envestindia.com


   News Flashes

Companies (passing of the resolution by postal ballot) Rules, 2001.

Government of India

Ministry of Law, Justice and Company Affairs

Department of Company Affairs

New Delhi –110001.

Dated 10-05-2001.

             G.S.R._337(E). – In exercise of the powers conferred by section 192A read with clauses (a) and (b) of sub-section (1) of section 642 of the Companies Act, 1956 (1 of  1956) the Government hereby makes the following rules, namely:-

 1.         Short title and commencement:-

(1)   These rules may be called the Companies (passing of the resolution by postal ballot) Rules, 2001.

(2)   They shall come into force on the date of their publication in the official gazette.

 2.            Definitions:-

             In these Rules unless the context otherwise requires:-

(a)    “Act” means the Companies Act, 1956,

(b)     “Postal Ballot” includes voting by share holders by postal or electronic mode  instead of voting personally by presenting for transacting businesses in a general meeting of the company,

(c)     “Requisite majority” with regard to Special Resolution means votes cast in favour of the business is three times more than the votes cast against,  with regard to ordinary resolution, votes cast in favour is more than the votes cast against.

 3.            Application:-

             These Rules shall be applicable to listed companies and in case of resolutions relating to such businesses as are specified under rule 4.

 4.                  List of businesses in which the resolutions may be passed through Postal Ballot.

(a)     alteration in the Object Clause of Memorandum;

(b)       alteration of Articles of Associations in relation to deletion or insertion of   provisions defining private company;    

(c)     buy-back of own shares by the company under sub-section (1) of section 77A;

(d)     issue of shares with differential voting rights as to voting or dividend or other wise under sub-clause (ii) of clause (a) of section 86;

            (e)     change in place of Registered Office out side local limits of any city, town or village as                   specified in sub-section (2) of section 146;

(f)     sale of whole or substantially the whole of undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 293;

(g)    giving loans or extending guarantee or providing security in excess of the limit prescribed under sub-section (1) of section 372A;

(h)    election  of a director under sub-section (1) of section 252;

(i)      power to compromise or make arrangements with creditors and members as specified  under sub-section (2) of section 391;

(j)     variation in the rights attached to a class of shares or debentures or other securities as specified under section 106.

 5.                  Procedure to be followed for conducting business through Postal Ballot:-

(a)       The company may make a note below the notice of General Meeting for

         understanding of members that the transaction(s) at Sl. No.     requires

         consent  of shareholders through postal ballot;

(b)          The board of directors shall appoint one scrutinizer, who is not in employment of the company, may be a retired judge or any person of repute who, in the opinion of the board can conduct the postal ballot voting process in a fair and transparent manner;

(c)           The scrutinizer will be in position for 35 days (excluding holidays) from the date of issue of Notice for Annual General Meeting.  He is to submit his final report on or before the said period;

(d)          The scrutinizer will be willing to be appointed and he is available at the Registered Office of the company for the purpose of ascertaining the requisite majority;

(e)           The scrutinizer shall maintain a register to record the consent or otherwise received, including electronic media, mentioning the particulars of name, address, folio number, number of shares, nominal value of shares, whether the shares have voting, differential voting or non-voting rights and the Scrutinizer shall also maintain record for postal ballot which are received in defaced or mutilated form.  The Postal Ballot and all other papers relating to postal ballot will be under the safe custody of the Scrutinizer till the Chairman considers, approves and sign the minutes of the meeting. Thereafter, the Scrutinizer shall return the ballot papers and other related papers/register to the company so as to preserve such ballot papers and other related papers/register safely till the resolution is given effect to;

(f)            Consent or otherwise relating to issue mentioned in Notice for Annual General Meeting received after 35 days from the date of issue will be strictly treated as if the reply from the member has not been received.   

 

 



Reliance to trade only on BSE, NSE

Reliance Industries is planning to delist its shares from the Ahmedabad, Calcutta, Delhi, Uttar Pradesh, Pune, Chennai, Bangalore and Cochin stock exchanges as part of a cost-cutting drive. The company is introducing a special resolution at the annual general meeting in Mumbai on June 15 to seek shareholders' approval for delisting of the company's shares from "any and all" of these stock exchanges at an "appropriate time in the future". The notice to the shareholders says actual timing of the delisting will depend on the future developments, including the integration of stock exchanges across the country. The move follows the increase in online trading due to the extension of the Bombay and National Stock Exchanges terminals to other cities. The notice says the company's shares are mainly traded on BSE and NSE and volumes in other exchanges are much lower. RIL's securities are also traded on other exchanges in the permitted category. While BSE and NSE recorded average daily trading volumes of 52.01 lakh and 61.18 lakh, respectively, during the year ended March 31, 2001, other stock exchanges had negligible trading volumes, at least in comparative terms. For instance, Bangalore and and New Delhi Stock Exchanges recorded volumes 0.30 lakh and 0.14 lakh, respectively. Among other stock exchanges, Calcutta had a relatively high trading volume of 29.51 lakh, while Cochin's volumes were 18.09 lakh. Kanpur and Pune had daily trading volumes of 8.37 lakh and 5.85 lakh, respectively, in March 2001. Chennai did not see any trading in the Reliance scrip at all. The notice says the listing fee paid to the smaller exchanges are "disproportionately higher" and not commensurate with the trading volumes.

Accounting Standard (AS) 22 - ‘Accounting for Taxes on Income’

(In this Accounting Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the ‘Preface to the Statements of Accounting Standards’.)Accounting Standard (AS) 22, ‘Accounting for Taxes on Income’, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1-4-2001. It is mandatory in nature for:

  • All the accounting periods commencing on or after 01.04.2001, in respect of the following:
    (i) Enterprises whose equity or debt securities are listed on a recognised stock exchange in India and enterprises that are in the process of issuing equity or debt securities that will be listed on a recognised stock exchange in India as evidenced by the board of directors resolution in this regard.
    (ii) All the enterprises of a group, if the parent presents consolidated financial statements and the Accounting Standard is mandatory in nature in respect of any of the enterprises of that group in terms of (i) above.

  • All the accounting periods commencing on or after 01.04.2002, in respect of companies not covered by (a) above.

  • All the accounting periods commencing on or after 01.04.2003, in respect of all other enterprises.

The Guidance Note on Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India in 1991, stands withdrawn from 1.4.2001. The following is the text of the Accounting Standard.

Objective
The objective of this Statement is to prescribe accounting treatment for taxes on income. Taxes on income is one of the significant items in the statement of profit and loss of an enterprise. In accordance with the matching concept, taxes on income are accrued in the same period as the revenue and expenses to which they relate. Matching of such taxes against revenue for a period poses special problems arising from the fact that in a number of cases, taxable income may be significantly different from the accounting income. This divergence between taxable income and accounting income arises due to two main reasons. Firstly, there are differences between items of revenue and expenses as appearing in the statement of profit and loss and the items which are considered as revenue, expenses or deductions for tax purposes. Secondly, there are differences between the amount in respect of a particular item of revenue or expense as recognised in the statement of profit and loss and the corresponding amount which is recognised for the computation of taxable income.

Scope

  1. This Statement should be applied in accounting for taxes on income. This includes the determination of the amount of the expense or saving related to taxes on income in respect of an accounting period and the disclosure of such an amount in the financial statements.

  2. For the purposes of this Statement, taxes on income include all domestic and foreign taxes which are based on taxable income.

  3. This Statement does not specify when, or how, an enterprise should account for taxes that are payable on distribution of dividends and other distributions made by the enterprise

Definitions

  1. For the purpose of this Statement, the following terms are used with the meanings specified:

    Accounting income (loss) is the net profit or loss for a period, as reported in the statement of profit and loss, before deducting income tax expense or adding income tax saving.

    Taxable income (tax loss) is the amount of the income (loss) for a period, determined in accordance with the tax laws, based upon which income tax payable (recoverable) is determined.

    Tax expense (tax saving) is the aggregate of current tax and deferred tax charged or credited to the statement of profit and loss for the period.

    Current tax is the amount of income tax determined to be payable (recoverable) in respect of the taxable income (tax loss) for a period.

    Deferred tax is the tax effect of timing differences.

    Timing differences are the differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods.

    Permanent differences are the differences between taxable income and accounting income for a period that originate in one period and do not reverse subsequently.


  2. Taxable income is calculated in accordance with tax laws. In some circumstances, the requirements of these laws to compute taxable income differ from the accounting policies applied to determine accounting income. The effect of this difference is that the taxable income and accounting income may not be the same.

  3. The differences between taxable income and accounting income can be classified into permanent differences and timing differences. Permanent differences are those differences between taxable income and accounting income which originate in one period and do not reverse subsequently. For instance, if for the purpose of computing taxable income, the tax laws allow only a part of an item of expenditure, the disallowed amount would result in a permanent difference.

  4. Timing differences are those differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods. Timing differences arise because the period in which some items of revenue and expenses are included in taxable income do not coincide with the period in which such items of revenue and expenses are included or considered in arriving at accounting income. For example, machinery purchased for scientific research related to business is fully allowed as deduction in the first year for tax purposes whereas the same would be charged to the statement of profit and loss as depreciation over its useful life. The total depreciation charged on the machinery for accounting purposes and the amount allowed as deduction for tax purposes will ultimately be the same, but periods over which the depreciation is charged and the deduction is allowed will differ. Another example of timing difference is a situation where, for the purpose of computing taxable income, tax laws allow depreciation on the basis of the written down value method, whereas for accounting purposes, straight line method is used. Some other examples of timing differences arising under the Indian tax laws are given in Appendix 1.

  5. Unabsorbed depreciation and carry forward of losses which can be set-off against future taxable income are also considered as timing differences and result in deferred tax assets, subject to consideration of prudence (see paragraphs 15-18).

Recognition

  1. Tax expense for the period, comprising current tax and deferred tax, should be included in the determination of the net profit or loss for the period.

  2. Taxes on income are considered to be an expense incurred by the enterprise in earning income and are accrued in the same period as the revenue and expenses to which they relate. Such matching may result into timing differences. The tax effects of timing differences are included in the tax expense in the statement of profit and loss and as deferred tax assets (subject to the consideration of prudence as set out in paragraphs 15-18) or as deferred tax liabilities, in the balance sheet.

  3. An example of tax effect of a timing difference that results in a deferred tax asset is an expense provided in the statement of profit and loss but not allowed as a deduction under Section 43B of the Income-tax Act, 1961. This timing difference will reverse when the deduction of that expense is allowed under Section 43B in subsequent year(s). An example of tax effect of a timing difference resulting in a deferred tax liability is the higher charge of depreciation allowable under the Income-tax Act, 1961, compared to the depreciation provided in the statement of profit and loss. In subsequent years, the differential will reverse when comparatively lower depreciation will be allowed for tax purposes.

  4. Permanent differences do not result in deferred tax assets or deferred tax liabilities.

  5. Deferred tax should be recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets as set out in paragraphs 15-18.

  6. This Statement requires recognition of deferred tax for all the timing differences. This is based on the principle that the financial statements for a period should recognise the tax effect, whether current or deferred, of all the transactions occurring in that period.

  7. Except in the situations stated in paragraph 17, deferred tax assets should be recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

  8. While recognising the tax effect of timing differences, consideration of prudence cannot be ignored. Therefore, deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty of their realisation. This reasonable level of certainty would normally be achieved by examining the past record of the enterprise and by making realistic estimates of profits for the future.

  9. Where an enterprise has unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets should be recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

  10. The existence of unabsorbed depreciation or carry forward of losses under tax laws is strong evidence that future taxable income may not be available. Therefore, when an enterprise has a history of recent losses, the enterprise recognises deferred tax assets only to the extent that it has timing differences the reversal of which will result in sufficient income or there is other convincing evidence that sufficient taxable income will be available against which such deferred tax assets can be realised. In such circumstances, the nature of the evidence supporting its recognition is disclosed.

Re-assessment of Unrecognised Deferred Tax Assets

  1. At each balance sheet date, an enterprise re-assesses unrecognised deferred tax assets. The enterprise recognises previously unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be (see paragraphs 15 to 18), that sufficient future taxable income will be available against which such deferred tax assets can be realised. For example, an improvement in trading conditions may make it reasonably certain that the enterprise will be able to generate sufficient taxable income in the future.

Measurement

  1. Current tax should be measured at the amount expected to be paid to (recovered from) the taxation authorities, using the applicable tax rates and tax laws.

  2. Deferred tax assets and liabilities should be measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

  3. Deferred tax assets and liabilities are usually measured using the tax rates and tax laws that have been enacted. However, certain announcements of tax rates and tax laws by the government may have the substantive effect of actual enactment. In these circumstances, deferred tax assets and liabilities are measured using such announced tax rate and tax laws.

  4. When different tax rates apply to different levels of taxable income, deferred tax assets and liabilities are measured using average rates.

  5. Deferred tax assets and liabilities should not be discounted to their present value.

  6. The reliable determination of deferred tax assets and liabilities on a discounted basis requires detailed scheduling of the timing of the reversal of each timing difference. In a number of cases such scheduling is impracticable or highly complex. Therefore, it is inappropriate to require discounting of deferred tax assets and liabilities. To permit, but not to require, discounting would result in deferred tax assets and liabilities which would not be comparable between enterprises. Therefore, this Statement does not require or permit the discounting of deferred tax assets and liabilities.

Review of Deferred Tax Assets

  1. The carrying amount of deferred tax assets should be reviewed at each balance sheet date. An enterprise should write-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be (see paragraphs 15 to 18), that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down may be reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be (see paragraphs 15 to 18), that sufficient future taxable income will be available.

Presentation and Disclosure

  1. An enterprise should offset assets and liabilities representing current tax if the enterprise:
    (a) has a legally enforceable right to set off the recognised amounts; and
    (b) intends to settle the asset and the liability on a net basis.

  2. An enterprise will normally have a legally enforceable right to set off an asset and liability representing current tax when they relate to income taxes levied under the same governing taxation laws and the taxation laws permit the enterprise to make or receive a single net payment.

  3. An enterprise should offset deferred tax assets and deferred tax liabilities if:
    (a) the enterprise has a legally enforceable right to set off assets against liabilities representing current tax; and
    (b) the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

  4. Deferred tax assets and liabilities should be distinguished from assets and liabilities representing current tax for the period. Deferred tax assets and liabilities should be disclosed under a separate heading in the balance sheet of the enterprise, separately from current assets and current liabilities.

  5. The break-up of deferred tax assets and deferred tax liabilities into major components of the respective balances should be disclosed in the notes to accounts.

  6. The nature of the evidence supporting the recognition of deferred tax assets should be disclosed, if an enterprise has unabsorbed depreciation or carry forward of losses under tax laws.

Transitional Provisions

  1. On the first occasion that the taxes on income are accounted for in accordance with this Statement, the enterprise should recognise, in the financial statements, the deferred tax balance that has accumulated prior to the adoption of this Statement as deferred tax asset/liability with a corresponding credit/charge to the revenue reserves, subject to the consideration of prudence in case of deferred tax assets (see paragraphs 15-18). The amount so credited/charged to the revenue reserves should be the same as that which would have resulted if this Statement had been in effect from the beginning.

  2. For the purpose of determining accumulated deferred tax in the period in which this Statement is applied for the first time, the opening balances of assets and liabilities for accounting purposes and for tax purposes are compared and the differences, if any, are determined. The tax effects of these differences, if any, should be recognised as deferred tax assets or liabilities, if these differences are timing differences. For example, in the year in which an enterprise adopts this Statement, the opening balance of a fixed asset is Rs. 100 for accounting purposes and Rs. 60 for tax purposes. The difference is because the enterprise applies written down value method of depreciation for calculating taxable income whereas for accounting purposes straight line method is used. This difference will reverse in future when depreciation for tax purposes will be lower as compared to the depreciation for accounting purposes. In the above case, assuming that enacted tax rate for the year is 40% and that there are no other timing differences, deferred tax liability of Rs. 16 [(Rs. 100 - Rs. 60) x 40%] would be recognised. Another example is an expenditure that has already been written off for accounting purposes in the year of its incurrance but is allowable for tax purposes over a period of time. In this case, the asset representing that expenditure would have a balance only for tax purposes but not for accounting purposes. The difference between balance of the asset for tax purposes and the balance (which is nil) for accounting purposes would be a timing difference which will reverse in future when this expenditure would be allowed for tax purposes. Therefore, a deferred tax asset would be recognised in respect of this difference subject to the consideration of prudence (see paragraphs 15 - 18)

Appendix 1

Examples of Timing Difference

Note: This appendix is illustrative only and does not form part of the Accounting Standard. The purpose of this appendix is to assist in clarifying the meaning of the Accounting Standard. The sections mentioned hereunder are references to sections in the Income-tax Act, 1961, as amended by the Finance Act, 2001.

  1. Expenses debited in the statement of profit and loss for accounting purposes but allowed for tax purposes in subsequent years, e.g.
    a) Expenditure of the nature mentioned in section 43B (e.g. taxes, duty, cess, fees, etc.) accrued in the statement of profit and loss on mercantile basis but allowed for tax purposes in subsequent years on payment basis.
    b) Payments to non-residents accrued in the statement of profit and loss on mercantile basis, but disallowed for tax purposes under section 40(a)(i) and allowed for tax purposes in subsequent years when relevant tax is deducted or paid.
    c) Provisions made in the statement of profit and loss in anticipation of liabilities where the relevant liabilities are allowed in subsequent years when they crystallize.

  2. Expenses amortized in the books over a period of years but are allowed for tax purposes wholly in the first year (e.g. substantial advertisement expenses to introduce a product, etc. treated as deferred revenue expenditure in the books) or if amortization for tax purposes is over a longer or shorter period (e.g. preliminary expenses under section 35D, expenses incurred for amalgamation under section 35DD, prospecting expenses under section 35E).

  3. Where book and tax depreciation differ. This could arise due to:
    a) Differences in depreciation rates.
    b) Differences in method of depreciation e.g. SLM or WDV.
    c) Differences in method of calculation e.g. calculation of depreciation with reference to individual assets in the books but on block basis for tax purposes and calculation with reference to time in the books but on the basis of full or half depreciation under the block basis for tax purposes.
    d) Differences in composition of actual cost of assets.

  4. Where a deduction is allowed in one year for tax purposes on the basis of a deposit made under a permitted deposit scheme (e.g. tea development account scheme under section 33AB or site restoration fund scheme under section 33ABA) and expenditure out of withdrawal from such deposit is debited in the statement of profit and loss in subsequent years.

  5. Income credited to the statement of profit and loss but taxed only in subsequent years e.g. conversion of capital assets into stock in trade.

  6. If for any reason the recognition of income is spread over a number of years in the accounts but the income is fully taxed in the year of receipt.

Appendix 2

Note: This appendix is illustrative only and does not form part of the Accounting Standard. The purpose of this appendix is to illustrate the application of the Accounting Standard. Extracts from statement of profit and loss are provided to show the effects of the transactions described below.

Illustration 1

A company, ABC Ltd., prepares its accounts annually on 31st March. On 1st April, 20x1, it purchases a machine at a cost of Rs. 1,50,000. The machine has a useful life of three years and an expected scrap value of zero. Although it is eligible for a 100% first year depreciation allowance for tax purposes, the straight-line method is considered appropriate for accounting purposes. ABC Ltd. has profits before depreciation and taxes of Rs. 2,00,000 each year and the corporate tax rate is 40 per cent each year.

The purchase of machine at a cost of Rs. 1,50,000 in 20x1 gives rise to a tax saving of Rs. 60,000. If the cost of the machine is spread over three years of its life for accounting purposes, the amount of the tax saving should also be spread over the same period as shown below:

Statement of Profit and Loss
(for the three years ending 31st March, 20x1, 20x2, 20x3)

(Rs in Thousands)

  20x1 20x2 20x3
Profit before depreciation and taxes

Less: Depreciation for accounting purposes

Profit before taxes

Less: Tax expense

Current tax

0.40 (200 - 150)

0.40 (200)

Deferred Tax

Tax effect of timing differences originating during the year 0.40 (150 - 50)

Tax effect of timing differences reversing during the year 0.40 (0 - 50)

Tax expense

Profit after tax

Net timing differences

Deferred tax liability
200

50

150





20





40



60

90

100

40
200

50

150







80





(20)

60

90

50

20
200

50

150







80





(20)

60

90

0

0

In 20x1, the amount of depreciation allowed for tax purposes exceeds the amount of depreciation charged for accounting purposes by Rs. 1,00,000 and, therefore, taxable income is lower than the accounting income. This gives rise to a deferred tax liability of Rs. 40,000. In 20x2 and 20x3, accounting income is lower than taxable income because the amount of depreciation charged for accounting purposes exceeds the amount of depreciation allowed for tax purposes by Rs. 50,000 each year. Accordingly, deferred tax liability is reduced by Rs. 20,000 each in both the years. As may be seen, tax expense is based on the accounting income of each period.

In 20x1, the profit and loss account is debited and deferred tax liability account is credited with the amount of tax on the originating timing difference of Rs. 1,00,000 while in each of the following two years, deferred tax liability account is debited and profit and loss account is credited with the amount of tax on the reversing timing difference of Rs. 50,000.

The following Journal entries will be passed

Year 20x1

Profit and Loss A/c Dr. 20,000

To Current tax A/c 20,000

(Being the amount of taxes payable for the year 20x1 provided for)

Profit and Loss A/c Dr. 40,000

To Deferred tax A/c 40,000

(Being the deferred tax liability created for originating timing difference of Rs. 1,00,000)

Year 20x2

Profit and Loss A/c Dr. 80,000

To Current tax A/c 80,000

(Being the amount of taxes payable for the year 20x2 provided for)

Deferred tax A/c Dr. 20,000

To Profit and Loss A/c 20,000

(Being the deferred tax liability adjusted for reversing timing difference of Rs. 50,000)

Year 20x3

Profit and Loss A/c Dr. 80,000

To Current tax A/c 80,000

(Being the amount of taxes payable for the year 20x3 provided for)

Deferred tax A/c Dr. 20,000

To Profit and Loss A/c 20,000

(Being the deferred tax liability adjusted for reversing timing difference of Rs. 50,000)

In year 20x1, the balance of deferred tax account i.e., Rs. 40,000 would be shown separately from the current tax payable for the year in terms of paragraph 30 of the Statement. In Year 20x2, the balance of deferred tax account would be Rs. 20,000 and be shown separately from the current tax payable for the year as in year 20x1. In Year 20x3, the balance of deferred tax liability account would be nil.

Illustration 2

In the above illustration, the corporate tax rate has been assumed to be same in each of the three years. If the rate of tax changes, it would be necessary for the enterprise to adjust the amount of deferred tax liability carried forward by applying the tax rate that has been enacted or substantively enacted by the balance sheet date on accumulated timing differences at the end of the accounting year (see paragraphs 21 and 22). For example, if in Illustration 1, the substantively enacted tax rates for 20x1, 20x2 and 20x3 are 40%, 35% and 38% respectively, the amount of deferred tax liability would be computed as follows:

The deferred tax liability carried forward each year would appear in the balance sheet as under:

31st March, 20x1 = 0.40 (1,00,000) = Rs. 40,000

31st March, 20x2 = 0.35 (50,000) = Rs. 17,500

31st March, 20x3 = 0.38 (Zero) = Rs. Zero

Accordingly, the amount debited/(credited) to the profit and loss account (with corresponding credit or debit to deferred tax liability) for each year would be as under:

31st March, 20x1 Debit = Rs. 40,000

31st March, 20x2 (Credit) = Rs. (22,500)

31st March, 20x3 (Credit) = Rs. (17,500)

Illustration 3

A company, ABC Ltd., prepares its accounts annually on 31st March. The company has incurred a loss of Rs. 1,00,000 in the year 20x1 and made profits of Rs. 50,000 and 60,000 in year 20x2 and year 20x3 respectively. It is assumed that under the tax laws, loss can be carried forward for 8 years and tax rate is 40% and at the end of year 20x1, it was virtually certain, supported by convincing evidence, that the company would have sufficient taxable income in the future years against which unabsorbed depreciation and carry forward of losses can be set-off. It is also assumed that there is no difference between taxable income and accounting income except that set-off of loss is allowed in years 20x2 and 20x3 for tax purposes.

Statement of Profit and Loss
(for the three years ending 31st March, 20x1, 20x2, 20x3)

(Rs in Thousands)

20x1 20x2 20x3
Profit (loss)

Less: Current tax

Deferred Tax:

Tax effect of timing differences originating during the year

Tax effect of timing differences reversing during the year

Profit (loss) after tax effect
(100)

---



40

---

(60)
50

---





(20)

30
60

(4)





(20)

36


MP Chitale chosen to valuate UTI-ISL

UNIT Trust of India has appointed MP Chitale & Co to conduct a valuation of its 100 per cent subsidiary — UTI-Investor Services. The valuation would be a basis for negotiations with short-listed bidders who are to be offered a strategic stake in the company. Once this process is over, the company is to be taken public. "The board of trustees of UTI had approved the appointment of MP Chitale and Co for conducting an independent valuation of UTI-ISL. This is in addition to the internal valuation exercise conducted by UTI," said UTI executive director BS Pandit. It’s learnt that the internal valuation put UTI-ISL at Rs 2-3 higher per share than the independent valuation. While Pandit declined to comment on the valuation figure, UTI insiders put the figure at Rs 55 crore. The net worth of the company as of March 31, 2000, stood at Rs 9.90 crore with a paidup equity capital of Rs 10 crore. The valuation worked out by the charted accountancy firm would be on the basis of the discounted cash flow method of arriving at net present value of future profits. The country’s largest MF had short-listed three to four players, including Tata Consultancy Services and Satyam Computer Services, to off-load part of its stake in the company’s Rs 10 crore paid-up equity capital. This plan, however, has been delayed because it’s scheduled to coincide with the implementation of UTI’s business process re-engineering exercise. Source : The Economic Times Dated : 14 May, 2001

Amendment in listing agreement pertaining to Non-promoter holding on a continuous basis and minimum number of shareholders

SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, B Wing, First Floor,
224, Nariman Point, Mumbai 400 021

SMDRP/POLICY/ CIR- 28/01
May 02, 2001

The Presidents/Executive Directors/
Managing Directors of all the Stock Exchanges
 

Dear Sir/Madam,

Sub: Non-promoter holding on a continuous basis and minimum number of shareholders

The matter of requirement of quantitative continuous listing conditions to be complied by the listed companies to maintain a minimum floating stock post listing was discussed in the meeting of the Secondary Market Advisory Committee. The recommendations of the Committee were considered by the SEBI Board in its meeting held on December 22, 2000. The Board approved the requirement of quantitative continuous listing conditions as a measure of investor protection as it would ensure availability of floating stock on a continuous basis. It was also decided to delete the requirement of minimum number of shareholders in proportion to capital offered.

Accordingly, the stock exchanges are directed to amend their Listing Agreement as under

  1. The existing clause 40A shall be substituted by following –

"40A – Conditions for continued listing

(i) The company agrees that in the event of the application for listing being granted by the Exchange, the company shall maintain on a continuous basis, the minimum level of non-promoter holding at the level of public shareholding as required at the time of listing.

  1. Where the non-promoter holding of an existing listed company as on April 01, 2001 is less than the limit of public shareholding as required at the time of initial listing, the company shall within one year raise the level of non-promoter holding to at least 10%. In case the company fails to do so, it shall buy back the public share holding in the manner provided in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997.
  1. The company agrees that it shall not make preferential allotment or an offer to buy back its securities, if such allotment or offer result in reducing the non-promoter holding below the limit of public shareholding specified under the SEBI (Disclosure and Investor Protection) Guidelines, as applicable at the time of initial listing or the limit specified in sub-clause (ii) for the existing listed company, as the case may be.
  2. The conditions stipulated in sub-clauses (i), (ii) and (iii) shall not apply to the companies referred to BIFR.

(v) The company agrees that the following shall also be the condition for continued listing.

    1. When any person acquires or agrees to acquire 5% or more of the voting rights of any securities, the acquirer and the company shall comply with the relevant provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
    2. When any person acquires or agrees to acquire any securities exceeding 15% of the voting rights in any company or if any person who holds securities which in aggregate carries less than 15% of the voting rights of the company and seeks to acquire the securities exceeding 15% of the voting rights, such person shall not acquire any securities exceeding 15% of the voting rights of the company without complying with the relevant provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997."
  1. SEBI vide its circular No. SMD/RCG/JJ/1819/96 dated May 15, 1996 and circular No. SMDRP/POLICY/CIR-30/98 dated October 16, 1998 had introduced the requirement of at least 5 public shareholders for every Rs. 1 lakh capital issued. This requirement is being withdrawn.

You are advised to modify the listing agreement as above and monitor the level of non promoter holding on a half yearly basis from the returns submitted by the companies in specified formats.



Click to view more   1   2   3   4   5   6   7   8   9   10   11   12   13   14   15   16   17   18   19   20   21   22   23   24   25   26   27   28   29   30   31   32   33   34   35   36   37   38   39   40   41   42   43   44   45   46   47   48   49   50   51   52   53   54   55   56   57   58   59   60   61   62   63  

 

 

 



Home | Application Forms | Equity | Flashes | Secondary Market | Mergers & Acquisitions | Taxation | Insurance |
Mutual Fund | SEBI | ESOS | Valuation | Venture Capital | Other Related Sites | Suggestions | Disclaimer | Site Map

Maintained By