Frienge Benefit Tax - FBT

1. Contribution made by employer to approved superannuation fund is exempted from FBT up to the limit of Rs.1 Lac per employee per year.
2. Expenditure towards 'Conveyance' attracts FBT @ 20% and expenditure towards 'Tour and Travel' attracts FBT @ 5%. This necessitates appropriate classification of expenses between conveyance and Tour Travel.
3. In case employer recovers some portion of the expenses from the employees the FBT will be applicable on the net amount of expenses.
4. When a common expenditure is shared by group companies, each company will be liable for FBT on its share of expenditure.
5. FBT is not applicable on the amount of LTA paid to the employees.
6. concessional ticket or sponsored tour of employee and family members attracts FBT.
   
   
   
   

Circular Resolution

1. Circular resolution can be passed for Board as well as Committee of Directors.
2. An Additional director can be appointed by a circular resolution.
3. Draft of the resolution will be circulated to all the directors then in India. However it is advisable to send the draft resolution ot all the directors.
4. Circular resolution should be sent to the alternate director and not the original director.
5. Circular resolution should be circulated to at least that number of directors as fixed for the quorum. In other words at least that number of directors must be present in India.
6. A certified true copy of the resolution may be issued. It is advisable to mention the date of passing the resolution.

Voluntary Retirement Scheme - VRS

Income Tax Benefits

Under the provisions of Section 10(10C) of the Income Tax Act, 1961, an employee is eligible to claim a one-time exemption up to Rs 5,00,000 in relation to the compensation received under a VRS



Conditions for claiming the benefit

1. The scheme applies to an employee who has completed 10 years of service or attained 40 years of age. In case of employees of PSU this condition is waived for the purpose of enjoying the tax exemption.
   
   
2. The vacancy resulting from an employee availing VRS should not be filled up and the retiring employee cannot take up employment with another company belonging to the same management where the employee was working.
3. The scheme should be drawn to result in overall reduction in the existing number of employees.
   
   
4. The scheme should apply to all employees (except directors) of the company.
   
   
5. The amount receivable by employees on voluntary retirement should not exceed 3 months salary for each completed year of service; or salary for the balance months of service left before the date of retirement or superannuation. ‘Salary’ in this case means the last drawn salary and includes only Basic salary + dearness allowance and excludes all other allowances and perquisites.
   
   
   
   

Once in the Life Time

This is a one time exemption available in the lifetime. If at a later stage in life, an employee gets similar opportunity of VRS then he would not be eligible to claim any exemption under Sec. 10 (10C) of the Act.

Bombay Stamp Act

Issue of Share Certificate
Rs. 1/- per Rs.1000. The amount of share certificate will include the amount of Premium paid.

Transfer of Shares
Stamp duty on transfer of shares is @ 0.25% of the market value of the shares on the date of the transfer. (w.e.f. March 2004)

Mortgage

Duty on Deposit of title deeds, mortgage of movables, pawn, pledge, and hypothecation deeds has been reduced from 0.5 % to 0.1%

Loans
Stamp Duty on unsecured loans, Loan agreements is 0.1%. Earlier the rate was 0.25%

Balance Sheet

Authentication - Sec.215

In the case of a company other than a Banking Company , by its or secretary, if any, and by not less than two directors of the

company one of whom shall be a managing director where there is one.

(c) 2006, Shreerang Ketkar, All rights reserved.

Annual General Meeting

Adjournment

Adjourned annual general meeting must itself be held within statutory

period, including the period of extension thereof, if any allowed, as

provided in section 166(1)

Partnership Firm

A firm is an artificial person and upon dissolution it ceases to exist. therefore a contract of agency entered into aby a firm stands terminated upon its dissolution.

Power of Attorney

General

A Power of Attorney [PoA] is governed by the Powers of Attorney Act 1882, Indian Contract Act 1872 and Indian Registration Act 1908.
There is a specific distinction between an Agent and a PoA holder. An Agent is not empowered to use the name of the principal whereas the Attorney can use the principal’s name in the transaction entered into by him.
A PoA issued in regard to a single transaction is known as a Special PoA.
An Attorney who is appointed as agent to do a certain thing and if there is no express term for termination of agency, then it can’t be terminated.
A PoA issued for registration of documents must be registered before the Registrar of the district where the Principal resides. A PoA issued out of India must be executed before a Notary Public, Magistrate or Indian Consul.
A PoA ceases on the death of either party. Where 2 Attorneys are appointed to act Jointly and one of them dies the survivor can’t act alone
A minor can’t issue Power of Attorney [POA] as a minor does not have legal rights to execute a document. A minor can execute a document only through his guardian

Duration:

A General Power of Attorney [POA], unless expressly or impliedly limited for a particular period continues in force until revoked or determined by death of either party.
A Special POA to do an act is determined when the act is done.

Termination:

1. A POA may be terminated -
1. by the Donor by revoking the attorneys authority, or
2. by the attorney renouncing his authority. or
3. after the activity is completed.
4. by the death of either party or
5. by the donor is declared as insolvent.
2. Termination of authority to the agent terminates the authority of all the sub-agents.
   
   

Irrevocable POA

A POA can not be revoked without the express consent of the attorney Where the attorney has an interest in the subject matter of the POA. Where the authority is given to the attorney by deed or for a valuable consideration or a security or for securing the interest of the attorney the POA is irrevocable during the subsistence of such security or interest.

When a POA can not be Revoked.

1. The POA can not be revoked after the agent has partly used the power vested in him.
2. Where there is an express or implied contract that the agency should be continued for a period of time. in case of revocation the Principal has to pay compensation for early revocation.
3. POA can not be revoked without giving notice.
   
   

Revocation

Revocation should be made known to the agent. The revocation does not take effect till the same is notified by the principal to the Agent.


POA ineffective

A suit filed by a POA holder on behalf of the principal is considered as nullity where the principal is dead at the time of filing the suit.


POA issued Jointly.

Death of one of the joint principals will not revoke the POA.


Authority

The power of attorney once utilised would not terminate or cease in relation to future acts which are only consequential to the previous acts already done.

An Advocate can not act simultaneously in processional capacity and also as an agent of the principal.

(c) 2006, Shreerang Ketkar, All rights reserved.

Corporate Governance Requirements.

1. The Company must publish its philosophy on code of Governance.
2. It is recommended that Chairman and CEO should not be the same person.
3. To disclose the Tenure and age limit of Directors including Independent Directors.
4. Disclose of Definition of Independent Director, Financial Expert and selection criteria for Board of Directors.
5. A Director shall not be a Chairman of more than 5 committees and shall not be a member of more than 10 committees across the companies where he is a director.
   
   
6. To have in place post Board meeting follow up system and compliance of Board procedures.
7. Appointment of Lead independent Director.
8. To setup a Remuneration Committee. Disclosure of Remuneration policy and remuneration of Directors.
9. to disclose Code of Conduct.
10. Audit Committee
1. Transparency in composition of Audit Committee
2. In case the Chairman is executive director 50% of the Committee members should be Independent directors.
3. In case the Chairman is non-executive director 1/3rd Committee members should be Independent directors.
4. At least 4 meetings in a year with duration between the two meetings of not more than 4 months.
5. To disclose the participation of invitees in the committee meetings.
6. Disclosure of Audit committee charter and terms of reference.
7. Publishing the Audit committee report.
11. To provide half yearly financial results to Share holders.
12. Disclose Audit Qualifications in the Annual Report.
13. To establish a Whistle Blower Policy.
14. To disclose details of last 3 AGM and EGM with details of Special resolutions passed in those meetings.
15. A Company shall have a code on Prohibition of Insider Trading.
    
    

(c) Copyright 2006, Shreerang Ketkar