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Thursday, 23 February 2012

The Foreign Exchange Management Act (FEMA), 1999

The Foreign Exchange Management Act (FEMA), 1999

authorised in this behalf by the Central Government in such manner as may be prescribed. However, no contravention shall be compounded unless the amount involved in such contravention is quantifiable. Where a contravention has been compounded, no proceeding can continue or be initiated against the person in respect of the contravention so compounded.

Q28. Mr. G., an Indian national desires to obtain Foreign Exchange on current account transactions for the following purposes:
(i) Payment of commission on exports made towards equity investment in wholly
owned subsidiary abroad of an Indian company.
(ii) Remittance of hiring charges of transponder. (iii) Remittance for use of trade mark in India.
Advise G whether he can obtain Foreign Exchange and, if so, under what
conditions? fC.A. (Final) Nov. 2001J
.9Lns. Under Section 5 of the Foreign Exchange Management Act, 1999, certain Rules have been framed for drawal of foreign exchange on current account. According to the said rules, drawal of foreign exchange for certain transactions is prohibited. In respect of certain transactions drawal of foreign exchange is permissible with the prior approval of the Central Government. In respect of some of the transactions, prior permission of RBI is necessary for drawal of foreign exchange.
(i) In respect of item No.1, Le., payment of commission on exports made towards equity investment in wholly owned subsidiary abroad of an Indian company is prohibited.
(m Orawal of foreign exchange for remittance of hiring charges of transponder,
can be made with the prior approval of the Central Government.
(iii) So far as remittance for use of Trade Mark in India is concerned, the necessary
foreign exchange can be obtained with the prior permission of the Reserve
Bank of India.
In the case of (ii) and (iii) above, approval of concerned authority is not required if the payment is made out of funds held in Resident Foreign Currency (RFC) Account or Exchange Earner's Foreign Currency (EEFC) Account of the remitter. Alternatively, foreign exchange can be drawn from an authorised person.


The ,Securities and ExchaI.ge Board of India (SEBI) Act, 1992

The ,Securities and ExchaI).ge Board of India (SEBI) Act, 1992

17. What is the specific advantage of Book-building process in connection with issue of securities by a company? State the guidelines issued by SEBI in this regard in respect of the following matters:
(i) Deteqnination of issue price and that of successful bidders. (ii) Reservation for individual investors who have not participated in the
bidding process and basis of allotment to such investors.
[May, 2000]
18. What are the Securities and Exchange Board of India's important guidelines
regarding pricing of first issue of equity shares of new companies?
[November, 2000]
19. What provision has been made under Section 15G of the SEBI Act, 1992, in
connection with penalty for insider trading? [November, 2000]
20. State, what is Employees Stock Option Scheme. Are promoters and the part-time
directors entitled to receive securities under the Scheme? Give Reasons.


Corporate Laws & Secretarial Practice

two Directors one of whom must be the Managing Di~ttor, if there is one. However, in case there is only one Director present for the time-being in India, he can sign the Board's Report provided he attaches a statement explaining the reason as to why it

cou~not be signed by at least two Directors.
A 12. The company of which you are the Secretary has adopted the calendar year
as its accounting year. Annual general meetings are usually held in the month of June
'-" each year. This year the audit of accounts has not been completed. Your Directors intend to hold the annual general meeting in the month of June, as usual, to transact the business other than the consideration of the accounts and to adjourn the meeting to a later date for the purpose of adoption of the an[lual accounts. They ask you whether this would be in order. State your views.
5tns. In case annual accounts are not ready for laying at the appropriate annual general m~ting, it is open to the company concerned to adjourn the said annual general meeting to a subsequent date when the annual accounts are expected to be ready for laying. Since consideration of accounts is only one of the matters to be dealt with at an AGM, Directors are under a statutory obligation to hold the meeting. The proper cour~shall ~ t Department of Company Affirirs communique dt, 2nd Feb, 1974). - --
The adjourned meeting must, however, be held within the maximum time limit allowed under Section 166 [Subal Dutta & Sons Pvt. Ltd. V s. Asstt. Registrar of Companies
W.B. (1986)].
~ \
Q: '13. Discuss the provisions of the Companies Act relating to determination of net
pr6fits. .
5tns. The Companies Act provides that 'Net Profit' for the purposes of calculating managerial remuneration shall be computed in accordance with the provisions of Sees. 349 and 350 of the Act.
The provisions of the above Sections require that in computing net profits of a company in any financial year for the purpose of calculating managerial remuneration, the following points should be considered:

1. Credit shall be Given for
Bounties and subsidies received from any Government or any public authority constituted or authorised in this behalfby the Government unless the Central Government otherwise directs.

2. Credit Shall Not be Given for the Following
(a) profits, by way of premium, on shares or debentures of the company which
are issued or sold by the company;
(b) profit on sales by the company of forfeited shares;
(c) profits of capital nature including profits from the sale of the undertaking or
any of the undertakings of the company, or any part thereof; and
(d) profits from the sale of any immovable property or fixed assets of a capital


Report of Board of Directors

Coroorate Laws & Secretarial Practice

(a) a copy of the balance sheet of the subsidiary;
(b) a copy of its Directors' report;
(c) a copy of its profit and loss account;
(d) a copy of its Auditor's report;
(e) a statement containing the following particulars:
(i) extent of holding company's interest in the subsidiary at the end of last
financial year; and "
(ii) the net aggregate amount of profits and losses of the subsidiary, whether
dealt with or not in the holding company's accounts;
if) a statement containing the following:
(i) details of any change in holding company's interest in the subsidiary
between the end of financial year of the subsidiary company and the end
of the financial year of holding company, and
(ii) details of any material changes since last financial year in respect of:
. the subsidiary's fixed assets,
. its investments,
. the moneys lent by it, and
. the moneys borrowed by it for every purpose other than that of
meeting current liabilities;
(g) where Directors of the holding company are unable to obtain"the necessary
information for any of the matters required to be specified by sub-section (4),
then a report in writing to that effect should be attached.
Where the financial year of the subsidiary company does not coincide with that of the holding company, the financial year of the subsidiary shall not end on a day which precedes the day on which the holding company's financial year ends by more than six months.
The documents referred to in (e), if), (g) above shall be signed by the persons by
whom the balance sheet of the holding company is required to be signed.
Q 10. "There shall be attached to every balance sheet laid before a company in general meeting a report by its Board of Directors." What are the matters which are required by law to be mentioned in the Director's Report?
As a Secretary of a public limited company, what methods would you include while preparing a report on behalf of the Board of Directors of your company, to be attached to the Balance Sheet of the company so that the report meets the disclosure require
ments as required under the Companies Act, 1956? [CA. (Final) May, 1996]

Yl.ns .

Report of Board of Directors
Section 217 provides that there shall be attached to every balance sheet laid before a company in a general meeting (in practice, the annual general meeting), a report by its Board of Directors, with respect to :
(a) the state of the company's affairs;
(b) the amounts, if any, which it proposes to carry to any reserves in such balance


Sunday, 19 February 2012



Saturday, 4 February 2012

What is mutual funds

MUTUAL FUNDS: It means "collects the savings from small
investors and invest them according to certain investment


Classification of Errors as per Accounting

Error of ommission 
Error of commission 
Error of dulplication
Error of principle


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