Economy

Legal matters

| Updated on March 13, 2011

This column has been contributed by vakilsearch ( >www.vakilsearch.com), an online legal guidance provider. These questions have been asked on vakilsearch.com.

We are a listed company with subsidiaries and associates. We are also part of some joint venture companies. As part of our compliance requirements, we need to have the audited accounts (standalone audited accounts and consolidated accounts) approved by 31st May 2011. For preparing consolidated accounts of the listed companies, the audited accounts of the subsidiaries, associates and joint venture companies have to be approved by their respective boards. What if the audited accounts of any of the subsidiary and/ or associate and/ or JV company cannot be approved by the Board within the time frame, how do we get the consolidated accounts of the listed company prepared and approved within the time frame?

If the audited accounts of the subsidiary and/or associate and/or JV company could not be approved by the Board and you want to get the consolidated accounts of the listed company prepared and approved within the time frame, you can do the following:

Step 1: Under Section 212(6), prepare a report detailing why the information was not obtainable and attach it to the balance sheet of the holding company.

Step 2: In addition, the holding company will have to make an application to the Central Government under Section 212(8) of the Companies Act. The application will have to be made in the specified form and in accordance with the guidelines laid down (For the exact form, you can refer to Page 2941 of the Ramaiya Companies Act). This form can be prepared electronically. Please note that these guidelines prescribe a nominal fee which will have to be paid as well.

We are a company based in Nagpur importing and supplying equipment for the construction industry. We have grown rapidly in size over the past two years, and today we employ 27 people in our facility. We discovered in late 2009 that an employee was informing our competitors about the internal working of our company and also encouraging wastage (although there was no evidence of theft). We asked him and two junior employees, both, to resign immediately. By the beginning of 2010, all three employees left the company. In February this year, an unknown Maharashtra based union is threatening us saying that we did not pay minimum wages and that we have to pay bonus for one month. They are also threatening to gherao the company and disrupt the trading activity. What action can we take?

Immediately, you can take the benefit of the Maharashtra Recognition of Trade Unions and Prevention of Unlawful Practices Act (also called the MRTU & PULP Act). As per the said Act, you can get an injunction against the union and until the dispute is resolved by the Labour Court, prevent any sort of disruption of activity at your enterprise. Please do this without any further delay.

Regarding the Payment of Bonus, because the size of your company has crossed twenty, you have to pay one month's bonus to every employee as per the Payment of Bonus Act. However, it is sufficient if you pay a month's bonus during Diwali or some other festival. It is not necessary to pay bonus once again.

Regarding the minimum wages, this is a mandatory requirement. If they (the Union) are claiming that you were not paying minimum wages, ask them for the notification which lays down what the minimum wages are, which will be issued by the State Government from time to time. If you were indeed not paying the minimum wages, you can pay the balance due immediately. Remember that providing free accommodation or at very nominal rent to employees to stay is included in the calculation of the minimum wages.

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Published on March 13, 2011
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