Tuesday, November 15, 2011

Corporate short stories-"One must not engage in duties other than his own"

WWaasshheerr mmaannss ssttaaffff
  
 There was a washer man who had a donkey and a dog. One night when the whole
world  was  sleeping,  a  thief  broke  into  the  house,  the  washer  man  was  fast  asleep
but  the  donkey  and  the  dog  were  awake.  The  dog  decided  not  to  bark  since  the
master  did  not  take  good  care  of  him  and  wanted  to  teach  hi
m  a  lesson.  The
donkey  got  worried  and  said  to  the  dog  that  if  he  doesn't  bark,  the  donkey  will
have  to  do  something  himself.  The  dog  did  not  change  his  mind  and  the  donkey
started  braying  loudly.  Hearing  the  donkey  bray,  the  thief  ran  away,  the  master

woke  up  and  started  beating  the  donkey  for  braying  in  the  middle  of  the  night  for
no reason. Moral: "One must not engage in duties other than his own" 

Now take a new look at the same story. 

The  washer  man  was  a  well  educated  man  from  a  premier
  management  institute.  He  had  skills  of
looking  at  the  bigger  picture  and  thinking  out  of  the  box.  He  was  convinced  that  there  must  be
some  reason  for  the  donkey  to  bray  in  the  night.  He  walked  outside  a  little  and  did  some  fact
finding, applied a bottom up approach, figured out from the grou
nd realities that there was a thief
who  broke  in  and  the  donkey  only  wanted  to  alert  him  about  it.  Looking  at  the  donkey's  extra
initiative  and  going  beyond  the  call  of  the  duty,  he  rewarded  him  with  lot  of  hay  and  other  perks
and be
came his favorite pet. 

The  dog'
s  life  didn't  change  much,  except  that  now  the  donkey  was  more  motivated
in  doing  the  dogs  duties  as  well.  In  the  annual  appraisal  the  dog  managed  a  "meets
requirement".  Soon  the  dog  realized  that  the  donkey  is  taking  care  of  his  duties  and
he  can  enjoy  his  life  sleeping  and  lazi
ng  around.  The  donkey  was  rated  as  "star
performer".  The  donkey  had  to  live  up  to  his  already  high  performance  standards.
Soon he was over burdened with work and always under pressure and now is looking
for  a  job  rotation.  If  you  have  worked  in  a  corporate  environment,  I  am  sure  you
have guessed the characters of the new story. 

Now take a look at another dime
nsion.
 
.......Looking at the donkey's extra initiative and going beyond the call of the duty, he was rewarded the "Star Performer"
at  a  huge  corporate  event.  The  donkey  had  proved
  his  caliber.  Expectations  went  up.  Work  load  increased.  He  was
always  under  pressure.  Therefore  performance  could  not  meet  elevated  expectations.  Meanwhile  the  dog  used  to  lick
the  washer  man's  feet  which  made  the  washer  man  feel  very  good.  At
the  same  time  the  washer  man  did  not  like  the  sound  of  the  Donkey's
braying.
 

At  the  time
  of  Performance  appraisal  and  increments,  the  Donkey  got  a
"Meets  expectation"  with  a  marginal  increment.  Whereas  the  Dog  got
the  best  Performance  rating  and  the  best  increment  that  the
organization  could  give  plus  a  performance  linked  bonus  for  keeping  the
washer  man’s  spirit  high.  Poor  Donkey
  could  not  go  against  nature  to
change  his  voice.  Nor  could  he  stoop  so  low  to  lick  the  washer  man's
feet.  The  Donkey  got  highly  de-motivated  and  is  searching  for  a  new
boss who would
 be fair and unbiased..
..
MYSORE CS CHAPTER NEWSLETTER NOV 2011 

Friday, September 30, 2011

EGM

EGM

An EGM of the Company need not be held at the Registered Office of the Company or within the city, town or village where the Registered office of the Company is situated.

An EGM of the Company can be held at any place. However, in my opinion, an EGM is a meeting of the members of the company and should be held at such place and time which is convenient to the members of the company. Before fixing the time and venue of the GM of the company and specially before deciding to hold the EGM of the company in a Foreign county,consent of the members should be obtained and if so agreed by all the members or majority of them, then the EGM of the Company may be held at any place so agreed to by the members inlcuding a foreign country.

Time, day and place of Extraordinary General Meeting
Unlike an annual general meeting, an extraordinary general meeting may be held at any time, on any day and at any place. Thus , extraordinary general meeting may be called even for a time beyond business hours ,on a public holiday and at a place other than the registered office of the company ,even outside the state in which the registered office of the company is situated or out side INDIA ( Please refer to Company law book by K.M.Ghosh & Dr. K .R. Chandratre’s page no.2511 para 1.4)

The provisions with regard to time, day and place of holding the meeting specified in Section 166(2) applies to AGM only.

Hence companies are free to hold EGM at any time, day and place.

Wednesday, September 28, 2011

esops to foreign nationals

1. No RBI approval for ESOS to overseas employee as per below provisions.
As per R. 8 of FEM (Transfer or Issue of Securities by a person resident out side India), Regulation 2000, An Indian
Company may issue shares under ESOS, to its employees or employees of its joint venture or wholly owned subsidiary
abroad who are resident outside India, directly or though a trust. Provided that the scheme has been drawn in terms of
regulations issued under SEBI Act, 1992 and face value of the shares to be allotted under ESOS to the non-resident
employees does not exceed 5% of the paid up capital of the issuing company.

2. As Reg. 8(3) of above, RBI reporting is must within 30 days of issue of shares.

3. Foreign national can open demat account, bank account and trading accounts as RBI KYC Norms. up to best of my
knowlege no RBI Approval is required.

4. Foreign employee can sale ESOS shares through stock exchagne/registered brocker at ruling market price.

5. As per R. 11(2) of the Regulation, an authorized dealer may allow the remittance of sale proceeds of a security (Net of
applicable taxes) to the seller of shares resident outside India.

Committee for allotment of shares

Committee for allotment of shares

GENERAL PRINCIPLES REGARDING ALLOTMENT

GENERAL PRINCIPLES REGARDING ALLOTMENT

With regard to the allotment of shares, the following general principles should be observed in addition to the statutory provisions, discussed hereafter:
  1. The allotment should be made by proper authority, i.e. the Board Directors of the company, or a committee authorised to allot shares on behalf of the Board. Allotment made without proper authority will be invalid. Allotment of shares made by an irregularly constituted Board of directors shall be invalid [Changa Mal v. Provisional Bank (1914) ILR 36 All 412].
It is necessary that the Board should be duly constituted and should pass a valid resolution of allotment at a valid meeting [Homes District Consolidated Gold Mines Re (1888) 39 Ch D 546 (CA)]. But Section 290 and the Rule in Royal British Bank v. Turquand (1856) 6 E & B 327 : (1843-60) All ER Rep 435 may make an allotment valid even if some defect was there in the appointment of directors but which was subsequently discovered. An allotment by a Board irregularly constituted may be subsequently ratified by a regular Board [Portugese Consolidated Copper Mines, (1889) 42 Ch. D 160 (CA)]. A director who has joined in an allotment to himself will be estopped from alleging the invalidity of the allotment [Yark Tramways Co. v. Willows, (1882) 8 QBD 685 (CA)].
  1. Allotment of shares must be made within a reasonable time (As per Section 6 of the Indian Contract Act, 1872, an offer must be accepted within a reasonable time). What is reasonable time is a question of fact in each case. An applicant may refuse to take shares if the allotment is made after a long time.
The interval of about 6 months between application and allotment was held unreasonable [Ramsgate Victoria Hotel Company v. Montefione (1866) LR 1 EX 109].
  1. The allotment should be absolute and unconditional. Shares must be alloted on same terms on which they were applied for and as they are stated in the application for shares. Allotment of shares subject to certain conditions is also not be valid one. For example where an applicant applied for shares on the condition that he will be appointed as branch manager of company but later on the condition was breached, it was held that he is not bound by the allotment of shares [Ramanbhai v. Ghasi Ram (1918) BOM. LR 595].
Similarly, if the number of shares alloted are less than those applied for, it cannot be termed as absolute allotment.
  1. The allotment must be communicated. As mentioned earlier posting of letter of allotment or allotment advice will be taken as a valid communication even if the letter is lost in transit. In Household Fire And Carriage Accident Insurance Co. Ltd. Grant (1879) 4 E.D. 216, Grant applied for certain shares in a company, the company despatched letter of allotment to him which never reached him. It was held that he was liable for the balance amount due on the shares. The mere entry of a shareholder’s name in the company’s register is insufficient to establish that an allotment was in fact made [Official Liquidator, Bellary Electric Supply Co. v. Kanni Ram Ramwoothmal (1933) 3 Com Cases 45; AIR 1933 Med 320]. There can be no proper allotment of shares unless the applicant has been informed of the allotment [British and American Steam Navigation Co. Re. (1870) LR 10 Eq 659]. A formal allotment is not necessary. It is enough if the applicant is made aware of the allotment. [Universal Banking Corpn. Re. Gunn’s Case (1867) 3 Ch App 40].
  2. Allotment against application only — No valid allotment can be made on an oral request. Section 41 requires that a person should agree in writing to become a member.
  3. Allotment should not be in contravention of any other law — If shares are allotted on an application of a minor, the allotment will be void.

 

Wednesday, July 27, 2011

Schedule XIII-COMPANIES ACT,1956

The notifcation issued on 8th February, 2011 viz., GSR 70E has made prior Central Government approval compulsory only for listed companies and subsidiaries of listed companiaes.

Unlisted companies which are not subsidiaries of listed companies may pay remuneration in excess of the limits laid down under Schedule XIII of the Act by obtaining the approval of the members through a special resolution passed at a General Meeting. The resolution must be recommended by a Remuneration Committee.

The same notification amended the definition of Remuneration Committee and says in case of unlisted companies Remuneration Committee  means committee of the Directors of the Company. The requirement to appoint independent directors to the remuneration committee has been waived.

Another notification issued on 14th July, 2011 further amended the law and says that in case of listed companies, if the said director is a professional and doesnot hold any interest in the capital of the company,even in such cases Central Government approval shall not be required.