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Sunday, August 30, 2009

Resolutions which are required to be passed as special resolutions

Section No.
Details
17 and 17A
Alter object clause, name of company, registered office to other State. Change to other State requires confirmation of Central Government (postal ballot required in case of listed companies). Change within the State but under jurisdiction of different ROC requires permission of RD u/s 17A – see 146(2))
21
Change name of Company, subject to approval of Central Government.
25(3)
To omit the name 'Limited' or 'Private Limited' in case of licensed company.
31(1)
Alter Articles of Association (postal ballot required in case of listed companies for insertion of provisions relating to private company).
77A
Buy back of securities (postal ballot required in case of listed companies, if in excess of 10% of total paid up capital in a year).
79A
Issue of sweat equity shares (postal ballot required in case of listed companies).
81(1A) and 81(3
Offer further shares to persons other than existing members (i.e. not to make a rights issue)
81(3)
Convert loans or debentures into shares, if approved before issue of debentures or raising of loans.
99
To determine that any portion of share capital shall not be called up except in winding up.
100(1)
Reduction in share capital (subject to confirmation by Court)
106
Varying rights of holders of class of shares (postal ballot required in case of listed companies for variation of rights attached to class of shares or debentures or other securities).
146(2)
Remove registered office out of city limits, but within the State (postal ballot required in case of listed companies).
149(2A)(b)
To commence new business.
163(1)
Keep statutory registers at any place within city / town other than the registered office.
208(2)
Authorise payment of interest out of capital - approval of Central Government is required
224(A)(1)
Appoint statutory auditors when share-holding of Government, financial institutions and nationalised banks is 25% or more.
237(a)(i)
Have affairs of the company investigated by inspector appointed by Central Government.
269 (read with Schedule XIII)
Approval of minimum remuneration to MD/WD/Manager, if more than prescribed ‘normal’ limit.
294AA(3)
Appoint sole selling agents in certain cases if paid-up capital is Rs 50 lakhs or more.
309(1)
Determine remuneration payable to a director (other than MD) - necessary only if Articles require a special resolution - applicable only to a public company or its subsidiary.
309(4)
Authorising payment by way of commission on basis of percentage of profit, to a director who is not MD or whole time director - applicable only to a public company or its subsidiary.
314(1), (1B)
Approval for holding office of profit under the company or subsidiary for director or his relative or partner, firm, private company etc. in certain cases.
323(1)
To alter memorandum of association so as to render unlimited liability of its directors or manager - resolution can be passed only if articles so authorise - such resolution can only apply to future director/s and manager. It does not apply to existing director / directors / manager during his current term, unless he has accorded his consent to his liability becoming unlimited.
372A(1)
Make / give investment / loans / guarantee / security beyond 60% / 100% limit (postal ballot required in case of listed companies for giving loans or extending guarantee or providing security in excess of limits).
433(a)
To get the company wound up by Court.
484(1)(b)
To have the company voluntarily wound up.
494(1)
To authorise liquidator in a voluntary winding up to accept shares as consideration for company's property.
512(1)(a)
To authorise liquidator in a members' winding up to exercise powers specified in section 457(1)(a) to (d).
517(1)
To accord sanction for any agreement between company and its creditors so as to bind company and its creditors.
546(1)(b)
To authorise liquidator to exercise certain powers in a voluntary winding up.
550(1)(b)
To direct disposal of books and papers after completion of winding up and about to be dissolved, in case of members' voluntary winding up.
579(1)
To alter form of constitution of a company registered under part IX of the Act, e.g. a partnership firm registered as a company.
581H to 581ZL
Resolutions relating to producer company.
SEBI
Resolution that acquirer need not make public offer to take 20% shares of target company (Required as per SEBI Takeover Regulations) (postal ballot required in case of listed companies).

Sunday, August 23, 2009

PSU Audit

  1. Do Board of Directors need to reply on the observations made by the CAG????? NO
  2. In case of a PSU, an officer of the Comptroller and Auditor General insists that he is entitled to supplement its tax audit report???? Can't Insist

Tuesday, August 18, 2009

Peer Review

Issued in March 2002,
Objective:
To assure that profession is conscious of its responsibilities and strive its best to ensure that highest standards are observed by all practicing members rendering audit and attestation services to the society.
To ensure that in professional assignments, the member of ICAI.
(a) Comply with technical standard, and
(b) Have proper system to maintain quality of work.

Bonus Issue and Revaluation Reserve

An unlisted public company or a private limited company can issue bonus shares even out of its revaluation reserve [SC in Bhagwati Developers vs. Peerless General Finance & Investment Company (2005)]

Wednesday, August 12, 2009

Dual Dating in Auditor's Report

SA 560/ AAS 19: Subsequent Events
Additional date is included in the auditor’s report:
  • to inform the users that the auditor’s procedures subsequent to that date;
  • were restricted to the subsequent amendment of the financial statements.
    e.g.: “(Date of Auditors’ Report), except as to Note Y, which is as of (date of completion of audit procedures restricted to amendments described in Note Y)”
    “30-04-2009, except as to Note Y, which is as of 25-5-2009 which is restricted to amendments described in Note Y ”

Tuesday, August 11, 2009

Think before you conclude..............

  1. What is "Deferred Revenue"?
  2. What is "Due Audit Care"?
  3. A tax auditor cannot be a statutory auditor and vice versa. Explain.
  4. Difference between "Material Fact" and "Material Misstatement".
  5. Difference between "Solicitation" and "Advertisement".

Any Answers................

Comment on the following with reference to the Chartered Accountants Act, 1949 and Schedules thereto:
  1. Mr. S, a Chartered Accountant published a book and gave his personal details as the author. These details also mentioned his professional experience and his present association as partner with M/s RST, a firm.
  2. Mr. C accepted the Statutory audit of M/s PSU Ltd., whose net worth is negative for the year 2003-04. The audit was to be conducted for the year 2004-05. The audited accounts for the year 2004-05 showed liability for payment of tax audit fees of Rs. 15,000 in favour of Mr. E, the previous auditor.
  3. M/s PQR, a firm of Chartered Accountants with 5 partners has accepted the audit of ABC Pvt. Ltd. for 2004-05 at, an audit fee of Rs. 2,500. ABC Pvt. Ltd. was incorporated in April, 2002, but had commenced operations in January, 2005.
  4. Mr. P, a Chartered Accountant in practice entered into a partnership with Mr. L, an advocate for sharing of fees for work sent by one to the other. However, due to some disputes, the partnership was dissolved after 1 month without any fees having been received.

Monday, August 10, 2009

Code of Ethics: Do you know..........

  1. Management Consultancy Companies floated by Practicing Chartered Accountants can receive remuneration from an employer based on percentage of the annual CTC of the Candidate while providing services relating to recruitment or placement of such candidate as only clauses (6) & (7) of Part I of First Schedule to The Chartered Accountants Act, 1949, are applicable to such companies. Individual practicing Chartered Accountants or their firms are not permitted for the same as per the provisions of Clause (10) of part I of the First Schedule to the CA Act, 1949;
  2. Publishing a book by a firm containing its history for the purpose of distributing to clients, associates, friends and well wishers and printing of the words ‘Celebrating 75 years in the Profession’ on special letterheads and envelopes of the firm will lead to solicitation of professional work, hence not permissible as per the provisions of Clause (6) and (7) of Part I of the First Schedule to the Chartered Accountants Act, 1949;
  3. It is prohibitive to undertake the assignments of Internal Audit of a client and entry of the transaction for Accounting, simultaneously being violative of the provisions of the ‘Guidance Note on Independence of Auditors’;
  4. Concurrent audit and the assignment of Quarterly review of the same entity cannot be taken simultaneously as the concurrent audit being a kind of internal audit and the quarterly review being a kind of Statutory audit undertaken simultaneously are prohibited under the provisions of ‘Guidance Note on Independence of Auditors’