Source Business Line
Govt may relax company law provisions for private firms
K. R. SRIVATS
Private companies may be exempted from related party transactions
NEW DELHI, JUNE 24:
Private companies may be exempted from complying with the new company law provisions on related party transactions (RPTs).
This forms part of several relaxations proposed by the Corporate Affairs Ministry (MCA) for private firms.
The Ministry has now come out with a draft notification which, among other things, provides for exemption to private companies with regard to compliance with provisions on related party transactions.
The new company law had wanted private companies to comply with detailed provisions on such transactions, including the most stringent one of seeking nod from disinterested directors and shareholders.
"The latest MCA proposal will free private companies from the hassle of getting disinterested vote and should definitely bring cheer to them," Lalit Kumar, Partner, J Sagar Associates, a law firm, told Business Line. Getting a disinterested vote is generally not possible in a private company situation where there are few members who are mostly related to one another, he added.
Interestingly, the RPT provisions in the erstwhile company law (1956 Act) did not exempt private companies.
"So the current proposal under the new company law is a major shift for private companies as far as the RPT are concerned," Kumar said.
Audit cap
Another proposal that could spell some good news for the audit fraternity is the exclusion of private companies from the audit cap norm.
According to this proposal, audits of private companies would not be counted for deciding on the audit cap of 20 audits per partner.
In all, the Ministry has proposed 13 changes to the norms involving private companies. These include provisions relating to acceptance of public deposits, voting rights, restrictions on board powers and loans to directors besides managerial remuneration.
While the draft notification would be placed before each house of the Parliament, suggestions and comments are invited from the public till July 1, the Ministry said in a circular.
(This article was published on June 24, 2014)
Source business standard
| Banks seek stringent norms for defaulters |
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Mumbai, 24 June At the behest of the finance ministry, banks have initiated aseries of stringent measures against defaulters. On Tuesday, at a meeting on a ministry- prepared list of the top 50 defaulters, bankers said a defaulter couldn't open a current account in any other bank, adding if an account was nonperforming for any bank, all the consortium members should classify the loan as a non- performing asset ( NPA). Kingfisher Airlines and Winsome Diamonds are among the top three on the list of defaulters. Some banks suggested as a precautionary measure, a borrower shouldnt be allowed to open a current account with a different bank even if a loan was standard in the base bank. They added there was a need to come up with ground rules on NPA sales to asset reconstruction companies (ARC). " There is a view that all consortium lenders should sell NPAs to one ARC, not separately," said a banker present at the meeting. Once a loan was sold, monitoring the ARCs was also important, banks said. Most banks have seen the assets bought by ARCs from banks were sold, without any effort to revive the unit. " The idea behind selling it to ARCs is to revive the asset. But in most cases, ARCs sell the asset to recover the money," said another banker. To revive a stressed asset, fund infusion might be needed, which an ARC might not be able to do. Banks also discussed options for ARCs to infuse funds in ailing units. Following a sharp rise in NPAs through the past two years, the Reserve Bank of India and the government have taken several steps to tackle the issue. The central bank has unveiled fresh norms to identify stress in the system at an early stage, and promised incentives to banks for doing so. However, if banks fail to act after stress is detected, they will face accelerated provisioning norms. According to a recent report by rating agency Icra, for public and private sector banks, gross NPAs, as percentage of total advances, increased through the past year — from 3.3 per cent to 3.9 per cent. The rating agency expects public sector banks gross NPAs to remain between 4.4 per cent and 4.7 per cent by March 31, 2015, against 4.4 per cent in March this year. " Overall ( for public sector banks and private banks), gross NPAs could be between four per cent and 4.2 per cent by March 2015, against 3.9 per cent as of March 2014," the rating agency said. WHAT LENDERS WANT allowed to open a current account with a different bank even if a loan is standard in the base bank should sell NPAs to one ARC, not separately monitoring the ARCs is important options for ARC to infuse funds in ailing units Uniform NPA classification proposed; Kingfisher, Winsome Diamonds among top 3 in finance ministry's top- 50 defaulters list |
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93810 11200
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