DATE FOR DETERMINING ''FAIR MARKET VALUE'' FOR FURTHER ISSUANCE OF SHARES

 DATE FOR DETERMINING ''FAIR MARKET VALUE'' FOR FURTHER ISSUANCE OF SHARES

VIOLATION OF RULE 14 OF THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014.

IN THE MATTER OF ROC, CHENNAI VS M/S VALUEPLUS TECHNOLOGIES PRIVATE LIMITED

Relevant Date for determining ''Fair Market Value'' of shares of the Company, as per the Valuation Report obtained from Registered Valuer, must be at least 30 days prior to the date of the General Meeting approving the issuance of equity shares.

However, the Company failed to do so, result in a violation of Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

Failure to file Valuation Report within 30 days from date of EGM resulted in ROC Chennai imposing a penalty of ₹15,000 on the company and its directors.

# R V SECKAR, FCS, LLB 79047 19295,

DIRECTOR'S REMOVAL WITHOUT MANDATORY SPECIAL NOTICE VIOLATES COMPANIES ACT

DIRECTOR'S REMOVAL WITHOUT MANDATORY SPECIAL NOTICE VIOLATES COMPANIES ACT

SH-4, THE SECURITIES TRANSFER FORM, WAS EXECUTED AND BORE THE PETITIONER'S SIGNATURE ON A DATE IN WHICH PETITIONER WAS NOT IN INDIA.

NCLT NEW DELHI FOR SUBH GUATAM  VS KREZON SPECIALTIES PRIVATE LIMITED

FACTS OF THE CASE

The petitioner, Shubh Gautam, challenged his removal as a director of Krezon Specialities Private Limited and questioned the validity of the transfer of his shares.

THE PRINCIPAL ALLEGATIONS WERE:

1.  ILLEGAL REMOVAL OF A DIRECTOR:

The company failed to establish that the petitioner had been served the requisite notice for the Extraordinary General Meeting (EGM) at which he was removed.

2.  QUESTIONABLE SHARE TRANSFER:

The petitioner disputed the execution and validity of the share transfer documents.

3.  DISPUTED FORM SH-4:

The securities transfer form was dated 5 August 2017 and purportedly carried the petitioner's signature.

4.  PETITIONER WAS OUTSIDE INDIA:

The petitioner produced flight tickets and immigration stamps establishing that he was outside India from 25 July 2017 to 6 August 2017.

Consequently, the Tribunal found that the petitioner could not have executed Form SH-4 in India on 5 August 2017, as alleged.

KEY FINDINGS OF NCLT

A. REMOVAL OF DIRECTOR WITHOUT SPECIAL NOTICE

The Tribunal held that Section 169 of the Companies Act, 2013 makes special notice mandatory for a resolution seeking removal of a director.

The company failed to produce evidence establishing that the petitioner had been duly served notice of the EGM.

The Tribunal therefore held that the removal was unlawful.

B. INVALIDITY OF SHARE TRANSFER

The Tribunal examined Form SH-4 and the supporting travel and immigration records.

The date of execution of Form SH-4 was 5 August 2017, whereas the petitioner's documentary evidence established that he was outside India on that date.

The Tribunal also considered the statutory requirements governing share transfers and the company's Articles of Association.

NCLT REFERRED SUPREME COURT VERDICT

The Tribunal also referred to the Supreme Court's decision in John Tinson & Co. Pvt. Ltd. & Ors. v. Mrs. Surjeet Malhan & Anr., (1997) 9 SCC 651, which held that the transfer of shares in a private limited company requires the prior sanction of its directors.

KEY TAKEAWAY

The case highlights two fundamental principles of corporate governance:

First: Procedural compliance under Section 169 is not a mere formality. It is a statutory safeguard against arbitrary removal of directors.

Second: The integrity of the register of members depends upon the authenticity of share transfer instruments. A company cannot disregard credible documentary evidence that puts the execution of a transfer instrument in doubt.

A Board resolution cannot override mandatory statutory safeguards under the Companies Act, 2013.

# R V SECKAR, FCS, LLB 79047 19295,

RBI EASES FOREX REPORTING RULES FOR SMALL SERVICE EXPORTERS & IMPORTERS

 RBI EASES FOREX REPORTING RULES FOR SMALL SERVICE EXPORTERS & IMPORTERS

KEY REGULATORY CHANGES:

1. Resident individual service exporters: EDF deemed filed upon submission of payment-credit information to the authorised dealer bank.

2. Other service exporters: Simplified EDF treatment for inward remittances up to ₹10 lakh per service.

3. Service imports: IDPMS reporting applies only to non-individual resident importers where invoice/contract value exceeds ₹10 lakh.

4. Bank reporting timeline: Five working days after receipt of relevant information.

Regulatory reference: FEMA (Export and Import of Goods and Services) (Second Amendment) Regulations, 2026.

# R V SECKAR, FCS, LLB 79047 19295

OLD TDS DEFAULTS CAN NOW FREEZ YOUR BANK ACCOUNT!

 OLD TDS DEFAULTS CAN NOW FREEZ YOUR BANK ACCOUNT!

A historical TDS default can trigger direct recovery action against your bank account under Section 416(5) of the Income-tax Act, 2025.

This is a serious development for companies, directors, CFOs and tax professionals.

The Income Tax Department can issue a written notice directly to a bank holding money on behalf of an assessee, requiring it to remit money towards outstanding tax arrears.

WHY SHOULD COMPANIES BE CONCERNED?

1️ BANK ACCOUNTS EXPOSED TO RECOVERY PROCEEDINGS

The Department can invoke the garnishee mechanism and direct the bank to remit amounts towards outstanding tax arrears. This can disrupt salaries, vendor payments and working capital.

2️ HISTORICAL DEFAULTS CAN CREATE CONTINUING COMPLIANCE PROBLEMS

Unresolved TDS defaults may prevent proper reconciliation and correction of earlier statements, increasing the risk of further demands.

3️ TDS CORRECTION DEADLINES HAVE BECOME CRITICAL

Section 397(3)(f) of the Income-tax Act, 2025 prescribes a two-year correction window.

The Income Tax Department has specifically advised that correction statements for:

FY 2018–19: Quarter 4

FY 2019–20 to FY 2022–23: All quarters

FY 2023–24: Quarters 1 to 3

were to be filed by 31 March 2026.

These specified periods are now time-barred for ordinary correction statement filing.

4️ DOCUMENTARY EVIDENCE BECOMES CRUCIAL

For historical demands, companies should preserve:

·       TDS challan and payment proofs.

·       Vendor confirmations and declarations.

·       PAN and transaction records.

·       Evidence that the recipient/payee has paid the applicable tax, wherever relevant.

5️ INTEREST CAN SUBSTANTIALLY INCREASE THE LIABILITY

Under Section 411(3), interest at 1% per month or part thereof may apply to unpaid demand amounts.

Section 411(7) provides a mechanism to seek reduction or waiver of interest, subject to prescribed conditions, including genuine hardship and circumstances beyond the assessee's control.

WHAT SHOULD COMPANIES DO IMMEDIATELY?

✅ Download year-wise TDS defaults from TRACES.

✅ Reconcile Form 26AS, challans and TDS returns.

✅ Identify short deduction, short payment and interest defaults.

✅ Obtain documentary evidence for disputed historical demands.

✅ Pay admitted liabilities and examine eligibility for interest waiver.

✅ If a bank attachment notice is received, immediately obtain the notice and verify the demand with the jurisdictional officer.

✅ Where an appeal has been filed, seek appropriate protection under Section 411(12), which permits the Assessing Officer, at their discretion, to treat the assessee as not being in default in respect of the disputed amount.

CORPORATE GOVERNANCE TAKEAWAY

TDS compliance is no longer merely a quarterly filing obligation.

It is a matter of financial discipline, internal controls, treasury management and board-level oversight.

An old TDS default can become a present-day cash-flow crisis. Prevention, reconciliation and documentary evidence are essential.

# R V SECKAR, FCS, LLB, 79047 19295

#RBI DELEGATES FEMA COMPOUNDING POWERS TO REGIONAL OFFICES OF RBI ,

 #RBI DELEGATES FEMA COMPOUNDING POWERS TO REGIONAL OFFICES OF RBI ,

Compounding applications for Overseas Investment, Borrowing and Lending, and Guarantees were earlier received at RBI's Central Office.

These powers have now been delegated to select Regional Offices of RBI.

#A.P. (DIR SERIES) CIRCULAR 28/2026-27, 23 OCTOBER 2026),

#R V SEKAR FCS, LLB 79047 19295,

#PC JEWELLER SHARES DECLINE OVER 4% AFTER SEBI FLAGS FAILURE TO MAINTAIN A STRUCTURED DIGITAL DATABASE FOR UNPUBLISHED PRICE-SENSITIVE INFORMATION,

 #PC JEWELLER SHARES DECLINE OVER 4% AFTER SEBI FLAGS FAILURE TO MAINTAIN A STRUCTURED DIGITAL DATABASE FOR UNPUBLISHED PRICE-SENSITIVE INFORMATION,

PC Jeweller Ltd acknowledged the lapse but stated that its trading window remained closed for designated persons and their immediate relatives during the relevant period.

The company also clarified that the warnings carry no financial penalty and will not affect its financial position or operations.

#R V SEKAR FCS, LLB 79047 19295,

 

IL&FS SEEKS RECOVERY OF ₹185.88 CRORE FROM 23 FORMER DIRECTORS – A MAJOR CORPORATE GOVERNANCE TEST FOR INDEPENDENT DIRECTORS

 IL&FS SEEKS RECOVERY OF ₹185.88 CRORE FROM 23 FORMER DIRECTORS – A MAJOR CORPORATE GOVERNANCE TEST FOR INDEPENDENT DIRECTORS

IL&FS KNOCKS NCLT TO RECOVER RS 185 CRORE EXCESS #REMUNERATION PAID TO 23 ERSTWHILE (IL&FS, IFIN, AND ITNL) DIRECTORS , MANAGERS & INDEPENDENT DIRECTORS.

LOSSES DUE TO RECASTED ACCOUNTS

This has been exposed after the recasted accounts of these companies (FY13-18) unveiled significant losses in its financials as compared to profits recorded earlier.

MANAGERIAL REMUNERATION RECOVERY UNDER SECTION 199 OF THE COMPANIES ACT

IL&FS said #recovery from managing directors, whole-time directors, managers and CEOs is being pursued under Section 199 of the Companies Act,

RECASTING OF ACCOUNTS

Section 199 of CA authorizes the recovery of excess remuneration paid to managerial personnel when a company is forced to restate its financial statements.

RECOVERY FROM INDEPENDENT DIRECTORS

Section 197(9) obligates "any director", including non-executive and independent directors, to refund sums drawn beyond prescribed limits.

APPLICATION TO NCLT MUMBAI

In an application filed before the Mumbai Bench of the NCLT, IL&FS has sought directions to its former directors and two key subsidiaries, IL&FS Financial Services (IFIN) and IL&FS Transportation Networks (ITNL), to return the excess remuneration.

RECASTED ACCOUNTS SHOWS A CUMULATIVE LOSS OF Rs 9,415.24 crore.

The recast accounts showed that IL&FS actually had a cumulative loss of Rs 9,415.24 crore from FY14 to FY18 against a reported profit of Rs 1,865.73 crores.

MCA DIRECTION

The Ministry of Corporate Affairs had directed IL&FS to recover the excess remuneration paid, following which IL&FS had issued notices to all 23 erstwhile directors.

RETALIATION BY IL&FS FORMER DIRECTORS

The former directors have disputed the notices on grounds including that the recast financials cannot retrospectively invalidate pay approved under duly audited original accounts, that the recast accounts are not audited statements and that the notices are vague because amounts differed between the first and later notices.

MAIN QUESTION

SHOULD IL&FS DIRECTORS, MANAGERS & INDEPENDENT DIRECTORS BE REQUIRED TO REFUND RS 185 CRORE EXCESS REMUNERATION WHEN PROFITS ON WHICH THEIR REMUNERATION WAS CALCULATED ARE SUBSEQUENTLY REVERSED THROUGH LEGALLY APPROVED RESTATEMENT OF FINANCIAL STATEMENTS?

CONCLUSION

The IL&FS case could become an important test of Sections 197 and 199 of the Companies Act, 2013, particularly concerning the recovery of excess remuneration from former independent directors. It sends a strong message that boardroom accountability must be substantive, not merely procedural.

#R V SEKAR FCS, LLB 79047 19295,