ICSI-OCT2012-6A.qxd 10/1/2012 4:31 PM Page 1 ICSI-OCT2012-6A.qxd 10/1/2012 4:31 PM Page 2 ICSI-OCT2012-6A.qxd 10/1/2012 4:31 PM Page 3 ISSN 0972-1983 10 CHARTERED SECRETARY R The Council [ Registered under Trade Marks Act, 1999 ] President Nesar Ahmad Vol. : XLII No. 10 Pp 1233-1352 October - 2012 Vice President S. N. Ananthasubramanian From the Members Anil Murarka (in alphabetical order) 1242 Ardhendu Sen President Arun Balakrishnan Ashok Kumar Pareek Atul Hasmukhrai Mehta Legal From the Atul Mittal 1282 1296 B. Narasimhan (LW-105-115) World (GN-215-236) Government Gopalakrishna Hegde 1318 News from the 1352 CS Harish Kumar Vaid Institute Quiz Pradeep Kumar Mittal Renuka Kumar (Ms.) ARTICLES ( A 398-434 ) Revathy Iyer (Ms.) Sanjay Grover Appointment of whole-time Company Secretary under section 383A of the Companies Act : Some Critical Issues 1244 Sridharan R Sudhir Babu C Enforcement Actions under Securities Laws 1250 U D Choubey (Dr.) Secretarial Audit (SA) A Better Regulatory Exercise 1256 Umesh Harjivandas Ved Vikas Yashwant Khare Liability of Reserve Bank of India to pay Dividend Distribution Tax 1265 Cloud Computing 1268 Secretary & Chief Executive Officer N. K. Jain Service Tax on Directors' Services - Company to Pay 1272 HR Post Retirement Social Responsibility Programme (PRSRP) - Editorial Advisory Board New Scenario 1277 Annual Subscription Chairman Justice D. R. Deshmukh Inland : Rs. 1000 (Rs. 500 for Students of the ICSI) Foreign : $100; £60 (surface mail) Single Copy : Rs. 100 Members Chartered Secretary is normally published in the first week of every (in alphabetical order) D.P. Dash month. Non-receipt of any issue should be notified within that month. Articles on subjects of interest to company secretaries are welcome. G.R. Bhatia Views expressed by contributors are their own and the Institute does Girish Ahuja (Dr.) not accept any responsibility. The Institute is not in any way Harish K. Vaid responsible for the result of any action taken on the basis of the advertisement published in the journal. All rights reserved. No part K S Chalapati Rao (Prof.) of the journal may be reproduced or copied in any form by any means Nawal Kishor (Prof.) without the written permission of the Institute. The write ups of this Om Prakash Dani issue are also available on the website of the Institute. Pavan Kumar Vijay Edited, Printed & Published by R.S. Nigam (Prof.) N. K. Jain for The Institute of Company Secretaries of India, Renu Budhiraja (Ms.) ICSI House , 22, Institutional Area, Lodi Road, New Delhi- 110 003. Phones : 41504444, 45341000, Grams : COMPSEC Sanjeev Kumar (Dr.) Fax : 91-11-24626727 T V Narayanaswamy E-Mail : [email protected] Vinod K. Singhania (Dr.) Website : http://www.icsi.edu Design & Printed at Editor & Publisher N. K. Jain M. P. Printers B-220, Phase II, Noida-201305 Consulting Editor V. Gopalan Gautam Budh Nagar, U. P. - India Legal Correspondent T. K. A. Padmanabhan October 1233 CHARTERED SECRETARY 2012 ICSI-OCT2012-6A.qxd 10/1/2012 4:31 PM Page 4 IMAGES Policy Document on Corporate Governance released by 01 Dr. M Veerappa Moily, Hon'ble Minister for Corporate Affairs and Power at the CII 8th International Corporate Governance Summit in Mumbai - Standing from Left: Jyoti Vij ( Chief, Regulatory Affairs, Corporate Governance and Financial Services, CII), Nesar Ahmad (President, The ICSI), R. Gopalakrishnan (Director, Tata Sons Ltd.), Keki Mistry (Vice Chairman, HDFC Bank Ltd.), Bahram Vakil (Partner AZ&B Partners), Prashant Saran (Whole Time Member, SEBI), Dr. M. Veerappa Moily (Hon'ble Minister of Corporate Affairs & Power), Adi Godrej (Chairman, Godrej Group), Chandrajit Banerjee (DG,CII) and Alka Kapoor (JD, ICSI). GRI South Asia Conference: Sustainability Reporting for a 02 Sustainable Economy - Opening Plenary - group Photo - Standing from Left: M.K.Chouhan (Chairman - Mahendra & Young Knowledge Foundation), Manfred Haebig (Director, Private Sector Development, GIZ), Aditi Haldar (Director, GRI Focal Point India), Bharat Wakhlu (Resident Director, Tata Sons), Pietro Bertazzi (Manager Policy & Advocacy, GRI), Nesar Ahamd 01 (President, ICSI), Naved Masood (Secretary, MCA), Herman Mulder (Chairman of the Board of Director, GRI), Dr. M. Veerappa Moily ( Hon'ble Union Minister of Corporate Affairs and Power, GOI), Richard Howitt (European Parliament Rapporteur on Corporate Social Responsibility), Jaydeep N Shah (President, ICAI), Ernst Ligteringen (Chief Executive, GRI), Teresa Fogelberg (Deputy Chief Executive, GRI), A. N Raman (Past President, SAFA), Carolyn Ervin (OECD, Paris). GRI South Asia Conference - Sustainability Reporting for 03 a Sustainable Economy - A view of the dignitaries, invitees and delegates. Meeting of GRI Officials with ICSI (Partner - GRI South 04 Asia Conference) - Standing from Left - Archana Kaul, Banu Dandona, N K Jain ( Secretary and CEO, ICSI), Aditi Haldar (Director, GRI Focal Point India), Nesar Ahmad (President, ICSI), Teresa Fogelberg (Deputy Chief Executive, GRI) and Pietro Bertazzi ( Manager Policy and Advocacy, GRI). NIRC - Chandigarh State Conference on Emerging 05 Opportunities for Professionals - Present Economic Scenario - Lighting of Lamp to mark the Inauguration - His Excellency Jagannath Pahadia (Governor of Haryana) and Nesar Ahmad inaugurating the Conference. Among others present in the picture Rajiv Bajaj, Avtaar Singh, Deepak Kukreja, Punit K. Abrol, Ranjeet Pandey, Vineet K. Chaudhary. 02 EIRC - Bhubaneswar Chapter - Pujan Ceremony for 06 extended floor of the Chapter building - Nesar Ahmad and N.K. Jain with Managing Committee and other members of the Chapter. EIRC - Bhubaneswar Chapter - Full Day Seminar on 07 Revised Schedule VI, XBRL Mode of Filing and Emerging Changes in Service Tax - Nesar Ahmad addressing. Others sitting on the dais from Left: A. Acharya, R.K. Kanodia, N.K. Jain, J.B. Das and D. Mohapatra. EIRC - Full Day Seminar on XBRL Under Revised 08 Schedule - VI, E-Voting and E-Conferencing - Lighting of Lamp to mark the Inauguration - Standing among others Dr. Pankaj Srivastava (Director, MCA), B P Dhanuka, Debashish Bandopadhyay, {ROC (WB)}, Ranjeet Kr. Kanodia, J. P. Agarwal (Architect, M/s. Agarwal & Agarwal) NIRC - Gurgaon Chapter - Celebration of 2nd ICSI 09 Corporate Governance Week 2012 - half Day Seminar on Good Corporate Governance & CSR - Sitting on the dais from Left : Pumit Chellaramani, Deepak Jain, Dhananjay Shukla and Ranjeet Pandey. October 03 2012 CHARTERED SECRETARY 1234 ICSI-OCT2012-6A.qxd 10/1/2012 4:31 PM Page 5 04 05 06 07 09 08 October 1235 CHARTERED SECRETARY 2012 ICSI-OCT2012-6A.qxd 10/1/2012 4:31 PM Page 6 At a Glance Secretarial Audit (SA) A Better Articles (A 398 - 434) p- 1244 p- 1256 Regulatory Exercise Appointment of whole-time Company p- 1244 Secretary under section 383A of the R Sridharan & R. Sriranjani ecretarial Audit is the new gen tool of reformation in Companies Act : Some Critical Issues S Corporate Compliances. It helps to discover and check the practices adopted by the Corporates for compliance Dr. K. R. Chandratre management. SA enables the law enforcing agencies to take ection 383A(1) mandates that every company having timely corrective actions by bringing to book the guilty. In the S such paid-up share capital as is prescribed by the Central times of Corporate Governance epoch, SA would provide comfort Government shall have a whole-time secretary. The words "shall to the stakeholders and other regulatory authorities about the have" were interpreted by the High Court in State of Gujarat v. Compliances. This Article analyses the concept, impact, role of Coromandal Investment Pvt. Ltd. as providing for either PCS, scope, process, procedure in SA and other related areas. employing, or hiring services under a contract for services of, a The enormity of multifarious compliances under the various Laws person who is eligible to be appointed as company secretary. to be complied by corporates and the impact of Secretarial Audit This created an impression that a company secretary need not is listed. The true essence of implementation of Secretarial Audit be in the employment of the company. The learned Judge, is brought out in this Article. however, did not consider the meaning and effect of the expression "whole-time" nor did it attempt to ascertain the true Liability of Reserve Bank of India meaning of the expression "shall have a whole-time secretary" p- 1265 having regard to the external aids of interpretation (in view of the to pay Dividend Distribution Tax ambiguous words "shall have") by applying the rule of "purposive interpretation"; he merely interpreted the words "shall have" by applying the literal rule of interpretation. Had this been done, T.N. Pandey probably the Judge would not have come to the conclusion which he author in this article has raised the issue as to whether he has come to. The purpose of the provision clearly is, which is T the RBI should be made liable for Dividend Distribution the true intention of the Legislature, to enjoin the companies Tax in respect of the dividends paid by it to Government of India. falling within the prescribed share capital bracket to employ a He has raised the issue of justification of dividend being exempt person as company secretary on full-time basis and debarring from tax and has quoted the examples of high income individuals such person from engaging in any employment, profession or who are receiving dividends in huge sums but not paying a single vocation. The Legislature do well to change the language and rupee by way of tax. insert clear and unambiguous words in section 383A to avoid any future calamity of misconstruction. Cloud Computing p- 1268 Enforcement Actions under p- 1250 Paras Kumar Jain Securities Laws loud computing is a model to procure information C technology capabilities on pay-per-use basis using internet M. S. Sahoo and thus saving money on infrastructure and support. There are no he Securities are a class of instruments which do not laws exclusive to the cloud.