookshop or stall or retail outlet nor used for any commercial purpose whatsoever. The contents of this booklet have been selected with due consideration of copyright provisions under Copyright Act, 1957.

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Service Tax & VAT Service tax valuation

Situation Value of taxable service

Value =

Sec 67(1)(i) – In a case where the provision of service is for a consideration in money, the value shall be gross amount charged by the service provider for such service provided or to be provided by him.

Value = (Its money value)

Sec 67(1)(ii) – In a case where the provision of service is for a consideration not wholly or partly in money, the value shall be such amount in money, with the addition of service tax charged as is equivalent to consideration.

Value = (Its money value)

Sec 67(1)(ii) – In a case where the provision of service is for a consideration not wholly or partly in money, the value shall be such amount in money, with the addition of service tax charged as is equivalent to consideration.

Service tax (Determination of value) Rules, 2006 shall apply

Sec 67 (1) (iii) – In a case where the provision of service is for a consideration which is not ascertainable, the value shall be the amount as may be determined in the prescribed manner (i.e. Valuation Rules)

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Value for service recipient -1 =

Rule 3 (a) - the value of such taxable service shall be equivalent to the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration.

Value of Service = EQUIVALENT MONEY VALUE of consideration which should not be less than COST of provision of service.

Rule 3(b) - Where the value cannot be determined in accordance with clause (a), the service provider shall determine the equivalent money value of such consideration which shall, in no case be less than the cost of provision of such taxable service.

Value = As determined by the excise officer after giving an opportunity of being heard. (If assessee is not satisfied with the value then he can go for appeal)

Rule 4 - Where the Central Excise Officer is satisfied that the value so determined by the service provider is not in accordance with the provisions of the Act or these rules, he shall issue a notice to such service provider to show cause why the value of such taxable service for the purpose of charging service tax Should not be fixed at the amount specified in the notice. The Central Excise Officer shall, after providing reasonable opportunity of being heard, determine the value of such taxable service for the purpose of charging service tax in accordance with the provisions of the Act and these rules.

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ISSUES IN VALUATION: � Issue-1: Who has to determine the value? � Rule 3 of valuation rules makes it clear that Value of taxable service shall be

determined by “Service provider”

� Issue-2: Are free services liable to service tax? � No, Service tax is not leviable on free services. The following case laws will

clarify the issue. ‘No service tax is payable if SIM cards are given free as bonus’ – Bharati cellular Ltd. ‘An assessee, who was a stock broker, didn’t charge brokerage in respect of certain transactions. It was held that Sec. 67 does not have any deeming provision and hence service tax is not leviable’ – Chandravadan Desai V. CCE The above treatment is applicable only when there is really free service and not when its cost is recovered through different means.

� Issue-3: TVS motors sells 2 wheelers to customers through dealers with a

free service during warranty period. In case of services to motor vehicles, though the service is termed as ‘free service’, actually the amount is paid to service provider (i.e. automobile dealer) by the manufacturer of automobile (i.e. TVS motors). The dealer didn’t pay service tax on the ground that he didn’t receive money from customers (i.e. Service recipient) but from a third party (i.e. Manufacturer). Is the dealer’s argument correct?

� The words used in sec. 67 are “charged for such service provided or to be provided by him” but it does not specify that the amount should be ‘charged’ to service reciver. Thus, the charge may be to anyone. It is not necessary that ‘charge’ should be only to receiver of service. Even if amount is ‘charged’ to some other person and not to receiver of service, service tax will become payable. Though the customer gets service free, it is not free service and would be taxable.

� Issue-4: TAX O KEY Ltd. appointed Mr. Giridharan as its statutory auditor and

paid amount to hotel and travelling agency for the accommodation and travelling expenses of auditor. The service provider (i.e. auditor) does not include the said amount paid by the company in the value of taxable services provided and argued that he didn’t receive that amount from the service recipient and it is directly paid by it to hotel and travelling agency. Is the treatment adopted by auditor correct?

� As per Sec. 67, amount need not be ‘charged’ by service provider. Money paid to third party on behalf and for the purpose of service provider is includible in the value of taxable services provided by service provider. Definition of ‘consideration’ also makes it clear that consideration need not be received by the service provider himself.

� Issue-5: X ltd. holds 27% shares in Y ltd. (X and Y are associated under

section 92A of Income tax Act). X ltd. provides consultancy services to Y ltd. and sent a bill for Rs. 30,000 to Y ltd. Y ltd. adjusted the amount through

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book entry and X ltd. also done the same. X ltd. didn’t pay service tax on the groung that it didn’t receive service charges and service tax from Y ltd., But department demanded duty from X ltd. Advise?

� The department through its letter clarified that service tax is leviable on taxable services provided by the person liable to pay service tax even if the amount is not actually received, but the amount is credited or debited in the books of account of the service provider. However, this provision is restricted to transaction between associated enterprises. In case of reverse charge, tax liability will be when book entry is made by service receiver.

� Issue-6: Whether the payment made by service recipient to service

provider, not in relation to service is includible in the value of taxable service?

� No, as laid down in the following cases. (i) CKP Mandal V. CCE Facts:

CKP Mandal, who was a mandap keeper entered into contract with other contractor.

The contract is for giving the contractor exclusive rights for rendering services of catering and decoration to the hirer of community hall.

Any other contractor was not to be allowed to provide these services to the hirer of community hall.

The contractors had given donation of Rs. 8.35 lakhs to the appellants (CKP Mandal) as contribution to corpus fund.

Issue: The department demanded duty from CKP Mandal on the ground that it has received Rs. 8.35 lakhs for the contract (i.e. Sale of rights). Decision: The court held that the amount received was not in relation to service of mandap provided by CKP mandal and hence tax is not required to be paid on this amount.

(ii) Cultural Society of Angamally V. CCE It was held that amounts received as donation and public/ government grants for activities of society are not related to services provided by society. These are excludible from taxable value for charging service tax.

� Issue-7: Hotel Marudhar palace charges 10% of the bill amount as service

charges and department has asked them to pay service tax on it. The assessee has submitted that the amount @ 10% collected from customers is subsequently disbursed among the staff; therefore it is not part of their income and cannot be included in the gross amount charged by them. Examine the case?

� The charge should be for taxable service provided or to be provided. Thus, if anyother amount is charged which is not for taxable service provided or to be provided, service tax is not payable on such charge. The 10% service charge which was later distributed as tips to employees. It was held that tax is payable on gross amount charged to customer and hence would include this ‘service charge’ also. – Hotel Mela plaza V. CCE

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VALUE ADDED TAX

Illustration on Basic Concept: Mr. S acquires goods from Mr. T for Rs. 1,000 on which tax is 10%, Mr. S adds Rs. 400 value of goods and sells at Rs. 100 profit. The tax rate is 20%. What is the ultimate price for customer (a) If VAT system is not present (b) If VAT system is implemented

Without VAT With VAT Sale price of Mr. T 1000 Sale price of Mr. T 1000 Add: Tax @ 10% 100 Add: Tax @ 10% 100 Amount paid by Mr. S 1,100 Amount paid by Mr. S 1,100 Cost to Mr. S 1,100 Cost to Mr. S (1,100 – 100) 1,000 Add: Profit and Value of goods 500 Add: Profit and Value of goods 500 Sale price of Mr. S 1,600 Sale price of Mr. S 1,500 Add: Tax @ 20% 320 Add: Tax @ 20% 300 Cost to Customer 1,920 Cost to Customer 1800 Tax payable by Mr. S 320 Tax payable by Mr. S (300 -

100) 200

Observation

Explanation Advantage

The cost saved by the consumer and tax revenue lost by the government is one and the same.

From the above illustration, the cost to consumer when VAT system is implemented is less compared to without VAT system. The consumer saves Rs. 120. The tax payable by Mr. S to the government is decreased when VAT system is implemented i.e. Rs. 120. Therefore the government loses its revenue in order to contribute it to consumer.

Avoids cascading effect of tax A persistent criticism of VAT has been that since the tax is payable on the final sale price, the VAT usually increases the prices of goods. However, VAT does not have any inflationary impact. With the introduction of VAT, tax impact on RM is totally eliminated. Therefore, there will be no increase in prices.

Why the VAT credit should not be considered in the cost and how it can be set off with tax payable? Logical Explanation Accounting Explanation

The VAT paid on purchases is available as credit. Whenever a portion of cost incurred is available as credit, it should not be considered while calculating the net cost incurred. If it is considered then cost to consumer will increase and leads to cascading effect of tax which is against the VAT system.

For purchases: Purchases A/C ----- Dr. VAT credit Receivable A/C --- Dr. To Cash/Creditors A/C For Setoff: VAT payable A/C --- Dr. To VAT credit receivable A/C To Cash (Bal. if any)

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The credit so available will be utilised for payment of VAT liability.

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Company Law/Company Secretarial Practice TYPES OF SHAREHOLDERS RESOLUTION

1. Ordinary Resolution – approval by MAJORITY [VOTE FOR > VOTE AGAINST] 2. Special Resolution – approval by not less than 3 TIMES greater than votes against

LIST OF ITEMS WHEN E-FORM 23 HAS TO BE FILED According to Section 192, every company must file with the ROC copies of following resolutions and agreements (i.e.) it requires registration:

1. ALL special resolutions passed by shareholders of the company 2. Board Resolutions & agreements regarding appointment / re-appointment / amendment

/ variation in terms of Managing Director 3. Ordinary resolutions and agreement u/s. 294 for appointing Sole Selling Agent 4. Ordinary resolution u/s. 484 for voluntary winding up 5. Ordinary resolution u/s. 293(1)-(a), (d) & (e) (NOT for Section 293(1)-(b) & (c)):

◦ Section 293(1)(a): SELL, lease or otherwise (like, mortgage) dispose of the whole, or substantially the whole, of the undertaking of the company

◦ Section 293(1)(b): REMIT any debt due by director ◦ Section 293(1)(c): INVESTS compensation received for compulsory acquisition ◦ Section 293(1)(d): BORROW exceeding the aggregate of the paid-up capital

of the company and its free reserves (excluding the temporary loans repayble within 6 months)

◦ Section 293(1)(e): CONTRIBUTE to charity in a financial year exceeding Rs. 50,000 or 5% of average net profit for preceding 3 financial years (whichever is greater)

LIST OF SPECIAL RESOLUTIONS WHENEVER you know that the particular item of business falls under the belowmentioned list, then that requires special resolution of shareholders and in that case, you may write the following steps:

1. Convene a Board Meeting to discuss (the item of business as below) 2. To call for a General Meeting and authorise the Company Secretary or Director of the

company to issue notices and make necessary arrangements for the same. 3. Convene the General Meeting to pass the special resolution concerning (the item of

business as below) 4. Once its approved, file e-form 23 with RoC along with:

◦ Copy of the Notice ◦ Extract of the Resolution ◦ Relevant Explanatory Statement ◦ Applicable Filing fees.

To alter the object clause [Section 17] To change the name of the company [Section 21] To OMIT Limited or Private Limited from the name of the company [Section 25] (i.e.) to change the name of the charitable organization

To alter the Articles [Section 31] Buy Back of securities exceeding 25% of Paid up capital & Free Reserves [Section 77A] Issue of sweat equity [Section 79A] Issue of further pre-emptive shares [Section 81(1A)]; (i.e.) further issue NOT to be

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offered as Rights issues; In this case, where no such special resolution is passed, then Ordinary resolution with CG approval may be obtained. Conversion of loans or debentures into shares [Section 81(3)] Creation of Reserve Capital [Section 99] Reduction of share capital [Section 100] Approval of variation of rights of shares of special class of shares [Section 106] To change the registered office outside the local limits of town [Section 146] To commence new line of business (i.e.) transfer from other objects to Main Objects by a Public company [Section 149]. In this case, where no such special resolution is passed, then Ordinary resolution with CG approval may be obtained. To keep the registers at a place outside the registered office [Section 163] and to enable inspection of the same. To authorize the payment of interest out of share capital [Section 208] for ventures not made profitable over a considerable period such as construction contracts To appoint auditors of Companies in which 25% of Subscribed Capital is held singly/jointly/in combination by CG/SG/Government Company/Public Financial Institution/Insurance Company/Nationalised banks and Financial Institutions, 51% of its capital is held by SG [Section 224A]. In this case, even Special Notice is mandatory. To request CG for investigation into the affairs of the company and to appoint inspectors [Section 237(a)(i)] To appoint sole selling agents by company with Paid-up capital of Rs.50 lakhs [Section 294AA] To fix remuneration of directors , where article requires Special Resolution [Section 309(1)] To pay commission to non-executive directors [Section 309(4)] To appoint director or such person in office or place of profit [Section 314] To make liability to director or manager unlimited [Section 323] To make inter-corporate loans and investments [Section 372A] To apply to the court for winding up [Section 433] To wind up the company voluntarily [Section 484] Power of Liquidator to sell company’s property for shares [Section 494] Powers of Liquidator in Voluntary Winding up [Section 512] Arrangement when binding on company & creditors [Section 517] Liquidator to exercise power u/s. 546 Disposal of books & papers [Section 550] Deed of Settlement by Company registered under Part IX of the Act [Section 579] LIST OF RESOLUTIONS REQUIRING POSTAL BALLOT Postal ballot is a system of voting at a general meeting through postal or electronic means. It is mandatory only for a company LISTED with stock exchanges to pass the resolution through postal ballot WITHOUT calling for a physical general meeting. The following businesses conducted by a LISTED COMPANY shall be mandatory done only through postal ballot,

1. Amendment of Object Clause – special resolution 2. Amendment of Situation Clause; i.e., shifting Registered Office outside the State – special resolution with Company Law Board approval 3. Amend Articles to include Section 3(1)(iii) – special resolution with Central Government approval 4. Buy Back of Shares u/s. 77A 5. Issue of Sweat Equity Shares u/s. 79A – special resolution

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6. Issue of Equity Shares with Differential Rights – ordinary resolution 7. Variation of Shareholders rights u/s. 106 – special resolution 8. Sale of whole or substantially the whole of undertaking u/s. 293(1)(a) – ordinary resolution 9. Loan / Guarantee / Security in excess of the limit u/s. 372A – special resolution 10. Election of Small Shareholder Directors u/s. 252 – ordinary resolution 11. Mandatory Public Offer of 20% when there is change in control of listed company as per provisio to Regulation 12 of SEBI Takeover Code is not made as approved by shareholders – special resolution 12. Prior Shareholders approval by way of Special Resolution WITH votes FOR by PUBLIC shareholders is atleast 2 times votes AGAINST by PUBLIC shareholders, through POSTAL BALLOT as per Regulation 8 of SEBI (Delisting of Equity Shares) Regulations, 2009 13. The non-convertible portion of partly convertible debt instruments issued by a listed issuer, the value of which exceeds Rs.50 lakhs, may be rolled over WITHOUT change in the interest rate, subject to compliance of Section 121 of the Companies Act, 1956 and approval of shareholders by Special Resolution as per Regulation 21 of SEBI (Issue of Capital & Disclosure Requirements – ICDR) Regulations, 2009

TYPES OF BOARD RESOLUTION

Simple Majority approval Unanimous approval

LIST OF BOARD RESOLUTIONS TO BE PASSED ONLY AT A BOARD MEETING u/s. 292 A Board meeting resolution can be passed either at a physical/electronic meeting OR by way of Circular Resolution. Circular resolution is one where a resolution is sent to all directors at their respective places for them to read, approve and sign the same. It is in the natue of DEED ESCROW (for drafting). However, the following board resolutions shall be done ONLY at the meeting of the board and NOT through Circular Resolution:

1. Calls on shares 2. Buy back UPTO 10% of Paid-up Equity Capital & Free Reserves u/s. 77A 3. Borrowing through Debentures & others 4. Making Investments & loans 5. Public Deposits u/s. 58A 6. Declaration of Solvency u/s. 77A for Buyback and u/s. 488 for Members Voluntary Winding

up 7. Section 262 regarding appointment of directors under Casual Vacancy 8. Section 293A regarding Political Contribution by Company 9. Section 297 as to the board sanction of contracts in which directors or related persons

are interested 10. Section 299 as to the board sanction of contracts in which directors or related persons

are interested 11. Section 308 regarding duty of directors and persons deemed to be directors to make

disclosure of share holdings 12. Unaudited quarterly & half yearly results of a LISTED company under Listing Agreement

with Stock Exchange. SPECIAL BOARD RESOLUTION SECTIONS REQUIRING UNANIMOUS APPROVAL

SECTION 316: Number of companies in which one director can be appointed as Managing Director

SECTION 386: Number of companies in which one individual can be appointed as Manager

SECTION 372A: Intercorporate Loans, guarantees & investments


FOR THE ABOVE SECTIONS 316, 386 & 372A:

The notice of the Board Meeting shall contain an AGENDA of the matters to be discussed The Board Resolutions can be passed ONLY at the meeting of the Board The Board Resolutions shall be approved UNANIMOUSLY (i.e) by all the board of directors

present at the meeting. Note: In all other cases, a board meeting notice need not contain the agenda and all other board resolution can be approved by way of Simple Manjority. GROUP RIGHTS UNDER COMPANIES ACT Sectio

n About No. of members required

Sec 106

Variation of rights of holders of special classes of shares

Passing a Special Resolution at a Meeting of Holders of that Class of Shares OR With Consent of 3/4th of Members, in writing;

Sec 107

Rights of Dissentient Shareholders to cancel the Variation u/s. 106

Such Variation can be cancelled WITHIN 21 days from the date of Special Resolution or Consent, on application to Court, by 10% OR more of the shares of that class who did not consent to such Variation.

Sec 169

Calling of extraordinary general meeting [EGM] on requisition

Company having share capital, such number at the date of the deposit of the requisition, holding 1/10th OR more of the paid-up capital of the company; Company NOT having share capital, holding 1/10th OR more of the total voting power at the said date.

Sec 179

Demand for Poll Public Company with Share Capital, By Disinterested Members holding 10% Voting Right OR Rs.50,000 Paid-up; Private Company with Share Capital,

If personally present is 7 or LESS, then by ONE Disinterested Member or Proxy If personally present is MORE than 7, then by TWO Disinterested Members or Proxies;

Any other Company, By Disinterested Members holding 10% Voting Right;

Sec 188

Circulation of Members Resolution

such number of members as represent 1/20th OR more of the total voting power of all the members having at the date of the requisition a right to vote on the resolution or business to which the requisition relates; OR 100 members OR more having the right aforesaid and holding shares in the company on which there has been paid-up of aggregate sum of one lakh OR more, of rupees in all;


Sec 235

Investigation of the affairs of a company

Company having a share capital, an application has been received from 200 members OR more; or from members holding 1/10th OR more of the total voting power therein

Company NOT having share capital, application from 1/5th OR more of Total in Register of Members (RoM)

Sec 252

Appointment of “Small Shareholder Director” by Small Share Holders holding Shares for Nominal Val UPTO Rs. 20,000/-

A public company having Paid-up Capital (PC) of

Rs. 5 Crores OR more AND having 100 or more Small Share Holders

may have a director appointed by their small shareholders;

Sec 287

Quorum for Board Meeting Quorum – 1st Condition 2 Directors OR 1/3rd of Total Strength, whichever is HIGHER Quorum – 2nd Condition

“IF” Interested Dir 2/3rd OR more of Total Strength (TS) “THEN” Balance 1/3rd if 2 Director or More, constitute a Valid Quorum for the Meeting

Sec 399

Eligibility Criteria for application under Oppression & Mismanagement

Company having share capital, Lesser of 100 members or 1/10th of Total Members or 1/10th of Issued Capital in which all calls are paid

Company NOT having share capital, 1/5th OR more of Total number of members in Register.

CRUCIAL SECTIONS WITH HINTS

SECTION 383A: APPOINTMENT OF COMPANY SECRETARY Where the Board of directors of any such company comprises only 2 directors, neither of them shall be appointed as company secretary of the company.

Total Paid-up Capital of the Company

Compliance Certificate (CC)

Company Secretary (CS)

5 crores or more Optional mandatory 2 crores to 5 crores Optional, if CS is

appointed optional, if CC is

obtained 10 lakhs to 2 crores Mandatory optional Less than 10 lakhs Optional optional

Note: PC = Paid-up Capital which includes all money flows for which shares are allotted, thereby consider Equity, Preference & also partly paid-up to the extent of paid-up. A Compliance Certificate can be issued only by a Company Secretary in Practice. A Practising Company Secretary can ISSUE Compliance Certificate of ANY company &/or SIGN Annual Return of a LISTED company UPTO 80 companies, in aggregate, in a CALENDAR YEAR.


SECTIONS 295, 297, 299 & 314 295: A director in a PUBLIC COMPANY has to VACATE the office on non-compliance of Section 295. It mandates CENTRAL GOVERNMENT APPROVAL in all cases. The cases include LOAN to directors and related persons . 297: This section deals with contracts in which directors are interested and will be attracted only if BOTH or EITHER of the person to the contract is a PRIVATE company. The Central Government approval will be mandatory only on crossing the paid-up capital exceeds prescribed limits. 299-301: The interested persons covered u/s. 269, 295, 297, 314 and holdings of more than 2% in anyother company shall be immediately intimated to the Board. 314: Office or place of profit by directors mandates shareholders approval by Special Resolution. The Central Government approval is required based on prescribed limits for person OTHER THAN directors. LIST OF E-FORMS TO BE FILED WITH ROC Some forms require pre-certification by professional e.g. Practising CS, CA or ICWA to ensure its authenticity. In addition to the Digital Signature of the Company Official, a Professional also has to certify the same by affixing the Digital Signature. The e-Form Nos. 1 (for declaration of dividend out of reserves & for Investor Education Protection Fund) 2, 3, 5, 8, 10, 17, 18, 20B, 21A, 23, 23AC, 23ACA, 24AB, 32 and 61 are required to be pre-certified.

Approval Services (Central Government) Description e-Form

Application to Central Government for modification in the matters to be stated in the company's balance sheet or profit and loss account pursuant to Section 211(4)

Form 23AAA

Application for exemption from attaching the annual accounts of the subsidiary companies pursuant to Section 212(8)

Form 23AAB

Application to Central Government for not providing depreciation pursuant to Section 205(2)(c)

Form 23AAC

Form of application to the Central Government for appointment of cost auditor pursuant to Section 233B(2)

Form 23C

Form for filing application for giving loan, providing security or guarantee in connection with a loan pursuant to Section 295

Form 24AB

Form of application to the Central Government for obtaining prior consent for holding of any office or place of profit in the company by certain persons pursuant to Section 314(1B)

Form 24B

Form for filing application for declaration as Nidhi Company with MoA & AoA containing only prescribed objects, details of financial dealings with non-members with Certificate from PCA & Auditors certificate as to compliance of MCA directions, Board Resolution & 2 directors Certificate that it has atleast 500 members on the date of application

Form 63

Form for filing application or documents with Central Government pursuant to Rule 2 of Companies (Application for extension of Time or Exemption u/s. 58A(8)) Rules, 1979 or explanation to qualification of cost audit report u/s. 233B(7)

Form 65


Form of application for approval for declaration of dividend out of reserves pursuant to Section 205A(3) & Rule 2 of Dividend out of reserve rules, 1975 Form

Form of application for removal of disqualification of directors pursuant to Section 274 Companies (Disqualification of Directors u/s. 274(1)(g) of the Companies Act, 1956) Rules, 2003

Form DD-C

Form of application for approval of the Central Government for the appointment of sole selling agents by the company pursuant to Section 294AA & Rule 2 of Companies (Appointment of Sole Agents) Rules, 1976

Form I

Form of application for approval of the Central Government for the appointment of sole buying agent by a company pursuant to Section 294AA & Rule 2 of Companies (Appointment of Sole Agents) Rules, 1976

Form II

Form for filing Cost Audit Report and other documents with CG pursuant to Sections 233B(4), 600(3)(b) and Rule 2(c) & 4 of Cost Audit (Report) Rules, 2001

Form I

Approval Services (Regional Director)

Description

e-

Application for confirmation by Regional Director for change of registered office of the company within the state from the jurisdiction of one Registrar to the jurisdiction of another Registrar pursuant to Section 17A

Form 1AD

Form for filing application to Regional Director pursuant to Sections 22, 25, 224(3) (7) & 297 or service of notice u/s. 391-394

Form 24A

Form for filing application for opening branch(s) by a nidhi company Form 64

Approval Services (Registrar of Companies)

Description

e-

Application for approval of the Central Government for change of name or conversion of a public company into a private company pursuant to Section 21 or 31(1)

Form 1B

Form for filing an application with Registrar of Companies pursuant to Sections 166, 210, 394, 560, 621A

Form 61

Change Services

Description

e-

Application form for availability or change of a name pursuant to Sections 20 & 21

Form 1A

Application for approval of the Central Government for change of name or conversion of a public company into a private company

Form 1B

Notice of consolidation, sub-division, conversion, re-conversion, redemption, cancellation, re-classification, etc. or increase in share capital or increase in number of members pursuant to Sections 95, 97, 94A(2), 81(4)

Form 5

Notice of situation or change of situation of registered office pursuant to Section 146

Form 18


Particulars of appointment of managing director, directors, manager and secretary and the changes among them or consent of candidate to act as a managing director or director or manager or secretary of a company and/ or undertaking to take and pay for qualification shares pursuant to Sections 303(2), 264(2), 266(1)(a) & 266(1)(b)(iii)

Form 32

Charge Management

Description

e-

Particulars for creation or modification of charges (other than those related to debentures) including particulars of modification of charge by asset reconstruction companies in terms of SARFAESI Act, 2002 pursuant to Sections 125, 127, 130, 132 & 135 with 600

Form 8

Particulars for registration of charges for Debenture pursuant to Sections 125, 127, 128, 129, 130, 132, 134, 135 with 600

Form 10

Particulars for satisfaction of charges pursuant to Section 138 with 600 Form 17

Company Registration

Description

e-

Application or declaration for incorporation of a company pursuant to Sections 33 (1) & (2) Form 1

Application form for availability or change of a name Form 1A

Notice of situation or change of situation of registered office Form 18

Declaration of compliance with the provisions of section 149(i)(a), (b) and (c) of the Companies Act,1956 pursuant to Section 149(1)(d)

Form 19

Declaration of compliance with the provisions of section 149(2)(b) of the Companies Act,1956 pursuant to Section 149(2)(c)

Form 20

Declaration of the compliance with the provisions of section 149(2A) and (2B) pursuant to Section 149(2A)(ii)

Form 20A

Particulars of appointment of managing director, directors, manager and secretary and the changes among them or consent of candidate to act as a managing director or director or manager or secretary of a company and/ or undertaking to take and pay for qualification shares

Form 32

Compliance Related Filing

Description

e-

Statement of amounts credited to investor education and protection fund pursuant to Rule 3 of IEPF (Awareness & Protection of Investors) Rules, 2001 Form 1

Return of allotment pursuant to Section 75(1) and for allotment of shares for consideration otherwise than in cash where agreement or contract is executed in writing

Form 2

Particulars of contract relating to shares allotted as fully or partly paid-up otherwise than in cash pursuant to Section 75(2) and for allotment of shares for Form 3


consideration otherwise than in cash where NO agreement or contract is executed in writing Statement of amount or rate percent of the commission payable in respect of shares or debentures and the number of shares or debentures for which persons have agreed for a commission to subscribe for absolutely or conditionally pursuant to Section 76(1)

Form 4

Return in respect of buy Back of Shares Form 4C

Statutory Report pursuant to Section 165 Form 22 Registration of resolution(s) and agreement(s) and postal ballots pursuant to Section 192 & 192A Form 23

Information by Auditor to Registrar pursuant to Section 224(1A) [Sec 224(1B) also for Public Companies]

Form 23B

Return of appointment of managing director or whole time director or manager pursuant to Section 269(2) & Schedule XIII

Form 25C

Form for submission of documents with Registrar of Companies pursuant to Sections 44, 60, 77A, 488, 497, 509, 516, 551 & 555 read with Company Court Rules 313, 315, 327, 331, 335 & Acceptance of Deposit Rule 10.

Form 62

Report by a public company pursuant to Sections 274(1)(g) & Rule 5 of Companies (Disqualification of Directors u/s. 274(1)(g) of the Companies Act, 1956) Rules, 2003

Form DD-B

Provisions related to Managerial personnel

Description

e-

Form of application to the Central Government for increase in the number of directors of the company pursuant to Section 259

Form 24

Form of application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing or whole-time director(s) or manager and commission or remuneration or expression of opinion to directors pursuant to Sections 198(4), 269, 309(3), 309(5B), 310, 311, 387, 388, 2(24), 4(7), 309(1)(b), 309(4)(a)-(b) & 316(4)

Form 25A

Form of application to Central Government for approval to amendment of provisions relating to managing, whole time or non rotational director with Copies of the proceedings along with board or general meeting resolution and NOC from Bank/FI, if any.

Form 25B

Form of application for removal of disqualification of directors Form DD-C

Annual filing eForms Description e-Form

Form for filing annual return by a company having a share capital with the Registrar pursuant to Section 159 Form 20B

Particulars of annual return for the company not having share capital pursuant to Section 160 Form 21A

Form for filing balance sheet and other documents with the Registrar pursuant to Section 220 Form 23AC

Form for filing Profit and Loss account and other documents with the Registrar pursuant to Section 220

Form 23ACA

Form for submission of compliance certificate with the Registrar pursuant to Section 383A & Rule 3(2) of Compliance Certificate Rules, 2001 Form 66


Other Forms

Description

e-

Form of Return to be filed with RoC pursuant to Section 187C(4) Form 22B

Notice of address at which books of account are maintained pursuant to Section 209(1)

Form 23AA

Information to be furnished in relation to any offer of a scheme or contract involving the transfer of shares or any class of shares in the transferor company to the transferee Company pursuant to Section 395(4A)(a)(i)

Form 35A

Appointment or cessation of receiver or manager pursuant to Section 137 & 600 with particulars of No. of charges and Court order, as signed by Receiver/Manager along with SRN of Form 36

Form 15

Receivers or Managers abstract of No. of Receipts & Payments pursuant to Section 421, 424 & 600 with Charge ID & Instrument or Court order details, as signed by Receiver/Manager

Form 36

Application by an existing joint stock company or by an existing company (not being a joint stock company) for registration as a public limited or private limited or an unlimited company pursuant to Sections 565, 566, 567 & 568

Form 37

Registration of an existing company as a limited company pursuant to Sections 565(1), 567 (a) & (c) and 568(a)

Form 39

Particulars of persons or directors charged or specified for the purpose of Section 5 (f) & (g)

Form 1AA

Notice of Court or CLB order pursuant to Sections 17(1), 17A, 17(5), 79, 81(2), 81(4), 94A(2), 102(1), 107(3), 111(5), 141, 155, 167, 186, 391(2), 394(1), 397, 398, 445, 466 (under liquidation), 481 (under liquidation or dissolved), 559 & 621A

Form 21

Documents delivered for registration by a foreign company pursuant to Section 592

Form 44

Form of annual return of a foreign company having share capital pursuant to Section 600(3)(b)(i) & Rule 3 of application of Section 159 to Foreign Companies Rules, 1975

Form 1

Return of alteration in the charter, statute or memorandum and articles, address of registered or principal office & directors & secretary of foreign company pursuant to Section 593 (a)/(b)/(c)

Form 49

Form for filing addendum for rectification of defects or incompleteness pursuant to Rule 20A(3) of the Companies (Central Government's) General Rules and Forms, 1956

Form 67

Source: www.mca.gov.in


Financial Management – Financing Decisions

COST OF CAPITAL

“Cost of Capital” is the minimum return expected by the contributors of capital. The contributors may be equity share holders, debenture holders and preference shareholders who invest in equity shares, debentures and preference shares respectively of a company.

Simply the company has to earn a minimum amount (return) on the money contributed by

outsiders (Investment) i.e. return of Investment (ROI) = Re turn x100

Investment

COST OF DEBT Normal Debentures Kd = Interest (1- tax rate) Debentures with flotation costs

Intereste (1 - Tax rate)KdNet sale proceeds

Net sale proceeds = capital raised (-) Flotation costs Redeemable debentures RV-NSPIntereste (1 - Tax rate) +

NKd RV NSP2

Rv = Redeemable value;

NSP = Net sale proceeds

N = Maturity period

COST OF PREFERENCE SHARES Normal Preference shares Kp = preference dividend Preference shares with flotation costs

Pref. dividendKpNet sale proceeds

Net sale proceeds = capital raised (-) Flotation costs Redeemable preference shares RV - NSPPref. dividend +

NKp RV + NSP2

RV = Redeemable value of preference share

NSP = Net sale proceeds

COST OF LOANS In all situations KL = Interest (1 – Tax rate)

COST OF EQUITY Computation of Cost of Equity (Ke) under various approaches:

Growth rate = g = Retention ratio x Return on Investment (ROI)

Dividend per share (DPS)Dividend Payout ratio = x100Earnings per share (EPS)

Retention Ratio = 1 – Dividend payout ratio

= 1 – DPS x100EPS

Price Approach

Dividend Price Approach

Earnings Price

Gordon’s Dividend Growth

Growth Approach

Earning’s Growth Approach

eDividend per share (DPS)

K x100Market price per share (MPS)

(or)

Total dividend x100Market value of equity

Capital Asset Pricing Model (CAPM)

Realized Yeild Approach

eEarnings per share (EPS)K x100

MPS

(or) Total earnings x100MV of equity

1e

0

DK gP

D1 = Expected dividend per share i.e. D0 (1+g) D0= Dividend paid by the company. P0 = Market price of share g = growth rate

e0

EPSK gP

E Be

B

D P PKP

D = Dividend PE = Price at end PB = Price at beginning PE – PB = Capital appreciation.

Ke = Rf + β (RM – RF) RF = Risk free rate β = Beta RM = Market return (RM – RF) = risk

= Retained earningsEPS DPS x100 x100

EPS Total earnings

21 www.learnlabz.com [email protected] Company Secretary Exams

f

f m f

Return of a security = R

= R β R R

sm f

m

R R

COST OF RESERVES Reserves are created out of profits

and are shareholders’ funds. So, the cost of reserves is nothing but cost of equity except that there are no flotation costs.

Kr = Ke (except flotation cost)

WEIGHTED AVERAGE COST OF CAPITAL (WACC) OR OVERALL COST OF CAPITAL o E E D D P PK W x K + W x K W x K

WE = weight of equity WD = weight of Debt weights are the proportions i.e. simply

EEquity CapitalWTotal Capital

Note: Market value weights are more appropriate than book value weights.

LEVERAGES

The employment of an asset (or) source of funds for which the firm has to pay a fixed cost (or) fixed return may be termed as leverage. Alternatively, containing, fixed cost in the total cost structure is known as “leverage”.

Operating Leverage 6. Containing fixed operating expenses in the operating cost structure.

7. Operating cost structure = Variable cost, Fixed cost, Taxes

8. % change in EBIT > % change in sales % change in EBIT 1% change in sales

Degree of operating leverage (DOL) is used to measure the operating leverage.

DOL

Financial leverage (Also known as Trading on equity)

Containing fixed financial cost i.e. interest (or) dividend in the financial cost structure.

Finance cost structure = Interest, Preference dividend and equity dividend

% change in EPS > % change in EBIT = % change in EPS 1% change in EBIT

Degree of Financial leverage (DFL) is used to measure the Financial leverage.


Combined leverage 14. In order to find out the % change in

EPS for change in sales, we use combined leverage.

15. The combined leverage is the product of DOL and DFL

16. % change in EPS% change in sales

17. Degree of combined leverage (DCL) = DOL x DFL

CAPITAL STRUCTURE - DECISIONS Capital Structure means the proportion of debt, equity and preference capital

in the total capital of a company. Optimum capital structure is that capital structure with minimizes the

company’s overall cost of capital (Ko) and maximizes the value of company (V).

EBIT – EPS ANALYSIS Multiple Financing options or alternatives

Given the level of EBIT (which is an outcome of Investment decisions), SELECT that option which has MAXIMUM EPS. i.e. Which maximizes the value of the company.

A single financing option or alternative

Use Financial Break Even Point (BEP). Financial BEP is the level of EBIT at which the company is in a position to recover its fixed financial charges (i.e. interest and preference dividend after adjustment for tax) or the level of EBIT at which EPS is zero.

Financial BEP � Interest + Pref. dividend

(1 - tax rate)

If actual EBIT < Financial BEP = Reject the option If actual EBIT > Financial BEP = Accept the option

In order to switch between options

Use Indifference point The level of EBIT at which EPS under the alternative financing options are same. In difference point can be constructed between two different alternative courses of action by equating the EPS Let, ‘X” be Indifference EBIT, then EBIT (1-T) (EBIT-I) (1-T)-P

N N , I= Int., T=tax, P=Pref. div.

If actual EBIT < Indifference point = Select that option which has


low debt. If actual EBIT > Indifference Point = Select that option which has high debt.

EBIT – MPS ANALYSIS Multiple Financing options or alternatives

Given the level of EBIT (which is an outcome of Investment decisions), SELECT that option which has MAXIMUM MPS. i.e. Which maximizes the value of the company. MPS = Market price per share = EPS X P/E ratio.

In order to switch between options

Use Indifference point In the same way for finding indifference point instead of equating EPS, market price per share under two alternative must be equated, which shall be as follows.

EBIT (1-T) (EBIT - I) (1 - T)P/E ratio = P/E ratio N N

The EBIT thus arrived is the indifference point.

COVERAGE RATIO Multiple Financing options or alternatives

Given the level of EBIT (which is an outcome of Investment decisions), SELECT that option which gives high coverage ratio.

EBITConverage ratio = Pref. div.Interest + (1 - T)

CAPITAL STRUCTURE – THEORIES

NET INCOME APPROACH (NI APPROACH) Suggested by: Durand Assumptions: (i) There are no taxes (ii) Kd < Ke , and will be constant (iii) The risk perception of investors does not change by increasing the debt proportion in the

capital structure. Capital structure and its behavior: Debt = 0% (100% Equity company)

Debt = 50% (50% Equity) Debt = 100% (No equity Company)

Ko = Ke (As no debt), At this situation Ko will be maximum

As Kd < Ke, when debt proportion increases, the Ko decreases

Ko = Kd (As no equity), At this situation Ko will be minimum

Bottom line: According to NI approach, 100% Debt is the optimum capital structure. Valuation Methodology: Earnings Before interest and Tax (EBIT) XXX Less: Interest (XXX) Earnings Before Tax (EBT), which is assumed to be available to equity share holders.

XXX


Capitalize the above using Ke, the resultant shall be value of equity XXX Add: Value of debt XXX Value of the company XXX

NET OPERATING INCOME APPROACH (NOI APPROACH) Suggested by: Durand Assumptions: (i) Kd will be constant at any level of leverage (i.e. Debt) (ii) The increase in debt is offset by increase in cost of equity due to which Ko will be constant (iii) Ke = K0 + (K0 - Kd) x D/E Capital structure and its behavior: Debt = 0% (100% Equity company)

Debt = 50% (50% Equity) Debt = 100% (No equity Company)

Ko = Ke (As no debt), At this situation Ke will be minimum.

As Kd < Ke, when debt proportion increases, the Ko should decrease but such decrease is offset by increase in Ke. Due to which Ko will be constant.

Ko will be constant but Ke will be maximum at this level.

Bottom line: According to NOI approach, any capital structure is optimum capital structure and any change in leverage does not affect the value of company and the cost of capital is independent of the leverage (i.e. K0 is constant) Valuation Methodology: Earnings before Interest and Tax (EBIT) XXX Capitalize the above using Ko, the resultant shall be value of company XXX Less: value of debt (XX) Value of Equity XXX Note: NOI approach failed to prove the reason for constant Ko, where MM approach steps in.

MODIGLIANI – MILLER APPROACH (MM APPROACH) The MM approach illustrates the arbitrage process with reference to valuation of two firms which are exactly similar in all respects except that in terms of leverage (i.e. one firm will have debt in capital structure and the other will not). These firms are called homogeneous firms. The firm which has debt in its capital structure is known as levered firm and unlevered firm is an all equity firm.

Investors usually switch their investment from overvalued company to undervalued company. As the two companies are homogeneous, the return provided by the two companies will be same but in case of overvalued company, the market value of investment is more. So, he sells that investment and with the money thus obtained will be invested in undervalued company.


If unlevered firm is overvalued If levered firm is overvalued

The rational investor will sell his holding in unlevered firm and invest in levered firm at the existing debt-equity mix in order to have the same return, but at a low investment outlay.

The investors in unlevered will sell their investment and invest in levered firm. As the demand for investment in levered firm is more, the share price will increase and so the value of firm. In the same way as the investors are willing to sell the shares in unlevered firm, the prices of those shares will decrease and hence the value of firm will decrease.

As a result the value of two firms will be identical at a point known as equilibrium point.

The investor will sell his investment in overvalued firm and invest in unlevered firm. Since unlevered firm will not have debt, he will borrow additional funds at the same cost available to levered firm (This is known as homemade (or) personal leverage) in order to invest the same proportion in unlevered firm. This borrowed is due to having the same financial risk that he has before in levered firm.

After repaying the interest on borrowed amount from the earnings available to him in unlevered firm, he will have the same amount of return as before. But the investment in less in unlevered company as compared to levered company.

If the arbitrage process continues the forces of demand and supply will act and the firm attains an equilibrium value.

According to MM, Value of Levered firm VL = VUL (Value of Un Levered) + Debt x tax rate

TRADITIONAL APPROACH The traditional approach argues that moderate degree of debt can lower the firm’s overall cost of capital and thereby, increase the firm value. The initial increase in the cost of equity is more than offset by the lower cost of debt. But as debt increases, shareholders perceive higher risk and the cost of equity rise until a point is reached at which the advantage of lower cost of debt is more than offset by more expensive equity.


Securities Law/Due Diligence & Corporate Governance REGULATIONS GOVERNING SECURITIES LAW IN INDIA

BASIC REGULATORY FRAMEWORK

Note: Securities Audit is an audit of the abovementioned laws.

SEBI (INTERMEDIARIES) Regulations, 2008 Note: Every intermediary shall comply with SEBI (Intermediaries) Regulations, 2008 read with RELEVANT REGULATIONS (for eg. SEBI (Merchant bankers) Regulations) respectively to function as an intermediary in the securities market and shall be a FIT & PROPER person as per Schedule – II and shall comply with the CODE OF CONDUCT under Schedule III.

SEBI Act, 1992 Regulate &

Develop Market. Protect interest of

investors

SCRA Act, 1956 Recognize and

supervise Stock exchange

Contract in securities

Listing Delisting

Depositories Act, 1996 Dematerialisation of

securities

Companies Act, 1956 Issue, Allot &

Transfer of securities

Disclosure requirements

Note: Under Section 55A of the Act.


RECONCILIATION OF SHARE CAPITAL AUDIT (earlier called SECRETARIAL AUDIT) As per SEBI circular, it has been decided that all the issuer companies shall subject themselves to a reconciliation of share capital audit to be undertaken by a qualified Chartered Accountant or a Company Secretary, for the purposes of reconciliation of the total admitted capital with both the depositories (NSDL & CDSL) and the total issued and listed capital and further it shall certify that the Register of Members is updated and all the DEMAT requests are confirmed within 21 days or explain with reasons. PUBLIC ISSUE OF SECURITIES IN INDIA BY INDIAN COMPANY Every PUBLIC LIMITED company issuing securities to public (i.e) issue made to 50 or more persons, shall do the following:

1. File Offer Documents with SEBI, ROC & Stock Exchanges 2. Apply for in-principle approval of listing with Stock Exchanges 3. Comply with SEBI Regulations thereof (as given under).

Note: The word “Securities” is defined in Securities Contract Regulation Act, 1956 and includes the following:

SECURITIES SEBI REGULATIONS

EQUITY SEBI (Issue of Capital & Disclosure Requirements-ICDR) Regulations, 2009

SECURITIES CONVERTIBLE INTO EQUITY like Convertible Debentures

SEBI (ICDR) Regulations, 2009 – same provisions as like Equity

DEBT SECURITIES which are NON-CONVERTIBLE SEBI (Issue & Listing of Debt Securities-ILDS) Regulations, 2008

SECURITISED DEBT INSTRUMENTS SEBI (Public Offer & Listing of Securitised Debt Instruments-POLSDI) Regulations, 2008

PUBLIC ISSUE OF SECURITIES IN INDIA BY FOREIGN COMPANY A foreign company can issue Indian Depository Receipts (IDR) WITHOUT having any company under Companies Act, 1956. In such case, it may be listed with Indian stock exchanges on compliance of CHAPTER – X of SEBI (ICDR) Regulations, 2009. PUBLIC ISSUE OF SECURITIES ABROAD BY INDIAN COMPANY An Indian Company can raise money from foreign country by issuing American Depository Receipt (ADR) or Global Depository Receipt (GDR) or Foreign Currency Convertible Bond (FCCB) or Foreign Currency Exchangeable Bond (FCEB) on compliance of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism), 1993 readwith Foreign Exchange Management Act, 1999 and Regulations made thereunder as if it is in the nature of Foreign Direct Investment (FDI). Kindly note, the ADR/GDR holder is not a member under Companies Act. Also, the depository under ADR/GDR is not a depository under Depositories Act. RAISING LOAN ABROAD BY AN INDIAN COMPANY


An Indian Company can raise loan from abroad which are referred as External Commercial Borrowings (ECB) UPTO USD 500 million in a Financial Year under Automatic route (i.e) without getting any approval of Central Government. CORPORATE GOVERNANCE COMPLIANCE OF LISTED COMPANY All the below mentioned compliances are the mandatory compliances by a listed company under Clause 49 of Equity Listing agreement. If a particular clause is NOT complied with, then reasons for the same shall be explained. Thus, it is a COMPLY or EXPLAIN approach. Particulars Clause of

Listing agreement

Compliance Status Yes/No

Remarks

I. Board of Directors 49(I)

(A) Composition of Board 49 (IA) (B) Non-executive Directors’ compensation & disclosures

49 (IB)

(C) Other provisions as to Board and Committees

49 (IC)

(D) Code of Conduct 49 (ID) II. Audit Committee 49 (II)

(A) Qualified & Independent Audit Committee

49 (IIA)

(B) Meeting of Audit Committee 49 (IIB) (C) Powers of Audit Committee 49 (IIC) (D) Role of Audit Committee 49 II(D) (E) Review of Information by Audit Committee

49 (IIE)

III. Subsidiary Companies 49 (III)

IV. Disclosures 49 (IV)

(A) Basis of related party transactions 49 (IV A) (B) Disclosure of Accounting Treatment 49 (IV B) (C) Board Disclosures 49 (IV C) (D) Proceeds from public issues, rights

issues, preferential issues etc. 49 (IV D)

(E) Remuneration of Directors 49 (IV E) (F) Management 49 (IV F) (G) Shareholders 49 (IV G) V. CEO/CFO Certification 49 (V)

VI. Report on Corporate Governance 49 (VI)

VII. Compliance 49 (VII)

CORPORATE GOVERNANCE COMPLIANCE OF UNLISTED COMPANY Every unlisted public limited company and private limited company may comply with voluntary guidelines on Corporate Governance as issued by Ministry of Corporate Affairs as an


option: Corporate Governance Voluntary Guidelines, 2009 Corporate Social Responsibility Voluntary Guidelines, 2009

Para 5 of Corporate Governance Voluntary Guidelines provides for SECRETARIAL AUDIT as under: Since the Board has the overarching responsibility of ensuring transparent, ethical and responsible governance of the company, it is important that the Board processes and compliance mechanisms of the company are robust. To ensure this, the companies may get the Secretarial Audit conducted by a competent professional (may be a Company Secretary). The Board should give its comments on the Secretarial Audit in its report to the shareholders. INVESTOR PROTECTION FUNDS There are three types of Investor Protection Funds:

1. Investor Education & Protection Fund (IEPF) under Ministry of Corporate Affairs 2. Investor Protection Fund (IPF) of Stock Exchanges 3. Investor Protection & Education Fund (IPEF) under SEBI.


Corporate Restructuring CHAPTER V OF COMPANIES ACT, 1956 SECTIONS CONTENTS

390 Interpretation (definition) of Sections 391 & 393 391 392 393

Power to compromise or make arrangements with creditors & members [covers mergers, demergers too]

Power of High Court to enforce compromise & arrangements Information [explanatory statement] as to compromises or

arrangements with creditors & members

394 Provisions for facilitating reconstruction & amalgamation of companies 394A Notice to be given to Central Government [Regional Director] for

applications u/s. 391 & 394 395 Power & duty to acquire shares of shareholders dissenting from scheme

or contract approved by majority [dealt under SEBI Takeover code] 396 Power of Central Government to provide for amalgamation of companies

in national (public) interest [by publishing a notification in official gazette]

396A Preservation of books & papers of amalgamated company [CG approval is mandatory to dispose the books]

Section 376: Conditions prohibiting reconstruction or amalgamation of company: Any provision in the memorandum or articles of a company, or in any resolution passed in general meeting by, or by the Board of Directors of, the company, or in an agreement between the company and any other person WHICH PROHIBITS merger, amalagamation, takeover, acquisition of a company IS VOID. That means, that company with such provisions can still enter into merger, amalgamation, etc...

The Company Court Rules, 1959 gives the procedure for application of Sections 391 to 394A of Companies Act and has provided the following forms (NOT E-FORMS) to be filed in the course of application u/s. 391 and petition u/s. 394 to High Court. The following is common procedure for merger, amalgamation, demergers or by whatever name called. 33 & 34: Application to Court & Affidavit 35: Court directions to convene a meeting (NOT a general meeting BUT a court-convened meeting) and to pass the resolution (NOT an ordinary/special resolution BUT a resolution to be approved by more than 50% in NUMBER of shareholders having 75% in VALUE of shares) 36, 37 & 38: Notice, Proxy & Advertisement [Affidavit u/Rule 76] 39 Chairman’s report within 7 days of meeting 40 Petition to Court 5 & 25 Advertisement & Affidavit 41 & 42 Court Orders with RoC in e-form 21. On filing with RoC, the transferor company will be DISSOLVED without undergoing the process of winding up and the property, liability and rights of the transferor company will be transferred & VESTED with the transferee company BY VIRTUE OF THE COURT ORDER WITHOUT ANY FURTHER ACT OR DEED.


Indirect Taxes Hierarchy of Excise Department

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs (CBE&C)

Central Excise Zones headed by Chief Commissioners

Central excise commisionerates headed by commissioners Commissioner (Appeals)

Additional commissioner of Central Excise (for each commissionerate)

Joint commissioner of Central Excise (for each commissionerate)

Deputy/Assistant commissioner of Central Excise (for each division)

Superintendent (for each Range) – He is the lowest rank of gazetted officer

Inspector (Not a gazetted officer) The following flow chart explains the basic procedures to be followed:

Manufacturer, who intends to start business, should “Register”

Maintain sufficient “Records” as prescribed

Manufacture the goods within factory

Preparation of “Invoice” while clearing goods “Assessment” of duty payable “Payment of duty” on monthly basis Submission of “Returns” on periodic basis

If it is cigarettes If it is other goods

System of ‘Physical control’ is applicable, wherein the goods has to be removed under an invoice to be assessed and counter signed by Excise officer

‘Self removal procedure’ is applicable, where manufacturer can clear the goods without supervision of Excise officer


PROCEDURE FOR SELF ASSESSMENT:


PROCEDURE FOR PROVISIONAL ASSESSMENT:

SHOW CAUSE NOTICE FOR SHORT PAYMENT OF DUTY (SEC. 11A):


Procedure for passing order by adjudicating authority:

APPEALS:





PAYMENT OF DUTY UNDER PROTEST (FIRST PROVISIO TO SEC. 11B): When assessee is not satisfied with- Classification of goods done by excise authorities; Determination of Assessable value by excise authorities; in adjudication proceedings,


General Laws/Drafting/Economic & Labour Laws/Due Diligence & Sustainability – ACTS TO BE KEPT IN MIND Try remembering the full NAME of the Act along with the YEAR and always mention this way while answering questions - “As per the provisions of ____Act, Year read with rules and regultions made thereunder, ....”

ACT YEAR

Indian Contract Act 1872 Indian Evidence Act 1872 Transfer of Property Act 1882 Powers of Attorney Act 1882 Indian Trust Act 1882 Indian Easement Act 1882 General Clauses Act 1894 Indian Stamp Act 1899 Registration Act 1908 Code of Civil Procedure 1908 Employees Compensation Act (earlier called Workmen Compensation Act)

1923

Indian Succession Act 1925 Sale of Goods Act 1930 Indian Partnership Act 1932 Central Excise Act 1944 Industries Employment (Standing Orders) Act 1946 Industrial Disputes Act 1947 Factories Act 1948 The Minimum Wages Act 1948 Employees State Insurance Act 1948 Constitution of India 1950 Industries (Development & Regulation) Act 1951 The Notaries Act 1952 Customs Act 1952 Employees Provident Funds & Miscellaneous Provisions Act 1952 Essential Commodities Act 1955 The Companies Act 1956 Securities Contract Regulation Act 1956 Copyrights Act 1957 Income Tax Act 1961 Limitation Act 1963 The Specific Relief Act 1963 Payment of Bonus Act 1965 Patents Act 1970 Contract Labour (Regulation & Abolition) Act 1970 Contempt of Courts Act 1971 Hire Purchase Act 1972 Payment of Gratuity Act 1972


The Code of Criminal Procedure 1973 Water (Prevention & Control of Pollution) Act 1974 Standards of Weights & Measures Act 1976 Air (Prevention & Control of Pollution) Act 1981 Consumer Protection Act 1986 Environment (Protection) Act 1986 Benami Transactions (Prohibitions) Act 1988 Finance Act (for service tax) 1994 Arbitration and Conciliation Act 1996 Depositories Act 1996 Trade Marks Act 1999 Foreign Exchange Management Act 1999 Geographic Indication of Goods Act 1999 Information Technology Act 2000 The Competition Act 2002 Prevention of Money Laundering Act (for banks, financial institution & sebi intermediaries)

2002

Right to Information Act 2005 The Limited Liability Partnership Act 2008 The National Green Tribunal Act, 2010 (earlier called Environment Tribunals)

2010

Special credits to Mr. Tharun Raj Grad CWA and all other 25 Learnlabz faculties for their well wishes. This booklet is offered free of cost and exclusively to select Company Secretary students in India. This booklet cannot be sold by any party nor displayed in any bookshop or stall or retail outlet nor used for any commercial purpose whatsoever. The contents of this booklet have been selected with due consideration of copyright provisions under Copyright Act, 1957.


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