The Hindu Business Line : What we don't see at RoC

INSPECTION of documents at the Registrar of Companies (RoC) is never a satisfying exercise. The documents are never complete. Is there a time limit on the RoC to update the files of companies once documents relating to them are filed with the RoC? - Anand Kumar, Bangalore

There seems to be no transparent legal requirement in this regard. Maybe, a conscientious RoC has come out with an internal circular.

But the point made by you is well taken. When companies have to work under strict time schedules as far as filing of documents are concerned, a fortiori, the RoC too should be made to work under strict time schedule because otherwise the documents filed on time may lie buried in the heap of papers coming into the RoC's office daily at a torrential pace for days together making inspections an incomplete exercise.

The ideal position would be when documents are taken on record on real-time basis, that is, as and when filed. This is possible when companies are given access to the RoC's Web site subject to strict controls so that they can post the information straightaway.

Act of commission

THE board of directors wants to fix sub-commission for individual activities without increasing the percentage of commission approved by the Central Government under Section 294AA. Will this require a fresh round of special resolution and Central Government approval? - Sampath Kumar, Bangalore

Though the overall rate of commission remains the same, it would be advisedly better for the company to seek fresh approvals because change of facts and circumstances always require such a course. The sanctioning authority must be taken into confidence, lest the company is accused of keeping them in the dark. After all, for all one knows, the Central Government could have sanctioned commissions per activity aggregating to a smaller percentage than what has been sanctioned.

Price discovery

WHAT is floor price of share and how is it determined? - Manas Dey, New Delhi

The raison d'etre of a book-building exercise is `price discovery'. The participants bid for shares on offer. The issuer-company, however, is at liberty to set the floor or the minimum price. This floor price is fixed in consultation with the merchant banker. A criticism levelled against the book-building process is that the floor price could mislead the participants, thus frustrating a true price discovery.

Lapsed losses?

THERE was an open offer for shares resulting in delisting of the company with public share holding being reduced to less than 10 per cent. The company has been carrying forward losses incurred when it was a listed company. Will these losses lapse now? - L. V. Srinivasan, Chennai

No, Section 79 of the Income-Tax Act comes into picture only when there is a change in majority voting power in a closely-held company, whereas in this case the company was admittedly a widely-held one not only as on the last day of the previous year in which the loss was incurred but, more importantly, at the time when the majority voting power changed hands.

This is evident from the language of the section which, inter alia, reads:

"Where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested."

Help me choose

CAN I opt for 10 per cent tax on long-term capital gains from few scrips sans indexing benefit, and 20 per cent tax with indexing benefit on other scrips? - Makhan Javer, e-mail

The choice can be exercised in respect of each transaction. You would be perfectly justified in working out the comparative tax liability under either option and choose the one that exposes you to the minimum tax liability.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

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