cs news october 2015 - j sundharesanjsundharesan.com/pdf/2015/cs news_october 2015.pdf · j...

CS NEWS C o n n e c t i n g

S t a t u t e s

2015

J Sundharesan & Associates Governance & Compliance Advisors

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www.jsundharesan.com

2015 - “The year of Governance”. To be Moral or Amoral Initiative by J Sundharesan

J SUNDHARESAN & ASSOCIATES CS NEWS – OCTOBER 2015

CS NEWS INSIDE!

Governance is responsibility, not achievement –

Sundharesan Jayamoorthi, life coach for directors & compliance guru

Corporate Development Judicial –

! Tech Invest India Pvt. Ltd. v Assam Power and Electricals Ltd & ORS [SC]

! Laxmi Fibres Ltd. v. A.P. Industrial Development Corporation Ltd. & ORS [SC]

From The Government –

! Ministry of Corporate Affairs (MCA) Updates.

! Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) (Third Amendment) Regulations, 2015.

! Securities and Exchange Board of India (Delisting of Equity Shares) (Second

Amendment) Regulations, 2015

Save our Earth–

! Eight million tons of plastic dumped in ocean every year.

Monthly Compliance

! Don’t miss it ☺

! Did you miss it #


Governance is responsibility, not achievement

“Corporate governance is not something that is put in place and then left. Ensuring its effectiveness depends on regular review, preferably regular independent review. And, in the end that comes down to the shareholders. Outside assessment and self-assessment need to be regular events.” - Jim Jones (Business Day)

Governance is a responsibility first, doing no wrong and most importantly to ensure dissemination of the vision statement of the CEO to the last person in the system. It is the responsibility of the CEO to ensure that everyone in the organisation works towards achieving the goals set by him ethically. One wrong by any employee of the company can lead to untold embarrassment for the CEO as it would mean the values have not been inculcated in everyone who are working for the company. In a recent case, an employee of a large reputed company was hauled up for rash driving after being drunk that killed few people on the road. The company had to issue a press release disassociating itself from the employee and the incident. Responsibility of governance lies with the last employee of the company as it may lead to a reputation risk for the company.

Achievement of governance on the other hand is measured and recognized based on the levels of responsibility by the company and its stakeholders. This success is measured for all the responsible practices. Achievement is not in receiving annual awards for corporate governance by the company, but creation of values that will hold the company in the long run for all the good reasons. A company that has done no wrong may not be a ‘page 3’ company but is a company that can sustain in its business for a longer period of time.

Governance is celebrated in the form of corporate governance awards for recognizing the achievements by the corporate. The basis for conferring these awards is more of a tick the box exercise and most of these committees do not seem to take into consideration the responsibility of a corporate while recognizing and granting awards. In fact most of the award ceremony is becoming a mockery with the award being bestowed to Corporate that sponsors the event and nothing more. Corporates can be more responsible beyond bottom lines to the society and not mistake responsibility for achievement.

In short recognition for Governance in Corporate also seem to have a price tag!

“If people are good only because they fear punishment, and hope for reward, then we are a sorry lot indeed.” - Albert Einstein


CASE LAW Tech Invest India Pvt. Ltd. v Assam Power and Electricals Ltd & ORS [SC]

DECIDED ON August 11, 2015

LEGISLATION Companies Act,1956

BRIEF FACTS

Companies Act, 1956 – liquidation proceedings – sale of property through public auction – valuation of property – sold at lower value – sale confirmed by court – allegation of undervaluation of assets and plea to set aside the sale – whether tenable – Held, Yes.

Facts: The respondent no. 1 had filed a winding up petition against the appellant-company alleging that the appellant-company had failed to repay a loan of Rs. 6 lakhs. The appellant-company was alleged to have, however, initiated measures to shut down its operations and sell its assets and issued closure notices in May, 1999 without repaying the dues to the respondent.

The Company Judge appointed an Official Liquidator on 14.10.1999 and the possession of the assets of the appellant-company was taken over by the Official Liquidator. The value of the assets was about 7 crores and the valuer appointed by the OL had valued the assets at Rs.6.25 crore. However this report was not submitted to the court. Later another valuation was done through another valuer who valued the assets @ Rs.76.80 lacs. Further no minimum reserve price was fixed for the public auction. However the court allowed the public auction and the property was sold to the 3rd Respondent. The objections raised by the appellant were not properly considered by the Company Judge as well as the Division Bench.

Decision: Appeals allowed.

Reason: Prima facie, it appears that the objections raised by the appellant were not properly considered inasmuch as the objections were not heard on merit and the auction sale was confirmed. Be that as it may, the conduct of the Official Liquidator in selling the property at a price of Rs. 45.45 lakhs without proper publicity through advertisement or fixing any reserve price for the assets cannot be sustained in law, particularly, when the predecessor Official Liquidator reported that the property put in auction is of much higher valuation.

Having considered the illegality and irregularity committed in the auction sale of the property, the entire process is vitiated. Further we are of the view that the Company Judge also failed to exercise its judicial discretion to see that the properties are sold at a reasonable price.

Corporate Development Judicial


Apart from that, when the valuation report was submitted before the Company Judge, it ought to have been disclosed the secured creditors and other interested persons in order to ascertain the market value of the property before property was auction sold. Since the same has not been done, the auction sale and the order confirming the sale are liable to be set aside.

We, therefore, allow these appeals and set aside the judgment and order passed by the Company Judge and also the order passed by the High Court in appeal. Consequently the Official Liquidator is directed to forthwith recover the possession of the properties and proceed with a fresh auction after obtaining the fresh valuation report and fixing the reserve bid. Needless to say that all further actions shall be taken in accordance with the procedure established by law.

CASE LAW Laxmi Fibres Ltd. v. A.P. Industrial Development Corporation Ltd. & ORS [SC]

DECIDED ON August 7, 2015

LEGISLATION Companies Act,1956

BRIEF FACTS Companies Act, 1956 – liquidation proceedings – secured creditor – sale of property through public auction – workmen dues deposited with the OL – whether the secured creditor has to prove his claim before the OL – Held, No.

Facts: In this appeal preferred by the appellant-company under liquidation represented by the Official Liquidator the question of law arising for consideration is whether the Official Liquidator can claim any power or jurisdiction in itself to adjudicate and quantify the claim of statutory corporations such as respondent No.1, A.P. Industrial Development Corporation and respondent No.2, A.P. State Financial Corporation when the Company Judge has permitted them to stand outside the liquidation proceeding subject to certain conditions under which the respondent Corporations may pursue the powers available to them under Section 29 of the State Financial Corporations Act, 1959 (for brevity referred to as ‘the SFC Act’).

The sale of the assets of the company was conducted by first respondent as per conditions imposed by the High Court. The company judge in his order imposed two conditions that (i) the respondent company has to prove its claim before the Official liquidator and; (ii) it should deposit the dues of the workmen with Official Liquidator.

Aggrieved only with the first condition, the respondent No.1 preferred an intra-court appeal bearing OSA No.85 of 2003. The learned Division Bench disposed of the appeal by directing that the confirmation of sale of the properties in favour of the highest bidder would be subject to only one condition that the Official Liquidator shall quantify the amounts liable to be paid to the workmen. The Division Bench accepted the objection raised by respondent-corporation that there could be no question


of establishing the claim of the corporation before the Official Liquidator as the corporation was a secured creditor.

Decision: Appeal dismissed.

Reason: The Division Bench in our view came to a correct conclusion that the Official Liquidator does not have jurisdiction to ascertain or adjudicate the claim of a secured creditor who has been permitted by the Company Judge to stand outside the liquidation proceeding with liberty to pursue its remedy as per statutory rights available under the SFC Act, subject only to the conditions imposed by the court.

In A.P. State Financial Corporation v. Official Liquidator (2000) 7 SCC 291 this Court had the occasion to examine the extent of powers available to a Financial Corporation under the SFC Act in the light of proviso to Section 529(1) and 529A of the Companies Act which were intended to protect the dues of the workmen. This Court held that the power available to a corporation under Section 29 to sell the property of a debtor company under liquidation is not absolute but is subject to the proviso to Section 529(1) and non obstante clause in Section 529A of the Companies Act providing for pari passu charge of the workmen.

In International Coach Builders Ltd v. Karnataka State Finance Corporation (2003) 10 SCC 482 this Court not only followed the view taken in A.P. State Financial Corporation case (supra) but went on to explain as to how the view adopted would not obliterate the difference between a creditor opting to stay outside winding up and one who opts to prove his debt in winding up.

A three Judges’ Bench in the case of Rajasthan State Financial Corporation v. Official Liquidator (2005) 8 SCC 190 approved and followed the earlier views in A.P. State Financial Corporation and in International Coach Builders Ltd.

In view of law noticed above, we find no error in the impugned order of the Division Bench. The appeal is, therefore, dismissed but without any order as to costs.


MINISTRY OF CORPORATE AFFAIRS (MCA) UPDATES

1. New forms AOC-4 (Non-XBRL), MGT-7, ADT-2 and SH-9 are available w.e.f September 25, 2015 along with C&I Validation tool beta version.

2. Versions of forms CRA-4 and CHG-4 are modified w.e.f September 25, 2015.

3. The version of Form MGT-7 and AOC-4 has been modified w.e.f., September 30, 2015.

4. New forms AOC-4 (XBRL) is available w.e.f., October 1, 2015.

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2015 [Issued by the Securities and Exchange Board of India vide No. SEBI/LAD-NRO/GN/2015-16/009, dated 14.08.2015. Published in the Gazette of India Extraordinary Part – Iii – Section 4, dated 14.08.2015.]

In exercise of the powers conferred under section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to amend the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, namely:-

1 These regulations may be called the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2015.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, in regulation 1, in sub-regulation (3), the proviso shall be substituted by the following, namely:

"Provided that these regulations shall not apply to direct and indirect acquisition of shares or voting rights in, or control over a company listed without making a public issue, on the institutional trading platform of a recognised stock exchange."

From The Government


Securities and Exchange Board of India (Delisting of Equity Shares) (Second Amendment) Regulations, 2015

[Issued by the Securities and Exchange Board of India vide No. SEBI/LAD-NRO/GN/2015-16/010, dated 14.08.2015. Published in the Gazette of India Extraordinary Part – Iii – Section 4, dated 14.08.2015.]

In exercise of the powers conferred by section 31 read with section 21A of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), section 30, sub-section (1) of section 11 and sub-section (2) of section 11A of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, namely:-

1. These regulations may be called the Securities and Exchange Board of India (Delisting of Equity Shares) (Second Amendment) Regulations, 2015.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, in regulation 3, in sub-regulation (1), the proviso shall be substituted with the following namely:

"Provided that these regulations shall not apply to securities listed without making a public issue, on the institutional trading platform of a recognised stock exchange."


Scientists have come up with a new way to measure ocean trash—and the numbers are even worse than thought.

Eight million tons of plastic trash ended up in the ocean from coastal countries—far more than the total that has been measured floating on the surface in the ocean's "garbage patches."

That's the bad news. The even worse news is that the tonnage is on target to increase tenfold in the next decade unless the world finds a way to improve how garbage is collected and managed.

The findings are part of a groundbreaking study published Thursday in Science that for the first time quantifies how much garbage flows into the world's oceans every year.

Until now, most efforts to measure ocean debris have involved sample counts of plastic floating on the surface in large garbage patches in each of the world's oceans. A study last year, for example, estimated the amount of floating trash to be 245,000 tons at most.

The new study also identifies the major sources of plastic debris and names the top 20 countries generating the greatest amount of ocean-bound trash. China is first. The United States is 20th. The rest of the list includes 11 other Asian countries, Turkey, five African countries, and Brazil.

By 2025, it would be 155 million tons a year if present garbage management practices remain the same.

Source: http://news.nationalgeographic.com/news/2015/02/150212-ocean-debris-plastic-garbage-patches-science/

SAVE OUR ENVIRONMENT

EIGHT MILLION TONS OF PLASTIC DUMPED IN OCEAN EVERY YEAR


DON’T MISS IT ☺

Compliance Calendar for the month of October 2015

DIRECT AND INDIRECT TAX

5th Excise Duty for all other units other than SSI units

6th Excise Duty for all other units other than SSI units through Internet Banking

15th Excise Duty for SSI units - Monthly for other mode(only quarterly)

16th Excise Duty for SSI units - Monthly for electronic mode

5th Service Tax Payment

6th Service Tax Payment through online

25th Service Tax Return

7th Payment of TDS/TCS

15th Return of TDS/TCS

10th Monthly Excise return by all assesses(except SSIs &EOUs) coming under CAE in form ER-1

10th Monthly Excise return by EOU assesses coming under CEA in Form ER-2

20th Quarterly Excise return by SSI Units in Form ER-3

10th Monthly Excise return for units paying more than 1 crore duty in Form ER-6

20th VAT payment – Monthly

21st VAT - Monthly Returns (Electronically)

20th CST Payment - Monthly

21st CST - Monthly Returns (Electronically)

31st Payment of Professional Tax

31st Professional Tax Return

FEMA

6th Monthly return in Form ECB-2 for companies availing External Commercial Borrowings under FEMA Regulations

Comply or Explain


LABOUR LAW COMPLIANCES

15th Monthly Declaration and filing of form (for the employees joined during the previous month) under ESI Act, 1948

15th Monthly Return of Employees qualifying for the first time under EPF & MP Act, 1952 in Form 5

15th Payment of contribution under EPF & MP Act, 1952

15th Nomination Forms to be submitted by new Joinees for the month under EPF & MP Act, 1952 in Form 2

25th Monthly Return on Employees leaving Organization under EPF & MP Act, 1952 in Form 10

15th Monthly Declaration and filing of Form (for the Employees joined during the previous month) under EPF &MP Act, 1952

21st Payment of contribution under ESI Act, 1948

25th Monthly Return of Contribution under EPF & MP Act, 1952 in Form 12A

COMPANIES ACT, 2013 COMPLIANCES

15th Form ADT-1 for appointment/ ratification of Appointment Of Auditor from the date of Annual General Meeting.

30th DIR-12 in case of regularization of appointment of Directors from the date of Annual General Meeting.

31st Filing of Form AOC-4/AOC-4 (XBRL) and MGT – 7 (MGT-7 for the Companies holding the AGM prior to July 31, 2015).


DID YOU MISS IT #

Compliance Calendar for the month of September 2015

DIRECT AND INDIRECT TAX

15th Advance Tax Payment

30th Income Tax Return

5th Excise Duty for all other units other than SSI units

6th Excise Duty for all other units other than SSI units through Internet Banking

15th Excise Duty for SSI units - Monthly for other mode(only quarterly)

16th Excise Duty for SSI units - Monthly for electronic mode

5th Service Tax Return for the month of August 2015

6th Service Tax Return for the month of August 2015 through online

7th Payment of TDS

10th Monthly Excise return by all assesses(except SSIs &EOUs) coming under CAE in form ER-1

10th Monthly Excise return by EOU assesses coming under CEA in Form ER-2

20th VAT payment - Monthly Cases

21st VAT - Monthly Returns (Electronically)

20th CST Payment - Monthly

21st CST - Monthly Returns (Electronically)

5th Payment of Service Tax

6th Payment of Service Tax (Electronically)

30th Payment of Professional Tax for the month of August 2015

30th Professional Tax Return for the month of August 2015

FEMA

6th Monthly return in Form ECB-2 for companies availing External Commercial Borrowings under FEMA Regulations

LABOUR LAW COMPLIANCES

15th Monthly Declaration and filing of form (for the employees joined during the previous month)


under ESI Act, 1948

15th Monthly Return of Employees qualifying for the first time under EPF & MP Act, 1952 in Form 5

15th Payment of contribution under EPF & MP Act, 1952

15th Nomination Forms to be submitted by new Joinees for the month under EPF & MP Act, 1952 in Form 2

25th Monthly Return on Employees leaving Organization under EPF & MP Act, 1952 in Form 10

15th Monthly Declaration and filing of Form (for the Employees joined during the previous month) under EPF &MP Act, 1952

21st Payment of contribution under ESI Act, 1948

25th Monthly Return of Contribution under EPF & MP Act, 1952 in Form 12A

COMPANIES ACT, 2013 COMPLIANCES

30th Last date for holding the Annual General Meeting of the Company

Disclaimer: Views and other contents expressed or provided by the contributors are their own and the firm does not accept

any responsibility. The firm is not in any way responsible for the result of any action taken on the basis of the contents

published in this newsletter. All rights are reserved. For Private circulation only.© 2015 J Sundharesan

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