Market regulator Securities and Exchange Board of India (SEBI) has imposed a Rs 1,000 crore penalty on Reliance Industries, the largest penalty in SEBI’s over 20 year history.

Market regulator Securities and Exchange Board of India (SEBI) has imposed a Rs 1,000 crore penalty on Reliance Industries, the largest penalty in SEBI’s over 20 year history.

In a case dating back to 2007, SEBI has found Reliance Industries and 12 related entities guilty of fraudulent and manipulative trades.

The SEBI order, published on its website on March 24, 2017, says Reliance Industries and the 12 other entities violated provisions of Section 12A of the SEBI Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the securities market) Regulations, 2003.

The regulator has prohibited the 13 entities, including Reliance Industries, “from dealing in equity derivatives in the F&O segment of the stock exchange, directly or indirectly for a period of one year”, from the date of the order.

The regulator has also directed Reliance Industries to, “to disgorge an amount of Rs 447.27 crore...along with interest calculated at the rate of 12 percent per annum from November 29, 2007 onwards, till the date of payment”. BloombergQuint calculated the interest amount to be approximately Rs 500 crore as of date.

Reliance Industries has 45 days to make the payment.

BloombergQuint has not yet been able to reach the company for a comment on the order, or on whether it intends to appeal it in the Securities Appellate Tribunal.

Courtesy -BloombergQuint 

Misconduct on the part of chartered accountants- nclt refers the case to the institute of chartered accountants for investigation.

Misconduct on the part of chartered accountants- nclt refers the case to the institute of chartered accountants for investigation.

East India Investments Holdings PTE Ltd v Mr Sudhindran Parikkal & Mr Chockalingam – NCLT Chennai bench

It was alleged by the petitioner that Respondents are being chartered accountants who certified the company documents such as DIR-12 , INC-22 without proper verification and without following the procedures laid down in the declaration contained in the certificates.

It was contended by the petitioners that the practising professionals colluded with company and certified the documents with the mala fide intentions mainly for promoting personal gain and with an intention to defraud.

The petitioner considered the erred chartered accountants and included them in the petition and prayed for a direction to the Institute of Chartered Accountants of India to initiate disciplinary action against the erred professionals.

The chartered accountants averred their innocence and claimed immunity against false allegation as they certified the documents on the basis of the information provided by the company officials.

The petitioner argued that if such kind of misconduct is not taken note of , then , the same is likely to encourage other such chartered accountants to follow suit where the reputation of Chartered Accountants Institute will be finally in peril.

In this case , the NCLT referred the allegations on the chartered accountants involved and directed the Institute of Chartered Accountants of India to initiate the investigation of professional and other misconduct .

The above case is an eye opener to all the professionals who are certifying the forms for MCA to show utmost care and diligence and check for all the information needed before certifying forms for filing with the ROC.

If Notice of the Board Meeting is not served to a director , then it tantamount to oppression of the minority director at the hands of majority director – Says NCLT Delhi Bench.

If Notice of the Board Meeting is not served to a director , then it tantamount to oppression of the minority director at the hands of majority directors – Says NCLT Delhi Bench.

In the matter of Mr.Daya Kishan & Ors v. Mr Dinesh International Ltd & Ors - NCLT - New Delhi- Bench III

Delhi Bench of NCLT ordered that Petitioner suffered oppression at the hands the Respondents for non-compliance of statutory requirements.

Facts of the Case:

It was alleged by the Petitioner that there was an abuse of Section 286 of the Companies Act, 1956 and Articles of Association (‘AOA’) of the Company on the footing of non-receipts of notice of Board Meetings which resulted in the  oppression  of the minority director and subsequently decision was in the EoGM to increase the share capital through allotment of shares which lead to the lessening of Petitioner’s percentage of equity shareholding of the company for which no advance notice was not served on the Petitioner.

 NCLT pronounced  that though Respondent Company was a closely held company consisting of family members however even as a matter of practice, company should have given at least oral information regarding convening of the Board Meeting when a association is at its low ebb. In such scenario, parties should confirm adherence not only according to the Company law but also in harmony with the AOA.

DECISION OF THE NCLT

NCLT accepted the Petitioner’s plea that no board meeting was really convened and the minutes recorded/ resolution passed were subsequently fictitious. NCLT held that transfer of assets of a corporate body to another group entity was wholly unfounded and mysterious even if there was partnership account of both parties.

NCLT further observed that  that the transfer of the Company’s documents and records from its registered office was not only against the legal obligation but also was kept out of Petitioner’s access thus holds that Respondent was clearly divesting the Petitioner of his privilege as a Director in the Company thereby tumbling it to a “zero”. Therefore, NCLT , Delhi Bench cancelled the resolutions passed / decision taken in the Board Meetings and EoGM.

NCLT ORDERS TO PAY A COMPOUNDING FEE OF Rs 2,00,000 BY M/s MVM Metal and Alloys Pvt Ltd FOR FILING OF ILLEGIBLE ACCOUNTS WITH THE ROC

NCLT ORDERS TO PAY A COMPOUNDING FEE OF Rs 2,00,000 BY M/s MVM Metal and Alloys Pvt Ltd FOR FILING OF ILLEGIBLE ACCOUNTS WITH THE ROC

⁠⁠⁠ Case: M/s MVM Metal and Alloys Pvt Ltd

Company filed financial statements for 2011-12 which were not legible, NCLT compounded the offence on payment of fine of Rs. 50,000 each on the Directors and on the Company totalling Rs. 2,00,000.

Facts: The attached financials which were filed by the Company for the Financial Year 2011-12 in e form were not legible and therefore were not accepted by the ROC and hence the same were not taken on record, thus attracted the violation of Section 162 of the Companies Act, 1956.

Thereafter, the Directors of the Company filed the same in year 2013 and the ROC took the date of filing the hard copy as the date of Compliance and accordingly the Compounding fees was recommended by the ROC to NCLT for the levy of Compounding Fees up to the date of filing of filing of those Financials.

What the Company Act 1956 Says

 Section 162 of the Companies Act, 1956 says: If a company fails to comply with any of the provisions contained in section 159, 160 or 161, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to Rs. 500 for every day during which the default continues.

NCLT is more powerful than CLB

It is time for the company secretaries in employment to know that Registrar is having more power under Companies Act ,2013 and ROC is now initiating those company’s which are not adhering the CA 2013 provisions in letter and spirit. Now , to safeguard the directors of the company for having committed an offence under CA 2013 and paying a compounding fee , Company secretaries are to be more vigil to see that annexures to accounts are legible and readable  which is filed with the Registrar of Companies. 

Courtesy : CS Amerendra  

M/s CARMEL ASIA HOLDINGS PRIVATE LIMITED WAS ASKED TO PAY A COMPOUNDING FINE OF Rs 4,72,675 for Not Appointing Company Secretary

M/s CARMEL ASIA HOLDINGS PRIVATE LIMITED WAS ASKED TO PAY A COMPOUNDING FINE OF Rs 4,72,675 for Not Appointing Company Secretary

Bangalore NCLT has made remarkable verdict where it ordered to pay a compounding fee of Rs 4,72,675 for Not Appointing Company Secretary .

The Company approached the erstwhile CLB and the present NCLT , Bangalore to compound the offence committed by it under section 383A for not appointing company secretary under section 383 A of the Companies Act ,1956. (Section 203 of Companies Act 2013)

It was argued by the petitioner company that even though it had appointed many company secretaries , they left the company in search of green pastures.

The Practicing Company secretary of the Company has informed the NCLT that the petitioner company is a subsidiary of M/s Sandur Power Company Limited and did not have adequate business activities and due to limited exposures , the appointed company secretaries are leaving the company in a short period. As such , the company is not able to get full time secretary during the intervening period.

It reflects that Petitioner Company has taken reasonable efforts to comply with the provision of the section 383 A of the CA 1956 but could not get a Company Secretary for the continuous period.

383A. Certain companies to have secretaries (1)  Every company having such paid-up share capital as may be prescribed (Rs.  5 crores) shall have a whole-time secretary and where the Board of directors of any such company comprises only two directors, neither of them shall be the secretary of the company: Provided that every company not required to employ a whole-time secretary under sub-section (1) and having a paid-up share capital of 10  lakh rupees or more shall file with the Registrar a certificate from a secretary in whole-time practice in such form and within such time and subject to such conditions as may be prescribed, as to whether the company has complied with all provisions of this Act and a copy of such certificate shall be attached with Board’s Report referred to in Section 217.

It is to be noted that argument by the company that it took earnest efforts to appoint a company secretary and is using the services of a practicing company secretary was not accepted by the NCLT , Bangalore.

Now  , the available company secretaries has touched the land mark trend of 50000 numbers , companies in India cannot argue that adequate company secretaries are not available for employment and they are taking earnest efforts to find a company secretary or using the services of a practicing company secretary.

There are lot of company secretaries who have qualified recently are find it difficult to sit in a job and they are jobless. They are vexed to blame themselves for successfully completing the company Secretaries course.

If any member finds that a company avoids to fill in a company secretary position , they can bring it to the notice of concerned Registrar of Companies.

NCLT , Bangalore decision is a land mark decision and it is an eye opener for those erring companies which has not appointed a company secretary.

WHETHER A NON-SHAREHOLDER OF A COMPANY HAS THE RIGHT TO INSPECT THE DOCUMENTS OR ATTEND AGM OF THE COMPANY UNDER SECTION 163 OF COMPANIES ACT- NO SAYS NCLT, MUMBAI BENCH.

WHETHER A NON-SHAREHOLDER OF A COMPANY HAS THE RIGHT TO INSPECT THE DOCUMENTS OR ATTEND AGM OF THE COMPANY UNDER SECTION 163 OF COMPANIES ACT- NO SAYS NCLT, MUMBAI BENCH. 

Mr. Anil Kumar Poddar versus M/s. Reliance Corporate IT Park Ltd. and Others

Right to receive the copies of Company documents - Right to inspection of the documents – the Meaning of Qualified person u/s. 163

Mr. Anil Kumar Poddar versus M/s. Reliance Corporate IT Park Ltd. and Others

Right to receive the copies of Company documents - Right to inspection of the documents – the Meaning of Qualified person u/s. 163

Held that:- This Petitioner has no shareholding in the company, therefore, he will not get any occasion to attend Annual General Meetings of the company or any of the meeting of the company to question the acts of the company. 

Hence, this Bench does not see any rationale in granting such a relief to a stranger to the company because by giving a conjoint meaning of the person mentioned in sub-section 2 of Section 163 - member or debenture holder and of any other persons, this Petitioner will not fall under any of the above three classes of persons, therefore, this Petitioner is not entitled to seek this relief u/s. 163.

This Bench having noticed that this Petitioner is in the habit of raising frivolous litigation again many of the listed companies either by subscribing one or two shares or under the head of "any other person" u/s. 163 by asking inspection of the documents from the date of inception of the companies. 

Knowing fully well, that it will not be possible to provide inspection of the documents from the date of inception, when the company failed to provide inspection or supply of copies, he files Petitions u/s. 163 or sec. 219 of the Companies Act, 1956. If any company says copies are provided as sought by the Petitioner, he will start arguing for exemplary costs for not providing inspection in the period mentioned in the statute.

Since this Bench has noticed that he is not a qualified person u/s. 163 to seek inspection, this Bench hereby dismisses all these 62 Petitions by imposing cost of ₹ 1000/- each in every TCP.

Check-list for Publishing quarterly/half-yearly results by listed companies and limited review report

Check-list for Publishing quarterly/half-yearly results by listed companies and limited review report

The Listing Agreement [LA] entered into by listed companies with stock exchange(s) [SEs] requires under clause 41 publishing of quarterly/half-yearly results by listed companies. The requirements are listed hereunder :

1) Quarterly Results [QR]

1. A company shall publish unaudited financial results on quarterly basis as per proforma given hereafter within one month of the end of the quarter to the SEs and immediately after market hours on the date of Board Meeting

1. The results shall also be published in a daily newspaper with national circulation and in one regional language daily newspaper within 48 hours of the Board Meeting.

1. The results shall be signed by the MD/Director

1. At least 7 days before the Board Meeting, the company shall inform the SEs about the Board Meeting

1. Any change of name in the company suggesting new line of business should disclose the turnover and income, etc. from the new activities separately for 3 years from the date of name change

1. The unaudited results should not substantially differ from the audited results by 20% otherwise reasons for the difference should be explained to the SEs

1. Unaudited QR for the last quarter need not be published if the company informs the SE in advance that it will publish audited results within 3 months from the end of the accounting year of the company

1. The QR shall be prepared on the basis of accrual accounting policy and in accordance with uniform accounting practices adopted for all the periods on quarterly basis

1. With effect from quarter ending on or after June, 2003 the QR shall be subjected to Limited Review by the auditors.

1. The format of limited review report (LRR) is given hereafter.

1. The LRR shall be submitted to the SEs within 2 months of the close of the quarter."

1. The company will have the option to publish consolidated quarterly financial results in addition to the unaudited quarterly financial results of the parent company as required under this clause

1. The company will publish its Annual Results in the same format as prescribed for quarterly results in this clause

2) Half-Yearly Results [HYR]

1. The HYR shall be in the same format as the QR and shall be subject to limited review by the auditors [discussed separately]

1. The format of limited review report [LRR] is given hereafter

1. The LRR shall be submitted to the SEs within 2 months of the end of the half-year

1. The QR of the 2 quarters contained in the half-year should not vary more than 20% of its sum total otherwise a statement of reasons should be sent to the SEs

1. To the extent possible, requirements in items relating to QR shall apply to HYR also.

FORMAT OF UNAUDITED FINANCIAL RESULTS FOR THREE MONTHS ENDED XX-XX-20XX

Part I (Rs.In lakhs)

Particulars	3 months ended (dd/mm/yyyy)	Preceding 3 months ended (dd/mm/yyyy)	Corresponding 3 months ended in the previous year (dd/mm/yyyy)	Year to date figures for current period ended (dd/mm/yyyy)	Year to date figures for the previous year ended (dd/mm/yyyy)	Previous accounting year ended (dd/mm/yyyy)
1 Income from operations Net Sales/Income from Operations Other Operating Income 2 Expenditure Cost of materials consumed. Purchase in stock- in-trade Changes in inventories of finished goods, work-in-progress and stock-in-trade Employees benefits expenses Depreciation and Amortisation Expense Other expenditure "Total(Any item exceeding 10% of the total expenditure to be shown separately)" 3 Profit/(Loss) from operations before other income, finance costs and exceptional items(1±2) 4 Other Income 5 Proftit / Loss from ordinary activity before finance costs and exceptional items (3±4) 6 Finance costs 7 Profit / (Loss) from ordinary activities after finance costsbut before exceptional items (5±6) 8 Exceptional items 9 Profit / (Loss) from Ordinary Activities before tax (7±8) 10 Tax expense 11 Net Profit / (Loss) from Ordinary Activities after tax (9±10) 12 "Extraordinary Item(net of tax expense Rs.____)" 13 Net Profit / (Loss) for the period (11 ± 12) 14 Share of Profit / (Loss) of associates* 15 Minority interest* 16 "Net Profit / (Loss) after taxes, minority interest and share of profit / (loss) of associates.(13 ± 14 ± 15)*" 17 Paid-up equity share capital (Face Value of the Share shall be indicated) 18 Reserve excluding Revaluation Reserves as per balance sheet of previous accounting year 19 (i) "Earnings Per Share (EPS)”(before extraordinary items ) (of Rs.____/- each)(not annualised): Basic Diluted 20 (ii) "Earnings Per Share (EPS)”(after extraordinary items )(of Rs.____/- each)(not annualised): Basic Diluted A Particulars of Shareholding 1 Public Shareholding No. of shares Percentage of shareholding 2 Promoters and promoter group shareholding ** Pledged/Encumbered Number of shares Percentage of shares (as a% of the total shareholding of promoter and promoter group) Percentage of shares (as a% of the total share capital of the company) Non-encumbered Number of Shares Percentage of shares (as a% of the total shareholding of promoter and promoter group) Percentage of shares (as a % of the total share capital of the company) B Investor Complaints Pending at beginning of quarter Received during the quarter Disposed of during the quarter Remaining unresolved at the end of the quarter

*Applicable in case of consolidated results.

Note: The classification/disclosure of items in the financial results shall be in accordance with the Revised Schedule VI of the Companies Act, 1956. Further to the above, profit/loss from discontinuing operations, if any, included in the above shall be disclosed with details thereof.

Courtesy : Bombay Chartered Accountant's Association