Thursday, July 18, 2013

Legal Perspectives> New Companies LAW

 18 Feb '15

In the meanwhile, indications from the Government are that the CSR compliance will be closely monitored, both at the individual company level and also on an overall basis. Towards this end, the Ministry of Corporate Affairs earlier this month constituted a committee to suggest measures for improved monitoring of the implementation of the CSR policies by companies under section 135 of the Companies Act, 2013. The terms of reference of the committee include suggesting measures for adoption by companies for systematic monitoring of CSR initiatives, and also mechanisms for providing feedback to the Government regarding efficacy of the CSR expenditure and quality of compliance.

This step indicates that the Government continues to place considerable importance on CSR measures. Although structured largely on a “comply-or-explain” basis, the intention seems to be to ensure maximum compliance.
OFFHAND: Looking back, attention may be drawn to comment earlier posted, besides elsewhere, @ "CSR in Government Companies". It is observed that, certain areas of doubt focused on therein are not gone into or fully taken care. Be that as not unexpected, the only comfort is that, as mentioned by the writer, measures as structured are largely on a “comply-or-explain” basis. Hoping that the companies would not fail to but take the obligation to comply with all seriousness, so that the ‘intention’ behind, to ensure maximum compliance, is translated into a reality and fructified.
<> Origin (Doubting Thomas):

"St. Thomas, apostle who doubted Jesus’ resurrection until he had proof of it (John 20:24–29)
First Known Use: 1883"

Now, having traced the origin, and given to know what that idiom means, still not minding to take the possible risk of self being dubbed as one:
The  CSR spending , given a statutory shape, and made mandatory for some, and not so for the rest in the corporate world, is referenced to 2 % of yearly profits ; and subject to a cap of average profits for a 3 year period. The points of basic doubt that instantly surfaces are mainly these:
Does that necessarily mean, and inevitably imply, that for any company to be hauled up and/or being called upon to explain in case of non compliance, the empowered authority may have to wait for the qualifying profits to be quantified much after the end of each year, also for the 3 year period end and the audited final accounts are made available?
Has the government already thought of, and truly effective machinery is in place, so also have formulated  equally effective measures  to keep a satisfactorily good, if not foolproof, track / monitoring  of the actual spending, apart from quantitatively, for only the permitted / envisaged purposes?
On the premise that as emphasised in the write-up, in cases of PSUs the aim is also to achieve the avowed objective of “good governance”, to what extent the ultimate responsibility and related answerability of  CAG, statutory auditor(s) , the internal management and internal audit/controls , and the like are envisaged/covered in the road map ?
Perhaps, hopefully, some sort of answers must be available, and forthcoming, if and when so inquired into or warranted.

Sep 20
Committee Report on Reforming Regulatory Environment in India

Last year, the Government had appointed a committee under the chairmanship of Mr. Damodaran, former Chairman of SEBI, to recommend reforms to enhance the regulatory environment for doing business in India. This was in response to the annual Doing Business rankings put out by the World Bank, where India has not been performing satisfactorily with little improvement or the last few years.

The committee has now issued its report, which is useful as it ....

< Overall, barring the few issues discussed above, the draft Rules merely expand or elaborate a few aspects set out in section 135 of the Act. It does not seem to entirely deal with or address the several concerns that have been voiced over the last couple of years in India regarding how CSR activities would be accomplished from an operational standpoint such as the true goals of this concept are realized rather than an effort that amounts to mere lip service.
Plain Speak:
To take a leaf from the memorable thoughts of 'nani', the great, -
if impartially but mindfully looked at, without having to embark on any in-depth application of mind, in one's perceptive view, this enactment is bound to stand out as one of those numerous  examples which go to infallibly demonstrate that , by and large, what is being practiced, as has been our propensity, can only be regarded as sheer “gestures”, in its true (but derog.) sense, - by any stasndard unfit/inappropriate to be named “policies” in its true sense or intimate perspective.
Ultimately, the sucees or failure of the idea of CSR now brought within the legal frame work of corporate law is going to entirely depend on how kindly and charitably each and every 'company' takes it and is mentally prepared to sincerely pursue as a welfare measure aimed at reaching the society at large, primarily for their collective benefit- not just limited to the selected group called 'stake hlders' .

< BS

Simplicity is the best policy

To Catch-up
Long battle awaits NSEL investors
The National Spot Exchange (NSEL) has been able to pay only half the money due to investors in its first payout on Tuesday...

Proceed with auction of collateral: FMC

Took serious note on cheques collected by exchange and dis-honoured

NSEL auditor in the dock over stock positions

Association to also complain to ICAI, against the auditor
“We will take legal action against the auditor...."

This sordid story, just as/so also any of the scores of like episodes that have come to be increasingly reported in recent times, in quick succession, it is strongly felt hence urged, deserve, nay ought, to be taken a serious / diligent note of by the apex body -cum -regulatory authority for, the auditors; more so suo motu, not merely to safeguard the integrity of thje profession but protecting the stakeholders' interests as well.

Promoter has to repay all investors: Motilal Oswal

Interview with Chairman, Motilal Oswal Financial Services

FinMin, watchdogs worried about Sahara-NSEL ties

Sahara Q shop, under Sebi lens, invested Rs 226 crore; says exposure in paddy, sugar from "own seed capital"


NSEL asked to cut settlement calendar

FMC wants forensic audit of exchange's books, questions credibility of its claims
For once, in fact for the first time in the history of so-called government-established institution of "Regulators", FMC being one of them, has taken certain rightful steps for promotion and improvement of functioning of the so-believed 'regulated' under its control. Especially, the authoritative suggestion to cut the settlement calendar and the outstanding ruling requiring a 'forensic  audit' deserve to be commended with a loud appreciation. It is only hoped that, - these steps would be rigorously and effectively pursued by FMC, to the end of a fruitful outcome; so also made a conscious note of, and imbibed and followed as a useful precedence for guidance, by the rest  of that institution, in- being for that thus-far eluding  common objective called - "public good". 

Deora seeks PM intervention to resolve NSEL payment crisis

Durables, banks, realty lead drop 

No exposure or financial commitments to NSEL, says MCX 

Keywords: FMCNSEL settlement planaccounts credibilitycommodity markets regulatorRs 5600 cr duesclear dues13000 investors

<> The FMC came down heavily on the NSEL for not taking guarantees for the financial settlement and providing different sets of information at different times.
While the exchange is required to guarantee the settlement of all financial obligations, the NSEL mentioned in its settlement plan that the dues would be cleared subject to realisation of funds from payers.
To this, the FMC said, “As such, the exchange appeared to have disowned its responsibility of guaranteeing the financial settlement. Whereas the exchange has the sole responsibility of settlement of trade on the exchange...It cannot simply depend upon the realisation of pay-in obligation from buyers.”

<><> What FMC has said, “.....the exchange has the sole responsibility of settlement of trade on the exchange...”, is indisputable and the common ground of grievance.

If so, selecting and marking certain obvious words as “Key Words”, as done, do not seem to make sense or help the readers’ purpose to get a real grip of the gravity or seriousness of the often missed “details” or ‘inside’ story so to say; a glaring instance of,- missing the wood for the tree.

To be precise, such details are to be found in following facts lately revealed /highlighted but tucked –in, in the write-up,  most likely to be skirted or glossed over, in general:

“......not taking guarantees for the financial settlement” and

providing different sets of information at different times.”

“.....dues would be cleared subject to realisation of funds from payers.”


Are high vegetable prices here to stay? - YES

The seasonal price spikes in the vegetable market, unlike in cereals, create larger ripples in the country. »



<> Vexing to the core>
Worthwhile to spare time and read the investigative article @
-How shares in listed firms are used to convert black money into white-
to understand, if not fully realize, why it is not but imperative to care to look at/be aware of the other side of the coin as well.- the realities of life.
Has the nation reached a stage/ dangerous peak of 'no return' or 'no salvation '; to simply throw up arms heavenwards to exclaim loudly- is not the entire government machinery (in the most comprehensive sense, SEBI a part of it, being no exception) fighting all the time, - mostly half-hardheartedly, despite knowing full well,- a miserably losing battle,- with such super-brains (though richly filled with nothing but typically crooked ideass) lined up in the opposite camp, bent upon working tirelessly  24x7 against the national interests/its economy/its people?
(Sorry, no mind to edit!)    


  • Legal x Illegal, Form v Substance, proof x No Proof
    <> What is under Control , Who Controls, Concept of 'smart', so on

    Aug 13

    <> In a lighter vein >

    “…Still the mystery” !

    Why at all to fret or fume? Mark the word used is “released” – not "REACHED" to..

    Professionals will also do better to remind selves of still the on-going or very much kept-alive-controversy on the legal interpretation of even the crucial words used in enactments – e.g. “send” and “serve” ; often contended, also successfully, to be taken to mean one and the same, hence interchangeable!

    Any other FAQ, or NOT-SO-FAQ ?


    How the NSEL crisis unfolded

    For three years from June 2007 when it received permission from the Ministry of Consumer Affairs to commence spot trading in commodities... »

    Pursuing an easy money policy to please industry and Government will push us off the precipice.»

    <> Sporadic reaction (unedited) The not-unknown economist has tried and put forth his own viewpoints and suggestions how best the obnoxious but seemingly uncontrollable "inflation" could be harnessed or brought under check and what all are the possible measures could think of. it is for months now that one has been reading such columns almost daily with no intermission. Some of them are prima facie mutually varying , at times glaringly contradicting. But then the most intriguing of all is none can be taken to know how far these are really and effectively reached to the empowered men in governance, in as pursuasive a manner as possible, so as to influence them to think of and getting to do some fast and sincere homework , and give a worthwhile trial/experiment.

    In short, common man has no clue as to whether the men in governance/at the helm of affairs even mind to know selves or compulsively made to so do,- why the need for them to take a note of and pay heed, and make use of them in having the economic poilicies framed /reframed from time time time, be it relating to micro-or -macro- ecomnmic field of activity; so as to eventually serve the cause of the people/the national economy. Suggestion is, there should be a machimnery, if not already in place or not an efrfective one, to make them realise that, for whom the  church bell tolls !
    Aug 8


    <The background to and salient features of the Bill have been described as follows:

    The new Companies Bill, on its enactment, will allow the country to have a modern legislation for growth and regulation of corporate sector in India. The existing statute for regulation of companies in the country, viz. the Companies Act, 1956 had been under consideration for quite long for comprehensive revision in view of the changing economic and commercial environment nationally as well as internationally. The new law will facilitate business-friendly corporate regulation, improve corporate governance norms, enhance accountability on the part of corporates/ auditors, raise levels of transparency and protect interests of investors, particularly small investors.

    The salient features of the new Companies law are: Business friendly corporate Regulation/ pro-business initiatives; e-Governance Initiatives; Good Corporate Governance and CSR; Enhanced Disclosure norms; Enhanced accountability of Management; Stricter enforcement; Audit accountability; Protection for minority shareholders; Investor protection and activism; Better framework for insolvency regulation; and Institutional structure.

    The narration of the new features makes for an exciting and stimulating reading. Sums up using almost everyone of the quite impressive words, invariably oft emloyed in/on such or similar contexts, sensational topics, normally heard of and familiar with. But the poser, stemmed on a spontaneous doubt,on which there is no knowing by a commoner (same may be believed to in no small measure hold good to many others more concerned as well) as to whether at all, and to what extent, these acclaimed features have been mindfully and sufficiently gone into by the artichitects / the concerned ministry in detail , besides having been adequately explained and made to be unsderstood by the legislators, before giving their final nod.

    No doubt, it is mentioined that , -" will usher in a new regime.......comes at least two decades after the proposal for the current round of reenactment was mooted." However, this, at best, is to be taken as a simplicitic factual observation, but prima facie, does not seem to, even trempotely, provide any useful clue or answer to the above poser.

    In this context, what, perforce, comes to one's mind, rather drives one to put across the poser, is the unquestionable wisdom gathered in hindsight, as echoed in the fitting quote:  

    'Prof. Irving younger of the Cornell University suggested that our judges should evolve the doctrine that "no law is validly enacted unless legislators voting for it have read it". By this test ninety percent of the laws passed by the Indian Parliament (and the State legislatures) would have to be invalidated."

    (< WE, THE PEOPLE, pg.48)

    RULE (of law) X Uncontrolled/-bridled Discretion X Corruption > A Mixed Bag of Worms (Miseries) ?! 

    Amit Bajaj Advocate,
    Bajaj & Bajaj Advocates,
    M +919815243335

    Aug 5

    Cover for professional mistakes

    Professionals such as lawyers, doctors and even architects are increasingly opting for indemnity insurance

    Or if a lawyer gives wrong advice on, say, taxation to his client and the client suffers financial losses, this will get covered under the policy. According to K G Krishnamoorthy Rao, managing director and CEO of Future Generali India Insurance: "Professions like accountancy, law and medical are considered the riskiest. This is because clients are aware of the increasing fraudulent practices that take place in these professions." The premiums are the most expensive here, usually, more than one per cent of the sum insured. For instance, to cover a doctor for Rs 50 lakh, he would have to shell out Rs 50,000 as premium. For less riskier professions, the premium rate could vary in the range of 0.30 to one per cent of the sum insured.
    <> The reported upswing in seeking protection through insurance cover against risks increasingly faced by professionals in practice calls for a worrisome consideration by one and all concerned- all stakeholders, particularly the serviced customers, clients, in short- 'consumers' at the receiving end.

    Underlines the utmost need or compulsion of maximum awareness / awakening on the part of the impacted victims for knowing their lawful rights and be vigilant all the time to sense impulsively or other wise the lurking risks round the corner.

    Of many other facets from the viewpoint of the service providers and advising professionals, what obviously calls for a special noting is that, insurance could be expected to provide the desired cover only so long as / to the extent there has been no 'negligence'/ want of diligence, or fraudulent motive, or the like, on their part.   
    In other words,if and when called upon, they must be in a position to establish that they were suitably equipped -in terms of knowledge, experience, expertise, exposure, so on, as lawfully expected of them.

    Over to social activists for an insightful deliberation and any useful contribution to improve upon the societal welfare.



    Who can buy?
    The professional indemnity cover can be bought by doctors, lawyers, CAs, management consultants, engineers, architects or organisations like law and CA firms, advertising and marketing agencies

    How much does it cost?
    0.30% to 1% of the amount insured. Premiums range between Rs 10,000 to as high as Rs 25 lakh,  depending on the profession, risk, scale of practice and revenues generated

    What does it cover?
    It compensates claims arising due to professional mistakes, error or omissions, breach of duty by a negligent act
    What the policy doesn’t cover
    It doesn’t cover fraudulent/criminal acts, false arrest, copyrights, patents, terrorism, penalties/ punitive damages.>

    < The marked one above, is seemingly so sweeping and prima facie abhorring, that does not appeal to one's common sense or general understanding OR KNOW OF THINGS, HENCE  WORTH CHECKING with Insce. experts/companies. A moment's thought should suffice for anyone to readily realise that, should the protection /cover offered be really so wide, then the Insurer would, AS MAY BE WELL IMAGINED, be undertaking / underwriting too big a risk to be not commensurate even with the specialy charged high premium; so much so, much to the discomfort and in essence, prejudicial to the rights and interests of its stakeholders- i.e. shareholders, not barring the government being one of them.
    Doubly abhorring, should the highly demoralising effect it would entail were to be kept in sharp focus from the societal welfare point of view! 

    Key Note: ICAI is, besides beng a members' body, more mportantly and signigicantly is supposed to function as 'regulator' vis a vis its constituerent members.

    It is observed that, in its official Journal (recent Isuue(s), under ICAI NEWS, appears, among others, a write-up on the same topic of "Insurance Protection" for Members in practice (individually or as a Firm). Further, what is intriguing rather startling is that, it has been given publicity, projecting / claiming unittingly or otherwse, as "An Intiative of the Committee for Capacity Building of..".   

    Upfront, what arises for an introspection and serious deliberation is,- the propriety or righteousness in having the initiative described as "for Capacity Building". Hopefully, the august committee of  the  Regulatory authority may have reasons or generally satisfying explanation to offer , particularly, to the section of the members, howsoever in minoroty they be, who are bent upon and naturally inclined to take a profoundly puritanic view of this and other such matters. 

    (< Reaction impromptu- left to be edited)

    18th July
    1. TD
    An exciting discovery,-exciting though for wrong reasons and highly belated,-bringing to the fore a veery important requirement of the law >
    No professional, even if possesses educational qualificaton, can validly appear and represent before IT Authority without a COP as mandated by the law.

    What should ideally be the basic expectations to be regarded as suitably qualified, rather 'equiped' ?

    2. BL

    a) T. B. KAPALI

    Missing the wood for the trees

    The financials of banks and insurance companies are very different. Policymakers should factor this into their calculus. »

    b) OPINION

    The heart of the matter

    A ‘Doctors’ Day run organised by IMA and Saffola (file photo)Take care of all the stakeholders of the business. That’s what matters, feels Marico. »

    c) Real estate investment to suit your needs
    Gold and real estate are two assets that all of you typically have in your portfolio. And when it comes to evaluating real estate investments, excel sheets, risk and return metrics are not very he

    xCERPTS >
    Invest in real estate, if you so desire. But do so meaningfully, as real estate can be an important source of income during your retired life. It is important that you do not have real estate as your primary investment, because it is lumpy and illiquid. You should make minimum down payment and buy your real estate investment with loan. This will help you save capital to contribute to your stock-bond portfolio. Besides, inflation typically favours the borrower.
    (The author is the founder of Navera Consulting, a firm that offers wealth-mapping and investor-learning solutions. Feedback may be sent to

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