Transfer of units from one SEZ to another SEZ

Instruction No. 59, dated 18-6-2010

Government has been receiving requests for shifting of units from one SEZ to another SEZ due to various reasons. These requests were considered but could not be acted upon as there are no specific provisions under the SEZ Rules for these shifts and also there are no rule prohibiting the shifts, with the consolidation of SEZs, shifting of units may become more frequent and, accordingly, the entire issue was placed before Board of Approvals for its directions. After due deliberations, it has been decided by the Board that in principle there is no objection for such shifting. However, all proposals for shifting of units from one SEZ to another must be placed before the Board for its consideration.

New law will make it tough to remove auditors
By Falaknaaz Syed Jun 21 2010 , New Delhi 

Tags: ICAI, Companies 

Companies may find it difficult to remove auditors as the government has incorporated the recommendations made by the Institute of Chartered Accountants of India (ICAI) in the Companies Bill 2009. The bill is currently pending wi­th the parliamentary standing committee on finance headed by former finance minister Yashwant Sinha.

The ICAI has suggested that an auditor should be removed only if 75 per cent shareholders vote in favour of his removal.

“We are seeking certain changes in the Companies Bill to make removal of auditors difficult. At present, auditors can be removed th­rough a simple resolution. We are asking that an audit­or should be removed only if there is a 3/4th majority,” ICAI president Amarjit Cho­pra said.

As per section 224(7) of Companies Act, 1956, extraordinary general meeting (EGM) of a company can remove an auditor even before the expiry of his or her term through an ordinary resolution.

The ICAI chief said: “ A simple resolution means a simple majority where 50 per cent of the shareholders holding voting power and one vote can remove an auditor. We are asking for a special resolution, which means not less than 75 per cent of the shareholders holding voting power and one vote should be required to remove the auditor.”

In the present law, in case the board of a company decides to remove their auditor, a confirmation is obtained from the shareholders through an EGM. The EGM of the company offers an opportunity to the auditor to put forth his side of the story. In case the shareholders are not convinced by the auditor, then he or she can be removed through an ordinary resolution. After this the resolution is forwarded to the central government, it gives the auditor a hearing and decides to accept or reject his removal.

GK Kedia & Company’s managing partner Gopal Kumar Kedia said: “In many small companies, the directors are the shareholders. There have been instances where the management of a company dictates the terms to the auditor although he or she is supposed to be independent. In case he does not cooperate with the directors in corrupt activities; they can remove him through a simple resolution. The central government too normally accepts the resolution.”

“In certain other cases, the managements may not pay the auditor and use competition to make him work on lower rates (against the code of ethics). So if the government accepts the amendment in the Companies Bill, auditors will be freed from pressure of management,” said Kedia.

The multi-crore Satyam scam that unfolded around two years ago brought to light the collusion between management of the IT company and its auditor PricewaterhouseCoopers (PwC), after it missed the fraud that was brewing over the years. The chairman of Satyam created bogus accounts by inflating the profits of the company, creating fictitious cash and assets on its books.

Financial Chronicle, New Delhi, 22-06-2010