ISSN 0972-2874

VOLUME NO. XXIII 10 OCTOBER 2006

EDITORIAL ADVISORY CENTRAL COUNCIL

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Edited, printed and published
(In alphabetical order) PREETI MALHOTRA (MS.) by N.K. Jain for the Institute of
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H I G H L I G H T S
l From the President 03
l Academic Guidance 05
l Students Quiz 24
l Legal World 33
l Students Services 36
CS Examination-June 2006- Rank Holders 39
l SMTP Organised by HQ/RCs/Chapters 42
l Schedule of Academic Development Programmes 42
l Schedule of Training Orientation Programme 42
l News and Announcements 44
l 35 Years of CS on CD-ROM 48

Student Company Secretary 1 October 2006

 TRAINING ORIENTATION PROGRAMME
As per Company Secretaries Regulations, 1982 (amended
from time-to-time) every student apart from passing the final
examination of the Institute is also required to possess the
practical experience and undergo practical training or be
exempted therefrom before becoming eligible to the Associate
Membership of the Institute. Students who do not possess
practical experience are required to undergo compulsorily 15
months Management/Apprenticeship training.
Most of the students commencing training are not aware of
the significance and methodology of training, business
environment, corporate culture, communication and
behavioural aspects. Keeping in view the above factors, the
Council of the Institute has decided that students requiring to
undergo training should compulsorily attend five days Training
Orientation Programme (TOP) before they are sponsored for
training. It has also been decided that henceforth students
will be sponsored for training in the companies or with company
secretaries in practice as per the following schedule.

Activities Session1 Session 2 Session 3 Session - 4

Registration of students January 1 to March 01 to June 01 to September 01 to
for 15 months Training January 10 March 10 June 10 September 10
Organisation of TOP January 15 to March 15 to June 15 to September 15 to
January 24 March 24 June 24 September 24
Campus Interview January 25 to March 25 to June 25 to September 25 to
January 31 March 31 June 30 September 30
Commencement of February 01 April 01 July 01 October 01
Training Onwards Onwards Onwards Onwards
Completion of April 30* June 30* September 30* December 31*
Training Next Year Next Year Next Year Next Year
* If the student avails extra leave, the training will be extended accordingly.
Training Orientation Programme is a part of the 10. Usefulness of reading newspapers
Management/Apprenticeship training and is based on Guru 11. Self-assessment
Shishya Parampara. Training Orientation Programme will not SWOT analysis
only expose the students to the business environment and Career prospects
corporate functioning but would also help them in acquiring
Personality
the desired skill and confidence.
12. Writing of curriculum vitae
The Regional Councils will organize the Training Orientation
Programme from 15th to 24th of the four fixed months i.e. 13. Interview Techniques
January, March, June & September. 14. Career Planning
For effective interaction and participation, not more than 15. Computer-Internet/E-mail
40 students would be enrolled in each TOP. A fee of Rs. 400/ 16. File management
- per participant will be charged. 17. Organisation structure, role and functioning of Competition
The following topics will be included in the programme : Commission of India, CLB/NCLT, ROC, Stock Exchange,
SEBI, RBI, DRT
1. Importance of Training
18. Usefulness of Professional Development Programmes.
2. Personality Development- Dress Code & How to carry
oneself 19. Code of Conduct
20. Future Prospects
3. Time Management
For helping the students to identify Companies or Company
4. Meaning of Professionals
Secretaries in practice for undergoing training, the Regional
5. Office Culture Councils would also arrange Campus Interviews, immediately
6. Communication Skill on conclusion of each TOP for on-the-spot selection of
Writing ability candidates. Such Campus Interviews will be organized during
Drafting of letters the four fixed months from March 25 to 31; June 25 to 30;
Speaking ability September 25 to 30 and January 25 to 31.
All students intending to commence Management/
7. Group discussion, Drafting of Minutes, Notices,
Apprenticeship training are advised to contact the respective
Resolutions etc.
Regional Councils for enrolling themselves for TOP. Only on
8. How to qualify professional examination successful completion of TOP, students would be sponsored
9. Managing under crisis for training by the Institute.

Student Company Secretary 2 October 2006

 FROM THE PRESIDENT

Without accepting the fact that everything changes, we cannot find perfect composure.
But unfortunately, although it is true, it is difficult for us to accept it. Because we cannot accept the truth of
transience, we suffer.
Shunryu Suzuki
Dear Students,
Accepting change is one thing; leading the change is the next higher thing. Apart from accepting the change, one has to
proactively deal with the change. Observation, study, analysis, assimilation and attuning to the change are essential qualities
demanded of a professional. The change comes in all aspects of the professional life with speed, novelty and cascade of
varying degrees. Anticipating change is an essential quality a professional has to develop. Ignoring change or refusing to adapt
to the change is to imbibe ostrich-like attitude. One has to raise the antenna high to scan the environment in order to be able to
ride over the change.
There is a perceptible change and an imperceptible change. You have to develop the ability to discern imperceptible change as
well. This is the change that afflicts most. It is an undercurrent and not a wave. Therefore, it is only the subtlety of the mind and
perspicacity of the intellect that can take note of such latent changes. Now how do you develop such subtlety and perspicacity?
No school or institution can teach you this. You have to develop the habits of intensive thinking and meditation.
People with erudition and wisdom have said that the wheel of change moves on and those who were down go up, and those
who were up, go down. In dynamic environment, change is inevitable. It could be gradual or fast depending upon the prevailing
circumstances. Though most managers, executives and supervisors believe that change is a bad word, but the fact remains
that the average individual goes through an enormous amount of change everyday. Think about the change a typical person
goes through: they change houses, they change religions, they change schools, they change cars, they change jobs, etc. The
difference between those changes and changes within their organizations is that they know what to expect outside of work.
They do the research on their own and are allowed to make or not to make those changes.
We are living in the global environment where changes are taking place very frequently. The situation is fluid and dynamic. In
this global race companies have to run continuously and adjust to changes while in the run. It is necessary for them to pursue
world-class standards and institutionalise global benchmarking systems.
Globalisation has opened new vistas for competent professionals. New fast paced competitive economy requires professionals
to be agile to suit changing conditions in markets as well as in technology. It calls upon a professional to be an expert in his
discipline and simultaneously to have the capacity to deliver value by application of other disciplines through collaborative
communication. So we have to change our behaviour and attitude and gear up to adept to the changing environment. Dont
adopt just getting by attitude. Management experts say just getting by is an attitude, many people accept. But it is the
attitude of amateurs. Professionals see situations and they handle what they see. They are not amateur dabblers. Develop the
frame of mind that whatever you do, you are doing it as a professional and move up to professional standards in it.
I would like to share with you that a research has been conducted to find out as to why so many IT projects fail to produce the
business transformation theyre expected to. The reason found after years of studying large-scale change is surprising. The
research, based on interviews with hundreds of executives in Fortune 1000type companies around the world, revealed that it
is not the complexity of the technology, a lack of buy-in from top management, high cost or the failure to create shareholder
value that derails new projects. Instead, the single biggest challenge in any transformation project is simply getting people to
change their behaviour.

Student Company Secretary 3 October 2006

It was also discovered that when people do change their behaviour, its rarely because they are offered a logical analysis that
shifts their thinking but because they are shown a compelling truth that influences their feelings. So we need to discard ruthlessly
outmoded assumptions and recognise the new realities. In the era of globalisation, businesses with global aspirations require
global managers having the innate ability to deal with flexibility, diversity and complexity. Today, companies recruit professionals
with effective skills and competencies to achieve a competitive edge.
Friends, the credibility of the business system, world trade, globalization and the new emerging international economic order
depends on good corporate governance. Good governance provides a competitive advantage in the global marketplace. Well
governed companies raise capital widely, easily and cheaply. Good governance leads to improved morale and higher productivity
and well governed companies last longer.
I am glad to inform you that the Institute has started the process of 6th ICSI National Award for Excellence in Corporate Governance
for the year 2006. This process culminates in the Award Function which has been scheduled for December 23, 2006 at Chennai.
The Awardee companies are identified by Honble Jury comprising of persons enjoying pre-eminence in their respective fields
of experience. The Institute also confers Lifetime Achievement Award to a corporate personality for translating excellence in
corporate governance into reality. Honble Justice Shri V N Khare, Former Chief Justice of India, has very kindly acceded to our
request to be the Chairman of Jury for this years Award.
The Awardee companies will be short-listed on the basis of scores earned in the First Questionnaire on stipulated parameters
such as Board Independence and Governance, Board Systems and Procedures, Transparency and Disclosure Compliances,
Consistent Shareholder Value Enhancement, Stakeholders Value Enhancement, Corporate Social Responsibility and Other
Good Corporate Governance initiatives/Recognitions. Based on the evaluation, twenty-five companies will be short-listed and
Second Questionnaire will be sent to those companies. On the basis of their response to the Questionnaire and the feedback
from Regulatory, Tax and Govt. Authorities, the final list will be placed for the consideration of the Jury.
I am pleased to inform you that as a result of constant efforts of the Institute to carve out newer areas for its members, the
National Stock Exchange has authorized Practising Company Secretaries to issue certifications regarding compliances by
trading members at par with Chartered Accountants. Accordingly, Practising Company Secretaries are authorized to issue
Certificate regarding Net worth alongwith the relevant computation; details of directors/proprietor; details of shareholding pattern
of corporates/firms; details of dominant group of corporates/ firms; undertaking from relative of persons constituting dominant
promoter group; and undertaking from corporates supporting dominant promoter group in respective formats as per relevant
Annexures of Annual Returns submitted by the trading member to the Stock Exchange.
Friends, I hope you must have celebrated Diwali, the festival of lights with joy and enthusiasm. Lamp or Diya is the symbol of
knowledge. The day of Diwali is to remember mantra - Tamaso Ma Jyotir Gamaya, (lead us from darkness to light). I convey you
all my belated greetings for Diwali.
To conclude, I would like to quote George Bernard Shaw who said The only man I know who behaves sensibly is my tailor; he
takes my measurements anew each time he sees me. The rest go on with their old measurements and expect me to fit them.

With best wishes,

Yours sincerely,

(H M Choraria)
choraria123@vsnl.net
Kolkata
October 12, 2006

Student Company Secretary 4 October 2006

 ACADEMIC GUIDANCE
ACADEMIC GUIDANCE
COMPANY LAW UPDATES1
(INTER/FINAL)
1. COMPANIES (CENTRAL GOVERNMENTS)
COMPANIES
GENERAL RULES AND FORMS
(AMENDMENT) RULES, 2006
PUBLISHED IN THE GAZETTE OF INDIA, EXTRA
ORDINARY, PART II, SECTION 3, SUB-SECTION (I)
MINISTRY OF COMPANY AFFAIRS
(Refer March 2006 issue of this bulletin at page 8 or
website of the Institute www.icsi.edu)
2. CORPORA TE GOVERNANCE IN
AT
LISTED COMP ANIES-CLAUSE 49 OF
COMPANIES-CLAUSE
THE LISTING AGREEMENT
SEBI, as part of its endeavour to continuously improve the
standards of corporate governance in line with the needs of a dynamic
market, constituted a Committee on Corporate Governance under
the Chairmanship of Shri N.R. Narayana Murthy to review the
performance of Corporate Governance to enhance the transparency
and integrity of the market.
Based on the recommendations of the Committee and also with a
view to promote and raise the standards of Corporate Governance,
SEBI revised claused 49 of the Listing agreement vide its circular
dated August 26, 2003, the implementation of which was deferred
later. The Securities and Exchange Board of India on October 29,
2004 again revised the Clause 49 of the Listing Agreement.
However, noticing that a large number of companies were still not
in the state of preparedness to be fully compliant with the requirements
of revised clause 49 of the listing agreement, SEBI allowed more
time to the corporates to conform to clause 49 of the listing agreement
and extended the date for ensuring compliance with the revised clause
49 of the listing agreement to December 31, 2005.
The text of Revised clause 49 as applicable to the listed
companies as on date is given below:
The company agrees to comply with the following provisions :
I. BOARD OF DIRECTORS
(A) Composition of Board
(i) The Board of directors of the compnay shall have an optimum
combination of executive and non-executive directors with not
less than fifty per cent of the board of directors comprising of
non-executive directors.
(ii) Where the Chairman of the Board is a non-executive director, at
least one-third of the Board should comprise of independent
directors and in case he is an executive director, at least half of
the Board should comprise of independent directors.
(iii) For the purpose of the sub-clause (ii), the expression
'independent director' shall mean a non-executive director of the
company who :
(a) apart from receiving director's remuneration, does not have
any material pecuniary relationships or transactions with
the company, its promoters, its directors, its senior
management or its holding company, its subsidiaries and
associates which may affect independence of the director;
(b) is not related to promoters or persons occupying
management positios at the board level or at one level below
the board;
1. Compiled by Alka Kapoor, Dy. Director and Shikha Talreja, AEO , The ICSI.
Student Company Secretary
(c) has not been an executive of the company in the immediately
preceding three financial years;
(d) is not a partner or an executive or was not partner or an
executive during the preceding three years, of any of the
following:
(i) the statutory audit firm or the internal audit firm that is
associated with the company, and
(ii) the legal firm(s) and consulting firm(s) that have a
material association with the company, .
(e) is not a material supplier, service provider or customer or a
lessor or lessee of the company, which may affect
independence of the director; and
(f) is not a substantial shareholder of the company i.e., owning
two per cent or more of the block of voting shares.
Explanation.-For the purposes of the sub-clause (iii) :
(a) Associate shall mean a company which is an "associate"
as defined in Accounting Standard (AS) 23, "Accounting
for Investments in Associates in Consolidated Financial
Statements", issued by the Institute of Chartered
Accountants of India.
(b) "Senior management" shall mean personnel of the company
who are members of its core management team excluding
Board of Directors. Normally, this would comprise all
members of management one level below the executive
directors, including all functional heads.
(c) "Relative" shall mean "relative" as defined in section 2(41)
and section 6 read with Schedule IA of the Companies Act,
1956.
(iv) Nominee directors appointed by an institution which has invested
in or lent to the company shall be deemed to be independent
directors.
Explanation.-" 'Institution' for this purpose means a public
financial institution as defined in section 4A of the Companies
Act, 1956 or a "corresponding new bank" as defined in section
2(d) of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 or the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1980 [both Acts]."
(B) Non-Executive Directors' Compensation and
Disclosures
All fees/compensation, if any paid to non-executive directors,
including independent directors, shall be fixed by the Board of Directors
and shall require previous approval of shareholders in general meeting.
The shareholders' resolution shall specify the limits for the maximum
number of stock options that can be granted to non-executive directors,
including independent directors, in any financial year and in aggregate.
Provided that the requirement of obtaining prior approval of
shareholders in general meeting shall not apply to payment of sitting
fees to non-executive directors, if made within the limits prescribed
under the Companies Act, 1956 for payment of sitting fees without
approval of the Central Govt.
(C) Other Provisions as to Board and Committees
(i) The board shall meet at least four times a year, with a maximum
time gap of four months between any two meetings. The
minimum information to be made available to the board is given
in Annexure IA.
(ii) A director shall not be a member in more than 10 committees or
act as Chairman of more than five committees across all
companies in which he is a director. Furthermore it should be a
mandatory annual requirement for every director to inform the
company about the committee positions he occupies in other
companies and notify changes as and when they take place.
Explanation
1. For the purpose of considering the limit of the committees
on which a director can serve, all public limited companies,
5 October 2006
 ACADEMIC GUIDANCE
whether listed or not, shall be included and all other
companies including private limited companies, foreign
companies and companies under section 25 of the
Companies Act shall be excluded.
2. For the purpose of reckoning the limit under this sub-clause,
Chairmanship/membership of the Audit Committee and the
Shareholders' Grievance Committee alone shall be
considered.
(iii) The Board shall periodically review compliance reports of all laws
applicable to the company, prepared by the company as well as
steps taken by the company to rectify instances of non-
compliances.
(D) Code of Conduct
(i) The Board shall lay down a code of conduct for all Board
members and senior management of the company. The code of
conduct shall be posted on the website of the company.
(ii) All Board members and senior management personnel shall
affirm compliance with the code on an annual basis. The Annual
Report of the company shall contain a declaration to this effect
signed by the CEO.
Explanation.-For this purpose, the term "senior management"
shall mean personnel of the company who are members of its
core management team excluding Board of Directors. Normally,
this would comprise all members of management one level below
the executive directors, including all functional heads.
II. AUDIT COMMITTEE
(A) Qualified and Independent Audit Committee
A qualified and independent audit committee shall be set up, giving
the terms of reference subject to the following:
(i) The audit committee shall have minimum three directors as
members. Two-thirds of the members of audit committee shall
be independent directors.
(ii) All members of audit committee shall be financially literate and
at least one member shall have accounting or related financial
management expertise.
Explanation 1:- The term "financially literate" means the abiIity
to read and understand basic financial statements, ie., balance
sheet, profit and loss account, and statement of cash flows.
Explanation 2 :-A member will be considered to have accounting
or related financial management expertise if he or she possesses
experience in finance or accounting, or requisite professional
certification in accounting, or any other comparable experience
or background which results in the individual's financial
sophistication, including being or havin'g been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
(iii) The Chairman of the Audit Committee shall be an independent
director;
(iv) The Chairman of the Audit Committee shall be present at Annual
General Meeting to answer shareholder queries;
(v) The audit committee may invite such of the executives, as it
considers appropriate (and particularly the head of the finance
function) to be present at the meetings of the committee, but on
occasions it may also meet without the presence of any
executives of the company. The finance director, head of internal
audit and a representative of the statutory auditor may be present
as invitees for the meetings of the audit committee;
(vi) The Company Secretary shall act as the secretary to the
committee.
(B) Meeting of Audit Committee
The audit committee should meet at least four times in a year and
not more than four months shall elapse between two meetings. The
quorum shall be either two members or one third of the members of
Student Company Secretary
the audit committee whichever is greater, but there should be a
minimum of two independent members present.
(C) Powers of Audit Committee
The audit committee shall have powers, which should include the
following:
1. To investigate any activity within its terms of reference.
2. To seek information from any employee.
3. To obtain outside legal or other professional advice.
4. To secure attendance of outsiders with relevant expertise, if it
considers necessary.
(D) Role of Audit Committee
The role of the audit committee shall include the following:
1. Oversight of the company's financial reporting process and the
disclosure of its financial information to ensure that the financial
statement is correct, sufficient and credible.
2. Recommending to the Board, the appointment, re-appointment
and, if required, the replacement or removal of the statutory
auditor and the fixation of audit fees.
3. Approval of payment to statutory auditors for any other services
rendered by the statutory auditors.
4. Reviewing, with the manqgement, the annual financial statements
before submission to the board for approval, with particular
reference to :
(a) Matters required to be included in the Director's
Responsibility Statement to be included in the Board's report
in terms of clause (2AA) of section 217 of the Companies
Act, 1956
(b) Changes, if any, in accounting policies and practices and
reasons for the same
(c) Major accounting entries involving estimates based on the
exercise of judgment by management.
(d) Significant adjustments made in the financial statements
arising out of audit findings
(e) Compliance with listing and other legal requirements relating
to financial statements
(f) Disclosure of any related party transactions
(g) Qualifications in the draft audit report.
5. Reviewing, with the management, the quarterly financial
statements before submission to the board for approval.
6. Reviewing, with the management, performance of statutory and
internal auditors, adequacy of the internal control systems.
7. Reviewing the adequacy of internal audit function, if any, including
the structure of the internal audit department, staffing and
seniority of the official heading the department, reporting structure
coverage and frequency of internal audit.
8. Discussion with internal auditors any significant findings and
follow up there on.
9. Reviewing the findings of any internal investigations by the
internal auditors into matters where there is suspected fraud or
irregularity or a failure of internal control systems of a material
nature and reporting the matter to the board.
10. Discussion with statutory auditors before the audit commences,
about the nature and scope of audit as well as post-audit
discussion to ascertain any area of concern.
11. To look into the reasons for substantial defaults in the payment
to the depositors, debenture holders, shareholders (in case of
non-payment of declared dividends) and creditors.
12. To review the functioning of the Whistle Blower mechanism, in
case the same is existing.
13. Carrying out any other function as is mentioned in the terms of
reference of the Audit Committee.
6 October 2006
 ACADEMIC GUIDANCE
Explanation (i): The term "related party transactions" shall have
the same meaning as contained in the Accounting Standard 18,
Related Party Transactions, issued by , the Institute of Chartered
Accountants of India.
Explanation (ii) : If the company has set up an audit committee
pursuant to provisions of the Companies Act, the said audit
committee shall have such additional functions/features as is
contained in this clause.
(E) Review of information by Audit Committee
The Audit Committee shall mandatorily review the following
information:
1. Management discussion and analysis of financial condition and
results of operations;
2. Statement of significant related party transactions (as defined
by the audit committee), submitted by management;
3. Management letters/letters of internal control weaknesses issued
by the statutory auditors;
4. Internal audit reports relating to internal control weaknesses;
and
5. The appointment, removal and terms of remuneration of the Chief
internal auditor shall be subject to review by the Audit Committee.
III. SUBSIDIARY COMPANIES
(i) At least one independent director on the Board of Directors of
the holding company shall be a director on the Board of Directors
of a material non-listed Indian subsidiary company.
(ii) The Audit Cornmittee of the listed holding company shall also
review the financial statements, in particular, the investments
made by the unlisted subsidiary company.
(iii) The minutes of the Board meetings of the unlisted subsidiary
company shall be placed at the Board Meeting of the listed
holding company. The management should periodically bring to
the attention of the Board of Directors of the listed holding
company, a statement of all significant transactions and
arrangements entered into by the unlisted subsidiary company.
Explanation 1 : The term "material non-listed Indian subsidiary"
shall mean an unlisted subsidiary, incorporated in India, whose
turnover or net worth (i.e., paid up capital and free reserves)
exceeds 20% of the consolidated turnover or net worth
respectively, of the listed holding company and its subsidiaries
in the immediately preceding accounting year.
Explanation 2 : The term "significant transaction or arrangement"
shall mean any individual transaction or arrangement that
exceeds or is likely to exceed 10% of the total revenues or total
expenses or total assets or total liabilities, as the case may be,
of the material unlisted subsidiary for the immediately preceding
accounting year.
Explanation 3 : Where a listed holding company has a listed
subsidiary which is itself a holding company, the above provisions'
shall apply to the listed subsidiary insofar as its subsidiaries are
concerned.
IV. DISCLOSURES
(A) Basis of Related Party Transactions
(i) A statement in summary form of transactions with related parties
in the ordinary course of business shall be placed periodically
before the audit committee.
(ii) Details of material individual transactions with related parties
which are not in the normal course of business shall be placed
before the audit committee.
(iii) Details of material individual transactions with related parties or
others, which are not on an arm's length basis should be placed
before the audit committee, together with Management's
justification for the same.
Student Company Secretary
(B) Disclosure of Accounting Treatment
Where in the preparation of financial statements, a treatment
different from that prescribed in an Accounting Standard has been
followed, the fact shall be disclosed in the financial statements,
together with the management's explanation as to why it believes
such alternative treatment is more representative of the true and fair
view of the underlying business transaction in the Corporate
Governance Report.
(C) Board Disclosures Risk management
The company shall lay down procedures to inform Board members
about the risk assessment and minimization procedures. These
procedures shall be periodically reviewed to ensure that executive
management controls risk through means of a properly defined
framework.
(D) Proceeds from public issues, rights issues,
preferential issues etc.
When money is raised through an issue (public issues, rights
issues, preferential issues etc.), it shall disclose to the Audit
Committee, the uses/applications of funds by major category (capital
expenditure, sales and marketing, working capital, etc.) on a quarterly
basis as a part of their quarterly declaration of financial results. Further,
on an annual basis, the company shall prepare a statement of funds
utilized for purposes other than those stated in the offer document/
prospectus/notice and place it before the audit committee. Such
disclosure shall be made only till such time that the full money raised
through the issue has been fully spent. This statement shall be certified
by the statutory auditors of the company. The audit committee shall
make appropriate recommendations to the Board to take up steps in
this matter.
(E) Remuneration of Directors
(i) All pecuniary relationship or transactions of the non-executive
directors vis-a-vis the company shall be disclosed in the Annual
Report.
(ii) Further the following disclosures on the remuneration of directors
shall be made in the section on the corporate governance of the
Annual Report:
(a) All elements of remuneration package of individual directors
summarized under major groups, such as salary, benefits,
bonuses, stock options, pension etc.
(b) Details of fixed component and performance linked
incentives, along with the performance criteria.
(c) Service contracts, notice period, severance fees.
(d) Stock option details, if any - and whether issued at a discount
as well as the period over which accrued and over which
exercisable.
(iii) The company shall publish its criteria of making payments to
non-executive directors in its annual report. Alternatively, this
may be put up on the company's website and reference drawn
thereto in the annual report.
(iv) The company shall disclose the number of shares and convertible
instruments held by non-executive directors in the annual report.
(v) Non-executive directors shall be required to disclose their
shareholding (both own or held by/for other persons on a
beneficial basis) in the listed company in which they are proposed
to be appointed as directors, prior to their appointment. These
details should be disclosed in the notice to the general meeting
called for appointment of such director.
(F) Management
(i) As part of the directors' report or as an addition thereto, a
Management Discussion and Analysis report should form part
of the Annual Report to the shareholders. This Management
Discussion & Analysis should include discussion on the following
7 October 2006
 ACADEMIC GUIDANCE
matters within the limits set by the company's competitive
position:
(i) Industry structure and developments.
(ii) Opportunities and threats.
(iii) Segment-wise or product-wise performance.
(iv) Outlook.
(v) Risks and concerns.
(vi) Internal control systems and their adequacy.
(vii) Discussion on financial performance with respect to
operational performance.
(viii) Material developments in Human Resources/Industrial
Relations front, including number of people employed.
(ii) Senior management shall make disclosures to the board relating
to all material financial and commercial transactions, where they
have personal interest, that may have a potential conflict with
the interest of the company at large (for e.g. dealing in company
shares, commercial dealings with bodies, which have
shareholding of management and their relatives etc.)
Explanation : for this purpose, the term "senior management"
shall mean personnel of the company who are members of its
core management team excluding the Board of Directors. This
would also include all members of management one level below
the executive directors including all functional heads.
(G) Shareholders
(i) In case of the appointment of a new director or re-appointment
of a director the shareholders must be provided with the following
information:
(a) A brief resume of the director;
(b) Nature of his expertise in specific functional areas;
(c) Names of companies in which the person also holds the
directorship and the membership of Committees of the
Board; and
(d) Shareholding of non-executive directors as stated in Clause
49(1V)(E)(v) above.
(ii) Quarterly results and presentations made by the company to
analysts shall be put on company's web-site, or shall be sent in
such a form so as to enable the stock exchange on which the
company is listed to put it on its own web-site.
(iii) A board committee under the chairmanship of a non-executive
director shall be formed to specifically look into the redressal of
shareholder and investors complaints like transfer of shares,
non-receipt of balance sheet, non-receipt of declared dividends
etc. This Committee shall be designated as 'Shareholders/
Investors Grievance Committee'.
(iv) To expedite the process of share transfers, the Board of the
company shall delegate the power of share transfer to an officer
or a committee or to the registrar and share transfer agents. The
delegated authority shall attend to share transfer formalities at
least once in a fortnight.
V. CEO/CFO CERTIFICATION
The CEO, i.e., the Managing Director or Manager appointed in
terms of the Companies Act, 1956 and the CFO i.e., the whole-
time Finance Director or any other person heading the finance
function discharging that function shall certify to the Board that:
(a) They have reviewed financial statements and the cash flow
statement for the year and that to the best of their knowledge
and belief:
(i) these statements do not contain any materially untrue
statement or omit any material fact or contain
statements that might be misleading;
(ii) these statements together present a true and fair view
of the company's affairs and are in compliance with
existing accounting standards, applicable laws and
regulations.
Student Company Secretary
(b) There are, to the best of their knowledge and belief, no
transactions entered into by the company during the year
which are fraudulent, illegal or violative of the company's
code of conduct.
(c) They accept responsibility for establishing and maintaining
internal controls for financial reporting and that they have
evaluated the effectiveness of internal control systems of
the company pertaining to financial reporting and they have
disclosed to the auditors and the Audit Committee,
deficiencies in the design or operation of internal controls,
if any, of which they are aware and the steps they have
taken or propose to take to rectify these deficiencies.
(d) They have indicated to the auditors and the Audit committee:
(i) significant changes in internal control over financial
reporting during the year;
(ii) significant changes in accounting policies during the
year and that the same have been disclosed in the notes
to the financial statements; and
(iii) instances of significant fraud of which they have become
aware and the involvement therein, if any, of the
management or an employee having a significant role
in the company's internal control system over
financial reporting.
VI. REPORT ON CORPORATE GOVERNANCE
(i) There shall be a separate section on Corporate Governance
in the Annual Reports of company, with a detailed
compliance report on Corporate Governance. Non-
compliance of any mandatory requirement of this clause
with reasons thereof and the extent to which the
nonmandatory requirements have been adopted should be
specifically highlighted. The suggested list of items to be
included in this report is given in Annexure-IC and list of
non-mandatory requirements is given in Annexure-ID.]
(ii) The companies shall submit a quarterly compliance report
to the stock exchanges within 15 days from the close of
quarter as per the format given in Annexure lB. The report
shall be signed either by the Compliance Officer or the Chief
Executive Officer of the company.
VII. COMPLIANCE
(1) The company shall obtain a certificate from either the
auditors or practising company secretaries regarding
compliance of conditions of corporate governance as
stipulated in this clause and annex the certificate with the
directors' report, which is sent annually to all the
shareholders of the company. The same certificate shall
also be sent to the Stock Exchanges along with the annual
report filed by the company.
(2) The non-mandatory requirements given in Annexure-ID may
be implemented as per the discretion of the company.
However, the disclosures of the compliance with mandatory
requirements and adoption (and compliance)/non-adoption
of the non-mandatory requirements shall be made in the
section on corporate governance of the Annual Report.
Annexure IA
Information to be placed before Board of Directors
1. Annual operating plans and budgets and any updates.
2. Capital budgets and any updates.
3. Quarterly results for the company and its operating divisions or
business segments.
4. Minutes of meetings of audit committee and other committees
of the board.
5. The information on recruitment and remuneration of senior
officers just below the board level, including appointment or
removal of Chief Financial Officer and the Company Secretary.
8 October 2006
 ACADEMIC GUIDANCE
6. Show cause, demand, prosecution notices and penalty notices (C)Proceeds from public 49(lVC)
which are materially important.
issues,rights issues,
7. Fatal or serious accidents, dangerous occurrences, any material preferential issues etc.
effluent or pollution problems.
(D)Remuneration of Directors 49(IVD)
8. Any material default in financial obligations to and by the
company, or substantial non-payment for goods sold by the (E)Management 49(IVE)
company. (F) Shareholders 49(IVF)
9. Any issue, which involves possible public or product liability V. CEO/CFO Certification 49(V)
claims of substantial nature, including any judgement or order
which, may have passed strictures on thc conduct of the company VI. Report on Corporate 49(VI)
or taken an adverse view regarding another enterprise that can Governance
have negative implications on the company. VII.Compliance 49(VII)
10. Details of any joint venture or collaboration agreement. Note
11. Transactions that involve substantial payment towards goodwill, (1) The details under each head shall be provided to incorporate all
brand equity, or intellectual property. the information required as per the provisions of the Clause 49
12. Significant labour problems and their proposed solutions. Any of the Listing Agreement.
significant development in Human Resources/Industrial Relations (2) In the column No.3, compliance or non-compliance may be
front like singing of wage agreement, implementation of Voluntary indicated by Yes/ No/N.A. For example, if the Board has been
Retirement Scheme etc. composed in accordance with the Clause 49-I of the Listing
13. Sale of material nature, of investments, subsidiaries, assets, Agreement, "Yes" may be indicated. Similarly, in case " the
which is not in normal course of business. company has no related party transactions, the words "N.A."
may be indicated against 49 (IV A).
14. Quarterly details of foreign exchange exposures and the steps
(3) In the remarks column, reasons for non-compliance may be
taken by management to limit the risks of adverse exchange
indicated for example, in case of requirement related to circulation
rate movement, if material.
of information to the shareholders, which would be done only in
15. Non-compliance of any regulatory, statutory or listing the AGM/EGM, it might be indicated in the "Remarks" column
requirements and shareholders service such as non-payment as - "will be complied with at the AGM". Similarly, in respect of
of dividend, delay in share transfer etc. matters which can be complied with only where the situation
Annexure IB arises, for example, "Report on Corporate Governance" is to be
a part of Annual Report only, the words "will be complied in the
FORMAT OF QUARTERLY COMPLIANCE REPORT ON next Annual Report" may be indicated.
CORPORATE GOVERNANCE
Annexure IC
Name of the Company:
Quarter ending on : Suggested list of items to be included in the Report
on Corporate Governance in the Annual Report of
Particulars Clause of Compli- Remarks Companies
Listing ance
Agreement status 1. A brief statement of company's philosophy on code of
Yes/No governance.
I. Board of Directors 49I 2. Board of Directors
(i) Composition and category of directors, for example,
(A) Composition of Board 49(IA) promoter, executive, non-executive, independent non-
(B)Non-executive Directors 49(IB) executive, nominee director, which institution represented
compensation & disclosures as lender or as equity investor.
(ii) Attendance of each director at the Board meetings and the
(C)Other provisions as to 49(IC) last AGM.
Board and Committees (iii) Number of other Boards or Board Committees in which he/
(D) Code of Conduct 49(ID) she is a member or Chairperson.
(iv) Number of Board meetings held, dates on which held.
II. Audit Committee 49(II)
3. Audit Committee
(A)Qualified & Independent 49(IIA) (i) Brief description of terms of reference
Audit Committee (ii) Composition, name of members and Chairperson
(B)Meeting of Audit 49(IIB) (iii) Meetings and attendance during the year
Committee 4. Remuneration Committee
(C)Powers of Audit Committee 49(IIC) (i) Brief description of terms of reference
(ii) Composition, name of members and Chairperson
(D)Role of Audit Committee 49(IID) (iii) Attendance during the year
(E)Review of Information by 49(IIE) (iv) Details of remuneration to all the directors, as per format in
Audit Committee main report.
III. Subsidiary Companies 49(III) 5. Shareholders Committee
IV. Disclosures 49(IV) (i) Name of non-executive director heading the committee
(ii) Name and designation of compliance officer
(A)Basis of related party 49(IV A) (iii) Number of shareholders' complaints received so far
transactions (iv) Number not solved to the satisfaction of shareholders
(B)Board Disclosures 49(IVB) (v) Number of pending complaints

Student Company Secretary 9 October 2006

 ACADEMIC GUIDANCE
6. General Body meetings directors may comprise of at least three directors, all of whom
(i) Location and time, where last three AGMs held should be non-executive directors, the Chairman of committee
(ii) Whether any special resolutions passed in the previous being an independent director.
3 AGMs (iii) All the members of the remuneration committee could be present
(iii) Whether any special resolution passed last year through at the meeting.
postal ballot-details of voting pattern
(iv) Person who conducted the postal ballot exercise (iv) The Chairman of the remuneration committee could be present
(v) Whether any special resolution is proposed to be conducted at the Annual General Meeting, to answer the shareholder
through postal ballot queries. However, it would be up to the Chairman to decide who
(vi) Procedure for postal ballot should answer the queries.
7. Disclosures (3) Shareholder Rights
(i) Disclosures on materially significant related party A half-yearly declaration of financial performance including
transactions that may have potential conflict with the summary of the significant events in last six-months, may be sent to
interests of company at large. each household of shareholders.
(ii) Details of non-compliance by the company, penalties,
strictures imposed on the company by Stock Exchange or (4) Audit qualifications
SEBI or any statutory authority, on any matter related to Company may move towards a regime of unqualified financial
capital markets, during the last three years. statements.
(iii) Whistle Blower policy and affirmation that no personnel has (5) Training of Board Members
been denied access to the audit committee.
(iv) Details of compliance with mandatory requirements and A company may train its Board members in the business model
adoption of the non-mandatory requirements of this clause. of the company as well as the risk profile of the business parameters
of the company, their responsibilities as directors, and the best ways
8. Means of communication
to discharge them.
(i) Quarterly results
(ii) Newspapers wherein results normally published (6) Mechanism for evaluating non-executive Board Members
(iii) Any website, where displayed The performance evaluation of non-executive directors could be
(iv) Whether it also displays official news releases; and done by a peer group comprising the entire Board of Directors,
(v) The presentations made to institutional investors or to the excluding the director being evaluated; and Peer Group evaluation
analysts. could be mechanism to determine whether to extend/ continue the
9. General Shareholder information terms of appointment of non-executive directors.
(i) AGM: Date, time and venue
(7) Whistle Blower Policy
(ii) Financial year
(iii) Date of Book closure The company may establish a mechanism for employees to report
(iv) Dividend Payment Date to the management concerns about unethical behaviour, actual or
(v) Listing on Stock Exchanges suspected fraud or violation of the company's code of conduct or
(vi) Stock Code ethics policy. This mechanism could also provide for adequate
(vii) Market Price Data: High, Low during each month in last safeguards against victimization of employees who avail of the
financial year mechanism and also provide for direct access to the Chairman of the
(viii) Performance in comparison to broad-based indices such Audit Committee in exceptional cases. Once established, the
as BSE Sensex, CRISIL index etc. existence of the mechanism may be appropriately communicated
(ix) Registrar and Transfer Agents within the organization.
(x) Share Transfer System
(xi) Distribution of shareholding
3. DR. J J IRANI COMMITTEE REPOR
REPORTT
(xii) Dematerialization of shares and liquidity ON COMP ANY LA
COMPANY W
LAW
(xiii) Outstanding GDRs/ ADRs/Warrants or any Convertible
instruments, conversion date and likely impact on equity Dr. J J Irani Expert Committee on Company Law has submitted
(xiv) Plant Locations its report charting out the road map for a flexible, dynamic and user-
(xv) Address for correspondence friendly new company law. The Committee has taken a pragmatic
approach keeping in view the ground realities, and has sought to
Annexure ID address the concerns of all the stakeholders to enable adoption of
NON-MANDATORY REQUIREMENTS internationally accepted best practices. Be it the role of directors in
(1) The Board the management of the company or the role of promoters at the time
of incorporation or the responsibility of professionals in ensuring better
A non-executive Chairman may be entitled to maintain a
governance, the report has made very dynamic and balanced
Chairman's office at the company's expense and also allowed
recommendations. The Report of the Committee has also sought to
reimbursement of expenses incurred in performance of his duties.
bring in multifarious progressive and visionary concepts and
Independent Directors may have a tenure not exceeding, in the
endeavored a significant shift from the "Government Approval
aggregate, a period of nine years, on the Board of a company.
Regime" to "Shareholder Approval and Disclosure Regime".
(2) Remuneration Committee
The Expert Committee has recommended that private and small
(i) The board may set up a remuneration committee to determine companies need to be given flexibilities and freedom of operations
on their behalf and on behalf of the shareholders with agreed and compliance at low cost. Companies with higher public interest
terms of reference, the company's policy on specific remuneration which access capital from public need to be subjected to a more
packages for executive directors including pension rights and stricter regime of Corporate Governance. Further, Government
any compensation payment. companies and public financial institutions be subject to similar
(ii) To avoid conflicts of interest, the remuneration committee, which parameters with respect to disclosures and Corporate Governance
would determine the remuneration packages of the executive as other companies are subjected to.

Student Company Secretary 10 October 2006

 ACADEMIC GUIDANCE
HIGHLIGHTS OF DR. J.J. IRANI COMMITTEE REPORT
Classification and Registration of Companies
l Concepts of small company and one person company be added.
l Small Companies should be subjected to a less stringent
regulatory framework.
l Simplified dispute resolution procedure for resolving disputes
amongst members of private companies may be promulgated.
l Government companies to be treated at par with other companies
in application of law.
l Non-commercial/commercially unviable social responsibilities
imposed on government companies to be transparently
assessed.
l No restriction on multilayer subsidiaries. Misuse of multilayer
subsidiaries to be prevented by transparent Board processes
and disclosures under close supervision of regulator for listed
companies.
l Recognition to arrangements between joint venture partners or
two or more substantial shareholders be provided for in company
law.
l Concept of PFls to be reviewed and may be deleted, with suitable
transitory provisions. Such institutions to be put through similar
requirements of financial and management prudence as other Fls.
l Registration process to be speedy and compatible with
e-governance.
l Detailed, updated and authenticated disclosures about
promoters, directors to be made by the company at the time of
incorporation.
l Companies to register their websites and e-mail addresses.
l E-governance system to be cost effective and accessible to all
companies, including small and one person companies. Suitable
e-forms to be devised and e-filings to be secured by digital
signatures.
l Concept of single national registry to be recognised.
l Name allotment to be made simpler through automatic
e-systems.
l Issue of a Certificate of Commencement of business may be
dispensed with.
l Formation of LLPs to be encouraged. A separate Act be brought
about to facilitate limited liability partnerships.
l Introduction of a separate Act to regulate producer companies
may be considered.
Management and Board Governance
l No limit to be laid on the maximum numbers of directors, such
decision to be left to shareholders.
l Every Company to have at least one director resident in India.
l No Government intervention in the process of appointment and
removal of Directors in non-Government companies.
l Obtaining the Central Government's approval under the
Companies Act for appointment of non-resident managerial
personnel be done away with.
l No age limit for directors need be prescribed in law. Adequate
disclosure of age to be in the company's documents.
l In first instance, requirement of ID's be extended to public listed
companies and companies accepting public deposits.
l Irrespective of whether the Chairman is executive or non-
executive, independent or not, a minimum of one third of the
total number of directors as independent directors, considered
adequate.
l Nominee directors appointed by any institution or in pursuance
Student Company Secretary
of any agreement or Government appointees representing
Government shareholding not to be deemed as independent
directors.
l No requirement to be there for a subsidiary company to
necessarily co-opt an independent director of the holding
company as an independent director on its board.
l Number of Directorships any one individual may hold including
alternate directorships should be limited to a maximum of 15.
l Only an independent director to be appointed as alternate director
to an independent director.
l Need for comprehensive revision of provisions of the Companies
Act relating to payment of managerial remuneration. No quantified
limits need to be prescribed.
l Relationship to be there between responsibility and performance
vis-a-vis remuneration.
l Shareholders to approve managerial remuneration. Government
approvals to be done away with.
l Recommendations of Remuneration committee to be considered.
l Disclose the Directors'/Managerial remuneration in the Directors'
Remuneration Report.
l Company to decide remuneration of non-executive directors
including independent directors.
l It may be in the form of sitting fees for Board and committee
meetings attended physically or participated in electronically and/
or Profit related commissions.
l Following Board Committees to be mandatory in respect of certain
companies:
Audit Committee for Accounting and Financial matters
Stakeholders Relationship Committee
Remuneration Committee
l Law to include certain duties of directors with civil consequences
for non performance.
l Failure to attend Board meetings for a continuous period of one
year to be a ground for vacation of office by director regardless
of leave of absence being given by the Board.
l Copy of resignation letter to be forwarded by the director within
the prescribed time to ROC alongwith proof of delivery to the
company. Company also to file such information with ROC within
a prescribed period. No requirement of formal acceptance of
resignation by the company.
l Promoters of every company to be identified at the time of
incorporation and in annual return.
l Responsibilities to be placed on directors of companies coming
out with public issues so as to prevent diversion of funds by
them. Such companies to preserve composition of Board for
two years or till the procured funds are utilized in accordance
with objectives stated in prospectus, whichever is earlier. In case
a director resigns, his liability under the prospectus (including
for utilization of funds) to continue for the aforesaid period.
l Companies and their key directors/officers may mitigate potential
personal liability by D&O Insurance.
l Insurance premium paid by the company, not to be treated as a
perquisite or income in the hands of a director.
l Companies can hold AGM at any place (in India) other than its
Registered Office, if atleast 10% members reside at such place.
l One buy-back offer by the company to be mandated within a
period of 3 years of its delisting from all stock exchanges.
l Following Key Managerial Personnel identified for all companies:
Chief Executive Officer (CEO)/Managing Director.
Company Secretary (CS)
11 October 2006
 ACADEMIC GUIDANCE
Chief Finance Officer (CFO)
l Appointment and removal of key managerial personnel to be
done by the Board.
l Small companies may be exempted from appointing such
personnel on whole time basis, and alternatively services may
be obtained by them from qualified practising professionals.
Related Party Transactions
l Transactions/contracts in which directors or their relatives are
interested to be regulated through a "Shareholder Approval and
Disclosure-based regime" and not through a "Government
Approval-based regime" .
l Directors' Responsibility Statement to include an additional clause
to the effect that every director has made relevant disclosures
for the purposes of ascertaining related party transactions.
l Details of transactions of the Company with its Holding or
Subsidiary/Fellow Subsidiary or Associate Companies
transactions on an arms length basis to be placed
periodically before the Board through the Audit Committee.
transactions not on an arms length basis to be placed before
the Board together with its Management justification. A
summary of such transactions with each party to form part
of the Annual Report.
Minority Interests
l Specific Minority Shareholders' group be represented on the
Boards of companies for facilitating investor protection.
l Law to indicate, in clear terms, the rights of members of the
company to get all information to which they are entitled, in a
timely manner.
l Financial information and disclosures provided to the
shareholders should not be in excessively technical format. They
should be simple to understand.
l Extensive use of postal ballot including electronic media be made
enabling shareholders to participate in meetings and decision
making.
l Introduction of principle of valuation of shares of a company
through an independent valuation mechanism.
l Independent valuer to be appointed by Audit Committee where
mandated, or by the Board.
l A company that has delisted from all the Stock Exchanges in
India and has a shareholder/depositor base of 1000 or more
should be mandated to give one buy-back offer within a period
of three years of delisting.
l Recognition of the principles of derivative actions and Class/
Representative actions as have been upheld by courts on many
occasions to check fraud on the minority by wrongdoers, who
are in control and who prevent the company from bringing an
action in its own name.
Investor Education and Protection
l Companies accepting public deposits should be required to:-
t Appoint independent directors;
t Appoint audit/remuneration/stakeholders relationship
committees;
t Undertake deposit insurance;
t Undertake credit rating;
t Be subjected to stringent disclosures monitoring and
stringent penalties for irresponsible/fraudulent behaviour.
l Provisions for compensation to investors in established cases
of fraud, to be incorporated.
l Investors to have option to approach consumer courts to redress
Student Company Secretary
their complaints of shares and securities (legally deemed as
'goods' under Consumer Protection Act, 1988).
l Procedure for making claims to be simplified.
l Court ordered refunds to be made from the funds available with
IEPF.
Access to Capital
l Suitable criteria for identifying Well Known Seasoned Issuers
(WKSI) be evolved by SEBI in respect of corporates, raising
capital more frequently. WKSI may be allowed to provide a main
document in a year and thereafter at any time of market access
during the currency of shelf-prospectus, only incremental
changes to be reported by them.
l Offer made to 50 or more persons is deemed to be a Public
Offer. Qualified Institutional Buyers (QIBs) be excluded in
reckoning the limit of 50 or more persons.
l Special category of shares may be issued termed as 'Tracking
Shares". Tracking shares to confer on the holders thereof a right
to participate in the dividend declared by the company, as
recommended by the Board from the profits, of that particular
division.
l Introduction of mechanism of buy back of shares from a subset
of shareholders on a preferential basis is not appropriate at this
stage.
l Companies be permitted to issue perpetual/longer duration
preference shares.
l For premature redemption of preference shares enabling
provisions for redemption upto certain percentage on an annual
basis may be provided. This may be done through "call/put option
mechanism".
l Public company not to allot shares as fully or partly paid-up
otherwise than in cash, unless the consideration is independently
valued.
l Valuer to be appointed by the company in consultation with the
allottee and valuation to be made known to the allottee and the
concerned Regulator.
l Prohibition on companies from making loans to stock brokers
and stock broking firm/stock broking companies subject to the
exemptions presently provided under Section 372A of the Act.
Approval for the above to be accorded by way of special resolution
instead of Government.
l In public unlisted companies, preferential allotment to be made
on the basis of valuation by an independent valuer.
l Section 208 to be deleted from the provisions of the Companies
Act as it has outlived the purpose for which it was introduced as
corporates are today resorting to finances available at market
driven rates of interest.
Accounts and Audit
l Consolidation of financial statements of subsidiaries with those
of holding companies be made mandatory.
l Attaching of accounts of subsidiary companies with the holding
companies, should be done away with.
l Financial statements of a foreign subsidiary, required to be
furnished to the shareholders of the holding company, be
accepted in the same format and currency in which these were
prepared as per laws of the relevant country.
l The definition of term 'financial statement' be laid down in the
Act and should include Profit & Loss Account, Balance-sheet,
Cash Flow Statement and Notes on Account.
l First Financial year to begin from the date of incorporation and
end on the immediately succeeding 31st March and subsequent
Financial Years also to end on 31st March every year.
12 October 2006
 ACADEMIC GUIDANCE
l Definition of 'Financial Year' be modified to indicate that the
duration of first financial year should be minimum three months
instead of the six months proposed in the Concept Paper.
l Appointment of CFO should be recognized under the Act and
CFO be made responsible for preparation and submission of
financial statements to the Board.
l Financial statements also to be signed by MD, CEO, CFO and
Company Secretary.
l Directors' Responsibility Statement to mention that the related
party transactions have been entered into at arm's length and if
not, the relationships of the directors in such transactions along
with the amounts involved have been disclosed as a part of
Director's Report along with management justification thereof.
l Two sets of existing rules relating to declaration of dividend out
of reserves and transfer of profit to reserve, be deleted.
l No restriction on writing off 95% of the original cost to the
company of the asset over a specified period, on the Central
Government in approving the basis of providing depreciation.
l Internal controls as mandated by the company with the approval
of Audit Committee, if any, be certified by CEO and CFO of the
company and in Directors' Report through a separate statement
on the assessment.
l All matters relating to appointment of auditors, examination of
the auditor's report along with financial statements prior to
consideration and approval by the Board, related party
transactions, valuations and other matters involving conflict of
interest to be referred to the Board only through Audit Committee.
l Government approval for appointment of Cost Auditor for carrying
out Cost Audit not considered necessary.
Mergers and Acquisitions
l Contractual mergers be given statutory recognition in company law.
l Single forum to approve the scheme of mergers and acquisitions
in an effective time bound manner.
l Concept of 'deemed approval' to be provided for in cases where
the regulators do not furnish their comments within a specified
time period to the Court/Tribunal.
l Valuation to be carried out by independent registered valuers
rather than by Court appointed valuers.
l Valuation standards may be developed on the lines of
International Valuation Standards.
l Audit Committee where mandated to verify the independence of
the valuer for the purposes of an independent valuation.
Otherwise the Board to carry out this task.
l Separate electronic registry to be constituted for filing schemes
under Sections 391/394 of the Companies Act.
l Need for uniformity and overall reduction of stamp duties
applicable for mergers, demergers, amalgamations or schemes
of reconstruction, takeover.
l Less regulation in respect of mergers among associate
companies/two private limited companies where no public interest
is involved.
l A Non obstante provision to be introduced to ensure that the
assets and liabilities of transferor company absolutely vest in
the transfree company notwithstanding anything to the contrary
in any other law.
Investigation
l Instead of separate provisions for both inspection and
investigation under the Act, a single comprehensive process of
investigation to be formulated.
l System of oversight through random scrutiny of the filings of
documents be adopted.
Student Company Secretary
l Government may appoint any officer of Government, any private
professional or group/firm of professionals as inspector for
investigation.
l Inspector/Investigator/his partner not to have material interest
in the company or its holding subsidiary.
l Presence of SFIO be recognised in the Companies Act. Officers
of the SFIO may also be authorised to file complaints for offences
under Criminal Procedure Code in addition to offences under
the Companies Act.
Offences and Penalties
l Law to encourage compliance through self-regulation.
l Penalties on companies to relate to the size of the company in
addition to the nature of offence.
l In investigation/prosecution of directors, statutory notices should
be issued only to Whole Time Directors. Non-whole Time
Directors may be asked to explain after applying attributability
or 'knowledge' test.
l The professionals such as accountants, the auditors, lawyers,
company secretaries advising companies on various matters also
to be held liable for wrong doing.
l Penalties to be classified in the form of schedules specifying
with relation to a given section, the nature of offence, the
prosecution mode and daily default fine, where applicable.
l Provision be made for publication of information relating to
convictions for criminal breaches of Companies Act on the part
of the company or its officers or key employees in the Annual
Report.
l To enable speedy imposition of penalties for criminal offences,
specified benches of the NCLT may be vested with criminal
jurisdiction.
l The issue of "Phoenix companies" be addressed through a
combination of disclosures, insolvency processes and
disqualification of delinquent directors.
Restructuring and Liquidation
l Rehabilitation and liquidation processes to be time bound.
l Setting up of institutional structure in the form of NCLT/NCLAT
for overseeing such processes.
l Winding up to be resorted to only when revival is not feasible.
Reasonable opportunity for rehabilitation of business be given
before it is decided to be liquidated.
l Period of one year to be adequate for rehabilitation from
commencement of process to sanction of plan.
l Two years to be feasible for completion of liquidation.
l Companies to convene a General Meeting without delay where
losses in financial year are equal to 25% or more of its average
net worth during last two financial years and there is a default in
making payments to the creditors.
l Full control of assets may be allowed to pass to administrator
nominated by creditors through exercise of right of substitution
where circumstance justifies.
l Role of operating agency envisaged under the existing law should
be performed by independent Administrator or such other
qualified professional.
l Creditors to actively participate and monitor the insolvency
process.
l Panel of Administrators and Liquidators to be prepared and
maintained by an independent body of professionals with
appropriate experience and knowledge of insolvency practice.
Panel to be of individual professionals rather than firms.
l Tribunal to appoint Administrator and Liquidators out of the panel
13 October 2006
 ACADEMIC GUIDANCE
maintained by the independent body and Official Liquidators from
panel of officials made available by the Government.
l A flexible but transparent system for disposal of assets efficiently
to be provided for.
l Tribunal should have clear authority and effective methods of
enforcing its judgments.
l Encourage and recognize the concept of Insolvency Practitioners
(Administrators, Liquidators, Turnaround Specialists, Valuers
etc). CS, CA and Cost Accountancy disciplines can offer high
quality professional for this purpose. Repeal of provision relating
to rehabilitation cess.
NEW CONCEPTS INTRODUCED BY DR. J.J. IRANI
COMMITTEE REPORT
To attune the Indian Company Law with the global reforms taking
place in the arena, the Report of the J J Irani Committee has sought
to bring in multifarious visionay concepts. The new concepts
introduced under the Report are as follows :
One Person Company (OPC)
To encourage corporatisation of business and entrepreneurship,
the concept of single person economic entity has been introduced in
the form of a 'one person company'.
It is recommended that:
(a) OPC may be registered as a private Company with one member
and may also have at least one director;
(b) Adequate safeguards in case of death/disability of the sole person
should be provided through appointment of another individual
as Nominee Director. On the demise of the original director, the
nominee director will manage the affairs of the company till the
date of transmission of shares to legal heirs of the demised
member.
(c) Letters 'OPC' to be suffixed with the name of One Person
Company to distinguish it from other companies.
Small Companies
The law should provide a framework compatible to growth of small
corporate entities and should enable them to achieve transparency
at a low cost through simplified requirements. With this aim and to
enable simplified decision making procedure by relieving small
companies from select statutory internal administrative procedures,
the Committee has recommended that such companies be governed
by a simpler regime through exemptions which can be given in the
form of a schedule to the Act. Such companies should be subjected
to reduced financial reporting and audit requirements as well as
simplified capital maintenance regime. Such companies should also
be subjected to scaled down free structure. The definition of small
companies may be based upon the gross assets comprising of fixed
assets, current assets and investments not exceeding a particular
limit as also the turnover of the company concerned.
Limited Liability Partnership (LLP)
The 'unlimited liability' of partners has so far been the chief reason
why partnership firms of professionals, have not grown in size to
successfully meet the challenges posed today by international
competition, WTO, GATT etc. As an alternative corporate business
vehicle that has the benefits of limited liability but allows its members
the flexibility of organizing their internal structure as a traditional
partnership, the Committee has proposed the concept of LLP to be
introduced.
In an LLP, while the LLP itself is liable for the full extent of its
assets, the liability of the partners is limited. Partners are protected
from vicarious liability i.e. liability arising from the incorrect decision
or misconduct of other partners and employees not under their direct
control. There is no recourse to attach the personal assets of other
members except the member who is negligent. However, the liability
Student Company Secretary
of negligent partner remains unlimited. Also any new or existing firm
of two or more persons can incorporate as an LLP.
Though advocating the adoption of the concept of LLP in the Indian
legal system, the Committee has recommended that a separate Act
be brought about to facilitate limited liability partnerships. The concept
need not be introduced in the Companies Act.
Independent Directors
Though the concept of independent directors is not new, it has so
far been enshrined in the corporate governance codes of various
countries. It is for the first time that the concept has been proposed
to be introduced in Company Law in India. The Committee has
however suggested that independent directors are required to be
appointed only in respect of listed companies or the companies which
have accepted public deposits.
The Committee has proposed that atleast one-third of the Board
should comprise of independent directors irrespective of whether the
company has an executive or non-executive Chairman.
No minimum qualification has been laid for an independent director.
It has been specified that the appointment of independent directors
should be made by the company from amongst persons, who in the
opinion of the Board, are persons with integrity, possessing relevant
expertise and experience and who satisfy the criteria for
independence. This will indirectly ensure that only the persons
possessing necessary knowledge, skills, and ethics are kept on the
Boards of Companies.
The Committee has recommended that the expression
'Independent Director', shall mean a non-executive director of the
company who:
(a) apart from receiving director's remuneration, does not have, and
none of his relatives or firms/companies controlled by him have,
any material pecuniary relationship or transactions with the
company, its promoters, its directors, its senior management or
its holding company, its subsidiaries and associate companies
which may affect independence of the director.
(b) is not, and none of his relatives is, related to promoters or persons
occupying management positions at the board level or at one
level below the board;
(c) is not affiliated to any non-profit organization that receives
significant funding from the company, its promoters, its directors,
its senior management or its holding or subsidiary company;
(d) has not been, and none of his relatives has been, employees of
the company in the immediately preceding years;
(e) is not, and none of his relatives is, a partner or part of senior
management (or has not been a partner or part of senior
management) during the preceding one year, of any of the
following:-
(i) the statutory audit firm or the internal audit firm that is
associated with the company, its holding and subsidiary
companies;
(ii) the legal firm(s) and consulting firm(s) that have a material
association with the company, its holding and subsidiary
companies;
(f) is not, and none of his relatives is, a material supplier, service
provider or customer or a lessor or lessee of the company, which
may affect independence of the director;
(g) is not, and none of his relatives is, a substantial shareholder of
the company i.e. owning two percent or more of voting power.
Explanation:
For the above purposes-
(i) "Affiliate" should mean a promoter, director or employee of
the non-profit organization.
(ii) "Relative" should mean the husband, the wife, brother or
sister or one immediate lineal ascendant and all lineal
14 October 2006
 ACADEMIC GUIDANCE
descendents of that individual whether by blood, marriage
or adoption.
(iii) "Senior management" should mean personnel of the
company who are members of its core management team
excluding Board of Directors. Normally, this would comprise
all members of management one level below the executive
directors, including all functional heads.
(iv) "Significant Funding" - Should mean 25% or more of funding
of the Non Profit Organization.
(i) "Associate Company" - Associate shall mean a company which
is an "associate" as defined in Accounting Standard (AS) 23,
"Accounting for Investments in Associates in Consolidated
Financial Statements", issued by the Institute of Chartered
Accountants of India.
Key Managerial Personnel
The Committee has identified CEO/MD/CFO and Company
Secretary as the Key Managerial Personnel for all companies, whose
appointment and removal shall be by the Board of Directors of the
company concerned.
Key Managerial Personnel should be in the wholetime employment
of only one company at a time and both the managing director and
the whole time directors should not be appointed for more than 5
years at a time. However, the present requirement of having managing
director/whole time director in a public company with a paid up capital
of Rs.5 crores may be revised to Rs.10 crores by appropriate
amendment of the Rules.
Directors and Officers (D&O) Insurance
The long felt need of the corporate sector in regard to extending
insurance cover for the key man and key directors of companies has
been addressed by the committee. It is recommended that insurance
of key men and key directors and senior officers of companies may
be taken by means of general insurance policies and the insurance
premium paid by the company for such a policy need not be treated
as perquisite or income in the hands of director concerned. However,
if the wrongful act of the director or concerned officer is established,
then the appropriate amount of premium attributable to such person
shall be considered as perquisite or income for the purpose of
remuneration.
Rights and liabilities of independent and executive directors
Independent directors should have access to accurate, relevant
and timely information in order to discharge their duties and
responsibilities effectively. With this objective in mind, the Expert
Committee has recommended that Independent/non-executive
directors should be able to call upon the Board for due diligence or
obtaining of record for seeking professional opinion by the Board,
right to inspect records of the company, review legal compliance
reports prepared by the company; and in case of disagreement, record
their dissent in the minutes.
It is further recommended that if the independent director does
not initiate any action upon knowledge of any wrong, such director
should be held liable. This implies, if irregularities come to the
knowledge of the directors and yet they do not act pro actively and
exercise due diligence to ensure that the interest of the company is
duly protected, then they should be held responsible.
Freeing the Managerial Remuneration of limits
Managerial remuneration in India has so far been restricted to
certain limits in the case of public companies and private companies
which are subsidiaries of public companies, with the overall limit being
11 % of the net profits of the company durin~the financial year.
The Committee has recommended removal of all ceilings on
payment of directors' remuneration. Shareholders of companies have
been empowered to decide as to how to remunerate their directors.
However, this process is to be transparent and based on principles
that ensure fairness, reasonableness and accountability. It is important
Student Company Secretary
that there should be a clear relationship between responsibility and
performance vis-a-vis remuneration, and that the policy underlying
Directors' remuneration be articulated, disclosed and understood by
investors/stakeholders. To ensure transparency, it is recommended
that Directors' Remuneration Report should form part of the annual
report of the company and should contain details of remuneration
package of ditectors including company's policy on directors'
remuneration, the performance graph of the company and the
remuneration of directors vis-a-vis the performance of the company.
Another important feature of the recommendations relating to
managerial remuneration is the removal of all government approvals.
The Committee felt that in the current competitive environment, where
Indian companies have to compete for specialized manpower globally,
it may not be feasible or appropriate for the government to interfere.
Instead of the restrictive regime based on 'government approvals',
the 'shareholder approval', regime be adopted. Decision on how to
remunerate directors should be left to the company. However, this
should be transparent and based on principles that ensure fairness,
reasonableness and accountability. The shareholders have been
recommended to be empowered to decide the remuneration of non-
executive directors including independent directors with no
government interference. The criteria for remuneration/compensation
of nonexecutive/independent directors should be based on their
attendance and contribution and performance of the company. This
may be in the form of sitting fees for Board and committee meetings
attended physically or participated in electronically and/or profit related
commissions.
Committees of the Board
While recognizing the need for discretion of the Board to manage
and govern the company through collective responsibility, the Expert
Committee has mandated the constitution of certain committees of
Board for certain categories of companies, whose recommendations
would be available to the Board for taking final decisions. These
Committees are Audit Committee, Remuneration Committee and
Stakeholders Relationship Committee. Although the concept of Audit
Committee was already there in the Companies Act,1956 the
mandatory requirement of other two committees in respect of certain
companies is new. While the constitution of Audit Committee and
Remuneration Committee has been recommended as must for all
listed companies and companies accepting public deposits, the
stakeholders relationship committee is suggested to be constituted
in companies having combined shareholder/deposit holder/debenture
holder base of 1000 or more. The main recommendations in respect
of these committees are as below:
Audit Committee for Accounting and Financial matters
l Majority of directors to be independent, if the company is required
to appoint Independent Directors.
l Chairman of the Committee to be independent
l Atleast one member to have financial knowledge.
l Chairman to attend AGM and provide clarification on matters
relating to Audit. If Chairman is unable to attend, he may authorise
any other member of Audit Committee to attend AGM on his behalf.
l Recommendations of the Audit Committee if overruled by the
Board should be disclosed in Directors' Report with the reasons
for overruling.
Stakeholders Relationship Committee
l To be constituted in companies having combined shareholder/
deposit holder/ debenture holder base of 1000 or more.
l Main objective shall be to monitor redressal of investor
grievances.
l Non-executive director to act as Chairman of the Comittee.
Remuneration Committee
l Compulsory constitution in Public listed companies or any
company accepting deposits.
15 October 2006
 ACADEMIC GUIDANCE
l To comprise of non-executive directors including atleast one
independent director if appointment of independent directors is
required. In such a case, Chairman also to be independent.
l Main objective shall be to determine the company's policy and
remuneration packages of MD/Executive directors/senior
management.
l Chairman or in his obsence atleast one member of the committee
should be present in General Meeting to answer shareholders'
queries.
Recognition to joint venture/shareholders' agreements
The Committee recognised the issues involved in validity of joint
venture covenants vis-a-vis the provisions of the existing Act. It was
noted that joint venture agreements have several clauses pertaining
to voting rights, additional quorum requirements, arbitration provisions,
pre-emption rights or restrictions on transfer of shares etc. The effect
of this framework is that dispute resolution in respect of joint venture
provisions becomes subject to contract law provisions and is subject
to lengthy arbitration. Companies, however, prefer such aspects to
be addressed more speedily through the corporate processes.
The Committee has, therefore, recommended that a transparent
modality for providing recognition to agreements between joint venture
partners for corporate action should be worked out in company law,
keeping in view the concern that such arrangements should not become
a window for circumventing the essential provisions of the law.
Tracking and Treasury Stocks
Tracking Shares -The Committee has recommended the
introduction of 'Tracking Stocks', also known as 'targeted stocks'.
Tracking Stocks as a financial vehicle that tracks the performance of
a particular division or subsidiary. A tracking stock is a type of common
stock that "tracks" or depends on the financial performance of a
specific business unit or operating division of a company, rather than
the operations of the company as a whole. As a result, if the said unit
or division performs well, the value of the tracking stocks may increase,
even if the company's performance as a whole is not up to mark or
satisfactory. The opposite may also be true.
By issuing a tracking stock, the different segments or divisions of
the company can be valued differently by investors. When a parent
company issues a tracking stock, all revenues and expenses of the
applicable division are separated from the parent company's financial
statements and bound to the tracking stock. Often this is done to
separate financial statement of a high-growth division from the financial
statements of the parent company which may contain huge losses.
The parent company and its shareholders, however, still control
operations of the subsidiary.
A key advantage of tracking stock is that it offers divisional
managers a degree of decision-making authority that might otherwise
be unattainable, given top management's reluctance to dilute its
control over the division's assets. The practical effect would be to
enhance job satisfaction for divisional managers, thus reducing
retention risk and also increasing the company's responsiveness to
changing market conditions. Also, investors have more direct access
to the specific businesses of the parent, which can be highly useful in
the case of a diversified company.
Treasury Stocks - The Committee has also recommended
introduction of treasury stocks as a measure for raising of funds at a
low cost. Presently, section 77 A of the Companies Act, 1956 provides
for buy-back of securities. Once bought back, the relevant securities
are to be extinguished. Internationally, however, a company can,
subject to certain restrictions, hold bought back shares itself under
the name "Treasury Stock". In other words, Treasury Stocks are the
shares which a company legitimately holds on its share register in its
own name. The voting rights on these Treasury Stocks are suspended
and company cannot exercise voting rights on such shares. No
distribution of dividend (including dividend during winding up) can be
made to such stock.
Student Company Secretary
The Committee felt that a number of preparatory actions were
required before the concepts of Tracking Stocks and Treasury Stocks
could be introduced, such as the regulations to be framed by capital
market regulator, development of appropriate, specific accounting
standards etc. It therefore recommended that while an enabling
provision for Tracking I Treasury Stocks could be incorporated in the
new Law, actual introduction of Tracking and Treasury Stocks in the
Indian Capital Markets be made only when the necessary framework
is ready.
Perpetual Preference Shares
As per the existing provisions, preference shares can be issued
for a maximum period of 20 years. As many companies may like to
raise capital of a quasi equity and permanent nature on account of
long gestation project capital requirements, the Committee felt that
the concept of perpetual preference shares or preference shares of
higher tenure be permitted in the new Law. The Committee
recommended that companies should be permitted to issue perpetual/
longer duration preference shares and that returns from such shares
may be linked to market benchmark or reset periodically. In case the
subscriber of perpetual preference shares wants to redeem his shares
prematurely, necessary enabling provisions to redeem the shares by
the company up to a certain percentage of preference shares on an
annual basis may be provided. This may be done through "call/put
option mechanism". The Committee also felt that flexibility should be
given to the companies to revise the tenure of already issued
preferential shares by obtaining prescribed approval of shareholders
for variation of rights.
Single Window Clearance for Mergers
The Committee recognised the fact that the Indian merger law, as
it exists today, is cumbersome and time consuming and rightly
emphasized on the need for speedier disposal of mergers and
acquisitions (M&As) proposals. Mergers and acquisitions today are a
widely used multipurpose business tool that can bring long term
benefits in the context of increasing competitiveness in the market.
The Committee addressed on formulation of a corporate insolvency
legislation which would enable to carry out M&As with "digital speed"
and made several recommendations in this regard. One of the
recommendation is a single window clearance for the purpose. The
law should provide for a single forum which would approve the
schemes of mergers and acquisitions in an effective time bound
manner. The concept of 'deemed approval' should be provided for in
cases where the regulators do not intimate/inform their comments
within a specified time period to the Court/Tribunal before which the
scheme of merger/amalgamation is submitted for approval.
Contractual Mergers
The Committee was of the view that contractual mergers may be
given statutory recognition in the Company Law in India as is the
practice in many other countries as a restructuring tool to hasten the
process of mergers and acquisitions. Such mergers and acquisitions
are in the contract form (i.e. without the intervention of the court) and
are made subject to subsequent approval of shareholders by simple
majority.
The recognition of such contractual mergers would eliminate
obstructions to mergers and acquisitions, give ex-post facto protection
and the ability to rectify them.
Time-bound proceedings for restructuring and liquidation
The Committee has recommended that a single independent forum
should be created for accelerating the liquidation process and a
definite and predictable time frame should be provided for. The existing
time frame in India is too long and keeps precious assets locked in
proceedings for many years, destroying their value in the process. In
this protracted and never-ending process, the assets not only lose
value but even disappear and vanish. On an average, a time frame of
two years should be feasible for the liquidation process to be
16 October 2006
 ACADEMIC GUIDANCE
completed. A period of one year should be adequate from
commencement of the process till sanction of a plan. There should
also be a definite time period within which proceedings may
commence from the date of filing of the application for rehabilitation.
The legislation should limit the possibility of appeals at every stage
so that the process is not delayed through frivolous appeals or stalling
tactics. A fixed time period should be provided for at each stage of
rehabilitation and liquidation process. Extension at every stage should
be rare and allowed only in exceptional circumstances and in any
case without effecting the outer time-limit provided for the process.
On an average a time frame of 2 years should be feasible for the
liquidation process to be completed.
Insolvency Practitioners
Keeping in view the important role of professionals and experts in
the insolvency process, the Committee has recommended the
recognition of the concept of 'Insolvency Practitioners'. Currently, the
law does not support effective participation of professionals and
experts in the insolvency process. Law should encourage and
recognize the concept of Insolvency Practitioners(Administrators,
Liquidators, Turnaround Specialists, Valuers etc.) and disciplines of
chartered accountancy, company secretaryship, cost and works
accountancy, law etc. can act as feeder streams, providing high quality
professionals for this new activity. Greater responsibility and authority
should be given to Insolvency Practitioners under the supervision of
the Tribunal to maximize resource use and application of skills.
The Insolvency fund
The Committee proposed that the provisions relating to
rehabilitation cess should be replaced by the concept of 'Insolvency
Fund' with optional contributions by companies. The Government may
make grants for the fund and provide incentives to encourage
contributions by companies to the fund. Companies which make
contributions to the fund should be entitled to certain drawing rights
in the event of insolvency. Administration of the fund should be by an
independent administrator. Insolvency fund should not be linked/
credited to Consolidated Fund of India.
4. THE COMP ANIES (AMENDMENT)
COMPANIES
ACT
ACT,, 2006
The Companies (Amendment) Bill, 2006 was introduced and
passed by the Parliament in May, 2006. The Bill received President's
assent on 29th May, 2006. The text of the Companies (Amendment)
Act, 2006 alongwith the objectives for enacting the same has been
reproduced hereinbelow for the information of the students. The
Highlights of the Amendment Act have also been published herein.
In the context of rapid developments witnessed in technology, the
Ministry of Company Affairs decided to enable the operations carried
out by the Ministry and its field offices to be performed more efficiently
and effectively through the use of contemporary information
technology and computers. The Ministry of Company Affairs on the
recommendations of Department of Information Technology is
implementing an e-Governance initiative through a project named as
MCA-21. This project will provide the public, corporate entities and
others an easy and secure online access to the corporate information,
including filing of documents and public access to the information
required to be in the public domain under the statute, at any time and
from anywhere.
The filing and registration of documents is a statutory requirement
under the Act. At present, the Act lays down the procedures for filing
of various documents in physical form and the processes associated
therewith. While, the broad enabling framework for such an initiative
is available under the Information Technology Act, 2000 read with
Companies Act, 1956, enabling provisions would still be required to
support certain online electronic processes which have since become
available due to technological advancement for various detailed
procedural requirements under the Companies Act, 1956.
Student Company Secretary
It is, therefore, proposed to insert new sections 610B, 610C, 610D
and 610E in the Companies Act, 1956 so as to make provision for
electronic filing system and for payment of fees through electronic form
under the said Act which are essential for the successful implementation
of the MCA-21 Project. After the proposed amendments to the
Companies Act, 1956 have been enacted, the documents in electronic
form duly authenticated with digital signatures shall be accepted under
the provisions of that Act. The proposed electronic system also provides
for multiple modes of payment of statutory fees.
The provisions of the Companies Act, 1956 allow an individual to
be a director of up to fifteen companies and such companies can be
located in the jurisdiction in any of the Registrars of Companies. There
is a need for individual identity of person(s) intending to be directors
of companies to be established. This would also facilitate effective
legal action against the directors of such companies under the law,
keeping in view the possibility of fraud by companies and the
phenomenon of companies that raise funds from the public and vanish
thereafter. It is, therefore, proposed to insert new sections 266A, 266B,
266C, 266D, 266E, 266F and 266G in the Companies Act, 1956 so
as to, inter alia, provide for allotment of a unique Director Identification
Number to any individual, intending to be appointed as a director in a
company or to any existing director of a company, for the purpose of
his identification as such, through electronic or other form and to
provide for penalty for any violation in this regard.
THE COMPANIES (AMENDMENT) ACT, 2006*
An Act further to amend the Companies Act, 1956.
Be it enacted by Parliament in the Fifty-seventh Year of the
Republic of India as follows:
1. Short title and commencement
(1) This Act may be called the Companies (Amendment) Act,
2006.
(2) It shall come into force on such date as the Central
Government may, by notification, appoint and different dates
may be appointed for different provisions of this Act.
2. Amendment of section 253
In section 253 of the Companies Act, 1956 (1 of 1956) (hereinafter
referred to as the principal Act), the following proviso shall be
inserted, namely:
Provided that no company shall appoint or re-appoint any
individual as director of the company unless he has been allotted
a Director Identification Number under section 266B..
3. Insertion of new sections 266A, 266B, 266C, 266D, 266E,
266F and 266G
After section 266 of the principal Act, the following sections shall
be inserted, namely:
"Director Identification Number
266A. Application for allotment of Director Identification
Number
Every
(a) Individual, intending to be appointed as director of a
company; or
(b) Director of a company appointed before the commencement
of the Companies (Amendment) Act, 2006,
shall make an application for allotment of Director Identification
Number to the Central Government in such form, and manner
(including electronic form) along with such fee, as may be prescribed:
* No. 23 of 2006. Assented to by the President of India on 29.05 .2006. Published
in the Gazette of India, Extraordinary, Part II, Section I, Dated 30.05.2006.
Section 4 of the Act came into effect on 16th September 2006 vide S.O. 1529(E)
dated 14.09.2006.
17 October 2006
 ACADEMIC GUIDANCE
Provided that every director, appointed before the commencement
of the Companies (Amendment) Act, 2006 shall make, within sixty
days of the commencement of the said Act, such application to the
Central Government:
Provided further that every applicant, who has made an application
under this section for allotment of a Director Identification Number,
may be appointed as a director in a company, or, hold office as director
in a company till such time such applicant has been allotted the
Director Identification Number.
266B. Allotment of Director Identification Number
The Central Government shall, within one month from the receipt
of the application under section 266A, allot a Director Identification
Number to an applicant, in such manner as may be prescribed.
266C. Prohibition to obtain more than one Director
Identification Number
No individual, who had already been allotted a Director
Identification Number under section 266B, shall apply, obtain or
possess another Director Identification Number.
266D.Obligation of Director to intimate Director Identification
Number to concerned company or companies
Every existing director shall, within one month of the receipt of
Director Identification Number from the Central Government, intimate
his Director Identification Number to the company or all companies
wherein he is a director.
266E. Obligation of company to inform Director Identification
Number to Registrar
(1) Every company shall, within one week of the receipt of
intimation under section 266D, furnish the Director
Identification Number of all its directors to the Registrar or
any other officer or authority as may be specified by the
Central Government.
(2) Every intimation under sub-section (1) shall be furnished in
such form and manner as may be prescribed.
266F. Obligation to indicate Director Identification Number
Every person or company, while furnishing any return, information
or particulars as are required to be furnished under this Act, shall
quote the Director Identification Number in such return, information
or particulars in case such return, information or particulars relate to
the director or contain any reference of the director.
266G. Penalty for contravention of provisions of section 266A
or section 266C or section 266D or section 266E
If any individual or director, referred to in section 266A or section
266C or section 266D or a company referred to in section 266E,
contravenes any of the provisions of those sections, every such
individual or director or the company, as the case may be, who or
which, is in default, shall be punishable with fine which may extend to
five thousand rupees and where the contravention is a continuing
one, with a further fine which may extend to five hundred rupees for
every day after the first during which the contravention continues.
Explanation : For the purposes of sections 266A, 266B, 266C, 266D,
266E and 266F, the Director Identification Number means an
identification number which the Central Government may allot to any
individual, intending to be appointed as director or to any existing
directors of a company, for the purpose of his identification as such.
4. Insertion of new sections 610B, 610C, 610D, and 610E
After section 610A of the principal Act, the following sections
shall be inserted, namely:
"610B. Provisions relating to filing of applications, documents
inspection, etc., through electronic form
(1) Notwithstanding anything contained in this Act, and without
Student Company Secretary
prejudice to the provisions contained in section 6 of the
Information Technology Act, 2000, (21 of 2000) the Central
Government may, by notification in the Official Gazette, make
rules so as to require from such date as may be specified in the
rules, that
(a) such applications, balance-sheet, prospectus, return,
declaration,memorandum of association, articles of
association, particulars of charges, or any other particulars
or document as may be required to be filed or delivered
under this Act or rules made thereunder, shall be filed,
through the electronic form and authenticated in such
manner as may be specified in the rules;
(b) such document, notice, any communication or intimation,
required to be served or delivered under this Act, shall be
served or delivered under this Act through the electronic
form and authenticated in such manner as may be specified
in the rules;
(c) such applications, balance-sheet, prospectus, return,
register, memorandum of association, articles of association,
particulars of charges, or any other document and return
filed under this Act or rules made thereunder shall be
maintained by the Registrar in the electronic form and
registered or authenticated, as the case may be, in such
manner as may be specified in the rules;
(d) such inspections of the memorandum of association, articles
of association, register, index, balance-sheet, return or any
other document maintained in the electronic form, which is
otherwise available for such inspection under this Act or
rules made there under, may be made by any person through
the electronic form as may be specified in the rules;
(e) such fees, charges or other sums payable under this Act or
rules made there under shall be paid through the electronic
form and in such manner as may be specified in the rules;
(f) the Registrar shall, register change of registered office,
alteration of memorandum of association or articles of
association, prospectus, issue certificate of incorporation
or certificate of commencement of business, register such
document, issue such certificate, record notice, receive such
communication as may be required to be registered or
issued or recorded or received, as the case may be, under
this Act or rules made there under or perform duties or
discharge functions or exercise powers under this Act or
rules made thereunder or do any act which is by this Act
directed to be performed or discharged or exercised or done
by the Registrar, by the electronic form, in such manner as
may be specified in the rules.
(2) The Central Government may, by notification in the Official
Gazette, frame a scheme to carry out the provisions specified
under sub-section (1) through the electronic form:
Provided that the Central Government may appoint different dates
in respect of different Registrar of Companies or Regional Directors
from which such scheme shall come into force.
610C. Power to modify Act in relation to electronic records
(including the manner and form in which electronic records
shall be filed)
(1) The Central Government may, by notification in the Official
Gazette, direct that any of the provisions of this Act, so far as it
is required for the purpose of electronic record specified under
section 610B in the electronic form,
(a) shall not apply, in relation to the matters specified under
clauses (a) to (f) of sub- section (1) of section 610B, as
may be specified in the notification; or
18 October 2006
 ACADEMIC GUIDANCE
(b) shall apply, in relation to the matters specified under clauses
(a) to (f) of sub section (1) of section 610B only with such
consequential exceptions, modifications or adoptions as
may be specified in the notification:
Provided that no such notification which relates to imposition of
fines or other pecuniary penalties or demand or payment of fees or
contravention of any of the provisions of this Act or offence shall be
issued under this sub-section.
(2) A copy of every notification proposed to be issued under sub-
section (1), shall be laid in draft before each House of Parliament,
while it is in session, for a total period of thirty days which may
be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid, both
Houses agree in disapproving the issue of the notification or
both Houses agree in making any modification in the notification,
the notification shall not be issued or, as the case may be, shall
be issued only in such modified form as may be agreed upon by
both the Houses.
610D. Providing of value added services through electronic
form
The Central Government may provide such value added services
through the electronic form and levy such fees as may be prescribed.
610E. Application of provision of Act 21 of 2000
All the provisions of the Information Technology Act, 2000 relating
to the electronic records (including the manner and format in which
the electronic records shall be filed), in so far as they are not
inconsistent with this Act, shall apply, or in relation, to the records in
electronic form under section 610B..
K N Chaturvedi
Secy. to the Govt. of India
HIGHLIGHTS OF COMPANIES (AMENDMENT)
ACT, 2006
The highlights of Companies (Amendment) Act, 2006 are as
follows:
Director Identification Number (DIN)
l Director Identification Number (DIN) to be obtained by all existing
directors and every other person, intending to become a director.
l DIN to be allotted by the Central Govt. within one month from
the receipt of application for allotment of DIN.
l Individuals prohibited to apply, obtain or possess more than one
DIN.
l Every existing Director to intimate his DIN to the company or all
companies wherein he is a director, within one month of receipt
of DIN.
l Intimation of DIN, to the Registrar or any other officer or other
authority by every company, within one week of the receipt of
intimation by the Director. Intimation to be given in prescribed
form and manner.
l DIN to be quoted by every person or company while furnishing
any return, information or particulars required to be furnished
under the Act, if such return etc. relate to the director or contain
any reference of the director.
Filing of applications, documents inspection etc. through
electronic form
l The applications, balance sheet, prospectus, return, declaration,
memorandum and articles of association, particulars of charges
or any other particulars or document required to be filed or delivered
under this Act or rules made thereunder, are to be filed through
electronic form and authenticated in manner specified in the rules.
Student Company Secretary
l The document, notice, any communication or intimation, required
to be served or delivered under the Act, should be served or
delivered through the electronic form and authenticated in manner
specified in the rules.
l The applications, balance sheet, prospectus, return, register,
memorandum and articles of association, particulars of charges or
any other document and return filed under the Act or rules made
thereunder shall be maintained by Registrar in electronic form and
registered or authenticated in manner specified in the Rules.
l The inspection of the MOA, AOA, register, index, balance-sheet,
return or any other document maintained in the electronic form,
which is otherwise available for such inspection under the Act or
rules made thereunder, may be made by any person through
electronic form as may be specified in the rules.
l Fees, charges or other sums, payable under the Act or rules
made thereunder, shall be paid electronically and in such manner
as may be specified in the rules.
l Registrar shall register change of registered office, alteration of
MOA or AOA, prospectus, issue certificate of incorporation or
certificate of commencement of business, issue such certificate,
record notice, receive such communication required to be
registered or issued or recorded or received, as the case may
be, under this Act or rules made thereunder by electronic form,
in the manner as may be specified in the rules.
Providing of value added services through electronic form
l Central Govt. may provide such value added services through
the electronic form and levy such fees as may be prescribed.
Application of provisions of Information Technology Act, 2000
l All the provisions of Information Technology Act, 2000 relating
to the electronic records (including the manner and format in
which the electronic records shall be filed), in so far as they are
not inconsistent with this Act, shall apply to the records in
electronic form.
HIGHTLIGHTS OF MCA21 PROJECT
INTRODUCTION
MCA21 is an ambitious e-governance initiative of Government of
India that builds on the Governments vision of National e-governance
in the country. As part of the Governments focus on governance
norms to meet the expectations arising from globalization, MCA21
project has been launched as a flagship initiative of Ministry of
Company Affairs (MCA) and is oriented at providing easy and secure
access to MCA services. The project is named as MCA21 as it aims
at repositioning MCA as an organization capable of fulfilling the
aspirations of its stakeholders in the 21st Century. Rather than
compelling the business community to physically travel to MCA offices,
MCA services will be made available at the place of their choice, be
it their homes or offices. The MCA21 project aims at moving from
paper based to nearly paper less environment.
The project is designed to fully automate all processes related to
the proactive enforcement and compliance of the legal requirements
under the Companies Act, 1956. E-filing facility includes incorporation
of new companies, filing annual and other statutory returns,
registration and verification of charges and processing of various
approvals/clearances etc. applied on time. Besides inspection of
company documents, request for certified copies is also facilitated
through MCA portal. The present scope of MCA21 project covers
only the offices of ROCs, Regional Directors and the Headquarters
at Delhi. It does not include other offices of MCA like Official
Liquidators, Company Law Board/Tribunal and Courts which are
proposed to be taken up in second phase.
The major components involved in this comprehensive e-
19 October 2006
 ACADEMIC GUIDANCE
Governance project are Front Office and Back Office. From the
customer perspective, the Front Office operations assume
significance, which would be administered through the Front Office
portal. The entire Back Office operations of the MCA would be
automated so as to achieve the objective of a user-friendly
computerized environment.
To facilitate smooth implementation of MCA21 Project, the
Companies (Amendment) Act, 2006 has been passed by the
Parliament and Section 4 of the Act has come into force w.e.f.
September 16, 2006.
KEY BENEFITS OF MCA21 PROJECT
MCA21 seeks to fulfill the requirements of the various stakeholders
including the Corporates, Professionals, Public Financial Institutions
and Banks, Government and the MCA employees. The benefits of
MCA 21 project are as follows:
(a) On-line incorporation of companies
(b) Simplified and easy mode of filing of Forms/ Returns
(c) Registration as well as verification of charges anytime and from
anywhere
(d) Inspection of public documents of companies anytime from
anywhere
(e) Corporate-centric approach
(f) Building up a centralized database repository of corporates
operating in India
(g) Enhanced service level fulfillment and customer relationship
building
(h) Total transparency through e-Governance
(i) Timely redressal of investor grievances
(j) Availability of more time for MCA employees for qualitative
analysis of corporate information.
SERVICES AVAILABLE ON MCA21
The following services will be available under the MCA21 project:
l Registration and incorporation of new companies
l Filing of Annual Returns and Balance Sheets
l Filing of forms for change of names/address/Directors details
l Registration and verification of charges
l Inspection of documents
l Applications for various statutory services from MCA
l Investor grievance redressal
FRONT OFFICE
Front Office represents the interface of the corporate and public
user with the MCA 21 system. This comprises of Virtual Front Office
and Physical Front Office. Virtual Front Office merely represents a
computer facility of the user/stakeholder/ professional for filling of
digitally signed e-Forms by accessing the MCA portal through Internet.
It also pre-supposes availability of related facilities to convert
documents into PDF format and scanning of documents wherever
required. When a company or user does not have these computer
facilities, it can avail of these facilities at the designated facilitation
centers, known as Physical Front Offices.
REGISTRAR'S FRONT OFFICE
To facilitate the change over from Physical Ducument Filing to
Digital Document Filing, the Ministry started offices known as the
Registrar Front Office. It is one of the various channels available to
stakeholders to enable them to do the statutory filing with ROC Offices
across the country. Registrar's Front Offices are managed and
operated by the operator. Till date these are 53 in number all over
India. RFO has all facilities which will be required for online filing like
trained manpower, broadband connectivity, scanner, painter and
related computer accessories. This office manned by MCA and TCS
Student Company Secretary
official provideds free of cost service in all aspects of MCA 21
e-governance project.
BACK OFFICE
Back Office represents the office of ROCs, Regional Directors
and Headquarters and takes care of internal processing of the forms
filed by the corporate user as per MCA norms and guideline. The e-
Forms will be routed dynamically to the concerned authority for
processing depending upon the assigned role. All the e-Forms along
with the attachments will be stored in the electronic repository, which
the staff of MCA can view depending upon the access rights.
e-FILING
MCA 21 project facilitates eFiling of various forms and applications
under the CompaniesAct,1956 and the Rules and Regulations
thereunder. The key details relevant to eFiling are presented
hereinafter.
WHAT IS AN E-FORM?
An e-Form is nothing but a re-engineered conventional form
notified, and represents a document in electronic format for filing
with MCA authorities through the Internet. This may be either a form
filed for compliance or information purpose or an application seeking
approval from the MCA.
e-FORMS NOTIFIED
MCA has, vide Notification No. GSR 56(E) dated 10th February
2006, issued the Companies (Central Governments) General Rules
and Forms (Amendment) Rules, 2006 and notified new e-Forms.
These new e-Forms have been evolved to suit e-filing. As MCA21
project has become effective, only e-forms are being accepted.
Therefore with effect from 28.2.2006 only the notified e-forms have
to be filed. In other words the forms earlier specified under the
Companies (Central Governments) General Rules and Forms, 1956
have become redundant and are no more applicable.
PRE-CERTIFICATION OF E-FORMS
Apart from authentication of e-forms by authorized signatories
using digital signatures, some e-forms are also to be certified by
practising professionals. Such certification as is presently required,
has not only been continued by MCA-21 in its e-forms but the same
has also been extended to several other forms comprising of Forms
Nos. 2, 3, 5, 8, 10, 17, 18, 23, 24AB, 32 and 61. This pre-certification
is to be carried out by inter alia Company Secretaries in whole-time
practice. Besides, Form 1 of Investor Education and Protection Fund
(Awareness and Protection of Investors) Rules, 2001 is also to be
pre-certified. The Practising Company Secretaries continue to be
eligible for signing of Form Nos.1, 19, 20, 20A and 25C.
CORPORATE IDENTITY NUMBER (CIN)
Every company has been allocated a Corporate Identity Number
(CIN). CIN can be found from the MCA21 portal through search based
on :
l ROC Registration No.
l Existing Company Name
l Old Name of Company
l Inactive CIN
FINDING CIN FROM REGISTRATION NUMBER/NAME
The existing company registration numbers currently in use are
unique within a given ROC Office, but it is not so across various ROC
Offices in the Country. The MCA portal will display the CIN of a
company when the company registration number or name is entered
along with the relevant ROC code. Since the company registration
number is not unique on an all India basis, the ROC code should also
be keyed in by the user to provide the exact CIN. The name or CIN of
the company may change over a period of time. System only displays
the current name and CIN.
In case of change of CIN, the user is required to enter previous
20 October 2006
 ACADEMIC GUIDANCE
(inactive) CIN and the system displays corresponding active CIN. In
case of change of name, the user is required to enter old name and
the system displays corresponding current name. This facility can be
used without logging into the system.
DIRECTOR IDENTIFICATION NUMBER (DIN)
In the scenario of e-filing, all existing directors and every other
person, intending to become a director is required to obtain the Director
Identification Number (DIN). DIN is a unique identification number for
an existing director or a person intending to become the director of a
company. DIN is also mandatory for directors of Indian companies
who are not citizens of India. However DIN is not mandatory for
directors of foreign company having branch offices in India. Only a
single DIN is required for an individual irrespective of number of
directorships held by him. All the directorships of an individual would
be mapped in the database through that DIN.
PROCEDURE FOR OBTAINING DIRECTOR
IDENTIFICATION NUMBER (DIN)
An existing Director/person intending to become a Director is
required to make an application to MCA for allotment of unique
identification, namely Director Identification Number (DIN). It is
intended to be a lifetime number. There is new e-Form, requiring
details such as name, address, and email ID of the person making
an application for allotment of DIN. There is no fee prescribed for
obtaining DIN.
On submission of above eForm, applicant shall be allotted a
provisional DIN. The applicant shall be required to take a printout of
the submitted eForm and will have to attach proof of identity, proof of
residence and photograph. The applicant shall be required to sign
the physical copies of the form and get these documents duly
notarized. The applicant shall be required to send these documents
to a DIN processing desk, MCA. On receipt of these documents, the
application will be scrutinized at Back Office and on an approval, the
DIN shall become active. The outcome of application (approval/
rejection) shall be communicated to the user through email.
Also the applicant can query the application status by quoting provisional
DIN allotted at MCA portal.
It must be noted that on resignation of the Director from a company,
the DIN obtained would not be cancelled as the same is individual
specific and will remain with the individual only.
Persons other than directors, e.g. Company Secretary are not
required to obtain identification number in the manner as directors
are required to get DIN.
DIGITAL SIGNATURE CERTIFICATE
A digital signature certificate is the electronic signature duly issued
in terms of the provision of the Information Technology Act by the
Certifying Authority established by the Government of India under
the Information Technology Act that shows the authenticity of the
person signing the same. It is electronic analogue of a written
signature. Every user who is required to sign an e-Form for submission
with MCA is required to obtain a Digital Signature Certificate. The
persons requiring Digital Signature Certificate includes the company
representatives, professionals and others who are required to affix
digital signatures for submitting an e-Form. The digital signature used
in e-form ensures the signatory authentication and data authentication,
besides ensuring maximum security of documents that are filed
electronically.
For MCA21, the following four types of users are identified as
users of Digital Signature Certificates (DSCs):
(a) MCA (Government) employees.
(b) Professionals (Chartered Accountants, Company Secretaries,
Cost Accountants and Lawyers) who interact with MCA and
companies in the context of the Companies Act.
(c) Authorized Signatories of the company including Managing
Director, Directors, Manager or Secretary.
Student Company Secretary
(d) Representatives of Banks and Financial Institutions.
The indicative process of issuance of DSC by registering online is
as follows:
(a) Applicant registers online as a new subscriber at CA (Certifying
Authority) website. As a part of registration he has to provide user
id password and email account and CA creates user account.
(b) Applicant is directed to the Certificate Enrollment page and
follows the enrollment procedure.
(c) Applicant takes the printout of Certificate Enrolment Form and
sends the required Certificate Validation documents to CA as
per the checklist mentioned in the Certificate Enrollment pages.
(d) Applicant downloads the Certificate once the email notification
on Certificate Issuance is received. The procedure for
downloading the Certificate is specified in the email.
FEES AND PAYMENT MECHANISM
The amount of fee depends on many parameters like type of
service requested, authorized capital of the company and the
stipulated rules for fee calculation.
Belated filing entails fees as per applicable rules.
Services for which fees are chargeable can broadly be categorized
under following four categories:
l Filing of e-Forms/applications
l Inspection of public documents online
l Requesting for certified copy or extract of a public document
l Transfer deed endorsement
System calculates the fee and it is displayed to the user. In case
user has to make the additional payment as advised by MCA/Company
Law Board, the user enters the amount of fee to be paid to MCA.
PAYMENT OPTIONS
Payment of fees can be made by user either offline or online
depending upon his convenience.
The following payment options are available to the user for
selection:
l Credit Card
l Internet Banking
l Challan
OFFLINE METHOD
User can make the payment offline by taking the printout of pre-
filled challan generated by MCA 21 system and walking into any of
the authorized bank branches to make the payment through traditional
modes of payment (Cash/DD/Local Cheque). The address of the bank
branches accepting payment on behalf of MCA is available on MCA
Portal. MCA has tied up with 200 branches of SEBI, PNB, Indian
Bank, ICICI and HDFC Bank to collect payment.
PAYMENTPROCESS
If the user does not make the payment in bank branch by date,the
submission of form on the portal shall be regarded as incomplete.The
applicant will be sent an email that this form cannot be regarded as
filed due to non-payment of fee.
ONLINEMETHOD
Electronic payments through Internet can be made either by credit
card or by Internet banking facility.
VIEWINGOFPAYMENTSTATUS
Status of payment done by user can be checked from the MCA
portal with the help of SRN.
The list of payment status as displayed on MCA Portal is
shown below:
(a) Paid
21 October 2006
 ACADEMIC GUIDANCE
(b) Waiting for payment
(c) Transaction cancelled Payment not received
Status (b) and (c) above are applicable in the case of offline
payment through bank challan mode.
SEARCHANDOTHERFACILITIES
The following search facilities are available to locate the requisite
information:
l Search for viewing public document
l Search for getting certified copy
l Finding the Corporate Identity Number (CIN)
l Checking company name
STEPS FOR ONLINE EFILING- A BRIEF
1. When the business or the registered users access the MCA
portal, they enter their username and authentication details -
Password/ Digital Certificate.
2. The user will be shown a list of eForms category-wise under
eForms tab .
3. At any time, the users can read the related instruction kit, available
under Help menu, to familiarize themselves with the procedures.
4. The users can then fill the appropriate eForm for the service
required. There is an option of pre-fill facility in the eForms, where
the static details such as name and address of the company will
be pre-filled by the system automatically on entering the
Corporate Identity Number (CIN).
5. The users attach the necessary documents to the eForm.
6. The users may avail the pre-scrutiny service of the eForm. The
documents will be verified (pre-scrutinised) by the system. In
case of any inadequacies, for example, if a mandatory column
in the eForm is not filled in, the user will be asked to rectify
before the document is ready for execution (signature).
7. The applicant or a representative of the applicant will then submit
the duly signed documents electronically.
8. The system will calculate the fee, including late payment fees, if
applicable.
9. Payments will have to be made through appropriate mechanisms
- electronic (credit card, Internet banking) or traditional means
(at the bank counter).
(a) Electronic payments can be made at the Virtual Front Office
(VFO).
(b) If the user selects the traditional payment option, the system
will generate a pre-filled challan in the prescribed format.
Traditional payments through cash, cheques can be done
at the designated network of banks using the system
generated challan.
10. The payment will be exclusively confirmed for all online (Internet)
payment transactions using payment gateways.
11. Acceptance or rejection of any transaction will be explicitly
communicated to the applicant (including facility to print a receipt
for successful transactions).
12. MCA21 will provide a unique transaction number, which can be
used by the applicant for enquiring status pertaining to that
transaction.
13. Filing will be complete only when the necessary payments are
made.
14. In case of a rejection, helpful remedial tips are provided to the
applicant.
15. The applicants will be provided an acknowledgement through e-
mail or alternatively they can check the MCA portal.
ONLINE INSPECTION OF DOCUMENTS
The documents filed online, once taken on record by ROC Offices
Student Company Secretary
shall be available for public viewing on payment of requisite fees.
These documents, which shall be in domain of public documents,
include documents relating to incorporation, charges, annual returns
and balance sheets and change in directors.
A certified copy of the documents can also be obtained by anyone
so interested. For the purpose there is also an option to mention the
number of pages in the document for which a certified copy is required
as well as the number of copies required.
COMPANY ACCOUNTS
COMPANY
(STUDY UPDATES)2
1. INDIAN ACCOUNTING STANDARDS
The Accounting Standards Board of the Institute of Chartered
Accountants of India has so far issued the following Accounting
Standards.
AS - 1 - Disclosure of Accounting Policies.
AS - 2 - Valuation of Inventories
AS - 3 - Cash Flow Statement.
AS - 4 - Contingencies and Events Occurring after the Balance
Sheet Date.
AS - 5 - Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies.
AS - 6 - Depreciation Accounting.
AS - 7 - Construction Contracts.
AS - 8 - Withdrawn and superseded by AS-26
AS - 9 - Revenue Recognition.
AS - 10 - Accounting for Fixed Assets.
AS - 11 - The Effects of Changes in Foreign Exchange Rates.
AS - 12 - Accounting for Government Grants.
AS - 13 - Accounting for Investments.
AS - 14 - Accounting for Amalgamations.
AS - 15 - Employee Benefits (Revised-2005)
AS - 16 - Borrowing Costs.
AS - 17 - Segment Reporting.
AS - 18 - Related Party Disclosures.
AS - 19 - Leases.
AS - 20 - Earnings Per Share.
AS - 21 - Consolidated Financial Statements.
AS - 22 - Accounting for Taxes on Income.
AS - 23 - Accounting for Investments in Associates in
Consolidated Financial Statements.
AS - 24 - Discontinuing Operations
AS - 25 - Interim Financial Reporting
AS - 26 - Intangible Assets
AS - 27 - Financial Reporting of Interest in Joint Ventures
AS - 28 - Impairment of Assets
AS - 29 - Provisions, Contingent Liabilities and Contingent Assets.
2. CORPORATE DIVIDEND TAX
As per Finance Act, 2003, the provision relating to tax on distributed
profit (corporate dividend tax) has been re-introduced and made
effective from 1.4.2003 and accordingly the domestic companies are
liable to pay tax on any amount declared, distributed or paid by way
of dividend at the rate of twelve and one-half percent. Hence, the
practical problems given in the study material may be modified
accordingly and this aspect may be keppt in mind while preparing for
December 2006 examination.
2. Prepared by M.A. Joseph, Asst. Director, The ICSI.
22 October 2006
 ACADEMIC GUIDANCE
3. ACCOUNTS OF BANKING COMPANIES (iii) Doubtful Assets: An asset would be classified as doubtful if it
INCOME RECOGNITION remained in the sub-standard category for 12 months. A loan
classified as doubtful has all the weaknesses inherent in assets
Assets of the banks are classified as performing assets and Non- that were classified as sub-standard, with the added characteristic
Performing Assets (NPAs) for the purpose of income recognition. that the weaknesses make collection or liquidation in full, on
Assets, which are not non-performing, are performing assets. An asset the basis of currently known facts, conditions and values highly
becomes non-performing when it ceases to generate income for questionable and improbable
banks. With a view to moving towards international best practices
and to ensure greater transparency, 90 days overdue norm for (iv) Loss Assets: A loss asset is one where loss has been identified
identification of NPAs has been adopted, from the year ending March by the bank or internal or external auditors or the RBI inspection
31st, 2004. Accordingly, a non-performing asset would be a loan or but the amount has not been written off, wholly or partly. In other
an advance where: words, such an asset is considered uncollectible and of such
little value that its continuance as a bankable asset is not
(i) Interest and/or installment of principal remain overdue for a period warranted although there may be some salvage or recovery value
of more than 90 days, in respect of a term loan;
(ii) Provisions
(ii) the account remain out of order in respect of overdraft/cash
credit; The purpose of classification of bank assets is to make adequate
(An account should be treated as out of order if the outstanding provision on the basis of quality of assets, the realisation of the security
balance remains continuously in excess of the sanctioned limit/drawing and the erosion in the value of security. It has been directed that the
power. In cases where the outstanding balance in the principal banks should make provision against the various assets on the
operating account is less than the sanctioned limit/drawing power, following basis:
but there are no credits continuously for 90 days as on the date of (i) Standard Assets: A provision of 0.25% to 1.00 is required as
Balance Sheet or credits are not enough to cover the interest debited under:
during the same period, these accounts should be treated as out of Category Provision required
order.)
(a) Direct advances to agriculture 0.25%
(iii) the bill remains overdue for a period of more than 90 days in and SME sectors
case of bills purchased and discounted;
(b) Personal loans, capital market 1.00%
(iv) interest and or installment of principal remains overdue for two
exposures, residential housing
harvest seasons but for a period not exceeding two half years in
the case of an advance granted for agricultural purposes; and beyond Rs. 20 lakhs and
commercial, real estate loans
(v) any amount to be received remains overdue for a period of more
than 90 days in respect of other accounts. (c) Other categories 0.40%
(Any amount due to the bank under any credit facility is overdue (ii) Sub-standard Assets: A general provision of 10 percent on total
if it is not paid on the due date fixed by the bank.) outstanding should be made without making any allowance for
Banks have been advised by the Reserve Bank of India that they Deposit Insurance and Credit Guarantee Corporation/Export Credit
should identify the non-performing assets and ensure that interest on Guarantee Corporation guarantee cover and securities available.
such non-performing assets is not recognised as income and taken The unsecured exposures which are identified as substandard
to the profit and loss account. Banks are to recognise their income would attract additional provision of 10 per cent, i.e., a total of
on Accrual Basis in respect of income on performing assets and on 20 per cent on the outstanding balance. Unsecured exposure is
Cash Basis in respect of income on non-performing assets. Any defined as an exposure where the realisable value of the security,
interest accrued and credited to income account must be cancelled as assessed by the bank/approved valuers/Reserve Banks
by a reserve entry once the credit facility comes under the category inspecting officers, is not more than 10 percent, ab-initio, of the
of non-performing assets. outstanding exposure.
ASSETS CLASSIFICATION AND PROVISIONS (iii) Doubtful Assets:
(i) Assets Classification (a) To the extent the debt is not covered by realisable value of the
Banks are required to classify the loan assets (advances) into security, 100% provision is to be made.
four categories viz: (b) In regard to the secured portion, provision may be made on the
(i) Standard Assets; following basis, at the rates ranging from 20 percent to 100
percent of the secured portion depending upon the period for
(ii) Sub-standard Assets;
which the asset has remained doubtful:
(iii) Doubtful Assets; and
Period for which the advance has Provision requirement (%)
(iv) Loss Assets. remained in doubtful category
(i) Standard Assets: Standard asset is one which does not Up to one year 20 per cent
disclose, any problem and which does not carry more than normal
risk attached to the business. Such asset is considered as One to three years 30 per cent
performing asset. More than three years
(ii) Subs-standard Assets : Sub-standard asset is one which has (i) outstanding stock of NPAs as - 60 per cent with effect from
remained as non-performing asset (NPA) for a period less than on March 31, 2004 March 31, 2005
or equal to 12 months. There is no promise of recovering the - 75 per cent with effect from
dues in full, having regard to the value of security or current March 31, 2006
networth of the borrower/guarantor, hence the possibility of loss - 100 per cent with effect
in realising such debts. In other words, such an asset will have from March 31, 2007
well defined credit weaknesses that jeopardise the liquidation of (ii) advances classified as doubtful - 100 per cent with effect
the debt and are characterised by the distinct possibility that the more than three years on or from March 31, 2005
banks will sustain some loss, if deficiencies are not corrected. after April 1, 2004

Student Company Secretary 23 October 2006

 ACADEMIC GUIDANCE
(iv) Loss Assets: The entire assets should be written off or if the
assets are to be retained in the books for any reason, 100%
provision is required to be made.
Note: Provision towards standard assets should not be deducted
from advances but shown separately as contingent provsions against
standard assets under Other Liabilities and Provisions - `Others
in Schedule V of the Balance Sheet.
THE COMPETITION ACT ACT,, 2002
IELIL-INTERMEDIATE/FSPELDC-FINAL
The students are informed that the following Sections of the
Competition Act, 2002 are applicable for December, 2006
examination:
Short Title, Extent and Commencement (Section 1), Definitions
(Section 2) Establishment of Commission (Section 7) Composition
of Commission (Section 8), Selection of Chairperson and Other
Members (Section 9), Terms of Office of Chairperson and Other
Members (Section 10), Resignation, Removal and Suspension of
Chairperson and other members (Section 11); Restrictions on
Employment of Chairpersons etc. (Section 12), Financial and
Administrative Powers of Member-Admininstration (Section 13)
Salary etc. of Chairperson and Other Members (Section 14),
Vacancy etc. not to invalidate proceedings of Commission (Section
15) Appointment of Director General (Section 16), Registrar and
Officers of Commission (Section 17), Benches of Commission
(Section 22), Distribution of Business of Commission (Section 23),
Appearance before Commission (Section 35), Competition
Advocacy (Section 49), Finance, Accounts and Audit (Sections 50,
51, 52 and 53), Miscellaneous (Section 54, 55, 56, 57, 58, 59, 60,
61, 62, 63 Section 64 and 65.
Students are advised to refer these Sections if any question is
posed on the Competition Act, 2002. A comparison of the provisions
of the MRTP Act, 1969 and the provisions of the Competition Act,
2002 is desirable to highlight the changes inserted by the
Competition Act, 2002.
Since all the Sections of the Competition Act, 2002 have not
come into force till now, the students may refer to provisions of
MRTP Act, 1969. However, credit will be given to the students if
they also refer the provisions of the Competition Act, 2002, while
answering the question based on MRTP Act, 1969.
ATTENTION STUDENTS!
Applicability of Latest Finance Act and other changes for
Company Secretary December 2006 Examination.
DIRECT TAXES
All the students may kindly note that for the December 2006
Examination session, in respect of Direct Taxes, the applicable
Assessment Year shall be 2006-07 (Previous year 2005-06).
Thus, they are advised to study Finance Act, 2005 for
December 2006 examination. Further, as per the syllabus, students
are required to update themselves about all the Circulars,
Clarifications, Notifications issued by CBDT & Central Government,
which come in to effect on or before six months prior to the date of
the respective Examination.
Gift Tax Act has been excluded from the scope of examination
from June 1999 session onwards unless otherwise informed.
INDIRECT TAXES
Students appearing in the Tax Laws (Indirect Tax portion to the
extent of topics covered in the syllabus) and Direct and Indirect
Taxation-Law and Practice (Indirect tax portion) paper of the
Intermediate and Final Courses respectively may please take note
of the following changes applicable for December 2006 Examination:
1. All changes made by the Finance Act, 2006.
2. All Circulars, Clarifications/Notifications issued by CBE&C/
Central Government which became effective six months prior
to the date of examination.
Student Company Secretary
STOP PRESS
ATTENTION STUDENTS
REFERENCER - ICL AND ICSP
The Institute proposes to release Referencer containing updates
of Company Law and Company Secretarial Practice Papers in
the light of MCA-21 (emergence of e-governance era). The
Referencer shall be available in the last week of October 2006
on the website of the Institute www.icsi.edu and at the Head
Office, Regional Offices and Chapter Offices from first week of
November 2006. The Students may also procure the Referencer
free of cost by sending a self-addressed envelope of size of
10 x 8 plus flap with pre-paid postage stamps of Rs. 5/- addressed
to Mr. Harish Joshi, Desk Officer, The Institute of Company
Secretaries of India, C-37, Sector 62, Institutional Area, Noida,
(U.P.). Students are advised to procure the said Referencer after
the specified date and update their study materials accordingly.
ATTENTION
REVISED STUDY MATERIALS
Queries are often being received by the Institute with regard to
availability of latest study materials. Students may note that the
2006 series of following study materials are available:
FOUNDATION
1. Information Systems and Quantitative Techniques
2. Financial Accounting
INTERMEDIATE
1. Company Accounts and Cost & Management Accounting
2. General and Commercial Laws
3. Tax Laws
FINAL
1. Advanced Company Law & Practice
2. Corporate Restructuring Law & Practice
3. Secretarial Management and Systems Audit
4. Financial, Treasury and Forex Management
5. Human Resource Management and Industrial Relations
6. Direct and Indirect Taxation-Law and Practice (2007 series)
STUDENTS QUIZ
PRIZE QUERY
A public limited company procured plain glazed creamic
duty paid tiles and processed them into decorated glazed
ceramic wall tiles by applying drying and colouring processes.
The Department of Central Excise considered the processing
done by the public limited company amounted to manufacture
and levied excise duty on the finished product. Is the action of
the Department correct in law?
CONDITIONS
1. Answer should not exceed one page typed in double space.
The answer sheet should contain the name, registration number
and address of the student.
2. Last date for receipt of answer is 16th November, 2006.
3. Two prizes (a first and a second) in kind will be awarded to the
best answers and the names of the contributors will be published
in the Bulletin.
4. The envelope should be superscribed Students Query,
October 2006 and addressed by name to N.K. Jain, Secretary
& Chief Executive Officer, The Institute of Company
Secretaries of India, ICSI House, 22, Institutional Area, Lodi
Road, New Delhi-110003.
24 October 2006
 ACADEMIC GUIDANCE
SPECIAL ECONOMIC ZONESPOLICY AND LAW*
SPECIAL ECONOMIC ZONES POLICY
Special Economic Zones (SEZ) are growth engines that can boost
manufacturing, augment exports and generate employment. The
private sector has been actively associated with the development of
SEZs. The SEZs require special fiscal and regulatory regime in order
to impart a hassle free operational regime encompassing the state of
the art infrastructure and support services.
The Government of India had announced a Special Economic Zone
scheme in April, 2000 with a view to provide an internationally
competitive environment for exports. The objectives of Special
Economic Zones include making available goods and services free
of taxes and duties supported by integrated infrastructure for export
production, expeditious and single window approval mechanism and
a package of incentives to attract foreign and domestic investments
for promoting export-led growth.
ELIGIBILITY
Special Economic Zone (SEZ) is a specifically delineated duty
free enclave and is deemed to be foreign territory for the purposes of
trade operations and duties and tariffs. Goods and services going
into the SEZ area from Domestic Tariff Area (DTA) are treated as
exports and goods coming from the SEZ area into DTA are treated as
if these are being imported. SEZ units may be set up for manufacture
of goods and rendering of services.
SETTING UP OF SEZ IN PRIVATE/JOINT/STATE SECTOR
A SEZ may be set up in the public, private, joint sector or by state
Government.
MANAGEMENT OF SEZ
SEZ has been put under the administrative control of the
Development Commissioner. All activities of SEZ units within the Zone,
unless otherwise specified, including export and re-import of goods
have been permitted through self-certification procedure.
ENTITLEMENT FOR SEZ DEVELOPER
For development, operation and maintenance of infrastructure
facilities in SEZs, the developer have been made eligible for the
following entitlements
(a) Income tax exemption as per 80 IA of the Income Tax Act.
(b) Import/ procure goods without payment of Customs/Excise duty.
(c) Exemption from Service tax.
(d) Exemption from CST.
EXIT FROM SEZ SCHEME
SEZ unit may opt out of the scheme with the approval of the
Development Commissioner. Such exit from the scheme is subject to
payment of applicable Customs and Excise duties on the imported and
indigenous capital goods, raw materials etc. and finished goods in stock.
In case the unit has not achieved positive NFE, the exit shall be subject
to penalty, that may be imposed by the adjudicating authority under
Foreign Trade (Development and Regulation) Act, 1992. SEZ unit may
also be permitted by the Development Commissioner, as one time
option, to exit from SEZ scheme on payment of duty on capital goods
under the prevailing EPCG Scheme, subject to the unit satisfying the
eligibility criteria of that Scheme and standard conditions for exit.
EXPORT AND IMPORT OF GOODS
SEZ units may export goods and services including agro-products,
partly processed goods, sub-assemblies and components except
prohibited items of exports in ITC (HS). The units may also export by-
products, rejects, waste scrap arising out of the production
process. Export of Special Chemicals, Organisms, Materials,
Equipment and Technologies (SCOMET) are subject to fulfillment of
* Prepared by Dr. S.K. Dixit, Joint Director, The ICSI.
Student Company Secretary 25
the conditions indicated in the ITC (HS) Classification of Export and
Import Items. SEZ units, other than trading/service unit, may also
export to Russian Federation in Indian Rupees against repayment of
State Credit/Escrow Rupee Account of the buyer, subject to RBI
clearance, if any.
SEZ unit may import/procure from the DTA without payment of
duty all types of goods and services, including capital goods, whether
new or second hand, required by it for its activities or in connection
therewith, provided they are not prohibited items of imports in the
ITC(HS). However, any permission required for import under any other
law shall be applicable. Goods include raw material for making capital
goods for use within the unit. The units are also permitted to import
goods required for the approved activity, including capital goods, free
of cost or on loan from clients.
SEZ units may procure goods required by it without payment of
duty, from bonded warehouses in the DTA set up under the Policy
and/or under Section 65 of the Customs Act and from International
Exhibitions held in India.
SEZ units, may import/procure from DTA, without payment of duty,
all types of goods for creating a central facility for use by units in
SEZ. The Central facility for software development can also be
accessed by units in the DTA for export of software.
Gem & Jewellery units may also source gold/ silver/ platinum
through the nominated agencies.
SEZ units may import/procure goods and services from DTA
without payment of duty for setting up, operation and maintenance of
units in the Zone.
LEASING OF CAPITAL GOODS
SEZ unit may, on the basis of a firm contract between the parties,
source the capital goods from a domestic/foreign leasing company.
In such a case the SEZ unit and the domestic/ foreign leasing company
shall jointly file the documents to enable import/ procurement of the
capital goods without payment of duty.
NET FOREIGN EXCHANGE EARNING (NFE)
SEZ unit should be a positive Net Foreign Exchange Earner. Net
Foreign Exchange Earning (NFE) is calculated cumulatively for a
period of five years from the commencement of production according
to the prescribed formula.
MONITORING OF PERFORMANCE
The performance of SEZ units is monitored by the Unit Approval
Committee, as per the specified guidelines.
LEGAL UNDERTAKING
The unit is required to execute a legal undertaking with the
Development Commissioner concerned and in the event of failure to
achieve positive foreign exchange earning it has been made liable to
penalty in terms of the legal undertaking or under any other law for
the time being in force.
APPROVALS AND APPLICATIONS
Applications for setting up a unit in SEZ other than proposals for
setting up of unit in the services sector (except software and IT enabled
services, trading or any other service activity as may be delegated by
the BOA), are approved or rejected by the Units Approval Committee
within 15 days as per prescribed procedure. In other cases approval
may be granted by the Board of Approval. Proposals for setting up
units in SEZ requiring Industrial Licence may be granted approval by
the Development Commissioner after clearance of the proposal by
the SEZ Board of Approval and Department of Industrial Policy and
Promotion within 45 days on merits.
DTA SALES AND SUPPLIES
SEZ unit may sell goods, including by-products, and services in
DTA in accordance with the import policy in force, on payment of
applicable duty. DTA sale by service/trading unit is subject to
achievement of positive NFE cumulatively. Similarly for units
October 2006
 ACADEMIC GUIDANCE
undertaking manufacturing and services/trading activities against a
single LOP, DTA sale are subject to achievement of NFE cumulatively.
The following supplies affected in DTA by SEZ units are counted
for the purpose of fulfilment of positive NFE:
(i) Supplies effected in DTA in terms of the Policy.
(ii) Supplies made to bonded warehouses set up under the Policy
and/or under Section 65 of the Customs Act.
(iii) Supplies to other EOU/SEZ/ EHTP/ STP units provided that such
goods are permissible for procurement by units.
(iv) Supplies against special entitlement of duty free import of goods
(v) Supplies of goods and services to such organizations which are
entitled for duty free import of such items in terms of general
exemption notification issued by the Ministry of Finance
(vi) Supply of services (by services units) relating to exports paid for
in free foreign exchange or for such services rendered in Indian
Rupees which are otherwise considered as having been paid for
in free foreign exchange by RBI.
(vii) Supplies of Information Technology Agreement (ITA-1) items and
notified zero duty telecom/electronic items.
ENTITLEMENT FOR SUPPLIES FROM THE DTA
Supplies from DTA to SEZ are entitled to the following:
DTA supplier is entitled for Drawback Or DEPB in lieu of drawback;
Discharge of Export performance, if any, on the supplier. SEZ units
are entitled to Exemption from Central Sales Tax; Exemption from
payment of Central Excise Duty on all goods eligible for procurement
by the unit. Reimbursement of Central Excise Duty, paid on bulk tea
procured from the licenced auction centres by the Development
Commissioner of concerned Zone as long as levy on bulk tea in this
regard is in force. Reimbursement of Duty paid on fuels or any other
goods procured from DTA as per the rate of drawback notified by the
Directorate General of Foreign Trade from the date of such notification.
Supplier of precious and semi-precious stones, synthetic stones and
processed pearls from Domestic Tariff Area to the units situated in
SEZ are eligible for grant of Replenishment Licenses at the prescribed
rates and for the specified items
INTER-UNIT TRANSFER
SEZ units may transfer manufactured goods, including partly
processed/semi-finished goods and services from one SEZ unit to
another SEZ/EOU/ EHTP/STP unit. Goods imported/procured by a
SEZ unit may be transferred or given on loan to another unit within
the same SEZ, which are duly accounted for, but not counted towards
discharge of export performance. Capital goods imported/procured
may be transferred or given on loan to another SEZ/EOU/ EHTP/
STP unit with prior permission of the Development Commissioner
and Customs authorities concerned. Transfer of goods within the
same SEZ does not require any permission but the units are required
to maintain proper accounts of the transaction.
SEZ unit, may subcontract a part of their production or production
process through units in the DTA or through other SEZ/EOU/ EHTP/
STP, with the annual permission of Customs authorities.
Subcontracting of part of production process may also be permitted
abroad with the approval of the Development Commissioner. Sub-
contracting by SEZ gems and jewellery units through other SEZ units
or EOUs or units in DTA are subject to following conditions:
(i) Goods, finished or semi finished, including studded jewellery,
taken outside the zone for sub- contracting are brought back to
the unit within 30 days. No cut and polished diamonds, precious
and semi-precious stones (except precious and semi precious
stone having zero duty) are allowed to be taken outside the zone
for sub-contracting.
(ii) Receive plain gold/silver/platinum jewellery from DTA in exchange
of equivalent quantity of gold/silver/ platinum, as the case may
be, contained in the said jewellery.
Student Company Secretary
(iii) SEZ units are eligible for wastage as applicable for sub-
contracting and against exchange
(iv) The DTA unit undertaking job work or supplying jewellery against
exchange of gold/silver/platinum are not entitled to export
benefits.
All units, including gem and jewellery, may sub-contract part of
the production or production process through other units in the same
SEZ without permission of Customs authorities subject to records
being maintained by both the supplying and receiving units.
SEZ units other than gems and jewellery units may be allowed to
undertake job-work for export, on behalf of DTA exporter, provided
the finished goods are exported directly from SEZ units. For such
exports, the DTA units are entitled to refund of duty paid on the inputs
by way of Brand Rate of duty drawback.
Scrap/waste/remnants generated through job work may either be
cleared from the job workers premises on payment of applicable
duty or returned to the unit.
SEZ units engaged in production/processing of agriculture/
horticulture products, may on the basis of annual permission from
the Customs authorities take out inputs and equipments to the DTA
farm subject to the prescribed procedure.
EXPORT THROUGH EXHIBITIONS/EXPORT PROMOTION
TOURS/EXPORT THROUGH SHOW ROOMS ABROAD/DUTY
FREE SHOPS
SEZ, units may Export goods for holding/ participating in exhibitions
abroad with the permission of Development Commissioner; Personal
carriage of gold/ silver/ platinum jewellery, precious, semi-precious
stones, beads and articles. Export of jewellery is also permitted for
display/ sale in the permitted shops set up abroad; Display/sell in the
permitted shops set up abroad or in the show rooms of their
distributors/agents; and Set up show rooms/retail outlets at the
International Airports.
PERSONAL CARRIAGE OF EXPORT/IMPORT PARCEL
Import/ export through personal carriage of gem and jewellery
items may be under-taken as per the procedure prescribed by
Customs. Import/export through personal carriage for units, other than
gem and jewellery unit is allowed provided the goods are not in
commercial quantity
EXPORT/IMPORT BY POST/COURIER
Goods including free samples, may be exported/imported by
airfreight or through Foreign Post Office or through courier, subject to
the procedure prescribed by Customs.
DISPOSAL OF REJECTS/SCRAP/WASTE/REMENANTS
Rejects/scrap/waste/remenants arising out of production process
or in connection therewith may be sold in the DTA on payment of
applicable duty. No duty is however payable in case scrap/waste/
remnants/ rejects are destroyed within the Zone after intimation to
the Custom authorities or destroyed outside the SEZ with the
permission of Custom authorities. Destruction as stated above does
not apply to gold, silver, platinum, diamond, precious and semi
precious stones.
REPLACEMENT/REPAIR OF GOODS
The general provisions of Policy relating to export of replacement/
repaired goods apply equally to SEZ units. However, the cases not
covered by these provisions are considered on merits by the
Development Commissioner. The goods sold in the DTA and found
to be defective may be brought back for repair/ replacement under
intimation to Development Commissioner. Goods or parts thereof,
including gem stones and precious metal components for jewellery
making, on being imported/ indigenously procured and found defective
or otherwise unfit for use or which have been damaged or become
defective after import/ procurement may be returned and replacement
obtained or destroyed. In the event of replacement, the goods may
26 October 2006
 ACADEMIC GUIDANCE
be brought back from the foreign suppliers or their authorised agents
in India or the indigenous suppliers. Destruction does not however
apply to gem stones and precious metals. Goods may be transferred
to DTA/abroad for repair/ replacement, testing or calibration, quality
testing and R & D purpose under intimation to Customs authorities
and subject to maintenance of records.
SAMPLES
SEZ units may, on the basis of records maintained by them, and
on prior intimation to Customs authorities:
(i) Supply or sell samples in the DTA for display/ market promotion
on payment of applicable duties;
(ii) Remove samples without payment of duty, on furnishing a
suitable undertaking to Customs authorities for bringing the goods
back within a stipulated period;
(iii) Export free samples, without any limit, including samples made in
wax moulds, silver mould and rubber moulds through all
permissible mode of export including through couriers agencies/
post.
SALE OF UN-UTILISED MATERIAL/OBSOLETE GOODS
In case an SEZ unit is unable, for valid reasons, to utilize the
goods, including capital goods and spares, it may dispose them in
the DTA in accordance with the import policy in force and on payment
of applicable duties or export them. Capital goods and spares that
have become obsolete/surplus may either be exported or disposed
of in the DTA on payment of applicable duties. The benefit of
depreciation, as applicable, are available in case of disposal in DTA.
No duty shall be payable in case capital goods, raw material,
consumables, spares, goods manufactured, processed or packaged
and scrap/waste/ remnants/rejects are destroyed within the Zone after
intimation to the Custom authorities or destroyed outside the Zone
with the permission of Custom authorities. However, destruction does
not apply to precious and semi precious and precious metals. SEZ
unit may be allowed by Customs authorities concerned to donate
imported/ indigenously procured computer and computer peripherals
without payment of duty, two years after their import/procurement
and use by the units, to recognized non-commercial educational
institutions, registered charitable hospitals etc.
SPECIAL ECONOMIC ZONES ACT
ACT,, 2005
While the policy relating to the Special Economic Zones is
contained in the Foreign Trade Policy, incentives and other facilities
offered to the Special Economic Zone developer and units are
implemented through various notifications and circulars issued by
the concerned Ministries/Departments. The system, therefore, did
not lend enough confidence for investors to commit substantial funds
for development of infrastructure and for setting up of the units in the
Zones for export of goods and services. In order to give a long term
and stable policy framework with minimum regulatory regime and to
provide expeditious and single window clearance mechanism, the
Government enacted Special Economic Zones Act, 2005. The Act
came into force w.e.f February 10, 2006.
SALIENT FEATURES
The salient features of the Act are as under:
(i) matters relating to establishment of Special Economic Zone and
for setting up of units therein, including requirements, obligations
and entitlements;
(ii) matters relating to requirements for setting up of off-shore banking
units and units in International Financial Service Center in Special
Economic Zone, including fiscal regime governing the operation
of such units;
(iii) the fiscal regime for developers of Special Economic Zones and
units set up therein;
Student Company Secretary
(iv) single window clearance mechanism at the Zone level;
(v) establishment of an Authority for each Special Economic Zone
set up by the Central Government to impart greater administrative
autonomy; and
(vi) designation of special courts and single enforcement agency to
ensure speedy trial and investigation of notified offences
committed in Special Economic Zones.
DEFINITIONS
1. Co-Developer means a person who, or a State Government
which, has been granted by the Central Government a letter of
approval under sub-section (72) of section3. [Section 2(f)]
2. Developer means a person who, or a State Government which,
has been granted by the Central Government a letter of approval
under sub-section (70) of section 3 and includes an Authority
and a Co-Developer. [Section 2(g)]
3. export means
(i) taking goods, or providing services, out of India, from a
Special Economic Zone, by land, sea or air or by any other
mode, whether physical or otherwise; or
(ii) supplying goods, or providing services, from the Domestic
Tariff Area to a Unit or Developer; or
(iii) supplying goods, or providing services, from one Unit to
another Unit or Developer, in the same or different Special
Economic Zone. [Section 2(m)]
4. import means
(i) bringing goods or receiving services, in a Special Economic
Zone, by a Unit or Developer from a place outside India by
land, sea or air or by any other mode, whether physical or
otherwise; or
(ii) receiving goods, or services by a Unit or Developer from
another Unit or Developer of the same Special Economic
Zone or a different Special Economic Zone. [Section 2(o)]
5. Infrastructure facilities means industrial, commercial or social
infrastructure or other facilities necessary for the development
of a Special Economic Zone or such other facilities which may
be prescribed. [Section 2(p)]
6. International Financial Services Centre means an International
Financial Services Centre which has been approved by the Central
Government under sub-section (1) of section 18. [Section 2(q)]
7. Manufacture means to make, produce, fabricate, assemble,
process or bring into existence, by hand or by machine, a new
product having a distinctive name, character or use and shall
include processes such as refrigeration, cutting, polishing,
blending, repair, remaking, re-engineering and includes
agriculture, aquaculture, animal husbandry, floriculture,
horticulture, pisciculture, poultry, sericulture, viticulture and
mining. [Section 2(r)]
8. Offshore Banking Unit means a branch of a bank located in a
Special Economic Zone and which has obtained the permission
under clause (a) of sub-section (1) of section 23 of the Banking
Regulation Act, 1949. [Section 2(u)]
9. person includes an individual, whether resident in India or
outside India, a Hindu undivided family, co-operative society, a
company, whether incorporated in India or outside India, a firm,
proprietary concern, or an association of persons or body of
individuals, whether incorporated or not, local authority and any
agency,-office or branch owned or controlled by such individual,
Hindu undivided family, co-operative, association, body, authority
or company. [Section 2(v)]
10. services means such tradable services which.
(i) are covered under the General Agreement on Trade in Services
annexed as IB to the Agreement establishing the World Trade
27 October 2006
 ACADEMIC GUIDANCE
Organisation concluded at Marrakesh on the 15th day of April,
1994;
(ii) may be prescribed by the Central Government for the purposes
ofthis Act; and
(iii) earn foreign exchange. [Section 2(z)]
ESTABLISHMENT OF SPECIAL ECONOMIC ZONE
Section 3 of the Act provides that the Central Government, State
Government, or any other person, jointly or severally, may establish
a Special Economic Zone. Any person who, intends to set up a Special
Economic Zone, may, after identifying the area, make a proposal to
the State Government concerned for the purposes of setting up a
Special Economic Zone. It also allows a person, at his option to make
a proposal directly to the Board for the purpose of setting up Special
Economic Zone. In cases where such proposal has been received
directly from a person, the Board may grant approval and after receipt
of such approval, the person concerned, is required to obtain the
concurrence of the State Government within prescribed time.
In a case a State Government intends to set up the Special
Economic Zone, it may after identifying the area, forward the proposal
directly to the Board of Approval for setting up of Special Economic
Zone. However, the Central Government has been empowered to set
up and notify the Special Economic Zone without consulting the State
Government concerned; without referring the proposal to the Board.
The State Government may, on receipt of the proposal for setting
up a Special Economic Zone forward the proposal together with its
recommendations to the Board of Approval within the specified time.
The Board of Approval may, after receipt of the proposal for setting
up a Special Economic Zone either approve the proposal or, approve
the proposal subject to such terms and conditions as it may deem fit
to impose. It can also modify or reject the proposal for setting up a
Special Economic Zone.
The Central Government has been empowered to specify the
minimum area of land for setting up a Special Economic Zone and
other terms and conditions subject to which the Board may approve,
modify or reject any such proposal received by it. Section 3(9) further
provides that if the Board approves the proposal without any
modification, it shall communicate the same to the Central
Government. If it approves the proposal with modification, it shall,
communicate the same to the person or the State Government
concerned if the modifications are accepted by the person or State
Government, the Board of Approval shall communicate the approval
to the Central Government. If it rejects the proposal, it shall record
the reasons therefor and communicate the rejection to the person or
the State Government concerned.
Section 3(10) requires the Central Government to grant on receipt
of communication from the Board of Approval, a letter of approval on
such terms and conditions and obligations and entitlements, as
approved by Board of Approval, to the person or the State Government
concerned. However the Central Government may, on the basis of
approval of the Board, approve more than one developer in one
Special Economic Zone in cases where one Developer does not have
in his possession the minimum area of contiguous land, as may be
prescribed, for setting up a Special Economic Zone. In all such cases,
each Developer is considered as a Developer in respect of the land
in his possession.
This section also provides that any person or a State Government,
who intends to provide any infrastructure facilities in the identified
area or undertaken any authorised operations may, after entering
into an agreement with the Developer, make a proposal for the same
to the Board of Approval, for its approval. Every such person or State
Government, whose proposal has been approved by the Board and
who, or which, has been granted letter of approval by the Central
Government, shall be considered a Co-Developer of the Special
Economic Zone.
Student Company Secretary
ESTABLISHMENT, APPROVAL AND AUTHORIZATION TO
OPERATE SPECIAL ECONOMIC ZONE
Section 4 of the SEZ Act requires the Developer to submit, after
the grant of letter of approval, the exact particulars of the identified
area to the Central Government which after satisfying that the specified
requirements are fulfilled, notify the specifically identified area in the
State as a Special Economic Zone. However, the Central Government
has been empowered to notify any additional area as a part of a
Special Economic Zone. This section empowers the Central
Government to authorise the Developer to undertake such operations
in a Special Economic Zone, as it may prescribe.
GUIDELINES FOR NOTIFYING SPECIAL ECONOMIC ZONE
Section 5 stipulates broader guidelines to be considered by the
Central Government, while notifying any area as a Special Economic
Zone or an area to be included in the SEZ and in discharging its
functions under the Act. These include
(a) generation of additional economic activity;
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities; and
(f) maintenance of sovereignty and integrity of India, the security of
the State and friendly relations with foreign States.
THE PROCESSING AND NON-PROCESSING AREAS
Section 6 empowers the Central Government or any specified
authority to demarcate the areas falling within the Special Economic
Zones as -
(a) the processing area for setting up Units for activities, being the
manufacture of goods, or rendering services;
(b) the area exclusively for trading or warehousing purposes; or
(c) the non-processing areas for activities other than those specified
under (a) or (b) above.
EXEMPTION FROM TAXES, DUTIES OR CESS
Section 7 exempts all goods or services exported out of, or
imported into, or procured from the Domestic Tariff Area, by a Unit or
Developer in a Special Economic Zone from the payment of taxes,
duties or cess under all enactments specified in the First Schedule.
The enactments specified in the First Schedule generally relate to
levy and payment of cess.
CONSTITUTION OF BOARD OF APPROVAL
Section 8 empowers the Central Government to constitute, by
notification, the Board of Approval within fifteen days of the
commencement of the Act. This section also provides for composition
of Board, term of office of Members, co-option of certain persons as
Members of the Board, its meetings and quorum, etc.
DUTIES, POWERS AND FUNCTIONS OF BOARD OF
APPROVAL
Section 9 casts upon the Board the duty to promote and ensure
orderly development of the Special Economic Zones. The powers
and functions of the Board, inter alia, include:
(a) granting of approval or rejecting proposal or modifying such
proposals for establishment of the Special Economic Zones;
(b) granting approval of authorised operations to be carried out in
the Special Economic Zones by the Developer;
(c) granting of approval to the Developers or Units (other than the
Developers or the Units which are exempt from obtaining approval
under any law or by the Central Government) for foreign
collaborations and foreign direct investments (including
investments by a person resident outside India) in the Special
Economic Zone for its development, operation and maintenance;
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 ACADEMIC GUIDANCE
(d) granting of approval or rejecting proposal for providing
infrastructure facilities in a Special Economic Zone or modifying
such proposals;
(e) granting, a licence to an industrial undertaking referred to in
section 3(d) of IDR Act, if such undertaking is established, as a
whole or part thereof, or proposed to be established, in a Special
Economic Zone;
(f) suspension of the letter of approval granted to a Developer and
appointment of an Administrator under section 10(1) of the Act;
(g) disposing of appeals preferred under section 15(4) and section
16(4) of the Act.
(h) performing such other functions as may be assigned to it by the
Central Government.
Section 9(3) empowers the Board of Approval to delegate such
powers and functions as it may deem fit to one or more Development
Commissioners for effective and proper discharge of the functions of
the Board. Section 9(5) stipulates that the Board in exercise of its
powers and performance of its functions be bound by such directions
on questions of policy, as the Central Government may give in writing
to it from time to time.
SUSPENSION OF LETTER OF APPROVAL AND TRANSFER
OF SPECIAL ECONOMIC ZONE IN CERTAIN CASES
Section 10 empowers the Board to suspend the letter of approval
granted to the Developer for a whole or part of his area established
as Special Economic Zone for a period not exceeding one year and
appoint an Administrator to discharge the functions of the developer
in accordance with the terms and conditions of the letter of approval
and manage the Special Economic Zone accordingly. The suspension
may be ordered by the Board, if in its opinion following circumstances
exist :
(i) the developer is unable to discharge the functions or perform
the duties imposed on him; or
(ii) the developer has persistently defaulted in complying with the
directions of the Board; or
(iii) the developer has violated the terms and conditions of the letter;
or
(iv) the financial position of the developer is such that he is unable
to fully and efficiently discharge the duties and obligations
imposed on him by the letter of approval.
However, no letter of approval can be suspended unless the Board
has given to the Developer not less than three months notice, in
writing, stating the grounds on which it proposes to suspend the letter
of approval, and has considered any cause shown by the Developer
within the period of that notice, against the proposed suspension.
It has been further provided that the Board may, instead of
suspending the letter of approval permit it to remain in force subject
to such further terms and conditions as it thinks fit to impose. Section
10(4) makes any further terms or conditions so imposed binding upon
the Developer. These terms and conditions have the force and effect
as if they were contained in the letter of approval.
In case the Board suspends a letter of approval, it has been put
under obligation to serve a notice of suspension upon the Developer
and fix a date for suspension to take effect. Upon suspension of the
letter of approval, the Special Economic Zone of the Developer vests
in the Administrator for a period not exceeding one year or up to the
date on which the letter of approval for such Special Economic Zone
is transferred, whichever is earlier. This section also contains
provisions for transfer of the Special Economic Zone of a Developer
whose licence has been suspended and take other actions consequent
upon the suspension of the letter of approval. The Board of Approval
has been empowered to issue such directions or formulate such
scheme as it may consider necessary for operation of such Special
Economic Zone.
Student Company Secretary
DEVELOPMENT COMMISSIONER
Section 11 empowers the Central Government to appoint the
Development Commissioner for one or more Special Economic Zones
and such Officers and other employees as it considers necessary to
assist every Development Commissioner. It also contains provisions
for salary and allowances and other terms and conditions of service
in respect of leave, pension, provident fund and other matters of the
Development Commissioner, officers and other employees.
FUNCTIONS OF THE DEVELOPMENT COMMISSIONER
Section 12 dealing with the functions of the Development
Commissioner requires every Development Commissioner to take
steps in order to discharge his functions to ensure speedy development
of the Special Economic Zone and promotion of exports therefrom.
The functions of the Development Commissioner include :
(a) guide the entrepreneurs for setting up of Units in the Special
Economic Zone;
(b) ensure and take suitable steps for effective promotion of exports
from the Special Economic Zone;
(c) ensure proper coordination with the Central Government or State
Government Departments concerned or agencies with respect
to, or for above purposes;
(d) monitor the performance of the Developer and the Units in SEZ;
(e) discharge such other functions as may be assigned to him by
the Central Government under this Act or any other law for the
time being in force; and
(f) any other functions as may be delegated to him by the Board of
approval.
This section entitles the Development Commissioner to be overall
in charge of the Special Economic Zone and to exercise administrative
control and supervision over the officers and employees. Every
Development Commissioner is also required to discharge such
functions and exercise such powers as may be delegated to him by a
general or special order by the Central Government or the State
Government concerned, as the case may be. The section further
empowers the Development Commissioner to call for such information
from a Developer or Unit from time to time as may be necessary to
monitor the performance of the Developer and the Unit. The
Development Commissioner has been authorised to delegate any or
all of his powers or functions to any of the officers employed under
him.
CONSTITUTION OF APPROVAL COMMITTEE
Section 13 empowers the Central Government to constitute by
notification, a Committee for every Special Economic Zone, to be
called the Approval Committee to exercise the powers and perform
the functions as specified. In the case of existing Special Economic
Zones, the Approval Committee is required to be constituted within
six months from the date of commencement of the Act and in case of
other Special Economic Zones established after the commencement
of the Act within six months from the date of establishment of such
Special Economic Zone. This section also contains provisions relating
to composition of meetings and its quorum and requires all orders
and decisions and instructions of the Approval Committee to be
authenticated by the signature of the Chairperson or any other Member
as may be authorised by the Approval Committee.
POWERS AND FUNCTIONS OF APPROVAL COMMITTEE
Section 14 empowers every Approval Committee to discharge
the functions and exercise the powers in respect of the following
matters :
(a) approve, the import or procurement of goods from the Domestic
Tariff Area, for carrying on the authorised operations by a
Developer in the Special Economic Zone;
(b) approve providing of services by a service provider from outside
India or from the Domestic Tariff Area for carrying on the
29 October 2006
 ACADEMIC GUIDANCE
authorised operations by the Developer, in the Special Economic
Zone;
(c) monitor the utilisation of goods or services or warehousing or
trading in the Special Economic Zone;
(d) approve, modify or reject proposals for setting up Units for
manufacturing or rendering of services or warehousing or trading
in SEZ in accordance with the provisions of section 15(8) of the
Act;
(e) allow on receipt of approval foreign collaborations and foreign
direct investments, including investments by a person outside
India for setting up a Unit;
(f) monitor and supervise compliance of conditions subject to which
the letter of approval or permission, if any, is granted to the
Developer or entrepreneur; and
(g) perform any other functions as may be entrusted to it by the
Central Government or the State Government concerned, as
the case may be.
In case the developer is Central Government, the approval
committee has been empowered to exercise all powers of the approval
committee, until the constitution of Approval Committee.
SETTING UP OF UNIT
Section 15 entitles any person, who intends to set up a Unit for
carrying on the authorised operations in a Special Economic Zone,
to submit a proposal to the Development Commissioner concerned.
The Development Commissioner in turn place the proposal before
the Approval Committee for its approval. The Approval Committee
may, approve the proposal with or without modification, and subject
to such terms and conditions as it may deem fit, or reject the same.
In case of modification or rejection of a proposal, the Approval
Committee has been put under obligation to afford a reasonable
opportunity of being heard to the person concerned and after recording
the reasons therefor, either modify or reject the proposal. Sub-section
(4) entitles a person aggrieved by an order of the Approval Committee,
to make an appeal to the Board of Approvals, within the prescribed
time and specified manner. Sub-section (8) empowers the Central
Government to prescribe the requirements (including the period for
which a unit may be set up) subject to which the Approval Committee
may approve, modify or reject the proposal. The Development
Commissioner may, after the approval of the proposal, grant a letter
of approval to the person concerned to set up a Unit and undertake in
the Unit such operations which the Development Commissioner may
authorise and every such operation so authorised is mentioned in
the letter of approval.
CANCELLATION OF LETTER OF APPROVAL GRANTED TO
ENTREPRENEUR
Section 16 empowers the Approval Committee to cancel the letter
of approval of an entrepreneur after reasonable opportunity of being
heard has been afforded to the entrepreneur. The Approval Committee
may, at any time, cancel the letter of approval if it has any reason or
cause to believe that the entrepreneur has persistently contravened
any of the terms and conditions or its obligation subject to which the
letter of approval was granted to the entrepreneur. It further provides
that where the letter of approval has been cancelled, the Unit shall
not, from the date of such cancellation, be entitled to any exemption,
concession, benefit or deduction available to it as such and such Unit
shall remit the exemption, concession, drawback and any other benefit
availed by the entrepreneur in respect of the capital goods, finished
goods lying in the stock and unutilised raw materials in the prescribed
manner. Sub-section (4) entitles any person aggrieved from an order
of the Approval Committee to make an appeal to the Board of Approval
within the prescribed time.
SETTING UP AND OPERATION OF OFFSHORE BANKING
UNIT
Section 17 dealing with setting up and operation of offshore
Student Company Secretary
Banking Unit provides that an application for setting up and operation
of an Offshore Banking Unit in a Special Economic Zone may be
made to the Reserve Bank, in the prescribed form and manner. The
Reserve Bank of India may, on being satisfied that the applicant fulfills
all the specified conditions, grant permission to such applicant for
setting up and operation of an Offshore Banking Unit in a Special
Economic Zone. Sub-section (3) empowers the Reserve Bank to
specify, by notification, the terms and conditions subject to which an
Offshore Banking Unit may be set up and operated in the Special
Economic Zone.
SETTING UP OF INTERNATIONAL FINANCIAL SERVICES
CENTRE
Section 18 empowers the Central Government to approve setting
up of an International Financial Services Centre in a Special Economic
Zone and to specify requirements for setting up the operation of such
Centre. However, the Central Government may approve only one
international Financial Services Centre in a Special Economic Zone.
The Central Government may subject to the guidelines as may be
framed by the Reserve Bank, the Security and Exchange Board of
India, the Insurance Regulatory and Development Authority and such
other authority as it may deem fit, prescribe the requirement for setting
up and terms and conditions of the operation of International Financial
Services Center.
SINGLE APPLICATION FORM, RETURN, ETC.
Section 19 empowers the Central Government to prescribe single
application form for obtaining any licence, permission or registration
or approval by a Developer or an entrepreneur under one or more
Central Acts. Section 19(b) empowers the Central Government to
authorise the Board, the Development Commissioner and the approval
Committee to exercise its powers on matters relating to the
development of SEZ or setting up or operation of units. Section 19(c)
empowers the Central Government to prescribe single form for
furnishing returns or information by a developer or an entrepreneur
under one or more Central Acts.
AGENCY TO INSPECT
Section 20 empowers the Central Government to specify, by
notification, any officer or agency for carrying out surveys or
inspections for securing the compliance with the provisions of any
Central Act by a Developer or an entrepreneur, as the case may be,
and such officer or agency is required to submit verification or
compliance report, in such manner and within such time as may be
specified in the said notification.
SINGLE ENFORCEMENT OFFICER OR AGENCY FOR
NOTIFIED OFFENCES
Section 21 empowers the Central Government to specify by
notification, any act or omission made punishable under any Central
Act, as notified offence for purposes of the proposed legislation. It
further empowers the Central Government to authorise any officer or
agency to be the enforcement officer or agency in respect of any
notified offence committed in a Special Economic Zone. Every officer
or agency so authorised has been granted all the corresponding
powers of investigation, inspection, search or seizure as provided
under the relevant Central Act in respect of the notified offences.
INVESTIGATION, INSPECTION, SEARCH OR SEIZURE
Section 22 empowers the agency or officer, with prior intimation
to the Development Commissioner concerned to carry out the
investigation, inspection, search or seizure in the Special Economic
Zone or in a Unit if such agency or officer has reason to believe
(reasons to be recorded in writing) that a notified offence has been
committed or is likely to be committed in the Special Economic Zone.
However, no investigation, inspection, search or seizure is allowed to
be carried out in a SEZ by any agency or officer other than those
referred to in section 21(2) or (3), without prior intimation or approval
30 October 2006
 ACADEMIC GUIDANCE
of the concerned Development Commissioner. It is further provided
that an officer or agency, if so authorised by the Central Government,
may carry out the investigation, inspection, search or seizure in the
Special Economic Zone or Unit without prior intimation or approval of
the Development Commissioner.
DESIGNATED COURTS TO TRY SUITS AND NOTIFIED
OFFENCES
Section 23 empowers the concerned State Government, in which
SEZ is situated, to designate, with the concurrence of the Chief Justice
of the High Court of that State, one or more Courts to try all suits of a
civil nature arising out of offences committed in the Special Economic
Zone. Section 23(2) provides that no court, other than the designated
court shall try any suit or conduct the trial of any notified offence.
APPEAL TO HIGH COURT
Section 24 entitles any person aggrieved by any decision or order
of the designated Court to file an appeal to the High Court within sixty
days from the date of communication of the decision or order of the
said court to him on any question of fact or law arising out of such
orders. However the High Court can, if it is satisfied that the appellant
was prevented by sufficient cause from filing an appeal within the
prescribed period of sixty days allow it to be filed within a further
period not exceeding sixty days.
OFFENCES BY COMPANIES
Section 25 dealing with offences by companies provides that where
an offence has been committed by a company, every person who at
the time the offence was committed was in charge of and was
responsible to, the company for the conduct of the business of the
company, as well as the company, shall be deemed to be guilty of the
offence and shall be liable to be proceeded against and punished
accordingly. However such person shall not be liable to any
punishment if he proves that the offence was committed without his
knowledge or that he had exercised all due diligence to prevent the
commission of such offence.
Section 25(2) provides that where an offence has been committed
by a company and it is proved that the offence has been committed
with the consent or connivance of, or is attributable to any neglect on
the part of, any director, manager, secretary or other officer of the
company, such director, manager, secretary or other officer shall,
also be deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly.
EXEMPTIONS, DRAWBACKS AND CONCESSIONS TO
EVERY DEVELOPER AND ENTREPRENEUR
Section 26 contains provisions relating to exemptions, drawbacks
and concessions to Developer and entrepreneur from any duty of
customs under the Customs Act, 1962, the Customs Tariff Act, 1975,
the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or
any other law for the time being in force, exemption from the service
tax under Chapter V of the Finance Act, 1994 and exemption from
levy of taxes on sale or purchase of goods other than newspapers
under the Central Sales Tax Act, 1956 if such goods are meant to
carrying on authorised operations by the developer or entrepreneur.
The developer or entrepreneur has also been entitled to drawback or
such other benefits as may be admissible from time to time on goods
brought or services provided from DTA into SEZ or unit or services
provided in SEZ or unit by service providers located outside India to
carry on the authorised operations by the Developer or entrepreneur.
The Central Government has also been empowered to specify the
manner in which and the terms and conditions subject to which, the
exemptions, concessions, drawbacks or other benefits are to be
granted to developer or entrepeneur.
APPLICATION OF THE PROVISIONS OF THE INCOME TAX
ACT, 1961 WITH CERTAIN MODIFICATIONS IN RELATION
TO DEVELOPERS AND ENTREPRENEURS
Section 27 provides for application of the provisions of the Income
Tax Act, 1961 to the Developer and entrepreneur for carrying on the
Student Company Secretary
authorised operations in the Special Economic Zones or Unit subject
to modifications specified in the second schedule.
DURATION OF GOODS & SERVICES IN SPECIAL
ECONOMIC ZONES
Section 28 empowers the Central Government to specify, the
period during which any goods brought into, or services provided in,
any Unit or Special Economic Zone without payment of taxes, duties,
levies or cess, shall remain or continue to be provided in such Unit or
Special Economic Zone.
TRANSFER OF OWNERSHIP AND REMOVAL OF GOODS
Section 29 allows the transfer of ownership in any goods brought
into, or produced or manufactured in, any Unit or Special Economic
Zone or removal thereof from such Unit or Zone, subject to such
terms and conditions as specified by the Central Government.
DOMESTIC CLEARANCE BY UNITS
Section 30 provides that any goods removed from a Special
Economic Zone to the Domestic Tariff Area be chargeable to duties
of customs including anti-dumping, countervailing and safeguard
duties under the Customs Tariff Act, 1975, where applicable, as
leviable on such goods when imported. This section further provides
that the rate of duty and tariff valuation, if any, applicable to goods
removed from a Special Economic Zone shall be at the rate and tariff
valuation in force as on the date of such removal, and where such
date is not ascertainable, on the date of payment of duty. This section
empowers the Central Government to make rules specifying conditions
in this regard.
SPECIAL ECONOMIC ZONE AUTHORITY
Section 31 dealing with the Constitution of Authority empowers
the Central Government to constitute by notification in the Official
Gazette, an Authority for every SEZ to exercise powers conferred on
and discharge the functions assigned to it.
In the case of an existing SEZ established by the Central
Government, the Central Government has been empowered to
establish such authority within six months from the date of
commencement of the Act. It is further provided that the person or
authority (including Development Commissioner) which is exercising
control over an existing SEZ, shall continue to do so till the authority
is constituted. Section 31(2) provides that every authority shall be a
body corporate by name as assigned, having perpetual succession
and a common seal, with power to acquire, hold and dispose of
property, both movable and immovable and to contract and shall sue
and be sued. Section 31(9) stipulated that no act or proceedings of
an authority shall be invalidated merely by reason of :
(i) any vacancy in or any defect;
(ii) any defect in the appointment of a person as its member; or
(iii) any irregularity in the procedure of the authority not affecting the
merits of the case.
FUNCTIONS OF AUTHORITY
Section 34 casts upon the Authority a duty to undertake such
measures as it thinks fit for the development, operation and
management of the respective Special Economic Zone. Section 34(2)
provides for following measures :
(a) the development of infrastructure in the Special Economic Zone;
(b) promoting exports from the Special Economic Zone;
(c) reviewing the functioning and performance of the Special
Economic Zone;
(d) levy user or service charges or fees or rent for the use of
properties belonging to the Authority;
(e) performing such other functions as may be prescribed.
DIRECTIONS BY THE CENTRAL GOVERNMENT
Section 38 empowers the Central Government to give directions
to the authority and makes it binding for every Authority of the Special
31 October 2006
 ACADEMIC GUIDANCE
Economic Zone to carry out the directions issued from time to time in
this regard.
RETURNS AND REPORTS BY THE AUTHORITY
Section 39 casts upon every Authority of the Special Economic
Zone a duty to furnish to the Central Government such returns and
statements and such particulars in regard to the promotion and
development of exports and the operation and maintenance of the
Special Economic Zone and Units as it may require from time to
time. This section further requires every authority to submit to the
Central Government after the end of each financial year a report in
form and before specified date, giving a true and full account of its
activities, policy and programmes during the previous financial year.
Section 39(3) requires a copy of every such report to be laid before
each House of Parliament, soon after its receipt
POWER OF THE CENTRAL GOVERNMENT TO SUPERSEDE
AUTHORITY
Section 40 empowers the Central Government to supersede an
Authority for a maximum period of six months if at any time it is of the
opinion that an Authority is unable to perform, or has persistently
made default in the performance of the duty imposed on it or has
exceeded or abused its powers, or has wilfully or without sufficient
cause, failed to comply with any direction issued by it. However, before
issuing a notification superseding an authority, the Central Government
is required to give reasonable time to that Authority to make
representation against the proposed supression and consider the
representations, if any, of the Authority. Section 40(2) dealing with
the consequences of publication of the notification superseding the
Authority, provides that,
(a) the Chairperson and other Members of the Authority shall,
notwithstanding that their term of office has not expired as from
the date of supersession, vacate their offices as such;
(b) all the powers, functions and duties which may, by or under the
provisions of the Act, be exercised or discharged by or on behalf
of the Authority shall, during the period of supersession, be
exercised and performed by such person or persons as the
Central Government may direct;
(c) all property vested in the Authority shall, during the period of
supersession, vest in the Central Government.
Section 40(3) also provides that on the expiration of the period of
supersession specified in the notification, the Central Government may
extend the period of supersession for such further period not exceeding
six months or reconstitute the Authority in the prescribed manner.
REFERENCE OF DISPUTE AND LIMITATION
Section 42 requires any dispute of civil nature arising among two
or more entrepreneurs or two or more Developers or between the
entrepreneur and Developer in the Special Economic Zone to be
referred to arbitration provided, the court or the courts to try suits in
respect of such dispute had not been designated. However no dispute
should be referred to the arbitration on or after the date of the
designation of court or courts under section 23(1). It further provides
that where a dispute has been referred to arbitration, the same shall
be settled or decided by the arbitrator to be appointed by the Central
Government and the provisions of the Arbitration and Conciliation
Act, 1996 shall apply to all arbitrations.
Section 43 stipulates that the period of limitation in the case of
any dispute which is required to be referred to arbitration shall be
regulated by the provisions of the Limitation Act, 1963, as if the dispute
was a suit and the arbitrator is civil court. Section 43(2), however,
empowers the arbitrator to admit, a dispute after the expiry of the
period of limitation, if the arbitrator is satisfied that the applicant had
sufficient cause for not referring the dispute within specified period.
PERSON TO WHOM A COMMUNICATION TO BE SENT
Section 45 provides that a communication by any competent
authority or person may be sent to the person who has the ultimate
control over the affairs of the Special Economic Zone or Unit or where
the said affairs are entrusted to a manager, director, chairperson, or
managing director, or to any other officer, by whatever name called,
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such communication may be sent to such manager, director,
chairperson, or managing director or any other officer.
IDENTITY CARD
Section 46 requires that every person whether employed or residing
or required to be present in a Special Economic Zone be provided an
identity card by every Development Commissioner in prescribed form
and containing specified particulars.
POWER OF THE CENTRAL GOVERNMENT TO MODIFY
PROVISIONS OF THE ACT OR OTHER ENACTMENTS IN
RELATION TO SPECIAL ECONOMIC ZONES
Section 49 empowers the Central Government to direct, by notification
in the Official Gazette, that any of the provision of the Act or any other
Central Act, any rules or regulations made thereunder or any notification
or order issued or direction given thereunder specified in the notification
shall not apply to a Special Economic Zone or a class of Special Economic
Zones or all Special Economic Zones; or shall apply to a Special
Economic Zone or a class of Special Economic Zones or all Special
Economic Zones only with such exceptions, modification and adaptation,
as may be specified in the notification. Sub section (2) requires a copy of
every notification proposed to be issued to be laid in draft before each
House of Parliament. The notification shall not be issued or, as the case
may be, shall be issued only in such modified form as may be agreed
upon by both the Houses of Parliament.
POWER OF STATE GOVERNMENT TO GRANT EXEMPTION
Section 50 empowers the State Government to notify policies for
Developers and Units and to take suitable steps for enactment of any law-
(a) granting exemption from the State taxes, levies and duties to
the Developer or the entrepreneur;
(b) delegating the powers conferred upon any person or authority
under any State Act to the Development Commissioner in rela-
tion to the Developer or the entrepreneur.
THE ACT TO HAVE OVERRIDING EFFECT
Section 51 giving overriding effect to this Act provides that the
provisions of this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the time being in
force or in any instrument having effect by virtue of any law other
than this Act.
SPECIAL ECONOMIC ZONES TO BE PORTS, AIRPORTS
INLAND CONTAINER DEPOTS, LAND STATIONS ETC. IN
CERTAIN CASES
Section 53 provides that a Special Economic Zone, on and from
the appointed day, be deemed to be a territory outside the customs
territory of India for the purposes of undertaking the authorised
operations. This section further provides that a Special Economic
Zone shall, with effect from such date as the Central Government
may notify, be deemed to be a port, airport, inland container depot,
land station and land customs stations under section 7 of the Customs
Act, 1962. The Central Government has been empowered to notify
different dates for different Special Economic Zones.
SPECIAL ECONOMIC ZONES RULES, 2006
Section 55 empowers the Central Government to make rules in
respect of specified matters and requires that the same be published
in the Official Gazette and be laid before each House of Parliament.
In this context, the Central Government has notified the Special
Economic Zones Rules 2006.
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15.03.2007. All deposits on account of Library Security will be
forfeited and no request for refund will be considered/entertained
after the stipulated date.
32 October 2006
 LEGAL WORLD
LEGAL WORLD
Compiled by T.K.A. Padmanabhan, FCS, Advocate, New Delhi.
CORPORATE LAWS
LW(S) 58.10.2006
ELGI FINANCE LTD. v. ESSROPE MILLS LTD [(2006) 70 SCL 308
(MAD.)] S.RAJESWARAN, J. (Decided on 27.6.2006)
SICA, 1985-Section 22- Leasing of machinery- Lessee company
became sick and reported to the BIFR- Lessor filed suit for the
repossession of leased machinery and injunction against lessee
for non-alienation of the leased assets whether suit is barred
by virtue of section 22 of the SICA- Held, No.
Brief Facts : The petitioner company, engaged in the business of
finance and hire purchase leasing, leased out some machineries to
the respondent company under hire purchase agreement.The
respondent, however, committed defaults in repaying the monthly
installments thereof and petitioner/plaintiff to repossess the plant and
machineries was also opposed and objected to by the respondent.
Consequently, the petitioner filed a suit for permanent injunction
restraining the respondent from creating any obstruction in the
petitioners way to get back repossession of those machineries. On
interim application of the respondent, however, the trial court stayed
the petitioners said suit, in view of section 22(1), pending disposal of
its case before the BIFR.
Decision : Petition allowed.
Reason : A close reading of section 22(1) makes it very clear that
when enquiry under section 16 is pending or any scheme under section
17 is under consideration or a sanctioned scheme is under
implementation or an appeal under section 25 is pending, then no
proceedings (1) for winding up of the industrial company or (2)
execution, distress or the like against any of the properties of the
company (emphasis supplied) or (3) for the appointment of a receiver
in respect thereof or (4) no suit for the recovery of money or (5) for
the enforcement of any security against the company and (6) or of
any guarantee in respect of any loans or advances granted to the
company, shall lie or be proceeded with, except with the consent of
the board or the appellate authority.
It was the case of the petitioner/plaintiff that under the hire purchase
agreement, the plaintiff was the owner of the machineries, until the
entire installments were paid by the respondent/ defendant and there
were clauses in the hire purchase agreement enabling the petitioner/
plaintiff for retaking possession of the hired articles in case of defaults
in the payment of installments.
The suit filed by the plaintiff was not for winding up or for execution,
distress or the like, against any of the properties of the respondent/
defendant. The properties, namely, the machineries were still the
properties of the petitioner/plaintiff and the prayer in the suit was only
for mere injunction restraining the respondent/defendant from
obstructing the repossession of the machineries from the premises
of the respondent/defendant. No relief by the petitioner had been
sought for the recovery of the money or for the enforcement of any
security and in such circumstances section 22(1) would not apply to
the facts of the instant case.
As far as the argument of the respondent/defendant that if the
machineries were allowed to be repossessed, as prayed for by the
petitioner in the suit was concerned, it would have an adverse effect
on the working of the respondent company and, therefore keeping in
mind the object of the Act, the suit proceedings were rightly stayed
by the trial court, could not be accepted for the reason that section
22(1) does not deal with a proceeding to repossess the properties of
the owner, and it would apply only when the properties are owned by
the sick company.
Student Company Secretary
In the result, the order of the trial court staying the suit proceedings
is erroneous and liable to be set aside.
LW(S) 59.10.2006
MAHARASHTRA STATE MINING CORPN. v. SUNIL [(2006) 70 SCL
351 (SC)] Ruma Pal, Dalveer Bhandari & Markandey Katju, JJ,
[Decided on 24.4.2006]
Companies Act, 1956-Section 291-Powers of board of directors
to ratify- Managing Director dismissed an employee- Employee
filing a writ petition- During the pendency of the petition the board
of directors ratified the dismissal made by the MD- High Court
allowed the petition of the employee- Whether the dismissal
and ratification valid- Held, yes.
Brief Facts : The appellant corporations managing director terminated
respondents services on 25-11-1991 for various misconducts. The
respondent filed a writ petition challenging the said dismissal order
on the ground that the Managing Director had no authority to do so
since the same was vested in the appellants board of directors. While
the said petition was pending, the Board of Directors passed a
resolution ratifying the managing directors impugned action. The High
Court, however, while setting aside the impugned termination order,
allowed respondents writ petition. Appellant appealed to the Supreme
Court.
Decision : Appeal allowed.
Reason : The High Court was right when it held that an act by a
legally incompetent authority is invalid. But it was entirely wrong in
holding that such an invalid act cannot be subsequently rectified by
ratification of the competent authority. Ratification, by definition, means
making valid an act already done. The principle is derived from the
Latin maxim rati habitio mandato aequiparatur , namely, a
subsequent ratification of an act is equivalent to a prior authority to
perform such act. Therefore, ratification assumes an invalid act, which
is retrospectively validated.
In the instant case, the managing directors order dismissing the
respondent from the service was admittedly ratified by the board of
directors on 20-2-1991 and the board of directors unquestionably
had the power to terminate the services of the respondent. Since the
order of the managing director had been ratified by the board of
directors, such ratification related back to the date of the order and
validated it. Therefore, the instant appeal is allowed, the impugned
judgment and order of the High Court is quashed, and the dismissal
order dated 25-1-1991 is upheld.
TAX LAWS
LW(S) 60.10.2006
PRECOT MILLS LTD. v. COMMISSIONER OF CENTRAL EXCISE
[(2006) 5 STT 1 (CESAT)] T.K.Jayaraman (T) & DR.S. L. Peeran,
(J) {Decided on 27.02.2006]
Service Tax- Assessee having several units- inter unit services-
Whether service rendered by one unit to another unit is liable to
tax- Held No.
Brief Facts : The appellant assessee was a manufacturer of yarn. It
had independent units for spinning, doubling, dyeing and weaving.
These units were treated as separate profit centers. The Corporate
Office of the company, in order to evaluate the performance of each
unit raised inter unit debit notes to account for the cost of goods and
services supplied by one unit to the other. However, the accounts of
various units were integrated and consolidated and single profit and
loss account/balance sheet was prepared annually for necessary
statutory compliance. The revenue demanded service tax from the
appellant in respect of services rendered to its dyeing unit for the
period from April 2000 to March 2001, for which inter unit debit note
was raised. The Asstt. Commissioner held that no service tax would
be payable as there was no relationship of service provider and client
in the transaction and he, accordingly, dropped the proposal for
33 October 2006
 LEGAL WORLD
demand. However, the Commissioner revised order of the Assistant
Commissioner and confirmed the demand of service tax against the
appellant. The appellant appealed to the Tribunal.
Decision : Appeal allowed.
Reason : For levability of service tax, there should be a service
provider and service receiver. In the instant case, both the service
provider and the service receiver were part of the same corporate
gentility. It as emphasized that the debit notes were issued only to
evaluate the performance of the dyeing unit as each unit was separate
profit center. The appellant did not receive any valuable consideration
for services rendered by one unit of the appellant to the other unit, in
view of the fact that each unit was part of the same in view of the fact
that each unit was part of the same legal entity, which was the
appellant. To put it differently, when one renders service to oneself,
as in the instant case, there is no question of leviability of service tax.
The Assistant Commissioners order was correct and legal. Hence,
there was no merit in the impugned orders of the Commissioner,
which ignored the main point that there was service provider and
client relationship in the instant transactions. In these circumstances,
no penalty was leviable.
LW(S) 61.10.2006
THANE JANATA SAHAKARI BANK LTD. v. COMMISSIONER OF
SALES TAX [(2006) 70 SCL 319 (BOM)] R.M.Lodha & J.P.Devadhar,
JJ. [Decided on 18.4.2006]
Section 35C of the Bombay Sales Tax Act read with Section 13
of the Securitisation Act- Recovery of tax dues Clash of lenders
interest and Sales Tax Departments interest over the assets of
the borrower company- Whether the Securitisation Act overrides
the provisions of the Bombay Sales Tax Act- Held, No.
Brief Facts : The petitioner bank had extended its credit facilities to
a company, which mortgaged its factory, land and building, by way of
equitable mortgage in its favor. Subsequently, said companys account
was classified as non-performing asset and the bank decided to initiate
recovery proceedings under the Act against the company. There was
also a huge outstanding of the sales tax dues against that company
under the Bombay Sales Tax Act, 1959 and the Central Sales Tax
Act and proceedings for recovery of the same had already been
initiated under the Maharashtra Land Revenue Code, 196. The sales
tax authorities also served a notice upon the bank asking it to discharge
the said sales tax liability on the ground that the recovery of said
dues had priority even over the secured creditors. However, thereafter,
the bank, invoking section 13 of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest, 2002 (the
Securitisation Act) sold mortgaged properties of company in auction
and appropriated the sale proceeds towards its own dues from the
company. Consequently, the respondent issued a show cause notice
proposing to initiate action against the petitioner under section 39 of
the Bombay Sales Tax Act. The bank filed the writ petition, inter alia,
contending that there being a conflict under section 38C of the Bombay
Sales Tax Act and section 35 of the Securitisation Act, the later being
the Central Act, must prevail.
Decision : Petition Dismissed.
Reason : The Bombay Sales Tax Act and the Securitisation Act have
been enacted by the competent Legislatures for different purposes
and operate in different fields. The Bombay Sales Tax Act is enacted
by the State Legislature under entry 54 of List II in the Seventh
Schedule for regulating the securitisation and reconstruction of
financial assets and for enforcement of security interest. There is
neither any conflict in these two Acts nor section 38C of the Bombay
Sales Tax Act that can be said to be inconsistent with section 35 of
the Securitisation Act. The area of operation is entirely different and
there is no overlapping anywhere.
Section 35 of the Securitisation Act may have had some bearing
if there was some provision in the Securitisation Act for first charge in
favour of the banks and financial institutions. But neither section 13
Student Company Secretary
nor any other provision under the Securitisation Act makes a provision
for first charge.
There being no provision in the Securitisation Act providing for
first charge in favour of the banks, section 35 of the Securitisation
Act cannot be held to override section 38C of the Bombay Sales Tax
Act which specifically provides that the liability under the said Act
shall be the first charge. The overriding provision contained in section
38C is only subject to the provision of the first charge in the Central
Act holding the field. The case of the bank was not covered by the
expression, Subject to any provision regarding first charge in any
Central Act for the time being in force and that being the position,
section 38C is not overridden by section 35 of the Securitisation Act.
By virtue of section 38C of the Bombay Sales Tax Act, recovery of
sales Tax dues has first charge. The said recovery is made as arrears
of land revenue and a conjoint reading of section 38C of the Bombay
Sales Tax Act and section 169 of the Maharashtra Land Revenue
Code leaves no manner of doubt that the recovery of sales tax dues
has priority over the secured creditors.
Accordingly, section 35 of the Securitisation Act has no effect
whatsoever in the operation of section 38C of the Bombay Sales Tax
Act. Section 35 of the Securitisation Act does not override section
38C of the Bombay Sales Tax Act and, therefore, based on section
35 of the Securitisation Act, the bank does not get precedence or for
that matter priority over the statutory first charge under section 38C
of the Bombay Sales Tax Act. Rather the statutory first charge under
section 38C of the Bombay Sales Tax Act has precedence over the
banks charge based on contract.
It was not in dispute that before the process was initiated by the
bank under section 13 of the Act, the sales Tax authorities had already
attached the properties of the company for recovery of sales tax dues.
Despite the recovery process for outstanding sales tax dues having
been initiated by the Sales Tax Authorities, who had a first charge
under section 38C of the Bombay Sales Tax Act, the bank in grossly
illegal manner proceeded under section 13 of the Securitisation Act
and sold the property of the company for recovery of its outstanding
dues. The action of the bank was wholly illegal and unauthorized.
GENERAL LAWS
LW(S) 62.10.2006
ESS VEE TRADERS & ORS. v. M/S AMBUJA CEMENT
RAJASTHAN LIMITED [131(2006) DLT 341] Badar Durrez Ahmed,
J [Decided on 3.7.2006]
Arbitration and Conciliation Act, 1996 read with the Indian
Partnership Act, 1932- Unregistered partnership firm- Plaintiff
applied to High court for the appointment of arbitrator- Whether
an unregistered firm could apply Held, No.
Brief Facts : The petitioner was an unregistered partnership firm. It
had entered into a contract with the respondent and dispute arose.
The petitioner applied to the High Court for the appointment of
arbitrator. The respondent contested that, the petitioner being an
unregistered firm could not initiate any legal proceeding.
Decision : Petition dismissed.
Reason : In this view of the matter, the settled position of law is that
registration is mandatory pre condition for the institution of a suit or
other proceeding as contemplated under section 69(2) and 69(3) of
the Indian Partnership Act, 1932. If on the date of institution of the
suit or proceeding, the firm is not registered, subsequent registration
during the pendency of the suitor proceeding will not cure this defect.
It is a mandatory pre condition and if it is not satisfied, the suit or
proceeding has to go. The present petition was instituted in August,
2003 when, admittedly, the petitioner No.1 was an unregistered firm.
The mandatory pre condition for institution of the present proceeding
was not satisfied. The subsequent registration of the firm on 9.1.2005
would not cure this fatal defect. Accordingly, the present petition is
not maintainable and is dismissed as such.
34 October 2006
 LEGAL WORLD
LW(S) 63.10.2006
DHARAM PAL v. RESERVE BANK OF INDIA & ORS. [132(2006)
DLT 1] Pradeep Nandrajog, J [Decided on 24.7.2006]
Torts- Negligence-Damages for negligent act-Employee went to
visit his maternal uncle with out informing the employer and his
wife- employer informed the wife of employee as dead- Employee
returned home and found that death ceremony was being
performed for him- He became joke of the village and was referred
to as ghost- Whether the employer was negligent in declaring a
living person as dead- Held, yes.
Brief Facts : This is an interesting case. The plaintiff had the habit of
going out of his house without informing his wife and others. Some
time in March 2002 the plaintiff went to Moradabad to visit his maternal
uncle without informing his wife and the defendant. On 16.3.2002,
the defendant informed the wife of plaintiff to collect the dues of her
late husband. The plaintiff returned to his home and found that teravi
ceremony being performed for his death. Every one thought that his
ghost has come and he became the laughing stock of his village. He
demanded explanation from the defendant that on what circumstance
the defendant had sent the letter to his wife that he had died. The
defendant gave a reply that it was by mistake. Plaintiff sued the
defendant for damages.
Decision : Suit decreed.
Reason : Dharma Pal claims that in early March, without informing
his family, he went to Moradabad to visit his material uncle. Admittedly,
on 16.3.2002 Vide Exhibit P-1 defendant wrote a letter to Dharma
Pals wife requesting her to collect some dues payable to Dharma
Pal. The said letter referred to Dharma Pal as (Late Dharma Pal).
According to the plaintiff since his family had not heard about
him, his wife, an uneducated lady believed the communication sent
by his ex employer. He claims that that she believed that the defendant
must have made proper inquiries before writing the letter and referring
to her husband as a dead person. She informed the other family
members. There was sorrow and mourning in the house and the
atmosphere was one of sadness. Everybody started crying and
weeping. Mother of Dharma Pal aged 59 years is stated to have
suffered a stroke and almost escaped death. Thereafter, relatives,
family friends and fellow members of the caste to which the plaintiff
belongs are stated to have impressed upon his wife to observe the
13th day ceremony when a person dies. This ceremony terahvi is
stated to have been performed. Dharma Pal claims to have returned
to his house. To the utter shock of the family, they thought that a
ghost has come. He claims that since he was publicly proclaimed
dead, persons in the neighborhood and his friends started subjecting
him to ridicule and he became a butt of jokes. He was referred to as
a ghost. He caused a communication to be sent to the Reserve Bank
inquiring about the circumstances under which he was referred to as
a dead person. Reply Ex.P.2 was sent on 8.4.2002 wherein expressing
regret for the letter dated 16.3.2002,RBI wrote that by mistake
(truitvash) he was referred to in the letter as late believing that he had
died (Aapko mrit samajh kar).
Defence of the defendant is that no ritual or ceremony was
performed as alleged by the plaintiff by his wife thinking him to be
dead. That the offending letter was an inadvertent clerical mistake.
Expressing regrets for the error it is stated that no cause has accrued
to the plaintiff to file the present suit.
Negligence is usually accompanied by inadvertence, but is not
the same thing. Carelessness as to possible consequences very often
results in failure to bring those conclusions in mind i.e. inadvertence.
Commonly therefore, the careless person not only does not intend
the consequences but does not even advert to it. What is possible or
probably does not occur to his mind. He may not intentionally cause
the harm but certainly exposes others to the risk of it.
To my mind, an attitude of mental indifference to obvious risks is
Student Company Secretary
nothing but a facet of negligence. While expressing regret to the
plaintiff, vide letter-dated 8.4.2002, Ex.P-2, as noted above, defendant
has admitted that reference to the plaintiff, as dead person was a
mistake. Word used by the defendant in the letter which is in Henagar
scrip is trutivash. Further, in the letter it has been admitted that plaintiff
was referred to as a dead person believing him to be a dead person.
What induced the belief in the officer who issued the letter has
not been brought out by the defendant. The obvious conclusion is
that the author of the letter acted with gross inadvertence bordering
on gross negligence. Indifferent attitude is writ large in the offending
letter. I hold it to be a case of gross negligence.
A reasonable person can certainly foresee the damage that may
be caused by declaring a living human as dead and communicating
the same to his family. Callousness in letters written by Government
officials is being noticed in various judicial pronouncements and at
least in my Court, if not every third, at least every forth litigation
involving the Government or its instrumentalities reflects callousness
and casualness shown by Governments servants or employees of
agencies under the Government.
I could not search for an equivalent case of the kind brought before
me. However, taking guidance from the principles under the Motor
Vehicles Act and other decisions where non pecuniary damages have
been granted, I note that on account of pain and suffering, depending
upon the age and the social background of a person damages between
Rs.10,000/- to Rs.50,000/- have been awarded by Courts.
Considering the circumstances under which the plaintiff found
himself and having no reasons to disbelieve when he states that he
has become a butt of jokes in his social circle I award damages to
the plaintiff in sum of Rs.10,000/-. The damages awarded are against
the first defendant.
Attention Students!
REVISION OF EXAMINATION FEE FROM DECEMBER, 2006
The Examination Fee stands revised from December, 2006
session of examination as under :
1. Foundation Exam : Rs. 875 (Lumpsum)
2. Intermediate Exam : Rs. 900 (Per Group)
3. Final Exam : Rs. 750 (Per Group)
UNIFORMITY IN SIGNATURES
It has been observed that some of the enrollment applications/
letters received from the students are either unsigned or bear
different signatures from time to time.
All the students are, therefore, advised to maintain uniformity
in their signatures on all the correspondence with the Institute
including students identity card, enrolment application and
attendance sheet provided in the examination hall at the time of
writing the examination.
PROHIBITION ON CARRYING MOBILE PHONES
TO EXAMINATION VENUE
Candidates intending to appear in the Company
Secretaries examinations may note that carrying of Mobile
phones, pagers or any other communication devises are strictly
prohibited into the premises where Company Secretaries
examinations are conducted. Candidates are, therefore,
advised not to bring any such prohibited items to the
examination venue, as the Institute and/or the Examination
Centre Staff shall not be responsible for safekeeping of any
such item(s). Infringement of these instructions shall
tentamount to adoption of unfair means and entail disciplinary
action.
35 October 2006
 STUDENTS SERVICES
STUDENTS SERVICES
REGISTRATION AND POSTAL TUITION
1. CANCGLLATION OF REGISTRATION
Registration of students registered upto and including Noveober,
2001 stands terminated on expiry of five-year period on 31st" October,
2006 leading to the fonlowing immediate consequences :
(a) Supply of Stwdent Company Secretary bulletin will be
discontinued from November, 2006 onwards.
(b) Response sheets will not be accepted even if submitted and
coaching completion certificates will not be issued (after the expiry
of registration period)
They are advised to apply for registration de novo/extension of
registration as per the guidelines published in this bulletin.
(Students whose registration was valid upto August, 2006 are
however, eligible to appear in December, 2006 examination
without seeking extension of registration/ registration de-novo
subject to fulfilling other requirements laid down in the
regulations.)
2. CHANGE OF ADDRESS
Change of address, if any, should be intimated to the Institute by
sending a separate letter in this regard. While intimating the change
in their mailing address, the students are advised to invariably quote
the PIN CODE number alongwith the student registration number,
name and full postal address with city, state in capital letters.
PIN CODE is required to be mentioned for quick delivery of
the mail. Students may, therefore, check up the computerised
mailing address as printed on the Student Company Secretary
bulletin. In case, it does not carry or carry the wrong PIN CODE
number, the same may be intimated immediately quoting
student registration number and full postal address with Postal
Index Number so that it could be incorporated in the
computerised mailing list.
3. STUDENTS IDENTITY CARD
All the students appearing in the examination must hold Identity
Card in the manner prescribed by the Institute, if not already obtained
at the time of seeking registration. For obtaining the Identity Card,
students are advised to obtain a proforma from the Headquarters/
Regional Offices of the Institute and send it again to the Institute duly
filled up and attested as per instructions given in the prospectus/
registration letter.
Students who have so far not obtained Identity Cards are advised
to write to the Institute immediately. The students should carry their
Identity Cards without fail for appearing in the Institutes examination. If
the Identity Card already issued has been lost or mutilated, student
should send a request for obtaining duplicate Identity Card together
with the mutilated Identity Card/Identity Card proforma duly filled in
and attested together with Rs. 50/- towards duplicate Identity Card fee.
4. COMPULSORY ENROLMENT FOR FINAL
COURSE
Students who have passed/completed both groups of Intermediate
examination are advised to seek compulsory enrolment for undergoing
coaching for the Final course on payment of Rs.4200/- towards postal
tuition fee.
Please note that a student is admitted to the final examination
only after a minimum period of nine calendar months has elapsed
since his/her passing the Intermediate examination and subject to
completion of coaching and fulfillment of other requirements.
5. ISSUE OF ADMISSION CERTIFICATES FOR
DECEMBER, 2006 EXAMINATION
The admission certificates for December, 2006 examination to all
Student Company Secretary
the eligible students would be dispatched by ordinary post by 11th
December, 2006. Simultaneously, the Admit Card Extracts woud
also be uploaded in the website of the Institute viz. www.icsi.edu by
the said date.
All the students are hereby advised to carefully check up the
particulars viz. Name, Centre, Medium, Group, Exemptions granted,
etc. shown in the Admit Card Extracts which are available on the
website of the Institute. If they come across any discrepancy and/or
non-availability of Admit Card on the website, it should at once be
brought to the notice of Mr. T P Balasubramanian, Administrative
Officer (Tel. 011-41504444 Extn. 515) for verification/ rectification.
While the requests for duplicate Admission Certificates are
promptly being attended to by the Headquarters, students may, as
per their convenience, also download Admit Card Extract from the
website of the Institute which alongwith the Student Identity Card
issued by the Institute would be equally valid for appearing in the CS
Examinations.
Alternatively, the students may approach Regional /Chapter/
Satellite Chapter Offices for issue of duplicate Admission Certificates
from 21st December, 2006 onwards.
6. CLARIFICATION REGARDING PAPERWISE
EXEMPTION
(a) The paperwise exemption is granted only on the basis of specific
request received in writing from a registered student along with
the attested photocopies of marks sheets for all parts of the
Degree/examination (on the basis of which the paperwise
exemption is sought) and the exemption fee @ Rs. 100/- per
paper. It is one time payment and not to be remitted for availing
of paper wise exemption in every session of examination during
the validity of registration period.
(b) The application for claiming paperwise exemption must reach
the Institute on or before the last date for submission of enrolment
application i.e. 25th March and 25th September for June and
December examinations respectively and with a late fee of Rs.
100/-, the application can be accepted upto 9th April and 10th
October respectively.
(c) The paperwise exemption once granted holds good during the
validity of registration period or passing/completing the
examination, whichever is earlier.
(d) The paperwise exemption is cancelled only on receipt of a specific
request in writing from the student concerned on or before the
last date for submission of the enrolment application. If any
candidate appears in the exempted paper(s) of examination
without receiving the written confirmation from the Institute, but
by making personal representation, appeal, request, etc., at the
Examination Centre at the last moment, his/her appearance in
such paper(s) shall automatically be treated as cancelled.
(e) It may be noted that candidates who apply for grant of paper
wise exemption or seek cancellation of paper wise exemption
already granted, before the last date of submission of enrolment
applications for a particular examination, must see and ensure
that they receive written confirmation from the Institute at least
15-20 days prior to the commencement of the examination.
Candidates who would presume automatic grant or cancellation
of paper wise exemption without obtaining written confirmation
on time and absent themselves in any paper(s) of examination
and/or appear in the exempted paper(s) would do so at their
own risk and responsibility and the matter will be dealt with as
per the above guidelines.
(f) Exemption once cancelled on request in writing shall not be
granted again under any circumstances.
(g) The candidates who have passed either group of the
Intermediate/Final examination under the old syllabus, may claim
the paperwise exemption in the corresponding subject(s) of new
36 October 2006
 STUDENTS SERVICES
syllabus indicating the basis of exemption as APO in the
appropriate column of the enrolment application.
(h) In case the paperwise exemption has already been granted on
the basis of qualification or the candidates is eligible for grant of
exemption on the basis of securing 60% or more marks, a
photocopy of the letter/marks-sheet issued by the Institute should
be enclosed with the enrolment application while claiming such
exemption, failing which the same may not be granted for the
ensuing examination.
(i) No exemption fee is payable for availing paperwise exemption
on the basis of APO or on the basis of securing 60% or more
marks in the Institutes examination.
(j) Paperwise exemption fee is payable only when the exemption is
to be availed on the basis of qualification(s) specified for the
purpose.
7. IMPORTANT
While making any correspondence regarding examination, the
students are advised to quote the following particulars for taking
prompt action:
(i) Name in full (ii) Student Registration number (iii) Stage of
examination (Intermediate/Final) (iv) Group opted (v) Centre opted
(vi) Particulars of fee remitted, i.e. Demand Draft (printed) number,
date, amount, name of the bank and its branch (vii) Date and mode
of despatch of enrolment application and their complete address with
PIN code, telephone number, mobile number or e-mail address.
In case of any specific problem/complaint regarding registration,
post-registration, students services and postal/oral coaching, students
may contact personally or write to Sohan Lal, Joint Director and for
academic guidance and suggestions, if any, students may write to
V K Aggarwal, Principal Director, at the Institutes address.
CLARIFICATION REGARDING HINDI MEDIUM
Queries are often being received by the Institute with regard
to the option of medium for pursuing the Company Secretaryship
Course.
It is clarified that the students may opt for pursuing the course
in English/Hindi medium. However, the study material at present
is available in English medium only. In any case, the students
can enjoy the facility of submitting their response sheets to the
test papers under the Postal Tuition Scheme in English or Hindi
medium. Similarly, they can opt to write the Institutes main
examination in English or Hindi Medium.
As regards writing of examination, the option is to be
exercised while filling up the examination form as and when the
students intend to appear in the examination. This option is to
be exercised on group wise basis and not on individual basis.
Answering to test papers and writing examination partly in
English and partly in Hindi medium is not permissible.
E-MAIL ADDRESS OF THE STUDENTS
Those students who are having e-mail address may communicate
the same to the Students Services Section at dss@icsi.edu which
will facilitate quick and economic communication from the Institutes
side. The e-mail address may be sent in the following format.
Name : irrevocable for that particular session of examination;
Registration No. : (iii) answer books of candidates who write part of papers/answers in
E-mail Address : one medium and the remaining part in other medium are liable
Student Company Secretary
EXAMINATION
1. DECEMBER, 2006 EXAMINATION
The next examination for the Foundation Course, Intermediate
and Final, scheduled in December, 2006, will be held from Tuesday,
the 26th December, 2006 to Wednesday, the 03rd January, 2007, at
64 examination centres, viz., 1. Agra; 2. Ahmedabad; 3. Aurangabad*;
4. Allahabad; 5. Ambala; 6. Bangalore; 7. Bareilly*; 8. Bhilwara;
9. Bhopal; 10. Bhubaneswar; 11. Chandigarh; 12. Chennai (West);
13. Chennai (South) 14. Coimbatore; 15. Dehradun; 16. Delhi (East);
17. Delhi (North); 18. Delhi (South); 19. Delhi (West); 20. Ernakulam;
21. Faridabad; 22. Ghaziabad; 23. Gurgaon; 24. Guwahati;
25. Hyderabad; 26. Indore; 27. Jaipur; 28. Jammu; 29. Jamshedpur;
30. Jodhpur; 31. Kanpur; 32. Kolkata (North); 33. Kolkata (South);
34. Lucknow; 35. Ludhiana; 36. Madurai; 37. Mangalore; 38. Meerut;
39. Mumbai (CG); 40. Mumbai (GK); 41. Mumbai (Jog); 42. Mysore;
43. Nagpur; 44. Nasik; 45. Noida; 46. Panaji (Goa); 47. Patna;
48. Pondicherry; 49. Pune; 50. Raipur; 51. Rajkot; 52. Ranchi;
53. Shimla; 54. Surat; 55. Thane; 56. Thiruvananthapuram;
57. Tiruchirapalli; 58. Udaipur; 59. Vadodara; 60. Varanasi; 61.
Vijayawada; 62. Visakhapatnam; 63. Yamuna Nagar (Haryana) and
64. Overseas Centre Dubai, as per the Time-Table and
Programme published on the last cover page of this issue.
NOTE:
(i) *Aurangabad and Bareilly Examination Centres are opened
for June, 2006 and December, 2006 sessions only purely on
an experimental basis and their continuance will be subject
to review and minimum number of students taking the
examination.
(ii) The Institute reserves the right to withdraw any examination
centre at any stage without assigning any reason.
(iii) Candidates should note that non-receipt/delayed receipt of
result-cum-marks statement, response to result queries,
requests for verification of marks, etc., will not be accepted
as valid and sufficient reason for seeking any relaxation or
not complying with the requirements of regulations and/or
last dates for submission of enrolment applications for the
next examinations. Therefore, the candidates in their own
interest are timely advised to keep track of important
announcements, last dates and observe the time schedule.
The list of examination center addresses for Institutes December,
2006 examinations will be published in the forthcoming issue of
Student Company Secretary bulletin for general information.
2. USE OF CALCULATORS IN EXAMINATIONS
Candidates are allowed to bring and use their own battery operated,
noiseless and cordless pocket calculators with not more than 6
functions, 12 digits and 2 memories. Exchange or lending/borrowing
of calculators among students is forbidden in the examination hall.
3. HINDI AS AN OPTIONAL MEDIUM OF WRITING
EXAMINATION
Candidates are allowed to use Hindi as an optional medium for
writing all papers of the Foundation (except: English & Business
Communication paper), Intermediate and Final examinations on
the following conditions:
(i) option of Hindi Medium for writing the examination is to be
exercised for all papers of an examination OR a particular group
of examination, and not for any individual paper(s) in the
enrolment application form each time for appearing in the
examination;
(ii) option of medium for writing examination once exercised is
to be cancelled without any notice;
37 October 2006
 STUDENTS SERVICES
(iv) candidates who have exercised option of Hindi medium in their
examination enrolment form for writing Foundation examination
and Group-I of Intermediate examination will be provided
Question Papers printed both in English and Hindi version
(except for English & Business Communication paper,
which will be printed/required to be answered in English
only). The Question Papers for Group-II of the Intermediate
examination and all papers of Final examinations will be printed
in English version only;
(v) if a candidate writes his/her answers in Hindi medium without
exercising such an option in the enrolment application form, he/
she may not be given credit for his/her answers;
(vi) candidates opting Hindi medium for the examination must write
HINDI MEDIUM in bold letters on the top of the cover page of
Answer Book No.1, 1B, as the case may be; and
(vii) candidates opting Hindi medium for the examination may write
answers to practical questions, headings, quotations, technical
and legal terms, sections, rules, etc., in English medium, if they
so desire.
4. IMPORTANT INSTRUCTIONS TO EXAMINEES
Candidates enrolled for appearing in the December, 2006
examinations are advised to carefully read and observe the
Instructions to Examinees printed on the Admission Certificate
(Roll Number) and enclosures thereto, and also on the Question
Papers and Answer Books. However, attention of candidates is
especially invited to the following instructions:
(i) on receipt of Admission Certificate (Roll No.), first of all, the
candidates must verify carefully the entries appearing therein.
Discrepancy/error, if any, in the Admission Certificate concerning
spellings of his/her name, stage of examination and examination
centre; medium of writing the answers, subject of examination
in which exemption was sought/shown, etc., should, at once, be
brought to the notice of Shri Sohan Lal, Jt. Director (Students
Services) well on time before commencement of the examination;
(ii) candidates are required to bring daily to the Examination Hall
their Admission Certificates and Student Identity Cards failing
which they may not be allowed admission to the Examination
Hall and/or to appear in the examination;
(iii) before attempting to write answers in the answer books,
each candidate must write his/her Roll Number on the special
slip affixed to Answer Book Nos. 1, 1-B and 1-C, date of
examination, stage of examination, name of the paper, etc.
against the relevant columns on the first page of the main
answer books and also on the top of Question Paper.
(iv) candidates must attempt questions in accordance with the
directions given on each Question Paper. If the questions are
attempted in excess of the prescribed number, only the questions
attempted first upto the required numbers will be valued and
awarded marks and the remaining questions will be ignored;
(v) Questions relating to graph/prcis should be attempted only on
graph/prcis sheets appended as last page to the Answer Book
wherever required. Do not write your roll number on the Graph/
Prcis Sheets and additional Answer Book No. 2. The additional
answer book(s) used, if any, should be fastened along with the
main answer book. Candidates who fail to observe this instruction
will be penalized.
(vi) each question should start on a fresh page and sub-
question(s) be attempted consecutively;
(vii) while attempting a fresh question/sub-question, candidates
should distinctly mention respective question number against
the answer in bold capital letters with coloured sketch pen/
different colour ink and underline the same [e.g. ANS. TO Q.
NO. 3(A)] on the left-hand side margin of the answer book and
also simultaneously mark (X) in the table provided on the cover
page against the respective question number;
Student Company Secretary
(viii)candidates must not, for any reason whatsoever, tear out
any page(s) from the Answer Book or leave any blank page
or unused spaces in between the pages. If such spaces are
left, score them out. If a candidate uses more than one
answer book, he/she should indicate on the cover page of
main answer book, the total number of answer books;
(ix) candidates are expected to write precise and to the point
answers to questions set in for the examinations in neat
and legible handwriting citing relevant provisions of the Act/
rules quoting case laws, etc., in support of the answers
wherever applicable;
(x) no candidate shall leave/be allowed to leave the Examination
Hall; (i) within first one hour of commencement of
examination, (ii) during last 15 minutes of examination
timing, (iii) without signing the attendance sheet, and (iv)
without properly handing over his/her answer books to the
Invigilator on duty;
(xi) a few minutes prior to the time of conclusion of examination
or before handing over the answer books to the supervisory
staff, candidates must re-check and ensure that they have
filled up relevant particulars on the cover page of Answer
Book Nos. 1, 1-B and 1-C, as the case may be, and properly
tied up all the additional answer book(s) No.2 along with
the main answer book;
(xii) candidates should strictly adhere the instructions being given by
the Invigilator(s)/Supervisors in the Examination Hall;
(xiii) candidates are strictly forbidden to carry with them into the
Examination Hall any book or printed/handwritten material,
notes, pager, mobile phone, etc., OR to talk or converse inter
se with other candidates in the Examination Hall;
(xiv) candidates for further strictly forbidden to copy from the answer
papers of any other candidate nor allow their answers to be copied
nor give nor attempt to give nor obtain nor attempt to obtain
irregular assistance of any description. It will be the responsibility
of each and every candidate to ensure that his/her answers are
not copied by another candidate. Failure to do so will invite
stern disciplinary action and penalty for adoption of unfair means;
(xv) no candidate shall, leave his/her seat in the examination
hall during the course of examination without the specific
permission of the Invigilator on duty for any reason
whatsoever;
(xvi) on completion of examination or expiry of the prescribed
examination timing, the answer book must be handed over
immediately to the Invigilator on duty and Invigilators
signatures be obtained in the relevant column of
acknowledgement printed on the Admission Certificate in
token of handing over the answer books.
(xvii) it shall be the personal responsibility of the candidate
concerned to properly hand over his/her answer book(s) to
the Invigilator on duty in the Examination Hall and obtain
acknowledgement therefor. Any representation regarding
omission to handover the written answer book(s) or not
obtaining the acknowledgement from the Invigilator at the
time of handing over his/her answer book(s) for any reason
whatsoever will not be entertained after the conclusion of
that particular session of examination;
(xviii) candidates are warned that any attempt to misbehave in any manner
or create disorderly scene in and around the examination hall or
harass or bodily harm the staff deployed for the conduct of
examination will be viewed seriously and severely punished; and
(xix) any attempt or act of violation of Instructions to Examinees
shall be viewed seriously and entail disciplinary action under the
"Company Secretaries Regulation, 1982".
38 October 2006
 STUDENTS SERVICES
LIST OF FIRST 25 TOP RANK HOLDERS, IN ORDER OF 27 19 2853 NU0227770 ARVIND KUMAR RAY, DELHI
MERIT, WHO HAVE SECURED NOT LESS THAN 55%
MARKS IN THE AGGREGATE IN THE FOUNDATION 28 19 4836 NU0246041 SANDHYA GOLA (MS.),
EXAMINATION, JUNE, 2006 FARIDABAD
SI. Rank Roll No. Admn. No. Name of the Student and 29 19 5896 SU0084471 BHAVYA PARVATHI K (MS.),
No. Centre MANGALORE
1. 1 1145 EU0088543 MOHIT AGARWAL, KOLKATA
30 19 8129 WU0151290 SWATI MOTILAL JALAN (MS.),
2. 2 1322 EU0098323 RAHUL RUNGTA, KOLKATA SURAT

3. 3 4061 NU0262772 RASHMI SHARMA (MS.), 31 20 5329 SU0074703 BALAJI H, CHENNAI

LUCKNOW
32 20 5417 SU0088113 BHAVYA M (MS.), CHENNAI
4 4 6918 WU0158432 MAHAK SINGAL (MS.),
33 20 7406 WU0161453 ANKIT JAGDISH BHEDA,
MUMBAI
MUMBAI
5 5 4470 NU0254115 ROHIT MANGAL, UDAIPUR
34 21 4463 NU0251682 APEKSHA NANDAWAT (MS.),
6 6 7025 WU0154578 MEETU DHINGRA (MS.), UDAIPUR
MUMBAI 35 21 8126 WU0150182 DEEPIKA SURENDRA KABRA
7 7 5403 SU0087308 RAJESH KUMAR P, CHENNAI (MS.), SURAT

8 8 6306 SU0081281 USHA G (MS.), CHENNAI 36 22 1314 EU0098100 SANJAY KHEMKA, KOLKATA

9 8 8048 WU0156667 VIPUL JAIN, RAIPUR 37 22 2603 NU0244638 GAYATRI CHAWLA (MS.)
DELHI
10 9 2574 NU0239406 KIRAN RANA (MS.), DELHI
38 22 3529 NU0246908 RAVINDER KUMAR, JAIPUR
11 9 4464 NU0252891 MANISH KUMAR BUMB,
UDAIPUR 39 22 6909 WU0156200 ROHAN PRAMOD SANKHE,
MUMBAI
12 10 6309 SU0082871 K REVATHY (MS.), CHENNAI
40 23 1243 EU0094561 SHRUTI PODDAR (MS.),
13 11 1752 EU0093488 NEHA DOSHI (MS.), KOLKATA KOLKATA

14 12 1294 EU0097140 RITTIKA CHOWDHARY (MS.), 41 23 1427 EU0097321 SONAM AGARWAL (MS.),
KOLKATA GUWAHATI

15 12 5819 SU0084955 SARASWATHI T (MS.), 42 24 1159 EU0089301 RAVI JAISWAL, KOLKATA

MADURAI
43 24 3600 NU0257737 ANGIRA SINGHVI (MS.),
16 12 7791 WU0155670 CHAITRALI VINOD JAIPUR
DESHPANDE (MS.), PUNE 44 24 7380 WU0160505 VIVEK RADHEYSHYAM
17 13 1228 EU0094150 SUNIL AGARWAL, KOLKATA MAHESHWARI, MUMBAI

18 14 1205 EU0093138 ANKIT AGARWAL, KOLKATA 45 25 4728 NU0247102 ARU SINGHAL (MS.),
DEHRADUN
19 14 3117 NU0239801 NEHA MALHOTRA (MS.),
DELHI 46 25 8122 WU0150013 VINEET VINOD MITTAL,
SURAT
20 14 4047 NU0258180 AKANKSHA JOHARI (MS.), LIST OF FIRST 25 TOP RANK HOLDERS, IN ORDER OF
LUCKNOW MERIT, WHO HAVE SECURED NOT LESS THAN 55%
MARKS IN THE AGGREGATE IN THE INTERMEDIATE
21 15 1654 EU0095361 SNEHA AGARWAL (MS.), EXAMINATION, JUNE, 2006
RANCHI
SI. Rank Roll No. Regn. No. Name of the Student and
22 16 8484 WU0118064 JAJU NIKHIL SATYANARAYAN, No. Centre
AURANGABAD 1. 1 15299 NR0449921 VINEET SODHANI, JAIPUR
23 17 1656 EU0095380 ANCHAL AGARWAL (MS.), 2. 2 13566 ER0212429 VINITAA AGARWAL (MS.),
RANCHI DELHI
24 17 4063 NU0262852 NIDHI AGARWAL (MS.), 3. 3 10010 ER0222602 POONAM JAIN (MS.),
LUCKNOW KOLKATA
25 18 1125 EU0087249 POONAM SINGHI (MS.), 4. 4 29189 WR0399820 SACHIN DHARMENDRA JAIN,
KOLKATA SURAT
26 18 4469 NU0254101 YASHVANT MANGAL, 5. 5 25749 WR0402322 AMITA NARENDRA
UDAIPUR SALUNKHE (MS.), MUMBAI

Student Company Secretary 39 October 2006

 STUDENTS SERVICES
6. 5 15802 NR0437988 SAURABH LODHA, JODHPUR LIST OF FIRST 10 TOP RANK HOLDERS, IN ORDER OF
MERIT, IN THE FINAL EXAMINATION, JUNE, 2006
7. 6 10024 ER0223157 NEHA GUPTA (MS.), KOLKATA
SI. Rank Roll No. Regn. No. Name of the Student and
8. 7 10056 ER0224223 NIDHI AGARWAL (MS.), No. Centre
KOLKATA 1. 1 47346 SR0300372 RAJESH K PAI, MANGALORE
9. 8 23082 SR0326502 ANAND M J, 2. 2 31548 ER0199599 VIKASH AGARWAL, KOLKATA
THIRUVANANTHAPURAM
3. 3 39198 NR0308208 ISHA GUPTA (MS.), KANPUR
10. 9 17584 NR0464439 NIDHI HIRAN (MS.), UDAIPUR
4. 4 45619 SR0298049 KALIYUGA EASWARASAMY V,
11. 10 10063 ER0224425 PRIYANKA SARAWAGI (MS.), COIMBATORE
KOLKATA
5. 4 50009 SR0311011 N SESHADRI, CHENNAI
12. 10 17586 WR0416550 MONIKA MUNDRA (MS.), 6. 5 35075 NR0404634 RAJAN SINGLA,
UDAIPUR CHANDIGARH
13. 11 9946 ER0216861 AKRAM JAMAL, KOLKATA 7. 5 53337 WR0324380 MEGHNA VINOD SHAH (MS.),
14. 12 28555 WR0412186 RAHUL ASHOKCHAND MUMBAI
KATARIYA, PUNE 8. 6 31514 ER0179419 RAVI RATHI, KOLKATA
15. 13 27367 WR0417117 HEMRAJ SATYANARAYAN 9. 7 38026 NR0413964 RAKESH RATHI, JAIPUR
JOSHI, MUMBAI
10. 8 50008 SR0277445 V RAMANUJAN, CHENNAI
16. 14 15817 NR0457090 HIMANSHU DHADDHA,
11. 9 31547 ER0199477 RAJEEV AGARWAL, KOLKATA
JODHPUR
12. 9 49202 SR0290427 VIJAY GILDA, VIJAYAWADA
17. 15 10007 ER0222517 PRIYANKA AGARWAL (MS.),
KOLKATA 13. 9 53348 WR0358099 RITESH GIRDHARILAL
PODAR, MUMBAI
18. 16 10046 ER0223907 GOVERDHAN CHANDAK,
KOLKATA 14. 10 31490 ER0166372 NISHA PATWARI (MS.),
KOLKATA
19. 16 11502 ER0224648 ADITYA TEKRIWAL, KOLKATA
15. 10 53313 NR0383848 RAHUL JAIN, MUMBAI
20. 17 24455 WR0413762 MAMTA KANTILAL GALA
(MS.), AHMEDABAD
NOTIFICATION
21. 18 14553 NR0451961 NAVEEN JAIN, DELHI
ICSI NO. 4 OF SEPTEMBER, 2006
22. 19 9798 ER0199381 SUNIL BHATERA, KOLKATA MERIT-CUM-MEANS ASSISTANCE SCHEME, 1983
In pursuance of para 13 of the Merit-cum-Means Assistance
23. 19 9969 ER0219888 NEHA SINGHANIA (MS.), (Company Secretaryship Course) Scheme, 1983, as amended upto
KOLKATA th
18 February, 2005, applications are invited to reach the Institute
in the prescribed form on or before 27th November, 2006 for
24. 19 11490 ER0223385 RAHUL JAIN, KOLKATA award of 15 numbers of financial assistance each for Intermediate
25. 19 27671 WR0383385 ROHAN AVINASH and Final course of the company secretaryship from students
UTTARWAR, NAGPUR who fulfil the eligibility criteria laid down under the said scheme.
According to the scheme, a candidate applying for assistance
26. 20 15809 NR0454791 ARUN BIYANI, JODHPUR should have passed Foundation or Both Groups of the Intermediate
examination without exemption in any paper, at one sitting, in the
27. 20 28552 WR0399857 NIHAAL DEEPAK BORKAR,
first attempt in June, 2006 examination. The income of such a
PUNE candidate, if employed or is having an independent source of
28. 21 19922 SR0335486 RAJESHWARI S PATIL (MS.), income, should not be more than Rs.1,00,000/- per annum and if
BANGALORE he/she is dependent on his/her parents/guardian/spouse whether
partially or wholly, the combined income from all sources should
29. 22 15311 NR0460001 SONIA PARNAMI (MS.), not be more than Rs.1,50,000/- per annum.
JAIPUR Prescribed application form together with a copy of the Merit-
cum-Means Assistance (Company Secretaryship Course) Scheme,
30. 22 30116 WR0415989 DIPTI DAYARAM DIWANI
1983 can be obtained from the Institute free of cost by sending a
(MS.), THANE self-addressed envelope of 23cms. x 11 cms. size duly affixed
31. 23 21817 SR0332783 CHANAKYA CHANDRA with postage stamp worth Rs.10/-. Applications not made on the
REDDY PATIL, HYDERABAD prescribed forms and/or without supporting documents, incomplete
applications, applications not fulfilling the eligibility criteria laid down
32. 24 30308 WR0405088 ANUP RAMPRASAD TOTALA, under the scheme or applications not reaching the Institute on or
AURANGABAD before 27th November, 2006 are liable to be rejected.
BY ORDER OF THE COUNCIL
33. 25 9980 ER0221308 PRIYA DHANUKA (MS.), File No.207:Exams:2006
KOLKATA New Delhi 110 003. (N. K. JAIN)
Dated, the 01st September, 2006 Secretary & CEO
34. 25 15814 NR0456201 VIMAL RATHI, JODHPUR

Student Company Secretary 40 October 2006

 ATTENTION STUDENTS
Several queries are being received in the Institute regarding
applicability of certain Acts/Amendments relevant for December
2006 Examination. Students may note that all the course
contents given in the syllabus are applicable. However, certain
Acts which are given in the syllabus have undergone changes/
amendments during the recent past. The Acts that have
undergone changes and are applicable for December 2006
examination as well as the changes that are not applicable for
the said examinations, have been mentioned herein below for
the information of the students :
ISLRFM:
CHANGE APPLICABLE
Revised Clause 49 of Listing Agreement
ICL:
CHANGES APPLICABLE:
1. Companies (First Amendment) Act, 2002
2. Sections 2 and 6 of Companies (Second Amendment) Act,
2002.
3. Revised Clause 49 of Listing Agreement.
4. Highlights of Companies (Amendment) Act, 2006.
5. Highlights of Dr. J J Irani Committee Report on Company Law.
6. Highlights of MCA 21 project and new e-forms.
CHANGES NOT APPLICABLE
1. Companies (Electronic Filing and Authentication of
Documents) Rules, 2006.
2. Companies (Second Amendment) Regulations, 2006
3. Companies (Third Amendment) Regulations, 2006
4. Company Secretaries (Amendment) Act, 2006
ICSP:
CHANGES APPLICABLE
1. Companies (First Amendment) Act, 2002.
2. Sections 2 and 6 of Companies (Second Amendment) Act,
2002
3. Revised Clause 49 of Listing Agreement.
4. Highlights of Companies (Amendment) Act, 2006.
5. Highlights of Dr. J J Irani Committee Report on Company
Law
6. Highlights of MCA 21 Project and new e-forms.
CHANGES NOT APPLICABLE
1. Companies (Electronic Filing and Authentication of
Documents) Rules, 2006.
2. Companies (Second Amendment) Regulations, 2006
3. Companies (Third Amendment) Regulations, 2006
4. Company Secretaries (Amendment) Act, 2006
IELIL:
CHANGES APPLICABLE
1. Monopolies and Restrictive Trade Practices Act, 1969 &
Competition Act, 2002. (Provisions mentioned else where in
this issue).
2. Patent Act, 1970 as amended by the Patents (Amendment)
Act, 2005 & Patents (Amendment) Rules, 2005.
3. Foreign Trade Policy 2004-09.
4. Money Laundering Act, 2002.
5. Copyright Act, 1957 as amended by Copyright (Amendment)
Act, 1999.
6. Foreign Exchange Management Act, 1999, Rules &
Regulations as amended upto December 31, 2005.
7. Trademarks Act, 1999 and Trade Mark Rules, 2002.
8. Special Economic Zones Act, 2005 and Rules, 2006.
Student Company Secretary
FWTO:
CHANGE APPLICABLE
- Special Economic Zones Act, 2005 and Rules, 2006.
FSPELDC :
CHANGES APPLICABLE
1. Monopolies and Restrictive Trade Practices Act, 1969 &
Competition Act, 2002 (Provisions mentioned else where in
this issue.)
2. Patents Act, 1970 as amended by the Patents (Amendment)
Act, 2005 and Patents (Amendment) Rules, 2005.
3. Foreign Trade Policy 2004-09.
4. Money Laundering Act, 2002.
5. Copyright Act, 1957 as amended by Copyright (Amendment)
Act, 1999.
6. Foreign Exchange Management Act, 1999, Rules &
Regulations as amended upto December 31, 2005.
7. Trademarks Act, 1999 and Trade Mark Rules, 2002.
8. Special Economic Zones Act, 2005 and Rules, 2006.
FACLP:
CHANGES APPLICABLE
1. Companies (First Amendment) Act, 2002.
2. Sections 2 and 6 of Companies (Second Amendment) Act,
2002.
3. Revised Clause 49 of Listing Agreement.
4. Highlights of Companies (Amendment) Act, 2006.
5. Highlights of Dr. J J Irani Committee Report on Company
Law.
6. Highlights of MCA 21 Project and new e-forms.
CHANGES NOT APPLICABLE
1. Companies (Electronic Filing and Authentication of
Documents) Rules, 2006.
2. Companies (Second Amendment) Regulations, 2006.
3. Companies (Third Amendment) Regulations, 2006.
FSMSA
CHANGES APPLICABLE
1. Companies (First Amendment) Act, 2002.
2. Sections 2 and 6 of Companies (Second Amendment) Act,
2002.
3. Revised Clause 49 of Listing Agreement.
4. Highlights of Companies (Amendment) Act, 2006.
5. Highlights of Dr. J J Irani Committee Report on Company
Law.
6. Highlights of MCA 21 Project and new e-forms.
CHANGES NOT APPLICABLE
1. Companies (Electronic Filing and Authentication of
Documents) Rules, 2006.
2. Companies (Second Amendment) Regulations, 2006
3. Companies (Third Amendment) Regulations, 2006
4. Company Secretaries (Amendment) Act, 2006
FCRLP:
CHANGES APPLICABLE
1. Sections 2 and 6 of Companies (Second Amendment) Act,
2002.
2. Highlights of Dr. J J Irani Committee Report on Company
Law.
3. New e-forms, wherever applicable.
CHANGE NOT APPLICABLE
- Sick Industrial Companies (Special Provisions) Repeal Act,
2003.
41 October 2006
 STUDENTS SERVICES
SMTP ORGANISED BY H.Q./REGIONAL COUNCILS/CHAPTERS
ELIGIBILITY OF PARTICIPANTS : ICSI final passed candidates. SMTP COURSE CONTENTS: Module I-Filling and Filing of Forms under the
Companies Act, 1956. q Module II-Practical and Procedural Aspects of Convening and Conducting Board Meetings & Annual General Meetings
and Related Aspects. q Module III-Managing Public Issues. q Module IV-Loan Documentation, Joint Ventures & Foreign Collaborations, Raising
Finance through EURO Issues & Export and Import Procedures and Documentation. q Module V-Practical and Procedural Aspects relating
to Appearance before CLB/Under SICA, Consumer Protection Act and Case Studies in RTP/UTP. In addition, the participants would be exposed
to case studies and mock board/general meeting, etc.
Organised by Dates & Duration Venue of Programme Contact Address
EIRC of 09.11.2006 EIRO Premises Executive Officer, EIRO of the ICSI, ICSI-EIRC Bldg., 3-A, Ahiripukur 1st
the ICSI to Lane, Near Beck Bagan Nursing Home, Kolkata-700019 Tel. : 22832973/
25.11.2006 22816541 Fax No. : 033-22816542 E-mail : eiro@icsi.edu

SCHEDULE OF ACADEMIC DEVELOPMENT PROGRAMMES (ADP)

Every student of the Institute who has been sponsored for 15 months training either in a company or under a Company Secretary in practice
is compulsorily required to attend and complete 25 Hours Academic Development Programmes (ADP). The duration of each ADP would be eight
hours and those who have attended three such programmes would be deemed to have attended 25 Hours ADP. Fee Rs. 250/- per participant.
The Schedule of ADPs proposed to be organized by EIRC & SIRC is as under:
Organised by Dates Venue of the Contact Address
Programme
EIRC of 18.11.2006 EIRO Premises Executive Officer, EIRO of the ICSI, ICSI-EIRC Bldg., 3-A, Ahiripukur 1st
the ICSI Lane, Near Beck Bagan Nursing Home, Kolkata-700019 Tel. : 22832973/
22816541 Fax No. : 033-22816542 E-mail : eiro@icsi.edu
SIRC of 18.11.2006 SIRC Premises Deputy Director, SIRC of the ICSI, SIRC-ICSI House, No. 9, Wheat Crofts
the ICSI Road, Nungambakkam, Chennai-600034 Tel. :044-28279898/28268685
Fax No. : 044-28268685 E-mail : icsisirc@md3.vsnl.net.in/siro@icsi.edu

SCHEDULE OF TRAINING ORIENTATION PROGRAMME (TOP)

Organised by Dates & Duration Venue of the Programme Contact Address
SIRC of 08.01.2007 SIRC Premises Deputy Director, SIRC of the ICSI, SIRC-ICSI House, No. 9, Wheat Crofts
the ICSI to Road, Nungambakkam, Chennai-600034 Tel. :044-28279898/28268685
12.01.2007 Fax No. : 044-28268685 E-mail : icsisirc@md3.vsnl.net.in/siro@icsi.edu

STATUS OF TRAINING
(Period from 01-09-2006 to 30-09-2006)
15 Months Training with Company/Company Secretary in Practice and 03 Months & 15 days Practical Training
STAGE-I STAGE-II
Biodata of the students sent to the companies/company Students sponsored for training
secretaries in practice for consideration
APPLICATIONS CASES
Pending Received Forwarded for Pending Pending Received No. of students Pending
Training as on during the consideration as on as on during who have actually as on
Type 31.08.06 month (upto 30.09.06) 30.09.06 31.08.06 the month taken for training 30.09.06
(upto 30.09.06)
15 Months in NIL 118 108 10 15 48 50 13
Companies
15 Months with NIL 22 22 NIL 05 56 49 12
CS in Practice
3 Months in 06 112 113 05
Company/
15 Days in
Optional Area
2. Exemption
1. Number of applications pending as on 31.08.2006 : NIL
2. Number of applications received for exemption : 99
3. Number of exemptions granted : 39
4. Number of pending applications as on 30.09.2006 : 60

Student Company Secretary 42 October 2006

LIST OF THE COMPANIES REGISTERED FOR Cinemax India Limited 15 Months Suitable
IMPARTING TRAINING DURING THE MONTH OF 349, Business Point Training
AUGUTST 2006 5th Floor, Western Express Highway
Andheri (East)
Region Training Stipend Mumbai-400069
Period (Rs.) Kewal Kiran Clothing Limited 15 Months 3000-
Northern Region 460/7, I.B. Patel Road Training 5000
IST Limited 15 Months Suitable Goregaon (East), Mumbai-400063
A-23, New Office Complex Training Tripex Overseas Limited 15 Months 5000
Defence Colony 1st Floor, Nutan Vidhya Mandir Training
New Delhi-110024 Opp. Kapadiya Hospital
Rotographics (India) Limited 15 Months Suitable 65, M.G. Road, Goregaon (West)
B-14, (Basement) Training Mumbai-400062
Lajpat Nagar-III Bhaskar Industries Limited 15 Months 2000
New Delhi-110024 6, Dwarka Sadan, Press Complex Training
Ayurvet Limited 15 Months Suitable Zone-1, M.P. Nagar, Bhopal-11, MP
6th Floor, Sagar Plaza Training Star India Private Limited 15 Months Suitable
District Centre, Laxmi Nagar Star House, Off. Dr. E. Moses Road Training
Vikas Marg, Delhi-110092 Mahalaxmi, Mumbai-400011
Bhandari Builders Pvt. Ltd. 15 Months Suitable National Stock Exchange 15 Days
8th Floor Bhadari House Training Exchange Plaza Training
91, Nehru Place Bandra-Kurla Complex in Optional
New Delhi-110019 Bandra (East) Area
AMD Metalplast Limited 15 and 03 Suitable Mumbai-400051
18, 1st Floor, Pusa Road Months Southern Region
Karol Bagh Practical Aurobindo Pharma Limited 15 Months Suitable
New Delhi-110005 Training Plot No. 2, Maitri Vihar Training
Transcorp International Limited 15 and 03 Suitable Ameerpet
C-300, II Floor, Meghalaya Tower Months Hyderabad-500018, AP
Church Road Practical
Jaipur-302001 Training CHANGE IN ADDRESS OF THE COMPANIES
FROM: GHCL Limited ...... Imparting 15 Monhs training
COLT Technology Services 15 Months 8000- Internation Trade Tower, F-Block, 2nd Floor, Nehru Place
India Pvt. Ltd. Training 10000 New Delhi-110019
Unitech Business Park TO: GHCL Limited
Tower-B, South City-I
B-38, Institutional Area, Sector-1, Noida-201301
Gurgaon-122001
FROM: Svam Software Limited..... Impating both 15 and 03
Forum I Aviation Limited 15 Months Suitable Months Practical Training
C-11, First Floor, Vista House Training 70, Janpath, Connaught Place, New Delhi-110001
S.D.A. Commercial Complex TO: Svam Software Limited
New Delhi-110016 S-524, Vikas Marg, Shakarpur, Delhi-110092
DB (International) Stock Brokers Ltd. 15 Months 4000- CHANGE IN NAME OF THE COMPANY IMPARTING
402, New Delhi House Training 5000
27, Barakhamba Road 15 MONTHS TRAINING
New Delhi-110001 FROM: The Tata Iron and Steel Company Limited
TO: Tata Steel Limited
Roop Polymers Limited 15 and 03 Suitable Bombay House, 24, Homi Mody Street, Fort, Mumbai-400001
27, I.D.C. Mehrauli Road Months
Gurgaon-122001 Practical LIST OF PRACTISING MEMBERS REGISTERED FOR
Haryana Training THE PURPOSE OF IMPARTING APPRENTICESHIP
Su-Kam Power Systems Ltd. 15 Months Suitable TRAINING DRUING THE MONTH OF AUGUST, 2006
196, Udyog Vihar, Phase-VI Training 1. HEMANT KUMAR SINGH PCSA-1393
Sector-37, Gurgaon-122001 59, Nehru Street
Western Region Main Road, Maujpur
Positive Packaging Industries Limited 15 Months 3500 New Delhi-110053
98, Jolly Maker Chambers No. 2 Training 2. AMIT KUMAR PCSA-1394
225, Nariman Point 72, Pocket-7, Sector-12
Mumbai-400021 Dwarka, New Delhi-110075
Reliance Securities Limited 15 and 03 Suitable 3. PRAVEEN BAZARI PCSA-1395
6th Floor, Nagin Mahal Months 410, Kashi Market
82, Veer Nariman Road Practical Opp. Hari Om Market
Churchgate, Mumbai-400020 Training Ring Road, Surat-395002
R.R. Ispat Limited 15 Months Suitable 4. MOHAN S RAO PCSA-1396
490/1, Urla Industrial Area Training 2-2-185/56/C3 (MCH No. 1089)
Raipur-493221 103, Satya Sai Apartments
(C.G.) Bagh Amberpet, Hyderabad-500013

Student Company Secretary 43 October 2006

 NEWS AND ANNOUNCEMENTS
ICSI-MOTHER TERESA INSTITUTE OF MANAGEMENT AND VOCATIONAL STUDIES
NEWS AND ANNOUNCEMENTS ORAL TUITION CENTRE
ORAL COACHING CLASSES FOR INTERMEDIATE
EASTERN INDIA REGIONAL COUNCIL GROUPS I & II* JUNE 2007 SESSION
ORAL COACHING CLASSES FOR FOUNDATION Oral Coaching classes for Intermediate Groups I & II* are
COURSE NOVEMBER, 2006 BATCH likely to commence from 16.11.2006. Course Fee :Rs. 3500/-
Starting From 15th November, 2006 (Per Group of Intermediate). Timings: 5.00 to 7.00 P.M. (Monday
Fees: Rs. 2600/- For Entire Duration of 5 Months to Saturday). Registration open on all working days between
Timing : 01.00 PM to 04.00 PM [3 Hours Classes] 9.30 A.M. and 6.00 P.M.
Number of Classes 200 of 1 Hours each Admission on first-come-first-served basis. For further details,
Classes to Be held at : "ICSI-EIRC Building" 3, Ahiripukar contact : J.K. Chawla/Vinay Gupta
1st Lane, Near Beckbagan Nursing Home, Kolkata-700019
Other Features : J Expert Faculty, Well furnished modern AC Mother Teresa Institute of Management
Class Room, Modular Desk, White Board, Projector, etc. & Vocational Studies
Periodical Tests and Issue of coaching Completion C-Block, Preet Vihar, Delhi-110092
Certificates. J Classes 5 days a week. J Admission on first- Phones : 22057200, 42420552, 42420553
come-first-served basis. J limited seats. Fax : 22509200 Email : mtim@vsnl.net
For further details contact : The Executive Officer, EIRC of (* Provided sufficient number of students are registered for Group II)
the ICSI at the above address. Phone : 22816542, 22832973,
(M) 9231977255 and (M) 9231972411 SOUTHERN INDIA REGIONAL COUNCIL
ORAL COACHING CLASSES-INTERMEDIATE/FINAL-
NORTHERN INDIA REGIONAL COUNCIL JUNE 2007 EXAMINATIONS
ORAL COACHING SCHEDULE FOR JUNE 2007 State Date of Timing Fees Last date for
EXAMINATIONS commence- receipt of
Date of Commencement of Classes : 25th October 2006 ment application
Venue: NIRC-ICSI, Prasad Nagar, New Delhi Intermediate 08.01.2007 6.30 A.M. Rs. 3350/- 02.01.2007
FINAL Group-I to per group
(Morning) 8.30 A.M.
Group Timings No.of Fees Days
Lectures Intermediate 08.01.2007 6.00 P.M. Rs. 3350/- 02.01.2007
Group-II to per group
Gr. I 7.30 12 Noon 90 Rs.4,000 Mon/Wed/Fri (Evening) 8.00 P.M.
Gr. II 4.00 8.00 P.M 100 Rs.4,300 Tue/Thu/Sat Final 05.03.2007 6.30 A.M. Rs. 3350/- 26.02.2007
Gr. III 7.30 12 Noon 115 Rs.5,000 Tue/Thu/Sat Group-I to per group
(Morning) 8.30 A.M.
INTERMEDIATE
Final 05.03.2007 6.00 P.M. Rs. 3350/- 26.02.2007
Group Timings No.of Fees Days
Group-III to per group
Lectures
(Evening) 8.00 P.M.
Gr. I 7.309.30 A.M. 135 Rs.4,000 Daily one lecture
For further details please contact:
Gr. I 10.002.30 P.M 135 Rs.4,000 Daily two lectures SIRO of the ICSI, New No. 9, Wheat Crofts Road,
Gr. I 3.00 7.00 P.M 135 Rs.4,000 Daily two lectures Nungambakkam, Channai-600034
Phone : (044) 28279898; 28268685
Gr. II 7.309.30 A.M 125 Rs.3,500 Daily one lecture e-mail: siro@icsi.edu; icsisirc@md3.vsnl.net.in
Gr. II 10.00 2.30 P.M 125 Rs.3,500 Daily two lectures
Gr. II 3.00 7.00 P.M 125 Rs.3,500 Daily two lectures
MODEL EXAMINATIONS-INTERMEDIATE/FINAL
FOR DECEMBER 2006 EXAMINATIONS
FOUNDATION
The SIRC of the ICSI is organazing model examination for
Timings No.of Fees Days December 2006 examinations for Intermediate and Final from
Lectures 26th November 2006 to 4th December 2006.
7.30 12 Noon 150 lectures Rs.3,500 Daily two lectures Timing : 10.00 A.M. to 1.00 P.M.
10.00 2.30 P.M 150 lectures Rs.3,500 Daily two lectures Model Examinations will be an exercise to the students to
confidently face the Institute's main examination. The Model
3.00 7.00 P.M 150 lectures Rs.3,500 Daily two lectures Examination fee is Rs. 200/- per group. Payment can be made
Note : Each lecture is of two hours duration. - Admission is by way of cash or Demand Draft favouring SIRC of the ICSI,
on first- come - first served basis. - Commencement of classes payable at Chennai. The last date for Registration is November
is subject to availability of sufficient number of students in each 20, 2006.
batch. -The students undergoing Oral Coaching and passing Interested Students may contact:
the required Eligibility Tests need not to submit the Response SIRC of the ICSI
Sheets under Postal Tuition Scheme. For further details contact at New No. 9, Wheat Crofts Road,
NIRC of the ICSI, Prasad Nagar, New Delhi. Phones : 25769352; Nungambakkam, Chennai-600034.
25763090, 25767190 Fax : 011-25722662 E-mail : niro@icsi.edu; Phone : (044) 28279898; 28268685
icsi@eth.net e-mail: siro@icsi.edu; icsisirc@md3.vsnl.net.in

Student Company Secretary 44 October 2006

Student Company Secretary 45 October 2006
 COMPULSORY SWITCHOVER TO NEW SYLLABUS - FINAL COURSE
1. All students are required to appear in the Final Examination under the New Syllabus only.
2. Their Student Registration Code Nos. have also been changed from CG/EG/NG/SGIWG to CR/ER/NR/SR/WR and the identity cards
already issued to them will hold good under the new syllabus as well.
3. With a view to mitigate the hardship to the students who have already passed any one Group of the Final Examination under the Old
Syllabus that they will have to appear in more number of papers on switch over to the New Syllabus, the Council reconsidered and
decided that a candidate at the Final Level shall be exempted on the basis of having passed/secured exemption in papers under the
syllabus specified in Part - III of Schedule CCA on switch over to the new syllabus specified in Part - III of Schedule CCB and the
following scheme of exemption shall be applicable to him:
Papers passed/exempted under the syllabus specified Exemption from papers under the syllabus specified
in Part - III of Schedule CCA in Part-III of Schedule CCB
1 Financial Management Financial, Treasury & Forex Management
2 Management Control and Information Human Resource Management and Industrial Relations
3 Corporate Tax Management - Direct Taxes Direct & Indirect Taxation - Law & Practice
4 Corporate Tax Management - Indirect Taxes Banking & Insurance-Law & Practice
5 Corporate Laws & Practice - I Advanced Company Law & Practice
6 Corporate Laws & Practice - II Corporate Restructuring -Law & Practice
7 Corporate Laws & Practice - III Secretarial Practice relating to Economic Laws and
Drafting and Conveyancing
8 Secretarial and Management Audit Secretarial, Management & System Audit
4. As per the revised scheme of exemptions approved as above, a student who has passed Group I or Group - II of the Final Examination
under the Old Syllabus comprising of four papers will be exempted from the four papers under the New Syllabus and shall be required
to appear in the remaining papers as per the following details:
TABLE OF CORRESPONDING EXEMPTIONS (FINAL)
Particulars of the Group Passed under Papers in which the student shall be Remaining Papers in which student will
Old Syllabus entitled for the Exemption under the be required to appear under the New
New Syllabus (as per revised scheme) Syllabus (as per revised scheme)
Group-I Group-II Group-I
1. Financial Management 1. Financial Treasury & Forex Management 1. Advanced Company Law & Practice
2. Management Control & Information 2. Banking & Insurance Law and Practice 2. Secretarial Practice relating to
3. Corporate Tax Management Group-III Economic Laws and Drafting &
Direct Taxes 1. Direct & Indirect Taxation Conveyancing
4. Corporate Tax Management Law & Practice 3. Secretarial Management & Systems
Indirect Taxes 2. Human Resource Management Audit
and Industrial Relations Group-II
1. Corporate Restructuring
Law & Practice
Group-III
1. WTO-International Trade, Joint Ventures
& Foreign Collaborations
Group-II Group-I Group-II
1. Corporate Laws & Practice-I 1. Advanced Company Law & Practice 1. Financial, Treasury and Forex
2. Corporate Laws & Practice-II 2. Secretarial Practice relating to Economic Management
3. Corporate Laws & Practice-III Laws and Drafting & Conveyancing 2. Banking & InsuranceLaw & Practice
4. Secretarial & Management Audit 3. Secretarial Management & Systems Audit
Group-II Group-III
1. Corporate Restructuring 1. WTO-International Trade, Joint
Law & Practice Ventures & Foreign Collaborations
2. Direct and Indirect Taxation
Law & Practice
3. Human Resource Management
and Industrial Relations
5. Students who have completed coaching for both groups of the Final Course under the Old Syllabus will be exempted from undergoing
coaching in all the three groups under the New Syllabus. However, students who have completed coaching in a single group/subject(s)
will also be eligible for the corresponding exemption as per table given under para (3) above.
6. All the students of Final Old Syllabus (Under the Compulsory Switchover Category) will be enrolled for December 2006 session of
Examination as per the above guidelines. The paper wise exemption(s) will be printed & mentioned on the Admit Card as well as in the
Attendance Sheet. In case of any discrepancy, the same may be brought to the notice of the Institute immediately or may contact Sohan
Lal, Joint Director or T.P. Balasubramanian, Administrative Officer on Tele No. 41504444 Extn. 511/515.

Student Company Secretary 46 October 2006

 Advertisement Tariff
(With Effect From 1.9.2006)
Back Cover Cover III
Non-Appointment Appointment Non-Appointment Appointment
Rs. Rs. Rs. Rs.
Per Insertion 18,000 7,000 Per Insertion 14,000 6,000
4 Insertions 64,800 25,200 4 Insertions 50,400 21,600
6 Insertions 95,040 36,960 6 Insertions 73,920 31,680
12 Insertions 1,83,600 71,400 12 Insertions 1,42,800 61,200

Full Page Half Page

Non-Appointment Appointment Non-Appointment Appointment
Rs. Rs. Rs. Rs.
Per Insertion 12,000 4,500 Per Insertion 7,000 2,500
4 Insertions 43,200 16,200 4 Insertions 25,200 9,000
6 Insertions 63,360 23,760 6 Insertions 36,960 13,200
12 Insertions 1,22,400 45,900 12 Insertions 71,400 25,500

Panel (Qtr. Page) Extra Box No. Charges

Per Insertion 5,000 1,500 For 'Situation Wanted' ads 25/-
(Subject to availability of Space)
For Others 50/-
Classified Ads 120/- Per 35/- per
col. line Col. line l The Institute reserves the right not to accept order
for any particular advertisement.
Mechanical Data l The Bulletin is published in the 3rd week of every
month and the advertisement material should be
Full page 18 5 24 cm
sent in the form of typed manuscript, art pull or in
Half Page 9 5 24 cm or 18 5 12 cm CD (open file) before 10th of any month for inclusion
in the same month's issue.
Quarter page 9 5 12 cm

FOR FURTHER INFORMATION WRITE TO:

THE EDITOR
STUDENT COMPANY SECRETARY

ICSI House, 22 Institutional Area, Lodi Road, New Delhi-110 003

Ph. : 41504444, 24617321-24 and 24644431-32
Fax : 91-11-24626727 E-mail : info@icsi.edu

Student Company Secretary 47 October 2006