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Frequently Asked Questions on Registration of Marriages
1. Who is the Registrar of Marriages?
2. What is the difference between registration of marriages under the Hindu Marriage
Act, 1955 and the Special Marriage Act, 1954
3. Are there any age limits prescribed?
4. Is it necessary for both the parties to the marriage to appear before the Registrar?
5. Whether a marriage between a citizen of India and a citizen of any other country can
be registered either under the Hindu Marriage Act or the Special Marriage Act?
6. What is the procedure for registration of Marriage ?
7. What is the procedure for getting the Marriage registered under the special Marriage
Act?
1. Who is the Registrar of Marriages?
Ans: All Sub-Registrars are Registrars of Marriages under the Hindu Marriage Act and
Marriage Officers under the Special Marriage Act.
2. What is the difference between registration of marriages under the Hindu Marriage
Act, 1955 and the Special Marriage Act, 1954?
Ans:The Hindu Marriage Act is applicable only to the Hindus, whereas the Special
Marriage Act is applicable to all citizens of India.
The Hindu Marriage Act provides for registration of an already solemnized marriage.
It does not provide for solemnization of a marriage by the Registrar. Parties to the marriage
have to apply to the Registrar in whose jurisdiction the marriage is solemnized or to the
Registrar in whose jurisdiction either party to the marriage has been residing at least for six
months immediately preceding the date of marriage. Both the parties have to appear before the
Registrar along with their parents or guardians of other witnesses within one month from the
date of marriage. There is provision for condonation of delay upto 5 years by the Registrar and
thereafter by the District Registrar concerned.
The Special Marriage Act provides for solemnization of a marriage as well as
registration by a Marriage Officer. The parties to the intended marriage have to give a notice
to the Marriage Officer in whose jurisdiction at least one of the parties has resided for not
less than 30 days prior to the date of notice. It should be affixed at some conspicuous place
in his office. If either of the parties is residing in the area of another Marriage Officer, a
copy of the notice should be sent to him for similar publication. Marriage may be solemnized
after expiry of one month from the date of publication of the notice, if no objections are
received. If any objections are received, the Marriage Officer has to enquire into them and
take a decision either to solemnize the marriage or refuse it. Registration will be done after
solemnization of the marriage.
Any marriage already celebrated can also be registered under the Special Marriage Act
after giving a public notice of 30 days, subject to the conditions.
3. Are there any age limits prescribed.
Ans: Yes. The bridegroom and the bride must have completed 21 years and 18 years of
age respectively.
4. Is it necessary for both the parties to the marriage to appear before the Registrar?
Ans:Yes. It is required under the law.
5. Whether a marriage between a citizen of India and a citizen of any other country can
be registered either under the Hindu Marriage Act or the Special Marriage Act?
Ans:No. The above Acts are applicable only to the citizens of India.
6. What is the procedure for registration of Marriage ?
Ans:An application for the registration shall be in FORM 'A' and shall be signed by
each party to the marriage or by the guardian such party shall be presented in person before
the Registrar in whose
* Jurisdiction either party to the marriage has been residing for at least
six months immediately preceding the date of marriage.
* The party has to append age proof, marriage photo
* Both the parties to the marriage and the guardian if any, appear before
the marriage register personally.
* the application for registration of marriage shall be presented within
one month of the date of solemnization of the marriage.
* if the delay is above one month up to 5 years Sub-Registrar will condone
the delay
* if the delay is above 5 years the District Registrar will condone the
delay.
7. What is the procedure for getting the Marriage registered under the special Marriage
Act?
Ans: The parties to the intended marriage have to give a notice to the marriage
officer in whose jurisdiction atleast one of the parties has to reside for not less than 30
days prior to the date of notice.
This notice will be displayed in the notice board of the Sub-Registrar office. After
expiry of one month if no objections are received, declarations by the bride and bridegroom
shall have to be filed. Then the marriage will be solemnized.
Requirements:
1. Temple/ Function hall reciepts
2. Marriage Photos with negatives
3. Wedding Card
4. Ration card / oter card (Residence proof) (Jurisdiction is very important)
5. Age proof ( 10th Marks list / Income tax Card etc / Driving License )
6. THREE persons for witness (no need of proofs)
7. Application ---- Form A (under rule 5(1) )
(Note: The certificate can be issued on the same day itself)
Friday, March 14, 2008
Thursday, March 13, 2008
Conversion of shares into stock
(23) The directors may, with the sanction of the company previously
given in general meeting, convert any paid up shares into stock.
(24) When any shares have been converted into stock, the several holders of
such stock may thenceforth transfer their respective interests therein, or any part of such
interest, in the same manner and subject to the same regulations as and subject to which any
shares in the capital of the company may be transferred, or as near thereto as circumstances
admit.
(25) The several holders of stock shall be entitled to participate in the
dividends and profits of the company according to the amount of their respective interests in
such stock ; and such interests shall, in proportion to the amount thereof, confer on the
holders thereof, respectively, the same privileges and advantages for the purpose of voting
at meetings of the company and for other purposes as would have been conferred by shares of
equal amount in the capital of the company but so that none of such privileges or advantages,
except the participation in the dividends and profits of the company, shall be conferred by any
such aliquot part of the consolidated stock as would not, if existing in shares, have
conferred such privileges or advantages.
Increase in capital
(26) The directors may, with the sanction of a special resolution of the
company previously given in general meeting, increase its capital by the issue of new
shares; such aggregate: increase to be of such amount, and to be divided into shares of such
respective amounts, as the company in general meeting directs, or, if no direction is given,
as the directors think expedient.
(27) Subject to any direction to the contrary that may be given by the
meeting that sanctions the increase of capital, all new shares shall be offered to the
members in proportion to the existing shares held by them, and such offer shall be made by
notice specifying the number of shares to which the member is entitled and limiting a time
within which the offer, if not accepted, will be deemed to be declined; and after the
expiration of such time, or on the receipt of an intimation from the member to whom such
notice is given that he declines to accept the shares offered, the directors may dispose of
the same in such manner as they think most beneficial to the company.
(28) Any capital raised by the creation of new shares shall be considered as
part of the original capital, and shall be subject to the same provisions, with reference to
the payment of calls, and the forfeiture of shares on non-payment of calls, or otherwise, as if
it had been part of the original capital.
(23) The directors may, with the sanction of the company previously
given in general meeting, convert any paid up shares into stock.
(24) When any shares have been converted into stock, the several holders of
such stock may thenceforth transfer their respective interests therein, or any part of such
interest, in the same manner and subject to the same regulations as and subject to which any
shares in the capital of the company may be transferred, or as near thereto as circumstances
admit.
(25) The several holders of stock shall be entitled to participate in the
dividends and profits of the company according to the amount of their respective interests in
such stock ; and such interests shall, in proportion to the amount thereof, confer on the
holders thereof, respectively, the same privileges and advantages for the purpose of voting
at meetings of the company and for other purposes as would have been conferred by shares of
equal amount in the capital of the company but so that none of such privileges or advantages,
except the participation in the dividends and profits of the company, shall be conferred by any
such aliquot part of the consolidated stock as would not, if existing in shares, have
conferred such privileges or advantages.
Increase in capital
(26) The directors may, with the sanction of a special resolution of the
company previously given in general meeting, increase its capital by the issue of new
shares; such aggregate: increase to be of such amount, and to be divided into shares of such
respective amounts, as the company in general meeting directs, or, if no direction is given,
as the directors think expedient.
(27) Subject to any direction to the contrary that may be given by the
meeting that sanctions the increase of capital, all new shares shall be offered to the
members in proportion to the existing shares held by them, and such offer shall be made by
notice specifying the number of shares to which the member is entitled and limiting a time
within which the offer, if not accepted, will be deemed to be declined; and after the
expiration of such time, or on the receipt of an intimation from the member to whom such
notice is given that he declines to accept the shares offered, the directors may dispose of
the same in such manner as they think most beneficial to the company.
(28) Any capital raised by the creation of new shares shall be considered as
part of the original capital, and shall be subject to the same provisions, with reference to
the payment of calls, and the forfeiture of shares on non-payment of calls, or otherwise, as if
it had been part of the original capital.
Board of directors
Board of directors
In relation to a company or other formal organization, a director is an officer (that is, someone who works for the company) charged with the conduct and management of its affairs. A director may be an inside director (a director who is also an officer or promoter or both) or an outside, or independent, director. The directors collectively are referred to as a board of directors. Sometimes the board will appoint one of its members to be the chair or chairperson of the board of directors, traditionally also called chairman or chairwoman.
Theoretically, the control of a company is divided between two bodies: the board of directors, and the shareholders in general meeting. In practice, the amount of power exercised by the board varies with the type of company. In small private companies, the directors and the shareholders will normally be the same people, and thus there is no real division of power. In large public companies, the board tends to exercise more of a supervisory role, and individual responsibility and management tends to be delegated downward to individual professional executive directors (such as a finance director or a marketing director) who deal with particular areas of the company's affairs.
Another feature of boards of directors in large public companies is that the board tends to have more de facto power. Between the practice of institutional shareholders (such as pension funds and banks) granting proxies to the board to vote their shares at general meetings and the large numbers of shareholders involved, the board can comprise a voting bloc that is difficult to overcome. However, there have been moves recently to try to increase shareholder activism amongst both institutional investors and individuals with small shareholdings. [1] [2] A board-only organization is one whose board is self-appointed, rather than being accountable to a base of members through elections; or in which the powers of the membership are extremely limited.
Contents
1 Classification
2 History
3 Election and removal
4 Exercise of powers
5 Duties
5.1 Acting in bona fide
5.2 "Proper purpose"
5.3 "Unfettered discretion"
5.4 "Conflict of duty and interest"
5.4.1 Transactions with the company
5.4.2 Use of corporate property, opportunity, or information
5.4.3 Competing with the company
5.5 Common law duties of care and skill
5.6 Remedies for breach of duty
5.7 The future
6 Failures
7 Sarbanes-Oxley Act
8 See also
9 Footnotes
10 External links
Classification
Main articles: executive director and non-executive director
Directors are traditionally divided into executive directors and non-executive directors. Broadly, executive directors tend to be persons who are dedicated full-time to their role in relation to the management of the company. Non-executive directors tend to be "outsiders" brought in for their expertise, and to lend a more impartial view in relation to strategic decisions. Many corporate reforms in the late 1990s and early 2000s were focused on increasing the number and role of non-executive directorships in public companies in the belief that an impartial view was more likely to restrain corporate excess and egos and reduce the likelihood of another major corporate scandal. This view is not new; similar recommendations were made by the Cadbury Committee in the United Kingdom in 1992.[3]
In practice, executive directors tend to dominate board meetings simply by virtue of their much greater familiarity with the company and its internal workings.
Some countries also classify persons who are not actually directors as either de facto directors, or "shadow" directors. A de facto director is a person who is not actually appointed as a director, but acts as if they were (often because they wrongly believe that they have been properly appointed as a director). A "shadow" director is also not a director at all, but seeks to control the direction and management of the company without putting themselves forward as being able to do so.[4]
History
The development of a separate board of directors to manage the company has occurred incrementally and indefinitely over legal history. Until the end of the nineteenth century, it seems to have been generally assumed that the general meeting (of all shareholders) was the supreme organ of the company, and the board of directors was merely an agent of the company subject to the control of the shareholders in general meeting.[5]
By 1906 however, the English Court of Appeal had made it clear in the decision of Automatic Self-Cleansing Filter Syndicate Co v Cunningham [1906] 2 Ch 34 that the division of powers between the board and the shareholders in general meaning depended upon the construction of the articles of association and that, where the powers of management were vested in the board, the general meeting could not interfere with their lawful exercise. The articles were held to constitute a contract by which the members had agreed that "the directors and the directors alone shall manage."[6]
The new approach did not secure immediate approval, but it was endorsed by the House of Lords in Quin & Artens v Salmon [1909] AC 442 and has since received general acceptance. Under English law, successive versions of Table A have reinforced the norm that, unless the directors are acting contrary to the law or the provisions of the Articles, the powers of conducting the management and affairs of the company are vested in them.
The modern doctrine was expressed in Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 by Greer LJ as follows:
"A company is an entity distinct alike from its shareholders and its directors. Some of its powers may, according to its articles, be exercised by directors, certain other powers may be reserved for the shareholders in general meeting. If powers of management are vested in the directors, they and they alone can exercise these powers. The only way in which the general body of shareholders can control the exercise of powers by the articles in the directors is by altering the articles, or, if opportunity arises under the articles, by refusing to re-elect the directors of whose actions they disapprove. They cannot themselves usurp the powers which by the articles are vested in the directors any more than the directors can usurp the powers vested by the articles in the general body of shareholders."
It has been remarked that this development in the law was somewhat surprising at the time, as the relevant provisions in Table A (as it was then) seemed to contradict this approach rather than to endorse it.[7]
Election and removal
In most legal systems, the appointment and removal of directors is voted upon by the shareholders in general meeting.[8]
Directors may also leave office by resignation or death. In some legal systems, directors may also be removed by a resolution of the remaining directors (in some countries they may only do so "with cause"; in others the power is unrestricted).
Some jurisdictions also permit the board of directors to appoint directors, either to fill a vacancy which arises on resignation or death, or as an addition to the existing directors.
In practice, it can be quite difficult to remove a director by a resolution in general meeting. In many legal systems the director has a right to receive special notice of any resolution to remove him;[9] the company must often supply a copy of the proposal to the director, who is usually entitled to be heard by the meeting.[10] The director may require the company to circulate any representations that he wishes to make.[11] Furthermore, the director's contract of service will usually entitle him to compensation if he is removed, and may often include a generous "golden parachute" which also acts as a deterrent to removal.
Exercise of powers
The exercise by the board of directors of its powers usually occurs in meetings. Most legal systems provide that sufficient notice has to be given to all directors of these meetings, and that a quorum must be present before any business may be conducted. Usually a meeting which is held without notice having been given is still valid so long as all of the directors attend, but it has been held that a failure to give notice may negate resolutions passed at a meeting, as the persuasive oratory of a minority of directors might have persuaded the majority to change their minds and vote otherwise.[12]
In most common law countries, the powers of the board are vested in the board as a whole, and not in the individual directors.[13] However, in instances an individual director may still bind the company by his acts by virtue of his ostensible authority (see also: the rule in Turquand's Case).
Duties
See also: Fiduciary duties
Because directors exercise control and management over the company, but companies are run (in theory at least) for the benefit of the shareholders, the law imposes strict duties on directors in relation to the exercise of their duties. The duties imposed upon directors are fiduciary duties, similar in nature to those that the law imposes on those in similar positions of trust: agents and trustees.
In relation to director's duties generally, two points should be noted:
1. the duties of the directors are several (as opposed to the exercise by the directors of their powers, which must be done jointly); and
2. the duties are owed to the company itself, and not to any other entity.[14] This doesn't mean that directors can never stand in a fiduciary relationship to the individual shareholders; they may well have such a duty in certain circumstances.[15]
Acting in bona fide
Directors must act honestly and in bona fide. The test is a subjective one—the directors must act in "good faith in what they consider—not what the court may consider—is in the interests of the company..."[16] However, the directors may still be held to have failed in this duty where they fail to direct their minds to the question of whether in fact a transaction was in the best interests of the company.[17]
Difficult questions can arise when treating the company too much in the abstract. For example, it may be for the benefit of a corporate group as a whole for a company to guarantee the debts of a "sister" company,[18] even though there is no ostensible "benefit" to the company giving the guarantee. Similarly, conceptually at least, there is no benefit to a company in returning profits to shareholders by way of dividend. However, the more pragmatic approach illustrated in the Australian case of Mills v Mills (1938) 60 CLR 150 normally prevails:
"[directors are] not required by the law to live in an unreal region of detached altruism and to act in the vague mood of ideal abstraction from obvious facts which must be present to the mind of any honest and intelligent man when he exercises his powers as a director."
"Proper purpose"
Directors must exercise their powers for a proper purpose. While in many instances an improper purpose is readily evident, such as a director looking to feather his or her own nest or divert an investment opportunity to a relative, such breaches usually involve a breach of the director's duty to act in good faith. Greater difficulties arise where the director, while acting in good faith, is serving a purpose that is not regarded by the law as proper.
The seminal authority in relation to what amounts to a proper purpose is the Privy Council decision of Howard Smith Ltd v Ampol Ltd [1974] AC 832. The case concerned the power of the directors to issue new shares.[19] It was alleged that the directors had issued a large number of new shares purely to deprive a particular shareholder of his voting majority. An argument that the power to issue shares could only be properly exercised to raise new capital was rejected as too narrow, and it was held that it would be a proper exercise of the director's powers to issue shares to a larger company to ensure the financial stability of the company, or as part of an agreement to exploit mineral rights owned by the company.[20] If so, the mere fact that an incidental result (even if it was a desired consequence) was that a shareholder lost his majority, or a takeover bid was defeated, this would not itself make the share issue improper. But if the sole purpose was to destroy a voting majority, or block a takeover bid, that would be an improper purpose.
Not all jurisdictions recognised the "proper purpose" duty as separate from the "good faith" duty however.[21]
"Unfettered discretion"
Directors cannot, without the consent of the company, fetter their discretion in relation to the exercise of their powers, and cannot bind themselves to vote in a particular way at future board meetings.[22] This is so even if there is no improper motive or purpose, and no personal advantage to the director.
This does not mean, however, that the board cannot agree to the company entering into a contract which binds the company to a certain course, even if certain actions in that course will require further board approval. The company remains bound, but the directors retain the discretion to vote against taking the future actions (although that may involve a breach by the company of the contract that the board previously approved).
"Conflict of duty and interest"
As fiduciaries, the directors may not put themselves in a position where their interests and duties conflict with the duties that they owe to the company. The law takes the view that good faith must not only be done, but must be manifestly seen to be done, and zealously patrols the conduct of directors in this regard; and will not allow directors to escape liability by asserting that his decision was in fact well founded. Traditionally, the law has divided conflicts of duty and interest into three sub-categories.
Transactions with the company
By definition, where a director enters into a transaction with a company, there is a conflict between the director's interest (to do well for himself out of the transaction) and his duty to the company (to ensure that the company gets as much as it can out of the transaction). This rule is so strictly enforced that, even where the conflict of interest or conflict of duty is purely hypothetical, the directors can be forced to disgorge all personal gains arising from it. In Aberdeen Ry v Blaikie (1854) 1 Macq HL 461 Lord Cranworth stated in his judgment that:
"A corporate body can only act by agents, and it is, of course, the duty of those agents so to act as best to promote the interests of the corporation whose affairs they are conducting. Such agents have duties to discharge of a fiduciary nature towards their principal. And it is a rule of universal application that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting or which possibly may conflict, with the interests of those whom he is bound to protect... So strictly is this principle adhered to that no question is allowed to be raised as to the fairness or unfairness of the contract entered into..." (emphasis added)
However, in many jurisdictions the members of the company are permitted to ratify transactions which would otherwise fall foul of this principle. It is also largely accepted in most jurisdictions that this principle should be capable of being abrogated in the company's constitution.
In many countries there is also a statutory duty to declare interests in relation to any transactions, and the director can be fined for failing to make disclosure.[23]
Use of corporate property, opportunity, or information
Directors must not, without the informed consent of the company, use for their own profit the company's assets, opportunities, or information. This prohibition is much less flexible than the prohibition against the transactions with the company, and attempts to circumvent it using provisions in the articles have met with limited success.
In Regal (Hastings) Ltd v Gulliver [1942] All ER 378 the House of Lords, in upholding what was regarded as a wholly unmeritorious claim by the shareholders,[24] held that:
"(i) that what the directors did was so related to the affairs of the company that it can properly be said to have been done in the course of their management and in the utilisation of their opportunities and special knowledge as directors; and (ii) that what they did resulted in profit to themselves."
And accordingly, the directors were required to disgorge the profits that they made, and the shareholders received their windfall.
The decision has been followed in several subsequent cases,[25] and is now regarded as settled law.
Competing with the company
Directors cannot, clearly, compete directly with the company without a conflict of interests arising. Similarly, they should not act as directors of competing companies, as their duties to each company would then conflict with each other.
Common law duties of care and skill
Traditionally, the level of care and skill which has to be demonstrated by a director has been framed largely with reference to the non-executive director. In Re City Equitable Fire Insurance Co [1925] Ch 407, it was expressed in purely subjective terms, where the court held that:
"a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience." (emphasis added)
However, this decision was based firmly in the older notions (see above) that prevailed at the time as to the mode of corporate decision making, and effective control residing in the shareholders; if they elected and put up with an incompetent decision maker, they should not have recourse to complain.
However, a more modern approach has since developed, and in Dorchester Finance Co v Stebbing [1989] BCLC 498 the court held that the rule in Equitable Fire related only to skill, and not to diligence. With respect to diligence, what was required was:
"such care as an ordinary man might be expected to take on his own behalf."
This was a dual subjective and objective test, and one deliberately pitched at a higher level.
More recently, it has been suggested that both the tests of skill and diligence should be assessed objectively and subjectively; in the United Kingdom the statutory provisions relating to directors' duties in the new Companies Act 2006 have been codified on this basis.[26] More recently, it has been suggested that both the tests of skill and diligence should be assessed objectively and subjectively and in the United Kingdom the statutory provisions in the new Companies Act 2006 reflect this.[26]
Remedies for breach of duty
In most jurisdictions, the law provides for a variety of remedies in the event of a breach by the directors of their duties:
1. injunction or declaration
2. damages or compensation
3. restoration of the company's property
4. rescission of the relevant contract
5. account of profits
6. summary dismissal
The future
Historically, directors' duties have been owed almost exclusively to the company and its members, and the board was expected to exercise its powers for the financial benefit of the company. However, more recently there have been attempts to "soften" the position, and provide for more scope for directors to act as good corporate citizens. For example, in the United Kingdom, the Companies Act 2006, not yet in force, will require a director of a UK company "to promote the success of the company for the benefit of its members as a whole", but sets out six factors to which a director must have regards in fulfilling the duty to promote success. These are:
* the likely consequences of any decision in the long term
* the interests of the company’s employees
* the need to foster the company’s business relationships with suppliers, customers and others
* the impact of the company’s operations on the community and the environment
* the desirability of the company maintaining a reputation for high standards of business conduct, and
* the need to act fairly as between members of a company
This represents a considerable departure from the traditional notion that directors' duties are owed only to the company. Previously in the United Kingdom, under the Companies Act 1985, protections for non-member stakeholders were considerably more limited (see e.g. s.309 which permitted directors to take into account the interests of employees but which could only be enforced by the shareholders and not by the employees themselves. The changes have therefore been the subject of some criticism. [3]
Failures
While the primary responsibility of boards is to ensure that the corporation's management is performing its job correctly, actually achieving this in practice can be difficult. In a number of "corporate scandals" of the 1990s, one notable feature revealed in subsequent investigations is that boards were not aware of the activities of the managers that they hired, and the true financial state of the corporation. A number of factors may be involved in this tendency:
* Most boards largely rely on management to report information to them, thus
allowing management to place the desired 'spin' on information, or even conceal
or lie about the true state of a company.
* Boards of directors are part-time bodies, whose members meet only occasionally
and may not know each other particularly well. This unfamiliarity can make it
difficult for board members to question management.
* CEOs tend to be rather forceful personalities. In some cases, CEOs are accused
of exercising too much influence over the company's board.
* Directors may not have the time or the skills required to understand the
details of corporate business, allowing management to obscure problems.
* The same directors who appointed the present CEO oversee his or her
performance. This makes it difficult for some directors to dispassionately
evaluate the CEO's performance.
* Directors often feel that a judgement of a manager, particularly one who has
performed well in the past, should be respected. This can be quite legitimate,
but poses problems if the manager's judgement is indeed flawed.
* All of the above may contribute to a culture of "not rocking the boat" at board
meetings.
Because of this, the role of boards in corporate governance, and how to improve their oversight capability, has been examined carefully in recent years, and new legislation in a number of jurisdictions, and an increased focus on the topic by boards themselves, has seen changes implemented to try and improve their performance.
Sarbanes-Oxley Act
In the United States, the Sarbanes-Oxley Act (SOX) has introduced new standards of accountability on the board of directors for U.S. companies or companies listed on U.S. stock exchanges. Under the Act members of the board risk large fines and prison sentences in the case of accounting crimes. Internal controls are now the direct responsibility of directors. This means that the vast majority of public companies now have hired internal auditors to ensure that the company adheres to the highest standards of internal controls. Additionally, these internal auditors are required by law to report directly to the audit board. This group consists of board of directors members where more than half of the members are outside the company and one of those members outside the company is an accounting expert.
In relation to a company or other formal organization, a director is an officer (that is, someone who works for the company) charged with the conduct and management of its affairs. A director may be an inside director (a director who is also an officer or promoter or both) or an outside, or independent, director. The directors collectively are referred to as a board of directors. Sometimes the board will appoint one of its members to be the chair or chairperson of the board of directors, traditionally also called chairman or chairwoman.
Theoretically, the control of a company is divided between two bodies: the board of directors, and the shareholders in general meeting. In practice, the amount of power exercised by the board varies with the type of company. In small private companies, the directors and the shareholders will normally be the same people, and thus there is no real division of power. In large public companies, the board tends to exercise more of a supervisory role, and individual responsibility and management tends to be delegated downward to individual professional executive directors (such as a finance director or a marketing director) who deal with particular areas of the company's affairs.
Another feature of boards of directors in large public companies is that the board tends to have more de facto power. Between the practice of institutional shareholders (such as pension funds and banks) granting proxies to the board to vote their shares at general meetings and the large numbers of shareholders involved, the board can comprise a voting bloc that is difficult to overcome. However, there have been moves recently to try to increase shareholder activism amongst both institutional investors and individuals with small shareholdings. [1] [2] A board-only organization is one whose board is self-appointed, rather than being accountable to a base of members through elections; or in which the powers of the membership are extremely limited.
Contents
1 Classification
2 History
3 Election and removal
4 Exercise of powers
5 Duties
5.1 Acting in bona fide
5.2 "Proper purpose"
5.3 "Unfettered discretion"
5.4 "Conflict of duty and interest"
5.4.1 Transactions with the company
5.4.2 Use of corporate property, opportunity, or information
5.4.3 Competing with the company
5.5 Common law duties of care and skill
5.6 Remedies for breach of duty
5.7 The future
6 Failures
7 Sarbanes-Oxley Act
8 See also
9 Footnotes
10 External links
Classification
Main articles: executive director and non-executive director
Directors are traditionally divided into executive directors and non-executive directors. Broadly, executive directors tend to be persons who are dedicated full-time to their role in relation to the management of the company. Non-executive directors tend to be "outsiders" brought in for their expertise, and to lend a more impartial view in relation to strategic decisions. Many corporate reforms in the late 1990s and early 2000s were focused on increasing the number and role of non-executive directorships in public companies in the belief that an impartial view was more likely to restrain corporate excess and egos and reduce the likelihood of another major corporate scandal. This view is not new; similar recommendations were made by the Cadbury Committee in the United Kingdom in 1992.[3]
In practice, executive directors tend to dominate board meetings simply by virtue of their much greater familiarity with the company and its internal workings.
Some countries also classify persons who are not actually directors as either de facto directors, or "shadow" directors. A de facto director is a person who is not actually appointed as a director, but acts as if they were (often because they wrongly believe that they have been properly appointed as a director). A "shadow" director is also not a director at all, but seeks to control the direction and management of the company without putting themselves forward as being able to do so.[4]
History
The development of a separate board of directors to manage the company has occurred incrementally and indefinitely over legal history. Until the end of the nineteenth century, it seems to have been generally assumed that the general meeting (of all shareholders) was the supreme organ of the company, and the board of directors was merely an agent of the company subject to the control of the shareholders in general meeting.[5]
By 1906 however, the English Court of Appeal had made it clear in the decision of Automatic Self-Cleansing Filter Syndicate Co v Cunningham [1906] 2 Ch 34 that the division of powers between the board and the shareholders in general meaning depended upon the construction of the articles of association and that, where the powers of management were vested in the board, the general meeting could not interfere with their lawful exercise. The articles were held to constitute a contract by which the members had agreed that "the directors and the directors alone shall manage."[6]
The new approach did not secure immediate approval, but it was endorsed by the House of Lords in Quin & Artens v Salmon [1909] AC 442 and has since received general acceptance. Under English law, successive versions of Table A have reinforced the norm that, unless the directors are acting contrary to the law or the provisions of the Articles, the powers of conducting the management and affairs of the company are vested in them.
The modern doctrine was expressed in Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 by Greer LJ as follows:
"A company is an entity distinct alike from its shareholders and its directors. Some of its powers may, according to its articles, be exercised by directors, certain other powers may be reserved for the shareholders in general meeting. If powers of management are vested in the directors, they and they alone can exercise these powers. The only way in which the general body of shareholders can control the exercise of powers by the articles in the directors is by altering the articles, or, if opportunity arises under the articles, by refusing to re-elect the directors of whose actions they disapprove. They cannot themselves usurp the powers which by the articles are vested in the directors any more than the directors can usurp the powers vested by the articles in the general body of shareholders."
It has been remarked that this development in the law was somewhat surprising at the time, as the relevant provisions in Table A (as it was then) seemed to contradict this approach rather than to endorse it.[7]
Election and removal
In most legal systems, the appointment and removal of directors is voted upon by the shareholders in general meeting.[8]
Directors may also leave office by resignation or death. In some legal systems, directors may also be removed by a resolution of the remaining directors (in some countries they may only do so "with cause"; in others the power is unrestricted).
Some jurisdictions also permit the board of directors to appoint directors, either to fill a vacancy which arises on resignation or death, or as an addition to the existing directors.
In practice, it can be quite difficult to remove a director by a resolution in general meeting. In many legal systems the director has a right to receive special notice of any resolution to remove him;[9] the company must often supply a copy of the proposal to the director, who is usually entitled to be heard by the meeting.[10] The director may require the company to circulate any representations that he wishes to make.[11] Furthermore, the director's contract of service will usually entitle him to compensation if he is removed, and may often include a generous "golden parachute" which also acts as a deterrent to removal.
Exercise of powers
The exercise by the board of directors of its powers usually occurs in meetings. Most legal systems provide that sufficient notice has to be given to all directors of these meetings, and that a quorum must be present before any business may be conducted. Usually a meeting which is held without notice having been given is still valid so long as all of the directors attend, but it has been held that a failure to give notice may negate resolutions passed at a meeting, as the persuasive oratory of a minority of directors might have persuaded the majority to change their minds and vote otherwise.[12]
In most common law countries, the powers of the board are vested in the board as a whole, and not in the individual directors.[13] However, in instances an individual director may still bind the company by his acts by virtue of his ostensible authority (see also: the rule in Turquand's Case).
Duties
See also: Fiduciary duties
Because directors exercise control and management over the company, but companies are run (in theory at least) for the benefit of the shareholders, the law imposes strict duties on directors in relation to the exercise of their duties. The duties imposed upon directors are fiduciary duties, similar in nature to those that the law imposes on those in similar positions of trust: agents and trustees.
In relation to director's duties generally, two points should be noted:
1. the duties of the directors are several (as opposed to the exercise by the directors of their powers, which must be done jointly); and
2. the duties are owed to the company itself, and not to any other entity.[14] This doesn't mean that directors can never stand in a fiduciary relationship to the individual shareholders; they may well have such a duty in certain circumstances.[15]
Acting in bona fide
Directors must act honestly and in bona fide. The test is a subjective one—the directors must act in "good faith in what they consider—not what the court may consider—is in the interests of the company..."[16] However, the directors may still be held to have failed in this duty where they fail to direct their minds to the question of whether in fact a transaction was in the best interests of the company.[17]
Difficult questions can arise when treating the company too much in the abstract. For example, it may be for the benefit of a corporate group as a whole for a company to guarantee the debts of a "sister" company,[18] even though there is no ostensible "benefit" to the company giving the guarantee. Similarly, conceptually at least, there is no benefit to a company in returning profits to shareholders by way of dividend. However, the more pragmatic approach illustrated in the Australian case of Mills v Mills (1938) 60 CLR 150 normally prevails:
"[directors are] not required by the law to live in an unreal region of detached altruism and to act in the vague mood of ideal abstraction from obvious facts which must be present to the mind of any honest and intelligent man when he exercises his powers as a director."
"Proper purpose"
Directors must exercise their powers for a proper purpose. While in many instances an improper purpose is readily evident, such as a director looking to feather his or her own nest or divert an investment opportunity to a relative, such breaches usually involve a breach of the director's duty to act in good faith. Greater difficulties arise where the director, while acting in good faith, is serving a purpose that is not regarded by the law as proper.
The seminal authority in relation to what amounts to a proper purpose is the Privy Council decision of Howard Smith Ltd v Ampol Ltd [1974] AC 832. The case concerned the power of the directors to issue new shares.[19] It was alleged that the directors had issued a large number of new shares purely to deprive a particular shareholder of his voting majority. An argument that the power to issue shares could only be properly exercised to raise new capital was rejected as too narrow, and it was held that it would be a proper exercise of the director's powers to issue shares to a larger company to ensure the financial stability of the company, or as part of an agreement to exploit mineral rights owned by the company.[20] If so, the mere fact that an incidental result (even if it was a desired consequence) was that a shareholder lost his majority, or a takeover bid was defeated, this would not itself make the share issue improper. But if the sole purpose was to destroy a voting majority, or block a takeover bid, that would be an improper purpose.
Not all jurisdictions recognised the "proper purpose" duty as separate from the "good faith" duty however.[21]
"Unfettered discretion"
Directors cannot, without the consent of the company, fetter their discretion in relation to the exercise of their powers, and cannot bind themselves to vote in a particular way at future board meetings.[22] This is so even if there is no improper motive or purpose, and no personal advantage to the director.
This does not mean, however, that the board cannot agree to the company entering into a contract which binds the company to a certain course, even if certain actions in that course will require further board approval. The company remains bound, but the directors retain the discretion to vote against taking the future actions (although that may involve a breach by the company of the contract that the board previously approved).
"Conflict of duty and interest"
As fiduciaries, the directors may not put themselves in a position where their interests and duties conflict with the duties that they owe to the company. The law takes the view that good faith must not only be done, but must be manifestly seen to be done, and zealously patrols the conduct of directors in this regard; and will not allow directors to escape liability by asserting that his decision was in fact well founded. Traditionally, the law has divided conflicts of duty and interest into three sub-categories.
Transactions with the company
By definition, where a director enters into a transaction with a company, there is a conflict between the director's interest (to do well for himself out of the transaction) and his duty to the company (to ensure that the company gets as much as it can out of the transaction). This rule is so strictly enforced that, even where the conflict of interest or conflict of duty is purely hypothetical, the directors can be forced to disgorge all personal gains arising from it. In Aberdeen Ry v Blaikie (1854) 1 Macq HL 461 Lord Cranworth stated in his judgment that:
"A corporate body can only act by agents, and it is, of course, the duty of those agents so to act as best to promote the interests of the corporation whose affairs they are conducting. Such agents have duties to discharge of a fiduciary nature towards their principal. And it is a rule of universal application that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting or which possibly may conflict, with the interests of those whom he is bound to protect... So strictly is this principle adhered to that no question is allowed to be raised as to the fairness or unfairness of the contract entered into..." (emphasis added)
However, in many jurisdictions the members of the company are permitted to ratify transactions which would otherwise fall foul of this principle. It is also largely accepted in most jurisdictions that this principle should be capable of being abrogated in the company's constitution.
In many countries there is also a statutory duty to declare interests in relation to any transactions, and the director can be fined for failing to make disclosure.[23]
Use of corporate property, opportunity, or information
Directors must not, without the informed consent of the company, use for their own profit the company's assets, opportunities, or information. This prohibition is much less flexible than the prohibition against the transactions with the company, and attempts to circumvent it using provisions in the articles have met with limited success.
In Regal (Hastings) Ltd v Gulliver [1942] All ER 378 the House of Lords, in upholding what was regarded as a wholly unmeritorious claim by the shareholders,[24] held that:
"(i) that what the directors did was so related to the affairs of the company that it can properly be said to have been done in the course of their management and in the utilisation of their opportunities and special knowledge as directors; and (ii) that what they did resulted in profit to themselves."
And accordingly, the directors were required to disgorge the profits that they made, and the shareholders received their windfall.
The decision has been followed in several subsequent cases,[25] and is now regarded as settled law.
Competing with the company
Directors cannot, clearly, compete directly with the company without a conflict of interests arising. Similarly, they should not act as directors of competing companies, as their duties to each company would then conflict with each other.
Common law duties of care and skill
Traditionally, the level of care and skill which has to be demonstrated by a director has been framed largely with reference to the non-executive director. In Re City Equitable Fire Insurance Co [1925] Ch 407, it was expressed in purely subjective terms, where the court held that:
"a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience." (emphasis added)
However, this decision was based firmly in the older notions (see above) that prevailed at the time as to the mode of corporate decision making, and effective control residing in the shareholders; if they elected and put up with an incompetent decision maker, they should not have recourse to complain.
However, a more modern approach has since developed, and in Dorchester Finance Co v Stebbing [1989] BCLC 498 the court held that the rule in Equitable Fire related only to skill, and not to diligence. With respect to diligence, what was required was:
"such care as an ordinary man might be expected to take on his own behalf."
This was a dual subjective and objective test, and one deliberately pitched at a higher level.
More recently, it has been suggested that both the tests of skill and diligence should be assessed objectively and subjectively; in the United Kingdom the statutory provisions relating to directors' duties in the new Companies Act 2006 have been codified on this basis.[26] More recently, it has been suggested that both the tests of skill and diligence should be assessed objectively and subjectively and in the United Kingdom the statutory provisions in the new Companies Act 2006 reflect this.[26]
Remedies for breach of duty
In most jurisdictions, the law provides for a variety of remedies in the event of a breach by the directors of their duties:
1. injunction or declaration
2. damages or compensation
3. restoration of the company's property
4. rescission of the relevant contract
5. account of profits
6. summary dismissal
The future
Historically, directors' duties have been owed almost exclusively to the company and its members, and the board was expected to exercise its powers for the financial benefit of the company. However, more recently there have been attempts to "soften" the position, and provide for more scope for directors to act as good corporate citizens. For example, in the United Kingdom, the Companies Act 2006, not yet in force, will require a director of a UK company "to promote the success of the company for the benefit of its members as a whole", but sets out six factors to which a director must have regards in fulfilling the duty to promote success. These are:
* the likely consequences of any decision in the long term
* the interests of the company’s employees
* the need to foster the company’s business relationships with suppliers, customers and others
* the impact of the company’s operations on the community and the environment
* the desirability of the company maintaining a reputation for high standards of business conduct, and
* the need to act fairly as between members of a company
This represents a considerable departure from the traditional notion that directors' duties are owed only to the company. Previously in the United Kingdom, under the Companies Act 1985, protections for non-member stakeholders were considerably more limited (see e.g. s.309 which permitted directors to take into account the interests of employees but which could only be enforced by the shareholders and not by the employees themselves. The changes have therefore been the subject of some criticism. [3]
Failures
While the primary responsibility of boards is to ensure that the corporation's management is performing its job correctly, actually achieving this in practice can be difficult. In a number of "corporate scandals" of the 1990s, one notable feature revealed in subsequent investigations is that boards were not aware of the activities of the managers that they hired, and the true financial state of the corporation. A number of factors may be involved in this tendency:
* Most boards largely rely on management to report information to them, thus
allowing management to place the desired 'spin' on information, or even conceal
or lie about the true state of a company.
* Boards of directors are part-time bodies, whose members meet only occasionally
and may not know each other particularly well. This unfamiliarity can make it
difficult for board members to question management.
* CEOs tend to be rather forceful personalities. In some cases, CEOs are accused
of exercising too much influence over the company's board.
* Directors may not have the time or the skills required to understand the
details of corporate business, allowing management to obscure problems.
* The same directors who appointed the present CEO oversee his or her
performance. This makes it difficult for some directors to dispassionately
evaluate the CEO's performance.
* Directors often feel that a judgement of a manager, particularly one who has
performed well in the past, should be respected. This can be quite legitimate,
but poses problems if the manager's judgement is indeed flawed.
* All of the above may contribute to a culture of "not rocking the boat" at board
meetings.
Because of this, the role of boards in corporate governance, and how to improve their oversight capability, has been examined carefully in recent years, and new legislation in a number of jurisdictions, and an increased focus on the topic by boards themselves, has seen changes implemented to try and improve their performance.
Sarbanes-Oxley Act
In the United States, the Sarbanes-Oxley Act (SOX) has introduced new standards of accountability on the board of directors for U.S. companies or companies listed on U.S. stock exchanges. Under the Act members of the board risk large fines and prison sentences in the case of accounting crimes. Internal controls are now the direct responsibility of directors. This means that the vast majority of public companies now have hired internal auditors to ensure that the company adheres to the highest standards of internal controls. Additionally, these internal auditors are required by law to report directly to the audit board. This group consists of board of directors members where more than half of the members are outside the company and one of those members outside the company is an accounting expert.
Tuesday, March 11, 2008
Start - Private Limited Company in India
Procedure involved to Start a Company (Private Limited) in India
This information will be useful for those who are looking in a nutshell the steps involved to start a Private Limited company in India
1. First and foremost identify the Directors of the Company. Minimum of two directors need to present and Maximum of 8 is allowed.
2. All Directors should have DIN (Directors Identification Number).
If you do not have one you can apply DIN online at www.mca.gov.in. FAQ on DIN http://www.mca.gov.in/MinistryWebsite/dca/faq/faq1.html Documents required for DIN
A. Identity Proof (Any one of the following)
PAN Card
Driving License
Passport
Voter ID Card
Others (to be specified)
B. Residence Proof (Any one of the following)
Driving License
Passport
Voter ID Card
Telephone Bill
Ration Card
Electricity Bill
Bank Statement
Others (to be specified)
3. Once you have got your DIN then you need to apply for Company name. You need to go with 5-6 names in the order which you prefer.If the name is not available then they go to the next one in the order you have provided.
4. You need to apply online for the name availability . You need to Fill in Form 1A. Forms are avilable at this location.http://www.mca.gov.in/MinistryWebsite/dca/downloadeforms/eformTemplates/1030-Form1A_h
elp.zip
5. Once you have got your name approved you have to apply for the Incorporation of Company. For this you will have to prepare Memorandum of Association which will detail what the company;s operations the first list of directors who are going the be in the board need to be defined in this document. This should be applied along with Form-1
http://www.mca.gov.in/MinistryWebsite/dca/downloadeforms/eformTemplates/1022-Form1_help.zip.
Ocne this has been approved make atleast 10-15 copies of your Certificate of Incorporation and Memorandum of Association and have it in a booklet form.
6. Once your company has been incorporated you can open a Current account in any of the leading banks for carrying out your operations. You will need to submit a copy of Certificate of Incorporation and Memorandum of Association along with Borad esolution to open the bank account.
7. Thenyou need to apply for TAN and PAN for the Company
https://tin.tin.nsdl.com/pan/form49A.html
https://tin.tin.nsdl.com/tan/form49B.html
8. If your services are in Software related area you can apply for STPI license which will give you certain benefits like Company need not pay tax for 5 years, there will be no import or expurty duty levied on software/hardware, You will get office spaces at lower rates at STPI units. These are few of the benefits of becoming an STPI member.
All this you can do on your own or you can outsource these to professional auditor. We did it through Auditor and it took almost three weeks (Upto Step 7 excluding STPI) and all charges(excluding sTPI) would approximately cost you Rs.25,000.
I am not sure how much it would cost if you do it on your own. I read in one of the blogs that in Delhi the whole process was completed in 30 minutes after the e-Governance was launched.
Good Luck and If you need more information or any guidance drop in a mail.
This information will be useful for those who are looking in a nutshell the steps involved to start a Private Limited company in India
1. First and foremost identify the Directors of the Company. Minimum of two directors need to present and Maximum of 8 is allowed.
2. All Directors should have DIN (Directors Identification Number).
If you do not have one you can apply DIN online at www.mca.gov.in. FAQ on DIN http://www.mca.gov.in/MinistryWebsite/dca/faq/faq1.html Documents required for DIN
A. Identity Proof (Any one of the following)
PAN Card
Driving License
Passport
Voter ID Card
Others (to be specified)
B. Residence Proof (Any one of the following)
Driving License
Passport
Voter ID Card
Telephone Bill
Ration Card
Electricity Bill
Bank Statement
Others (to be specified)
3. Once you have got your DIN then you need to apply for Company name. You need to go with 5-6 names in the order which you prefer.If the name is not available then they go to the next one in the order you have provided.
4. You need to apply online for the name availability . You need to Fill in Form 1A. Forms are avilable at this location.http://www.mca.gov.in/MinistryWebsite/dca/downloadeforms/eformTemplates/1030-Form1A_h
elp.zip
5. Once you have got your name approved you have to apply for the Incorporation of Company. For this you will have to prepare Memorandum of Association which will detail what the company;s operations the first list of directors who are going the be in the board need to be defined in this document. This should be applied along with Form-1
http://www.mca.gov.in/MinistryWebsite/dca/downloadeforms/eformTemplates/1022-Form1_help.zip.
Ocne this has been approved make atleast 10-15 copies of your Certificate of Incorporation and Memorandum of Association and have it in a booklet form.
6. Once your company has been incorporated you can open a Current account in any of the leading banks for carrying out your operations. You will need to submit a copy of Certificate of Incorporation and Memorandum of Association along with Borad esolution to open the bank account.
7. Thenyou need to apply for TAN and PAN for the Company
https://tin.tin.nsdl.com/pan/form49A.html
https://tin.tin.nsdl.com/tan/form49B.html
8. If your services are in Software related area you can apply for STPI license which will give you certain benefits like Company need not pay tax for 5 years, there will be no import or expurty duty levied on software/hardware, You will get office spaces at lower rates at STPI units. These are few of the benefits of becoming an STPI member.
All this you can do on your own or you can outsource these to professional auditor. We did it through Auditor and it took almost three weeks (Upto Step 7 excluding STPI) and all charges(excluding sTPI) would approximately cost you Rs.25,000.
I am not sure how much it would cost if you do it on your own. I read in one of the blogs that in Delhi the whole process was completed in 30 minutes after the e-Governance was launched.
Good Luck and If you need more information or any guidance drop in a mail.
Monday, March 10, 2008
Business-Plans--6-Questions
Toward the conclusion of the calendar year, you should seriously consider investing the time to reflect upon your business. If your business is going to succeed, it will be because you and only took the necessary steps to ensure it's success. Clearly, no one cares about your business as much as you do.
In the same way that a doctor performs checkups to determine the overall health of a patient and to discover any developing problems, so you should perform checkups on your business.
Of course, this activity can be performed at any time of the year.
Do your best to answer these questions:
1. Are you following your business plan, and does the plan need revising?
Do you have a business plan? If not, that should be on your "to-do" for the next
year, somewhere near the top!
2. What part(s) of your business were effective?
You may think that I am only referring to profitability. Profit is important and
vital, however also consider your overall plans and goals. It may be the
activities producing the highest profit may also be those which require continual
intervention by you.
If part of your business plan includes constructing systems which don't require
direct involvement by you, do your best to honestly look at your situation to
determine whether your business is getting closer to that goal or not.
A vital part of this process is knowing or identifying who your best customers
are.
Are there common characteristics which are shared by others who are not yet your
clients?
3. What part(s) of your business were not effective?Conversely, did any parts of your
business fall short of your objectives? Look at clients as well as vendors.
Are you getting your money's worth for the investment?
4. Which part(s) of your business can be optimized or removed?
Be honest with yourself about those activities which are more trouble than they
contribute to your bottom line. What products or services are you providing which
may need to be discontinued?
For those activities, services or product lines which you will not discontinue,
how can you make them better? Perhaps you want to outsource certain activities.
Maybe you can make small tweaks to your advertising and see a huge increase in
sales (it happens more often than you might think).
5. Which new opportunities should you explore for your business?
New opportunities often surface due to shifts in market conditions, changes in
conditions specific to your company, or simply changes in your own perspective.
6. Are there any tax planning steps you can take right now?
Call your tax accountant and ask whether changes in the tax laws affect you, and
in the event your situation has changed dramatically from last year, your
accountant should be notified in the event your tax planning strategy should be
modified. Of course, tax planning must usually be done before the end of the year
to be effective.
In the same way that a doctor performs checkups to determine the overall health of a patient and to discover any developing problems, so you should perform checkups on your business.
Of course, this activity can be performed at any time of the year.
Do your best to answer these questions:
1. Are you following your business plan, and does the plan need revising?
Do you have a business plan? If not, that should be on your "to-do" for the next
year, somewhere near the top!
2. What part(s) of your business were effective?
You may think that I am only referring to profitability. Profit is important and
vital, however also consider your overall plans and goals. It may be the
activities producing the highest profit may also be those which require continual
intervention by you.
If part of your business plan includes constructing systems which don't require
direct involvement by you, do your best to honestly look at your situation to
determine whether your business is getting closer to that goal or not.
A vital part of this process is knowing or identifying who your best customers
are.
Are there common characteristics which are shared by others who are not yet your
clients?
3. What part(s) of your business were not effective?Conversely, did any parts of your
business fall short of your objectives? Look at clients as well as vendors.
Are you getting your money's worth for the investment?
4. Which part(s) of your business can be optimized or removed?
Be honest with yourself about those activities which are more trouble than they
contribute to your bottom line. What products or services are you providing which
may need to be discontinued?
For those activities, services or product lines which you will not discontinue,
how can you make them better? Perhaps you want to outsource certain activities.
Maybe you can make small tweaks to your advertising and see a huge increase in
sales (it happens more often than you might think).
5. Which new opportunities should you explore for your business?
New opportunities often surface due to shifts in market conditions, changes in
conditions specific to your company, or simply changes in your own perspective.
6. Are there any tax planning steps you can take right now?
Call your tax accountant and ask whether changes in the tax laws affect you, and
in the event your situation has changed dramatically from last year, your
accountant should be notified in the event your tax planning strategy should be
modified. Of course, tax planning must usually be done before the end of the year
to be effective.
కంపనీ లా Board
The Company Law Board was constituted by the Central Government as an independent quasi-judicial body w.e.f 31.5.1991 Under Section 10E of the Companies Act, 1956 replacing the erstwhile Company Law Board which was primarily as a delegatee of the Central government since 1.2.1964. The Company Law Board has framed Company Law Board Regulations 1991 wherein all the procedure for filing the applications/petitions before the Company Law Board has been prescribed. The Central Government has also prescribed the fees for making applications/petitions before the Company Law Board under the Company Law Board (Fees on applications and Petitions) Rules 1991.
The Board has its Regional Benches at Mumbai, Calcutta, Chennai & New Delhi besides the Principal Bench at New Delhi and the Additional Principal Bench at Chennai. The matters falling under section 235, 237, 247, 248, 250, 388B, 408 & 409 and matters falling under Chapter VI of Part VI of the Companies Act, 1956 and under section 2 A of the Monopolies Act are dealt with by the Principal Bench at New Delhi and the matters also falling under section 235, 237, 247 and 250 of the Act and matter falling under Chapter VI of Part VI of the Act in so far as they relates to Southern Region are dealt with by the Additional Principal Bench at Chennai. The Regional Benches are mainly concerned with petitions/applications under sections 17, 18, 19, 58A, 80A, 111,111A, 113, 141,163,167, 186, 196, 219, 269, 614, 621A, 634A, of the Companies Act, 1956 and Section 45QA of the Reserve Bank of India Act, 1934. The matters falling under section 45QA of the Reserve Bank of India Act, which were earlier within the purview of the RBI, have now been entrusted to the Company Law Board. The Central Government have accordingly amended RBI Act giving powers to the Company Law Board to deal with the applications filed by the aggrieved depositors of Non-Banking Financial Companies (NBFCs) under section 45QA of the RBI Act, 1934.
Principal Bench : Bench Officer, Company Law Board, 5th Floor, ‘A’ Wing , Shastri Bhavan, Dr. Rajendra Prasad Road, New Delhi-110001 Phone : 011 - 23387355
Addl. Principal Bench :Bench Officer, Company Law Board, Shastri Bhawan, Block-1, 26, Haddows Road, Chennai. Phone : 044 - 28273639
Southern Region Bench :Bench Officer,Company Law Board, Shastri Bhawan, Block-1, 26, Haddows Road, Chennai Phone : 044 - 28273512
Constitution of Board of Company Law Administration
10E (1) As soon as may be after the commencement of the Companies (Amendment) Act, 1988, the Central Government shall, by notification in the Official Gazette, constitute a Board to be called the Board of Company Law Administration.
(1A) The Company Law Board shall exercise and discharge such powers and functions as may be conferred on it, by or under this Act or any other law, and shall also exercise and discharge such other powers and functions of the Central Government under this Act or any other law as may be conferred on it by the Central Government, by notification in the Official Gazette under the provisions of this Act or that other law.
(2) The Company Law Board shall consist of such number of members, not exceeding (nine), as the Central Government deems fit, to be appointed by that Government by notification in the Official Gazette:
Provided that the Central Government may, by notification in the Official Gazette, continue the appointment of the Chairman or any other member of the Company Law Board functioning as such immediately before the commencement of the Companies (Amendment) Act, 1988, as the chairman or any other member of the Company Law Board, after such commencement for such period not exceeding three years as may be specified in the notification.
(2A) The members of the Company Law Board shall possess such qualifications and experience as may be prescribed.
(3) One of the members shall be appointed by the Central Government to be the chairman of the Company Law Board.
(4) No act done by the Company Law Board shall be called in question on the ground only of any defect in the constitution of, or the existence of any vacancy in, the Company Law Board.
(4A) (Omitted by the Companies (Amendment) Act, 1988, w.e.f. 31.5.1991. For text of omitted sub-section (4A) refer Appendix I.)
(4B) (The Board) may, by order in writing, form one or more Benches from among its members and authorise each Bench to exercise and discharge such of the Board’s powers and functions as may be specified in the order; and every order made or act done by a Bench in exercise of such powers or discharge of such functions shall be deemed to be the order or act, as the case may be, of the Board.
(4C) Every Bench referred to in sub-section (4B) shall have powers which are vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908), which trying a suit, in respect of the following matters, namely: -
(a) discovery and inspection of documents of other material objects producible as evidence;
(b) enforcing the attendance of witnesses and requiring the deposit of their expenses;
(c) compelling the production of documents or other material objects producible as evidence and impounding the same;
(d) examining witnesses on oath;
(e) granting adjournments;
(f) reception of evidence on affidavits.
(4D) Every Bench shall be deemed to be a civil count for the purposes of section 195 and (Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974) ) and every proceeding before the Bench shall be deemed to be judicial proceeding within the meaning of section 193 and 228 of the Indian Penal Code (45 of 1860) and for the purpose of section 196 of that Code.)
(5) Without prejudice to the provisions of sub-section (4C) and (4D), the Company Law Board shall in the exercise of its powers and the discharge of its functions under this Act or any other law be guided by the principal of natural justice and shall act in its discretion.
(6) Subject to the foregoing provisions of this section the Company Law Board shall have power to regulate its own procedure.
45QA of the RBI Act, 1934 : Application by the Depositors of NBFCs
58 A : Application by the Companies other than NBFCs
58AA : Non payment of deposit of small depositors
111 : Power to refuse registration and appeal against refusal
111 A : Rectification of register on transfer
113 : Delivery / Issue of certificates of Shares,Debentures ,Bonds ,Debenture -Stocks
117C : Non redemption of Debentures
237(b) :Investigation of company's affairs in other cases
269 :Reference against Appointment of managing or whole-time director
397/398: Application to CLB for relief in cases of Oppression /Mismanagement
408 : Prevent Oppression or mismanagement
250 : Prevent transfer of Shares debentures and impose restriction thereon
409 : Prevent change in Board of Directors
614 :Enforcement of the duty of the Company to file returns etc. with the Registrar of Companies
The Board has its Regional Benches at Mumbai, Calcutta, Chennai & New Delhi besides the Principal Bench at New Delhi and the Additional Principal Bench at Chennai. The matters falling under section 235, 237, 247, 248, 250, 388B, 408 & 409 and matters falling under Chapter VI of Part VI of the Companies Act, 1956 and under section 2 A of the Monopolies Act are dealt with by the Principal Bench at New Delhi and the matters also falling under section 235, 237, 247 and 250 of the Act and matter falling under Chapter VI of Part VI of the Act in so far as they relates to Southern Region are dealt with by the Additional Principal Bench at Chennai. The Regional Benches are mainly concerned with petitions/applications under sections 17, 18, 19, 58A, 80A, 111,111A, 113, 141,163,167, 186, 196, 219, 269, 614, 621A, 634A, of the Companies Act, 1956 and Section 45QA of the Reserve Bank of India Act, 1934. The matters falling under section 45QA of the Reserve Bank of India Act, which were earlier within the purview of the RBI, have now been entrusted to the Company Law Board. The Central Government have accordingly amended RBI Act giving powers to the Company Law Board to deal with the applications filed by the aggrieved depositors of Non-Banking Financial Companies (NBFCs) under section 45QA of the RBI Act, 1934.
Principal Bench : Bench Officer, Company Law Board, 5th Floor, ‘A’ Wing , Shastri Bhavan, Dr. Rajendra Prasad Road, New Delhi-110001 Phone : 011 - 23387355
Addl. Principal Bench :Bench Officer, Company Law Board, Shastri Bhawan, Block-1, 26, Haddows Road, Chennai. Phone : 044 - 28273639
Southern Region Bench :Bench Officer,Company Law Board, Shastri Bhawan, Block-1, 26, Haddows Road, Chennai Phone : 044 - 28273512
Constitution of Board of Company Law Administration
10E (1) As soon as may be after the commencement of the Companies (Amendment) Act, 1988, the Central Government shall, by notification in the Official Gazette, constitute a Board to be called the Board of Company Law Administration.
(1A) The Company Law Board shall exercise and discharge such powers and functions as may be conferred on it, by or under this Act or any other law, and shall also exercise and discharge such other powers and functions of the Central Government under this Act or any other law as may be conferred on it by the Central Government, by notification in the Official Gazette under the provisions of this Act or that other law.
(2) The Company Law Board shall consist of such number of members, not exceeding (nine), as the Central Government deems fit, to be appointed by that Government by notification in the Official Gazette:
Provided that the Central Government may, by notification in the Official Gazette, continue the appointment of the Chairman or any other member of the Company Law Board functioning as such immediately before the commencement of the Companies (Amendment) Act, 1988, as the chairman or any other member of the Company Law Board, after such commencement for such period not exceeding three years as may be specified in the notification.
(2A) The members of the Company Law Board shall possess such qualifications and experience as may be prescribed.
(3) One of the members shall be appointed by the Central Government to be the chairman of the Company Law Board.
(4) No act done by the Company Law Board shall be called in question on the ground only of any defect in the constitution of, or the existence of any vacancy in, the Company Law Board.
(4A) (Omitted by the Companies (Amendment) Act, 1988, w.e.f. 31.5.1991. For text of omitted sub-section (4A) refer Appendix I.)
(4B) (The Board) may, by order in writing, form one or more Benches from among its members and authorise each Bench to exercise and discharge such of the Board’s powers and functions as may be specified in the order; and every order made or act done by a Bench in exercise of such powers or discharge of such functions shall be deemed to be the order or act, as the case may be, of the Board.
(4C) Every Bench referred to in sub-section (4B) shall have powers which are vested in a Court under the Code of Civil Procedure, 1908 (5 of 1908), which trying a suit, in respect of the following matters, namely: -
(a) discovery and inspection of documents of other material objects producible as evidence;
(b) enforcing the attendance of witnesses and requiring the deposit of their expenses;
(c) compelling the production of documents or other material objects producible as evidence and impounding the same;
(d) examining witnesses on oath;
(e) granting adjournments;
(f) reception of evidence on affidavits.
(4D) Every Bench shall be deemed to be a civil count for the purposes of section 195 and (Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974) ) and every proceeding before the Bench shall be deemed to be judicial proceeding within the meaning of section 193 and 228 of the Indian Penal Code (45 of 1860) and for the purpose of section 196 of that Code.)
(5) Without prejudice to the provisions of sub-section (4C) and (4D), the Company Law Board shall in the exercise of its powers and the discharge of its functions under this Act or any other law be guided by the principal of natural justice and shall act in its discretion.
(6) Subject to the foregoing provisions of this section the Company Law Board shall have power to regulate its own procedure.
45QA of the RBI Act, 1934 : Application by the Depositors of NBFCs
58 A : Application by the Companies other than NBFCs
58AA : Non payment of deposit of small depositors
111 : Power to refuse registration and appeal against refusal
111 A : Rectification of register on transfer
113 : Delivery / Issue of certificates of Shares,Debentures ,Bonds ,Debenture -Stocks
117C : Non redemption of Debentures
237(b) :Investigation of company's affairs in other cases
269 :Reference against Appointment of managing or whole-time director
397/398: Application to CLB for relief in cases of Oppression /Mismanagement
408 : Prevent Oppression or mismanagement
250 : Prevent transfer of Shares debentures and impose restriction thereon
409 : Prevent change in Board of Directors
614 :Enforcement of the duty of the Company to file returns etc. with the Registrar of Companies
Final accounts:
Definition::
Accounts made up only at the end of a firm's financial year. For a manufacturing firm, the final accounts consist of (1) manufacturing account, (2) trading account, (3) profit and loss account, and (4) profit and loss appropriation account. A trading firm's final accounts will include all of the above except the manufacturing account. Together, these accounts generate the gross profit, net income, and distribution of net income figures of the firm.
final accounts is in the Accounting & Auditing and Banking, Commerce & Finance subjects.
• Preparation of Final Accounts
1. Organisations need for additional information
2. Making up Final Accounts :: To derive the additional information needed
3. Preparing Trading and Profit & Loss a/c :: To derive information relating to profits
4. Preparing Trading and Profit & Loss a/c :: Illustration.
5. Preparing the Balance Sheet » To Derive Information relating to Position :: Illustration
6. Need for a Seperate "Trading a/c" and "Profit & Loss a/c"
7. Transfer of Net Profit to "Capital a/c" or "Profit & Loss Appropriation a/c"
8. Using Trial Balance in the Preparation of Final Accounts
9. What are Adjustments? Dealing with them in preparing Final Accounts
10. Trading Account » Ascertaining Cost of Goods Sold.
11. Trading Account » Closing Stocks, Opening Stocks Valuation.
12. Trading Account » Recording Closing Stock and Opening Stock.
13. Trading Account » Purchase Returns and Sales Returns.
14. Bases/Systems of Accounting » Cash, Mercantile, Hybrid.
15. Converting the Basis/System of Accounting » Cash to Mercantile ...
16. Finding Profits of a period under a Basis given profits under the other
17.
18. More Topics » Under Construction.
19.
• Adjustments
1. Expenditure » Outstanding and Prepaid
2. Incomes » Receivable and Prereceived
3. Drawings of Goods/Stock » Used up by owners Personally
4. Goods/Stock used in the building up or construction of an asset
5. Goods/Stock used for Advertisement Purposes
6. Valuation of Normal/Abnormal Losses
7. Abnormal Loss :: Accounting Treatment & Adjustments
8. Normal Loss :: Accounting Treatment & Adjustments
9.
10. More Topics » Under Construction.
11.
------------*****************--------------
Introduction:
Final Accounts works with your existing Money Manager data files to prepare a formal set of
end-of-year accounts.
Final Accounts handles Fixed Asset Depreciation, Audit Trails, VAT Reconciliation, Bank
Reconciliation, Trial Balance, Balance Sheet, Profit & Loss, Accounting Ratios, Capital
Allowances, Private Use, Tax Calculations etc..
Final Accounts adjusts itself automatically to cater for the differing requirements of Sole
Traders, Partnerships, Limited Companies, Charities etc..
With just a few minutes work you can add the extra information that will turn your Money
Manager data into a fully balanced set of Final Accounts.
When you install Final Accounts on your computer, a new FA button appears on your Money Manager
toolbar. When you click on this button, the menu and tool-bar change to give you access to the
Final Accounts functions. You can go back and forth between the Money Manager and Final
Accounts menus at the click of a button, and have reports etc. from both programs open on the
screen simultaneously.
Final Accounts is described over several pages, click on the line of buttons above to see each
page. Several pages will contain small screenshots and reports, you can click on these to see
a full-size version.
------------*****************--------------
A few extra items of information are required to turn your Money Manager data into a balanced
set of final accounts:
Business Type
You set the business type to Sole Trader, Partnership (up to 8 partners), Limited
Company, Club or Charity, and Final Accounts will adjust itself automatically to cope with the
differing requirements of that type of business.
Accounting Categories
You assign standard accounting categories (such as Sales, Cost of Sales, Overheads,
Long-Term Loans, Directors Emoluments etc.) to each of your Money Manager Account and Class
Codes, so that Final Accounts knows where to put them on the P&L and balance sheet.
Terminology
Many terms used in Final Accounts' reports and screens can be changed to suit your
circumstances. For example a charity may wish to substitute "Revenue" for "Sales". You can
change the wording for most sections of the Profit and Loss and Balance Sheet reports, as well
as the categories of Assets.
Previous Year Data File
If you specify a data file for the previous year, Final Accounts can transfer
appropriate data from it for the start of the current year, and also show the comparative data
for last year alongside the current year on the P&L and Balance Sheet (it will also show it
with the change in absolute or percentage terms).
Opening Entries, Closing Entries, Journal Entries
Entries may be made for accruals and prepayments relating to different accounting
periods.
One year's Closing Entries are automatically reversed to form the Opening Entries for the
following year.
You can also make Journal Entries at the end of the year to reassign expenses or to reproduce
your accountant's Journal Entries.
Stock
The value of stock (if appropriate) may be entered for the end of each month. You may
also enter different sets of stock values for several different departments, in order to
produce departmental Profit and Loss reports.
------------*****************--------------
Trial Balance:::
The Trial Balance is available as a simple end-of-year statement showing the balances of all
the Accounts and Classes (which add up to zero when the accounts are in balance), or as an
Extended Trial Balance with columns for Opening Balance, Debit and Credit during the year,
Closing Entries and Final Balance.
------------*****************--------------
Profit and Loss:
The Profit and Loss report can be produced in a wide variety of formats.
It can be fully detailed, semi-detailed or abridged:
------------*****************--------------
------------*****************--------------
Balance-sheet:
The Balance Sheet is available as either
Assets vs. Liabilities, or
Assets vs. Capital
You can specify the level of detail, e.g. showing each bank account balance on a separate line
or showing the total balance for all bank accounts on a single line.
You can have a second column showing the balance sheet for last year, and a third column
showing the difference, either absolute or as a percentage:
----
You can also have a balance sheet with a column for every month or quarter in the accounting
period.
The layout of the balance sheet is adjusted according to whether it is for a sole trader,
limited company etc..
There is also an Opening Balance Sheet to show that the accounts balance at the start of the
accounting period.
Most of the terms used in the headings can be changed (e.g. "Work in Progress" instead of
"Stock").
------------*****************--------------
------------*****************--------------
Assets:
There are seven user-defined categories of Fixed Assets which may be assigned to your Class
Codes. Thus when you buy a van the system knows that the class code you have used is in the
Motor Vehicle category of fixed assets.
For each category you may enter the percentage Depreciation Rate (for reducing balance
depreciation) or an absolute amount (for straight-line depreciation).
Brought-Forward Cost and Depreciation balances are entered manually for the first year, and
read automatically from the previous year's data file for subsequent years.
-----
Additions and Disposals during the year are extracted automatically from the Money Manager data
file, and disposal write-offs and losses are calculated automatically.
------------*****************--------------
------------*****************--------------
Tax-caculation:
Capital Allowances (WDA)
This is the calculation of the tax-deductible element of fixed asset depreciation. A
"pool" is maintained and carried forward from year to year, and WDA rates or amounts are
assigned to each category of assets.
Private Use of Expenses
Any category of income or expenditure may be assigned a percentage for private use.
The program can then calculate the total private use amount for the year and take it into
account in the tax calculation.
Tax Calculations
You can set the appropriate Tax and NIC rates yourself, and enter personal tax
allowances and pension contributions where appropriate. For partners (up to 8) the income to be
taxed is divided according to percentage share and the tax is calculated for each partner.
------------*****************--------------
------------*****************--------------
------------*****************--------------
------------*****************--------------
------------*****************--------------
------------*****************--------------
Balancing Report:
This useful report shows the state of balance in various parts of the accounts. If any
imbalances are found, the system will give the probable reasons for the imbalance, and by
clicking on the area of imbalance with the mouse you can soon get to the root of any problem.
Cash Flow Statement:
The Cash Flow Statement shows the money that came into the business during the year,
and where it all went:
Bank Reconciliation:
The Bank Reconciliation is a formal report establishing the relationship between your
accounts and your bank statements:
VAT Reconciliation:
This report compares the VAT due each month (or quarter) with the VAT actually
declared:
Accounting Ratios:
Accounting Ratios reveal the underlying financial health and direction of the business
or enterprise.
You may show comparative figures for up to 6 past years:
Duplicate Entry Detection:
There is an option for going through all the transactions in the accounts to detect any
possible duplicated entries.
InfoZoom:
You can click on numbers in reports to see in detail how that number is made up.
Calculator:
Fully functional calculator that can be used on its own without Final Accounts:
Help and Support:
The printed manual is clear and concise, written by non-accountants for
non-accountants. It includes installation instructions, examples, illustrations, hints, index
etc..
On-screen help is available at the touch of a button. Sample data files are provided to help
you learn and experiment before starting on your own accounts.
All Moneysoft products come with free telephone support.
------------*****************--------------
------------*****************--------------
Lesson 1: Adjustments made to the Trial Balance; capital expenditure and revenue expenditure;
calculating accruals and prepayments; bad debts; calculating the value of stock
Lesson 2: Using the Journal; double entry to be used for the most common year-end adjustments;
making Journal entries in order to record adjustments made in the ledger accounts
Lesson 3: Extending the Trial Balance to include Journal entries , accruals and prepayments;
calculating the profit , or loss of the business
Lesson 4: Preparing a P&L account and Balance Sheet; preparing a profit and loss account and
balance sheet; calculating the gross profit percentage; calculating the mark up percentage
Lesson 5: Closing off the ledger accounts; identifying which balances are transferred to the
next accounting period and which are transferred to the Profit and Loss account
------------*****************--------------
Accounts made up only at the end of a firm's financial year. For a manufacturing firm, the final accounts consist of (1) manufacturing account, (2) trading account, (3) profit and loss account, and (4) profit and loss appropriation account. A trading firm's final accounts will include all of the above except the manufacturing account. Together, these accounts generate the gross profit, net income, and distribution of net income figures of the firm.
final accounts is in the Accounting & Auditing and Banking, Commerce & Finance subjects.
• Preparation of Final Accounts
1. Organisations need for additional information
2. Making up Final Accounts :: To derive the additional information needed
3. Preparing Trading and Profit & Loss a/c :: To derive information relating to profits
4. Preparing Trading and Profit & Loss a/c :: Illustration.
5. Preparing the Balance Sheet » To Derive Information relating to Position :: Illustration
6. Need for a Seperate "Trading a/c" and "Profit & Loss a/c"
7. Transfer of Net Profit to "Capital a/c" or "Profit & Loss Appropriation a/c"
8. Using Trial Balance in the Preparation of Final Accounts
9. What are Adjustments? Dealing with them in preparing Final Accounts
10. Trading Account » Ascertaining Cost of Goods Sold.
11. Trading Account » Closing Stocks, Opening Stocks Valuation.
12. Trading Account » Recording Closing Stock and Opening Stock.
13. Trading Account » Purchase Returns and Sales Returns.
14. Bases/Systems of Accounting » Cash, Mercantile, Hybrid.
15. Converting the Basis/System of Accounting » Cash to Mercantile ...
16. Finding Profits of a period under a Basis given profits under the other
17.
18. More Topics » Under Construction.
19.
• Adjustments
1. Expenditure » Outstanding and Prepaid
2. Incomes » Receivable and Prereceived
3. Drawings of Goods/Stock » Used up by owners Personally
4. Goods/Stock used in the building up or construction of an asset
5. Goods/Stock used for Advertisement Purposes
6. Valuation of Normal/Abnormal Losses
7. Abnormal Loss :: Accounting Treatment & Adjustments
8. Normal Loss :: Accounting Treatment & Adjustments
9.
10. More Topics » Under Construction.
11.
------------*****************--------------
Introduction:
Final Accounts works with your existing Money Manager data files to prepare a formal set of
end-of-year accounts.
Final Accounts handles Fixed Asset Depreciation, Audit Trails, VAT Reconciliation, Bank
Reconciliation, Trial Balance, Balance Sheet, Profit & Loss, Accounting Ratios, Capital
Allowances, Private Use, Tax Calculations etc..
Final Accounts adjusts itself automatically to cater for the differing requirements of Sole
Traders, Partnerships, Limited Companies, Charities etc..
With just a few minutes work you can add the extra information that will turn your Money
Manager data into a fully balanced set of Final Accounts.
When you install Final Accounts on your computer, a new FA button appears on your Money Manager
toolbar. When you click on this button, the menu and tool-bar change to give you access to the
Final Accounts functions. You can go back and forth between the Money Manager and Final
Accounts menus at the click of a button, and have reports etc. from both programs open on the
screen simultaneously.
Final Accounts is described over several pages, click on the line of buttons above to see each
page. Several pages will contain small screenshots and reports, you can click on these to see
a full-size version.
------------*****************--------------
A few extra items of information are required to turn your Money Manager data into a balanced
set of final accounts:
Business Type
You set the business type to Sole Trader, Partnership (up to 8 partners), Limited
Company, Club or Charity, and Final Accounts will adjust itself automatically to cope with the
differing requirements of that type of business.
Accounting Categories
You assign standard accounting categories (such as Sales, Cost of Sales, Overheads,
Long-Term Loans, Directors Emoluments etc.) to each of your Money Manager Account and Class
Codes, so that Final Accounts knows where to put them on the P&L and balance sheet.
Terminology
Many terms used in Final Accounts' reports and screens can be changed to suit your
circumstances. For example a charity may wish to substitute "Revenue" for "Sales". You can
change the wording for most sections of the Profit and Loss and Balance Sheet reports, as well
as the categories of Assets.
Previous Year Data File
If you specify a data file for the previous year, Final Accounts can transfer
appropriate data from it for the start of the current year, and also show the comparative data
for last year alongside the current year on the P&L and Balance Sheet (it will also show it
with the change in absolute or percentage terms).
Opening Entries, Closing Entries, Journal Entries
Entries may be made for accruals and prepayments relating to different accounting
periods.
One year's Closing Entries are automatically reversed to form the Opening Entries for the
following year.
You can also make Journal Entries at the end of the year to reassign expenses or to reproduce
your accountant's Journal Entries.
Stock
The value of stock (if appropriate) may be entered for the end of each month. You may
also enter different sets of stock values for several different departments, in order to
produce departmental Profit and Loss reports.
------------*****************--------------
Trial Balance:::
The Trial Balance is available as a simple end-of-year statement showing the balances of all
the Accounts and Classes (which add up to zero when the accounts are in balance), or as an
Extended Trial Balance with columns for Opening Balance, Debit and Credit during the year,
Closing Entries and Final Balance.
------------*****************--------------
Profit and Loss:
The Profit and Loss report can be produced in a wide variety of formats.
It can be fully detailed, semi-detailed or abridged:
------------*****************--------------
------------*****************--------------
Balance-sheet:
The Balance Sheet is available as either
Assets vs. Liabilities, or
Assets vs. Capital
You can specify the level of detail, e.g. showing each bank account balance on a separate line
or showing the total balance for all bank accounts on a single line.
You can have a second column showing the balance sheet for last year, and a third column
showing the difference, either absolute or as a percentage:
----
You can also have a balance sheet with a column for every month or quarter in the accounting
period.
The layout of the balance sheet is adjusted according to whether it is for a sole trader,
limited company etc..
There is also an Opening Balance Sheet to show that the accounts balance at the start of the
accounting period.
Most of the terms used in the headings can be changed (e.g. "Work in Progress" instead of
"Stock").
------------*****************--------------
------------*****************--------------
Assets:
There are seven user-defined categories of Fixed Assets which may be assigned to your Class
Codes. Thus when you buy a van the system knows that the class code you have used is in the
Motor Vehicle category of fixed assets.
For each category you may enter the percentage Depreciation Rate (for reducing balance
depreciation) or an absolute amount (for straight-line depreciation).
Brought-Forward Cost and Depreciation balances are entered manually for the first year, and
read automatically from the previous year's data file for subsequent years.
-----
Additions and Disposals during the year are extracted automatically from the Money Manager data
file, and disposal write-offs and losses are calculated automatically.
------------*****************--------------
------------*****************--------------
Tax-caculation:
Capital Allowances (WDA)
This is the calculation of the tax-deductible element of fixed asset depreciation. A
"pool" is maintained and carried forward from year to year, and WDA rates or amounts are
assigned to each category of assets.
Private Use of Expenses
Any category of income or expenditure may be assigned a percentage for private use.
The program can then calculate the total private use amount for the year and take it into
account in the tax calculation.
Tax Calculations
You can set the appropriate Tax and NIC rates yourself, and enter personal tax
allowances and pension contributions where appropriate. For partners (up to 8) the income to be
taxed is divided according to percentage share and the tax is calculated for each partner.
------------*****************--------------
------------*****************--------------
------------*****************--------------
------------*****************--------------
------------*****************--------------
------------*****************--------------
Balancing Report:
This useful report shows the state of balance in various parts of the accounts. If any
imbalances are found, the system will give the probable reasons for the imbalance, and by
clicking on the area of imbalance with the mouse you can soon get to the root of any problem.
Cash Flow Statement:
The Cash Flow Statement shows the money that came into the business during the year,
and where it all went:
Bank Reconciliation:
The Bank Reconciliation is a formal report establishing the relationship between your
accounts and your bank statements:
VAT Reconciliation:
This report compares the VAT due each month (or quarter) with the VAT actually
declared:
Accounting Ratios:
Accounting Ratios reveal the underlying financial health and direction of the business
or enterprise.
You may show comparative figures for up to 6 past years:
Duplicate Entry Detection:
There is an option for going through all the transactions in the accounts to detect any
possible duplicated entries.
InfoZoom:
You can click on numbers in reports to see in detail how that number is made up.
Calculator:
Fully functional calculator that can be used on its own without Final Accounts:
Help and Support:
The printed manual is clear and concise, written by non-accountants for
non-accountants. It includes installation instructions, examples, illustrations, hints, index
etc..
On-screen help is available at the touch of a button. Sample data files are provided to help
you learn and experiment before starting on your own accounts.
All Moneysoft products come with free telephone support.
------------*****************--------------
------------*****************--------------
Lesson 1: Adjustments made to the Trial Balance; capital expenditure and revenue expenditure;
calculating accruals and prepayments; bad debts; calculating the value of stock
Lesson 2: Using the Journal; double entry to be used for the most common year-end adjustments;
making Journal entries in order to record adjustments made in the ledger accounts
Lesson 3: Extending the Trial Balance to include Journal entries , accruals and prepayments;
calculating the profit , or loss of the business
Lesson 4: Preparing a P&L account and Balance Sheet; preparing a profit and loss account and
balance sheet; calculating the gross profit percentage; calculating the mark up percentage
Lesson 5: Closing off the ledger accounts; identifying which balances are transferred to the
next accounting period and which are transferred to the Profit and Loss account
------------*****************--------------
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