(Tuesday, 15 September 2009) Written by Dave Coles
Not sure if anyone can help, after a bit of advice, we have an employee who's wife also works for us part time but in addition has her own "design" company, a large sub-contract order has gone to her company for the design, supply & fit of kitchens/bathrooms on one of our larger sites, in turn she has raised an order to another company (who we have a direct account with) to supply the kitchens/bathrooms - is this legal or just immoral? as it is, she stands to gain rather a large "Slice" of the profits that, in my opinion should be the company's.
Does anybody know if this is against company law, or is it just a case of a "loophole" where individuals can make profits at the expense of others?
Thanks
As everybody admits, by its very nature, company management and the governing law will always be complicated. Company is a juristic person, it will survive irrespective of its members coming and going, it is run by professionals called directors, company needs to adhere to the strict rules pertaining to disclosure of material information to the statutory bodies, fairness is to be adhered to at any cost and as such the company management will always be complicated. Indian Companies Act, 1956 deal with the issues pertaining to incorporation, management and winding-up of companies in India. With many amendments and new concepts coming-in, a need was felt to repeal the existing companies act, 1956 and to enact a new company law. The concept paper with regard to the proposed companies bill is kept in the official websites seeking suggestions/comments from the public. Though, the ministry of corporate affairs in India very frequently highlights the new companies bill, it is yet to be passed and it still remains as a Bill.
Under the existing companies act, 1956, the central government to some extent, the Registrar of Companies, the Company Law Board, the Company Court and SEBI in case of listed companies, are conferred with certain powers like calling for information, taking action for violation of law, the prevention of mismanagement and the liquidation process etc. It is there everywhere that it is the responsibility of the state to safeguard the interests of the public and it always includes shareholders. As such, everywhere the state's authority to take appropriate action against the erring companies and erring officials is preserved though the state will very rarely exercise its power. Apart from the other authorities, the Company Law Board and Company Court are conferred with certain powers like entertaining applications from the minority who allege oppression and mismanagement, the applications seeking winding-up, sanctioning the scheme of amalgamation etc. Again, the power of Company Law Board is limited while dealing with the issue of remedial nature. Thus, the shareholder or the person concerned or the company, are normally confused as to where he should go seeking redressel in a company litigation and its a fact. Again, when the power is split among many independent forums, then, there will be confusion and administration of justice will be difficult. Addressing this, the state has proposed to set-up a tribunal called "National Company Law Tribunal" and also "Appellate Tribunal". The issue is challenged before the Constitutional Court and the issue is now pending before the Supreme Court of India.
In the proposed Companies Bill, there is a provision for establishment of National Company Law Tribunal and the issue of its Jurisdiction in entertaining all company litigation is to be further stressed and clarified.
I do strongly feel that there is no clarity under the Indian Companies Act, 1956 as to where a company issue is to be agitated and it is to be clarified in the proposed bill. It is very very vital where India attracts so much FDI and where there tend to be a rise in Economic Growth in India.
(Thursday, 27 August 2009) Written by Adrian Roche
Can someone advise me what the rules are for the minimum shareholder vote required for the approval of a resolution at an AGM. I was advised it was 75% of members thanks
I am in the process of alloting new shares in a Ltd company and the Company's Articles and Investor Agreement contain a pre emption rights clause requiring them to be offered to the existing investors in proportion to their existing share ownership.
My question is; When writing to the Company investors to offer the new shares: should I -
1. offer them at the premium rate stating that in absence of them renouncing the shares this will be interpreted as acceptance.
or,
2. offer the investors the shares, asking for express acceptance in via writing?
My preference would be the latter and not for an absence of a response to be construed as acceptance.
Would there, in this process, also be any legal protocol for whether the shares are offered at nominal or premium rates?
Any links to templates would be much appreciated.
Thanks!
Please can anyone tell me who employs the directors in this situation. Two are working and will not let the other two anywhere near the premises. The dividend paid is minute but their wages are astronomical. Must be a law against this.
Hi,
Thanks for visiting these pages. I hope to upload and comment on various issues relating to the new act and general common issues that arise within comany law.
Hopefully speak soon
Husband and wife hold shares in a Ltd Co, 99 to H and 1 to W. The husband dies intestate leaving two sons of a former marriage. The intestacy rules provide for half of the estate residue to go to the sons. However, they want half of the assets of the company (its freehold and cash) but I think they are only entitled to ownership of half of the deceased's shares. This leaves the wife as the majority shareholder. Does anyone have any thoughts, or experience of this situation?
This is an enquiry really for my brothers comany
He holds 75% shares (recently injected money into the business and revaluation give him 75%)
He and Mother are directors, Mother is Chairman
2nd brother, until recently an employee, took out a loan,circa 120K, in his own name, but managed to get the company to pay the 1st instalment. It was then discovered and stopped. He is no longer an employee as the company cannot afford either his salary, or his expenses, generally approved by the Chairmam. This is not the first time funds have been misappropriated, but it has been smoothed over in the pas by the chairman. Now with the change in shareholding, it would appear she does not understand she can neither 'smooth it over' or indeed, undertstand that the company cannot afford him or his behavior or in deed condone his behavior.
He has no money, other than that privately accepted from his mother (mainly due to gambling debts)
Does the company have grounds for legal action?
The Chairman whishes him to be re-instated. Can this be prevented?
How can the company remove the Chairman?
All advise will be welcome.
I am a shareholder 15% of a company and Md/Director. The other shareholders are 50% VC and 35% chairman. The chairman wants to make me redundant as the company can not affor to keep me as he put it. I am the only director that works full time in the company there are no other managers. Can anyone advise me on the following.
Can he make me redundant? also he wants to do this with only a months notice period, although there was verbal agreement and some initail proposed agreements to 6 moths notice. but no service agreements were ever made.
Can he remove me as a director.
can he force me to sell my shares.
Opinion