NSEL said these five defaulting members did not have adequate commodities in the warehouses, which is against the mechanism specified in the Exchange circulars
National Spot Exchange Ltd (NSEL) said it has filed complaint against five of its defaulting members before the investigation authorities.
In a statement, NSEL said it declared its nine members as defaulters when they did not complete the last pay-in. "Amongst these nine defaulting members, the exchange has initiated case for investigation against five defaulting members who did not have adequate commodities in the warehouses, which is against the mechanism specified in the Exchange circulars. Non-delivery of commodities or its withdrawal is a breach of faith and breach of contractual arrangements," the release said.
The five defaulters against which NSEL has filed complained are, Ark Imports Pvt Ltd, Lotus Refineries Pvt Ltd, NK Proteins Ltd, Vimladevi Agrotech Ltd and Yathuri Associates. The four other announced defaulters are Loil Overseas Foods Ltd, NCS Sugars Ltd, Spin Cot Textiles Pvt Ltd and Tavishi Enterprises Pvt Ltd.
As per the rules and bye-laws, the Exchange has asked these defaulting members to submit their books of accounts and hand-over all the collaterals to NSEL.
NSEL has appointed SGS to carry out quality and quantity inspection of the commodities lying in the warehouses and their reports are being received in stages based on the inspection being done.
NSEL said it will also take similar recourse for other defaulting members who are not cooperating. As informed earlier, the NSEL board has already initiated investigation against the management team and its former managing director and chief executive.
Given the recent corporate scandals there has been a greater focus on better corporate governance and transparency in the new Companies Bill with stricter punitive action. However, its effectiveness would be known only when the provisions come into force
“The new Companies Bill has brought in a lot of transparency by making companies disseminate information in a clear and transparent manner,” says Savithri Parekh, Head of Legal & Secretarial, Pidilite Industries at a Moneylife Foundation event. There have been substantial changes in the restructuring provisions with greater focus on disclosure and compliances. The Bill provides for greater autonomy for the companies to function, more of self-regulation, greater responsibility of the board and directors, and focus on compliance. “Many of the new provisions in the new version of the Companies Bill 2012 have been made because of two major incidents, one is the Satyam scam and the other is that of Sahara,” said Jayant Thakur, Chartered Accountant, who advises listed and non listed companies and intermediaries on SEBI laws. “These two incidents raised many questions with the provisions of the existing law such as that of independent directors, voting powers etc. and how could the shareholders be compensated for the losses. All this has led to new provisions such as that of class action suits,” explained Mr Thakur speaking at the same event.
But much depends on the timing of the Bill when it would come into force. “In the last 10-15 years, many of the laws relating to corporate bodies have a provision that they will come into effect partly or wholly on notification. Therefore, the whole act may not come into effect immediately. For example, going eleven years back, the Companies Amendment Act 2002, has still not come into effect wholly, because there are certain provisions that have come into effect and certain provisions that have not come into effect. Much this is because of litigation or the way the laws have been framed. Here again, in the present Bill, some of the sections may come into force on a phased basis,” said Mr Thakur
In terms of disclosures, says Ms Parekh, “the annual return filed by the company would need to contain details of the remuneration of the directors and key management personnel, penalty or punishment imposed, certification of compliances and other details like shares held by foreign investors etc.” The Directors Report would contain enhanced disclosures such as number of meetings of the board, policy on Directors’ appointment, remuneration including qualification, positive attributes, independence and other matters, particulars of loans guarantee and investments and details about CSR policy and initiatives. Though some of the disclosures were available in other parts of the Company’s Annual Report, now, the shareholders would find this information in only one place.
While the earlier Act had no provisions on insider trading, under the new Act insider trading is prohibited and penal provisions under the corporate laws will also be applicable. The guilty would be subject to imprisonment up to 5 years or fine of minimum Rs. 5 lakhs and maximum Rs25 crores or three times amount of profits or both. However, the issue in this provision as pointed out by Ms Parekh is ‘price sensitive information’ is not clearly defined. There are only examples of price sensitive information that is given in clause 36 of the Listing Agreement.
One of the important introductions in the Companies Bill is that of Corporate Social Responsibility (CSR) which has been mandated for all companies. “Well managed companies like the Tata’s, Nestle etc. spend anywhere between 1.2% and 3.5% of their profits on CSR activities,” explained Ms Parekh. The new bill mandates a compulsory expenditure of 2% of average net profit of the last three years. Activities cannot be conducted in remote areas, but in the local areas where the company operates. Details of the activities and the location need to be disclosed as well.
Under the Companies Bill, if anyone (officers, directors, independent Directors, auditors) commits a fraud, they would go for a minimum imprisonment of six months and up to 10 years. And if the public interest is affected in the fraud, the minimum imprisonment is three years. “Fraud is very widely defined,” said Mr Thakur. Statements under oath, mis-statements in prospectus, mis-statements in share sale/purchase agreements, mis-statements in projections, etc. for obtaining bank credit, making multiple share applications and fraudulently issuing duplicate shares are some violations treated as fraud.
For the first time, a provision has been made for class action suits. It is provided that specified number of members, depositors or any class of them, may, if they are of the opinion that the management or control of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors, file an application before the Tribunal on behalf of the members or depositors. Knowing the limitation of individual investors to fight against a company’s might, many a company has taken them for granted. To overcome this weakness in the law, the Companies Bill has now proposed a new Clause 37 that provides for action by a group of shareholders. The session ended with some searching questions from the audience.
The upmove on Nifty may continue if it manages to close above 5,455
The Indian indices on Monday opened in the positive for the second consecutive trading session and remained in the positive for most of the session and closed marginally higher than Friday’s close. The fall in US home sales eased speculation the Federal Reserve will reduce economic stimulus next month.
The Sensex opened at 18,603 and the Nifty opened at 5,499. Both the benchmarks made their respective intra-day high and low before ending in the positive for the third consecutive trading session. The Sensex moved in the range of 18,489 and 18,728 while the Nifty moved in the range of 5,454 and 5,529. The Sensex closed at 18,558 (up 39 points or 0.21%) while the Nifty closed at 5,477 (up 5 points or 0.09%). The National Stock Exchange (NSE) recorded a lower volume of 63.37 crore shares.
Among other indices, Media (1.57%); MNC (1.49%); Realty (1.48%); Pharma (1.12%) and Infra (1.04%) were among the top gainers while Bank Nifty (1.02%); Finance (0.88%); PSE (0.23%); Service (0.19%) and Energy (0.04%) were the top losers today.
Of the 50 stocks on the Nifty, 30 ended in the in the green. The top gainers were Sesa Goa (9.93%); BHEL (6.03%); Jaiprakash Associates (4.87%); Ranbaxy (4.38%) and Ambuja Cements (3.38%). The major losers were IDFC (8.77%); Axis Bank (5.15%); ONGC (3.63%); Gail (3.22%) and ICICI Bank (2.47%).
Apart from the slump in the US home sales, the statement given by financial services secretary Rajiv Takru after the meeting between finance minister P Chidambaram, finance ministry officials, bankers and foreign institutional investors in Mumbai on Saturday, brought further support for the ongoing positive move.
Takru said, "All measures to attract fund flows are under consideration. I think you should see something coming up shortly, say within a week or in the next 10 days." Also economic affairs secretary Arvind Mayaram present at the meeting, later said tapering of quantitative easing programme by the US will have little impact as it will be compensated by strong capital inflows from the FDI side and by issuance of overseas bonds by public sector entities. He said, of the $11-12 billion of inflows expected, $4 billion would be through quasi-sovereign bonds. The partially convertible rupee reached Rs64.20/21 per dollar today.
Montek Singh Ahluwalia, deputy chairman of the Planning Commission has suggested a cut in wasteful government expenditure as a strong and necessary measure to control the fiscal deficit but defended financial burden of the Food Security. "It's unpleasant, it's tough, but if people understand that you are trying to manage an economy, after all there are a lot of people who say there is a huge amount of waste in government expenditure, it is not going to be that difficult to cut it," Ahluwalia told in a television interview. Planning Commission was in the eye of the storm last year for its lavish renovation of toilets.
Global credit rating agency Fitch ratings today said it was getting more challenging for India to meet its fiscal deficit target in the current fiscal year ending March 2014 with revenues slowing. Fitch had last week said that the pressure on Indian currencies and asset prices is not a trigger for rating action at this point. Fitch has a stable outlook on the 'BBB-' sovereign credit ratings for India.
The research and analysis wing of Moody’s, the global rating agency, today said that the Indian economy will grow at 4.5% in the first quarter (April-June) of 2013-14. Moody's Analytics said that the gross domestic product (GDP) data is expected to show further deceleration in this quarter, "highlighting the challenges faced by new central bank governor Raghuram Rajan." The GDP numbers will be released on Friday. Earlier, Finance Minister P Chidambaram had also said that the first quarter GDP growth would remain more or less flat.
Most of the Asian indices closed in the positive. Jakarta Composite fell the most, 1.18% while Shanghai Composite was the top gainer, 1.90%.
Sales of new single-family homes in the United States fell sharply in July to their lowest level in nine months, casting a shadow over the country's housing recovery. Sales dropped 13.4% to an annual rate of 394,000 units, the Commerce Department said on Friday. The report could weaken the case for the U.S. Federal Reserve to reduce its support for the economy by trimming monthly bond purchases later this year.
At the time of writing, the European indices were trading lower. The durable-goods data from the US was lower than expected but the US Futures shrugged off the negative data and went into positive territory.