My typical husband

Am not sure what goes on in his mind, but am sure he is a more influenced by his parents...more specifically my idiot in law has a bigger say in his nodding hid head in affirmative or otherwise....

Ever since my wedding, my idiot in laws went into insecurity that their son will wave them a big good bye and elope with his bride(me). this led to many foolish arguments and sadistic attitude towards me. this included snatching my money to the tune of Rs 2 Lakhs and physical abuse toooo. Either way, my husband doesnot see any fault with his parents. they shoudl be secure (even though am sick and dying out of insecurity; both financially and physically) One can never imagine when sadism strikes my in-laws, suddenly they go psychic, hyper and what not. WHy the hell should i bear their emotional fancies????

Coming to my pretty smart and handsome husband....his divine parents are never at fault, his sister is who is insane and should be in a mental asylum is the perfect lady on earth. My husband never feels anythign responsibility towards me. He feels that staying with me itself is the biggest boon he gives me. i should treasure his presence in every manner. People who already read my previous blog on "worst people in my life"will understand that i left hell of the house along with my husband. Now my husband feels he is put to un-expressable pressure as he has to struggle between his bride and parents. His divine mother has changed a lot and loves me to the core (now that i have stashed away some finances for my future)...and so did i change..i hate them to the core, i dispise at the mere thought of catching up with them again .......

my changed mother in-law now wants a grandson..during my days with her in the hell (so called house worth half a million) ..i was put through the trauma of verbal abuse that i will never bear the kids....am sure that the verbal abuse will automatically eb transferred to her own daughter (who is already aborted..and will soon be in the mental asylum) ......the idiot-in-law was insecure that if my husband has kids with me, she will be put to untold misery ..she will be cheated upon by her own son by having a family with as low a person as me... she never performed a pooja or called a relative to introduce to me during my 365 days of hell..now that am out of the hell, she prays regularly to the Gods (i wonder if that can be demons too)

My husband who has a black cloth on his eyes feels no emotions at all. he fears accompanying me to a doc for kids (now we r married for 2 years)..he fears he will cheat his mom by having kids with me...as having kids will mean more financial stress and emotional binding with me...and that will be cheating his mom and cut down on financial help to his greedy father...
my sweet of a husband does not want to spend time with me..and how the hell can we bear kids without spending time??? with the hectic office schedules, we hardly have time on weekends and that too he should justify by smelling the sweet ass of his parents....and only with the nod of his greedy , idiot parents, will he come to spend time with me...infact he doesnot have time to shop with me for a storage solution that we have been planning since 6 months.....he doesnot have time to take me to a park or a new year party or in the least gift me a bunch of lfowers on my birthday!!! But his divine mom deserves a chocolate on her birthday....which my husband promptly denies..says he never bought chocolates ofor his mom, inspite of the fact that i showed him the shopping bill from his pocket......he has all the time in the world for his parents...am not sure if I should still stick on to the relation or not!!!!

worst people in my life

the title of the post itself gives some nasty feelings as to why the hell is this lady writing about worst people...people do write about good people and sweet memories ...they prefer to forget the bad ones, but i dare to pen down the worst part of my life too, which i think will definitely pinch where it pinches to the people who will ultimately know about this blog of mine...and give me a sense of satisfaction............

the in-laws or or as i would like to nick name...my idiot-in-lawsconsist of the ever greedy Father-in-law, my mever happy mother-in-law, the always fighter cock sister -in-law. this itself gives the first post intro of my so called in-laws family. And my husband though knows it all, doesnot want to accept that it is their fault, it is always me who is at fault...i had to literally force myself out of that hell of a house ..i never felt at home during my one-year stay int he joint family of these crazy people.

to cut the long story short...my sis-in-law is not on good terms with her in-laws and she behaves as if, me and my husband will crawl at her feet and say “Yes, oh great one, our life is all focused on you and you only! We have no feelings or emotions or anything except as they relate to YOU!!!" She assumes that it is only her husband (my brother-idiot-in-law) who gave away all the hard earned money to his parents and that her in-laws should come and smell her rose scented ass !!!!!!!!!!!!!

and coming ot my idiot in laws, it doesnot feel bad for them to snatch away all my hard earned money and my husband's money in the name of "marriage expenses"...inspite of the fact that my dad spent everything, they spend as much as 2 Lakhs for the marriage. And again, mind you, dont call it a dowry, they never beg dowry, all they need is reimbursement for marriage expenses which is a whooping 2 Lakhs..and their running expenses are just three times higher than what my parents spend in the same city.

overall, my greedy-father in law was successful in grabbing about 5 Lakhs from me and my husband, but it should not matter me, because me and my husband will inherit the house after his demise, after his wife's demise and if his sister feels not to file a case for the share in the property....which am sure wil take about 30 years in the least for me to inherit..... by which time, i will grow over 50 years for sure. All the while grabbing money, he used to say, dont worry my son, i will give u back the money as and when u need it, but when i needed petty 20K, he didnt have it, but within a week of my asking, he has 17K to purchase a refrigerator..and my husband thinks, his father is a genuine person and suddenly he got some unexpected funds from nowehere and he purchased a refirgerator...GOD save ME....inspite of stashing away about 5 Lakhs in his name, having own home and having a life long pension of about 15K per month, my father-in-law is poor.....he begs his son and daughter -in-law for more........yes he is poor not financially but mentally..........

i fail to understand the logic and my husband doesnot want to listen to me....that my father in law inspite of having so many funds, begs us for more and on the other hand, his son-in-law should not give a penny to his parents..............

coming to my mother-in-law, bigger idiot...feels that she is the divine mother descended directly from heaven just to marry off her precious son to as low a person as me....she gets upset when i dont stand up when she enters the room....as if am her slave......she gets irritated if i sleep with her son and wake up with him...i dont understand the logic again, her daughter who is a house wife sleeps from 10 AM till 6 PM and myself being a working woman shouldnt sleep from 10 PM till 7 AM ..............i should be a super woman, ideal Daughter in law, who should wake up by 5 AM, brew coffee for all, cook breakfast, pack lunch, keep their lunch ready, come back from office at 8PM, cook dinner for all, serve them, clean the kitchen and then sleep.......if i miss this time table for any reason, she will bring down the roof and shout at the top of her voice....she will also blackmail her son that, she has been downgraded to a cook in the house (she cooked hardly 3 times during my 1 year stay there) and to the extent that she will dramatically pick up a bottle of phenyl to threaten a suicide. i really wish she does drink a bottle of phenyl .......
And amidst all this, my husband doesnot see anything wrong at all...his mom and sis are the perfect people on earth..they know everything about fashion and advise us about what to wear, where to purchase and at what cost and colour..and if i go about buying anything on my own, either the colour chosen is bad or the rates are too high or the vegetables are not at all tasty..to the extent that the ice-cream that i carry home is too sweet and the dry fruits are tooo dry ......

Last but not the least, my sister-in-law the dirty imp, ghost and a demon of my idiot-in-law family...she happily leaves her husband abroad and spends over 5 months in a year at her mom's place..and i shudnt visit my parents or my parents shudnt visit me even though we reside in the same city. She gets upset at the sight of my parents that she stops eating and my parents in law have to pursuade her to eat and because it is my fault coz of my parents visit upset her, my punishment is that, i shouldnt visit my parents or vice versa during her stay.

again i dont understand the logic....the in-laws of my sis-in-law never cared a damn about her and therefore, she stopped talking to them...and that she is justified as they didnt gift her anything for over a year.......and coming to me...my in-laws gifted me with so many brickbats, so many abusive words...never let me sleep with a peace of mind...to the extent that every festival during my stay of 1 year with them ended up with a silly fight ...like my dad didnt wish their daughter or i insulted her by not conceding to her wish to have a photo with her son.....and i should be happy with all this coz they r divine ...........i started losing weight horribly and was sick more often......and finally

fed up with all this, i just gave up that idiot family and moved out on my own with my husband to a different apartment......then my father-in-law comes into picture again..he is so much in love with his son and daughter-in-law that he used to visit us every weekeend and sneaks out like a female vamp in the daily serials of "k-series"..he never gets enough of what i do with the money (now that i stopped giving him my money and now he gets only his son's share of money...50% of what he had planned wud accrue to him)

And soon after he realised that i saved as much to secure my future and within 5-6 months i will be ready to plan a own home for myself, they started feeling more love for me.....instantly their doors became open for me ....i should start living with them and al their complaints are automatically forgotten..they will hire a maid servant to cook, maid to do the dishes and wash clothes and everything to make me feel more comfortable....

and when i turned down this plan of theirs.....my husband feels that am unreasonable

now that i forced them out of my life..... i observed that am gaining weight and healthy too

thank GOD..am out of that hell now and vow that i will never enter that hell again during my life time......come what may!!!!

Two Day residential Seminar.....

Here comes my view and review on the Two Day residential Seminar conducted by the SIRC jointly with Hyderabad Chapter of the ICSI on 16th & 17th April 2010 at Alankrita Resorts....

First things first..the drawbacks of the programme as i always find so many...the programme was ill-planned..the information about the seminar was sent hardly a week before, the Annual participation scheme members were not sure of any concession (this was later clarified just 20 hours before the seminar), the sponsorship details was not informed properly...

all this mess landed into hardly 25 delegates for the seminar...too less a number compared to the earlier seminar at the same venue...which was attended by over 200 delegates.

Coming to the programme....at the inaugural session, i was called on stage to light the lamp along with Dr Chandratre...(author of over 25 books, 1000 articles, etc etc).....a honour that will remain with me forever.....

post lunch, when the first technical session started, people were dozing off...though the speaker was interesting, the hall was too big and the power supply was very poor. this led into break in the flow of subject to the speaker...and the volume of PA system had to be adjusted constantly to avoid blowing the ear drums of the delegates.

the day closed with a tea break..heard there was a cultural evening..God knows who attended it at 7 PM...out of some 25 delegates...some 10 had left along with me..so probably the cultural evening was attended by the SIRC members only...

the next day had even lesser delegates as most of them lost interest on the first day itself....the first technical session started an hour late..but still, Mr Pasupati kumar, CFO of Delloitte impressed the members with his awesome insight into the subject ....his style of taking through the session was excellent and his session was naturally overshot by 40 minutes...then came Mr M R Gopinath, a PCS from Bangalore..his quick wit and one liners and his constant digs at women made the session live and interesting

the last session was by Mr Vikas Khare...who appeared boring..without any wit or delegate participation..it was one sided talk from the speaker and as the session was running out of time...he had to wind up..probably his entry was at wrong timing, otherwise..the sessionw as excellent and he had made a point to mail his rpesentation to all participants...which is well appreciated.

the seminar came to an end with a awesome lunch.....

AFM 2010

The Annual Fellowship meet (AFM) of the Hyderabad Chapter of the ICSI...a platform where the new committee members are introduced and the past ones are felicitated. i was overjoyed when i got permission to attend the meet . the meet was meant to be attended with family....but somehow, i got to go alone.

the AFM for the year 2010 was organised at Sailing boat club near Tank Bund. the venue was a scenic beauty with Tank bund at the far end....lighting on the necklace road...and the lush green lawn outside the meeting room. i went there with many hopes...expectations to be a part of the fun games there. the room was decorated with loads of balloons, light music at the background..kids running everywhere.......members of the Institute split into groups chit chatting.

the meet was attended by top notch CS including the DHR, PVS, PS Sastry, Av Syamala, Ahalada Rao, S V Suryanarayana, A V Syamala, Jagannatham...etc


Now about the actual programme...if you want to understand the importance of an elevated wooden plank for the artists to perform (also called the stage)...attend this programme....if you want to understand the importance of clarity in PA systems (also called mikes) ..attend this programme...if you want to understand the importance of hosting/ organising ....this programme is a must to attend....why is it sooo impritant?

the lack of stage...really was a big flop...the artists were mixed up with the DJ guys..and the backstage supporters. the audience were confused between the performers and the supporters. the mikes were of poor quality which added to the flop show....the people at the far end the hall were unable to understand or seewhat was going on at the head of the meeting hall.

Now comes the dance show by the students, which was supposed to be the hilarious video of the year (posted by Youtube)...but the performers and audience being on the same plane (without a stage) the dance became a mourning show.. the performers 9who were actually supposed not to give expressions, which is a part of the comedy)) appeared to be dumb people...who move their hands and legs .

the skit by the students, though had imitations from Dharm Paaji and Sunny deol...was flop show again ..coz of poor mike quality and lack of platform. the audience were like commenting..what is happening there?? are they talking to themselves or performing anything??

then comes simple quiz from the host, who was literally inaudible and the kids surrounding him answered all questions by peeping into the questionnaire itself....no point in quiz..the lady accompanying the host was so slow ..that she took her own sweet time to pass on the mike to people who were actually trying to answer....still, they managed to get answers from one or two from audience..surpassing all the kids. The next game was find your partner.....the members were toooo lazy (or disinterested may be) to find their partners from the slips given.....the host had to help each one find their partner..and he had a tough time to gather them on the stage..request them to participate...train them to dance to the music by DJ.....

then comes our new chairman..who has an awesome authoritative voice...to calm the dance floor for the felicitation to happen. the felicitations......was a cake cutting programme....which was surrounded by kids again and other members having a gala time chit chatting with each other. Then there was dinner...which was tasting good...but the space was tooo less to accommodate the people. ..thats all ...after this dinner...i left the meeting...without knowing why i was there.......

37th National Convention of the ICSI- An overview

The convention with over 1000 delegates, Minister of Corporate affairs as invitee, people from various parts of the country….yes it is the Grand 37th National Convention of the ICSI held from 5-7th November 2009 at Hotel Mariott, Hyderabad.

Being a local resident of Hyderabad, I had it easy to locate the venue. There were about 10s of counters for registration of delegates and thanks to Hyderabad Chapter, I had my delegate number that helped in getting the kit within no time. The kit was a beautiful black laptop bag, with pens, a few business cards, a t-shirt with ICSI logo in the front and Bajaj Allianz logo on the back (which was dissented by many) and brouchers from the sponsors. After the long queue at the entrance, I entered the convention hall which was decorated professionally with a big screen for clear view of the happenings on the dais, a balcony to accommodate delegates that wouldnot fit into the convention hall, ICSI banners, sponsorship banners, a big welcome screen behind the dais, etc.

Skipping the minute details of the lighting of the lamp and Council members taking the dais let me get into the happenings straight away. The curtain raiser that gave an insight into the 3-day programme was organized very well. The Awards for best chapter and other categories including moot courts and related stuff were well-organised but the award winners were concentrating more on photographs being taken rather than the big trophy in their hands. The release of convention souvenir, Secretarial standard 10 and other ICSI publications had the Council members showing off their teeth and flashing the publications rather than anything else. The host who announced the names was amateur and a lot shaky. Probably the Hyderabad chapter could have chosen a better host for such an important event.

Mr Salman Khurshid, Minister of Corporate Affairs was the guest for the inaugural session, believe me…he was simply superb in delivering his message to the members. He was crisp and to the point. A politician having such indepth knowledge of the subject along with command over the language is quite unbelievable.

The first technical session on Managing growth in turbulent times had many delegates dozing off while Mr Pramanik was delivering his message. But, Ravi Kashtia and Jim Brady were interesting speakers. They highlighted on ways and means to manage growth with their slight humour.

I don’t prefer going into the nitty gritty of each technical session, but each speaker was excellent and an expert in his subject. Especially the dynamism and sharpness exhibited by Ms Vijaya, CS of Bharati Airtel is worth mentioning.

I didn’t prefer to stay back for the cultural evening and dinner that followed.

The second day of the convention started off with 5K run for a cause…well, I didn’t participate again. After that, a special breakfast for women was organized. This had 3 speakers; one from Administrative wing of the AP govt, one industrialist and another was a founder of well known social welfare organization. We even had the first Woman president of the ICSI and First ICSI-SIRC chairperson with us. Each one had different insights into the women problems, ways and means to tackle them. The bottom line was to have a good networking circle amongst ourselves to better our personal lives.

The open house session with the central council members was good. Many of the CS had different sorts of complaints on the response of the Ministry or the council or the student services. There were also many satires on the working of the ICSI which were intelligently handled by the Prez ICSI

Thereafter, the technical sessions are as usual boring stuff which had many delegates going out for networking or discussing business and some were dozing off, myself being one of them.

This was followed by a brief lunch that did not have soup but had plenty of fruit salads and other goodies. There was separate section for non vegetarians too.

The trip to Ramoji film city (RFC) was a chaos with so many delegates ending up into confusion whether to get into a bus or not. The entry at RFC was organized well, the stunt show was over crowded and so was the Action theatre. The tour through the RFC was excellent with an enthusiastic guide explaining each and every thing in detail with a pinch of wit. Most of us felt that the time was insufficient as it started to get dark by 6 PM itself.

The hot coffee on one hand, cookies on the other with the serene blue sky overhead and neatly towed green grass underneath was a superb experience. At 7 PM the cultural show began under the blue sky. There were dance performances, one minute game shows for the participants, comedy stints by well known comedians and few gymnastic wonders by the RFC people.

Dinner was also served simultaneously and this has a separate section for Jain food too. As dinner was coming to an end, it started to rain cats and dogs and the pleasant evening was forcibly wound up at 8.30 which would have been at 10 PM otherwise.

The day 3 of the convention began with a breakout session on M&A under competition regime and Tax reforms simultaneously in two different halls. The speakers for M&A were wittier than others of their genre and the delegates had an excellent time in understanding the concept.

This was followed by an interactive session with the Jt Secretary to MCA, a dynamic lady with elegance and intelligent charm of her own. She coordinated the session, took all the inputs from the delegates and briefed the members on the happenings at the ministry, the efforts put in by them and the like. Overall, the session was lively and highly useful for the members present.

The Valedictory session was the most emotional part as it was the point where all the delegates part away with a promise to meet at the next National Convention. The Prez ICSI gave a brief overview of the 3-day convention, thanked the delegates, organizers and all those who made the convention a grand success. He also highlighted the records that were broken at the convention. The 3-day convention came to an end with a special lunch.

LAZY BANKING

In 2005 managerial autonomy to PSBs by leaving assorted decisions (acquisitions, closure of unviable branches, opening overseas offices, human resource policies) to boards was highlighted as a part of de-regulation of the Government. The buzzwords then were "competition, corporate governance, and independent directors". But the buzzwords now are "government control" and government is not to be confused with governance.

The nationalization of banks in 1969 was aimed t improve credit delivery, expand the areas of banking in rural India and encourage the small-scale industries. Nationalisation was introduced to further regulate the Banking industry apart from the RBI and the Banking Regulations

Apart from Nationalising Banks, restrictions were imposed on composition of boards of directors and on bank lending to units that directors were interested in. But then, credit delivery or populism of the late 1960s and early 1970s was only one part of the jigsaw. This statement can be observed from the preamble to the Banking Companies Act of 1970 wherein it is stated that "an Act to provide for the acquisition and transfer of the undertakings of certain banking companies, …….. in order to control the heights of the economy …………….and for matters connected therewith or incidental thereto." The key word was 'control', but not regulation. Opposition to privatisation of public sector enterprises isn't about strategic sectors and market failure. It is about losing control. The heights of the economy became the depths.

The fiasco of nationalization was extended and the fall out was seen in September 2006 that wrought havoc in many ways. First, since government equity was declining and public shareholding increasing, the number of independent directors was slashed. Second, possibility of nomination from SEBI, NABARD and public financial institutions was removed. Third, the number of full-time directors was doubled (from two to four). Fourth, "excess" directors were made to retire, on a first-in first-out criterion, that is, on basis of seniority. Fifth, SEBI'S attempt to push corporate governance was a problem, since SEBI'S suggested draft amendment to Clause 49 of the Listing Agreement proposed that directors nominated by government or public financial institutions wouldn't be counted as independent directors.

The expression “lazy banking” was coined a few years ago to describe the “Public Sector Banks” and their way of banking. The desks at Public Sector Banks are strewn with papers, bulletins and what not…and every one seems to know what exactly is demanded of them. But again, this did not change anything not even the credit delivery in the least.

The nomination of Independent Directors has turned out to be a matter of graft and reward and their expertise never entered the rulebooks of the Banking industry. Probably a CRAZY Banking approach to the banking formulation will wipe away the lazy Banking in India.

The Lazy banking has resulted in corporate India generating income without availing the Bank Credit which is a severe indictment of Indian banks and this inertia is a symptom of deeper malice.

During 1998-2003, the Banks ignored Lending to commercial sector and the funds were extensively invested in Government Bonds. Ironically, this strategy did not harm banks. The cut in interest rates by the RBI in 1999 the Banks that invested in Bonds profited. The Banking sector earned huge profits irrespective of whether the profiteering Bank was a weak one or otherwise. These profits were utilized to the “cleaning of Bank’s Balance sheets “popularly known as wiping off Bad debts and raising of capital.

On the other hand, denial of credit to industrial sector worsened the small players in the market. In other words, our banks were more comfortable funding the fiscal deficit rather than private commercial activity. Gratuitous perversity in Indian banks is observed and that is coined as the Lazy banking.

The era of Lazy banking can also be attributed to the Industrial recession that created a fever amongst the Bankers about CBI raids for wrong credits.

The worst days of lazy banking are now over. Over the past, because of the economic recovery, credit to industry has been growing considerably. The focus has shifted back to loan growth. Most of the demand till now has come from working capital. And the bond market is no longer that attractive - bond prices have plunged and bond issuance is bound to suffer as the government cuts its fiscal deficit.

Yet, the recent episode of lazy banking throws up many hard questions. These questions should become part of the current debate on banking reform, which is hopelessly stuck on whether foreign capital should be allowed into the Indian banking industry. The good health of Indian banks is worthy of celebration. But what if this health has been achieved by not lending to the economy?

Bank nationalisation has been demonised for a number of valid reasons. Politicians used the banking system to dish out loans to favoured interest groups, and directly contributed to the huge bad loan problem of later decades. Capital was misallocated. But what is not adequately appreciated is the fact that the policy of bank nationalisation was actually a success in terms of its key goal - spreading the banking habit in the country and providing credit to small companies and farmers.

The first round of banking reforms in 1992 was partly responsible for the credit squeeze of the past five years, especially because of capital adequacy norms that made lending to the government more attractive than before. While Indian banks will have to deal with many issues ranging from capital adequacy to globalisation - they will also have to ensure that small companies and farmers, who form the bedrock of the Indian economy in terms of output, employment and exports, are not starved of credit. And this lending should be done in a way that earns profits.

Fortune favours the quick adapter. The year 2006-07 was challenging in several ways. Treasury income, their mainstay in the earlier part of the decade, went down appreciably as bond prices sagged and yields rose under intensifying demand for money, even as the government put far less paper in the market. With ‘lazy banking’ options closed, commercial lending was all the rage, but here too, there were the RBI-delivered shocks—higher risk weightages in creamy sectors like housing loans, apart from two CRR hikes in rough conjunction with repo and reverse repo rate hikes aimed at vacuuming liquidity and preventing froth.

But with the economy in boom, banks were not short of business—not even depositors, it turns out, though this took a tax-sop nudge from the finance ministry. The funds crunch scare did not quite materialise.

The Reserve Bank has also been periodically issuing guidelines on public grievance redressal mechanism in banks, including constitution of customer service centers. Based on the recommendations of a Committee on Procedures and Performance Audit of Public Services for ensuring improvements in quality of service rendered, banks were advised to constitute a Customer Service Committee of the Board. In the Reserve Bank, the Customer Service Department has recently been constituted to, inter alia, serve as the interface between customers and banks.
On a broader plane, the Reserve Bank has been adopting a two-pronged strategy to generate greater awareness and expand the reach of banking services – which can be termed as empowerment and protection. As regards the former, financial inclusion is the first stage of the process. This is strengthened by inculcating awareness among the masses through financial education. Concurrently, an advisory mechanism in the form of credit counseling is being encouraged to help distressed borrowers and bring them within the fold of formal finance. As regards protection, a Banking Codes and Standards Board of India has been established recently to ensure a comprehensive code of conduct for minimum standards of banking services to be offered by banks. The revised Banking Ombudsman Scheme has been put in place to redress deficiencies in customer service by banks.

The economy is presently in a phase of rapidly rising incomes, rural and urban, arising from an expansion of extant economic activities as well as the creation of new activities. Corporate profitability has exhibited sustainable trends and consumer incomes are increasing rapidly, riding on the growth momentum. All of these developments suggest that the demand for financial services, both for savings as well as production purposes, will be greater than has been the case in the past, and there will be many new entrants in need of financial services who have not hitherto been served. At present our financial depth is much lower than that of other Asian countries, though it has picked up in the recent past. While there is evidence of an increase in financial deepening, particularly during the present decade, the increase in the breadth and coverage of formal finance has been less than adequate. Deepening the financial system and widening its reach is crucial for both accelerating growth and for equitable distribution, given the present stage of development of our country.

There has been a burst of entrepreneurship across the country, spanning rural, semi-urban and urban areas. This has to be nurtured and financed. It is only through growth of enterprises across all sizes that competition will be fostered. A small entrepreneur today will be a big entrepreneur tomorrow, and might well become a multinational enterprise eventually if given the comfort of financial support. But we also have to understand that there will be failures as well as successes. Banks will therefore have to tone up their risk assessment and risk management capacities, and provide for these failures as part of their risk management. Despite the risk, financing of first time entrepreneurs is a must for financial inclusion and growth.

The Parliament passed the Credit Information Bureau Act last year and the guidelines for its implementation will be released shortly. This should enable, over time, the availability of credit histories of both individuals and small businesses, which will help significantly in reducing transactions and information costs for banks. It will also help in spreading the credit culture among borrowers. It should help banks greatly in assessing and managing risk at low cost.

As poverty levels decline and households have greater levels of discretionary incomes, they will be first time financial savers. They will, therefore, need to have easy access to formal financial systems to get into the banking habit. Banks will need to innovate and devise newer methods of including such customers into their fold. The importance of 'no-frills' account and expanding the range of identity documents that is acceptable to open an account without sacrificing objectivity of the process in this milieu can never be over-emphasised. Banks will need to go to their customers, rather than the other way around.
The micro-credit and the Self Help Group movements are in their infancy but are gathering force. More innovation in the form of business facilitators and correspondents will be needed for banks to increase their outreach for banks to ensure financial inclusion. New entrants to the banking system need households at their doorstep.

To conclude, with increasing liberalisation and higher economic growth, the role of banking sector is poised to increase in the financing pattern of economic activities within the country. To meet the growing credit demand, the banks need to mobilise resources from a wider deposit base and extend credit to activities hitherto not financed by banks. The trend of increasing commercialisation of agriculture and rural activities should generate greener pastures, and banks should examine the benefits of increasing penetration therein. Financial inclusion will strengthen financial deepening and provide resources to the banks to expand credit delivery.

Source of Capital - The Private Equity

The investment by Private equity partners in the Indian corporate sector is gaining momentum in spite of the turbulent economic scenario. Though in its nascent stages, Private Equity (PE) investment has assumed the status of mainstream source of capital. While India Inc is gearing to share its financial stake in the otherwise family-run enterprises, analysts raise fears that the quick exit of PE partners from these investments would leave companies high and dry.

Private equity investment was highly opposed in the 1970’s where the business tycoons developed the flip by taking over a company, attack wages and jobs to ‘cut away fat’, then sell back to the market in a three to five year cycle. The most common use of this system for profit stems where management teams buy out publicly listed companies and take them off the stock market as private entities.

The practice reached its zenith in the 80s when major takeovers were attempted by firms for their practice of taking healthy companies, selling their assets, firing much of the workforce and then selling back a shell to the public markets. The Private Equity market died down in the 90s, as mega-mergers placed many of the big players beyond the reach of even major private equity groups and confidence dimmed in the risks of investing during an economic downturn.

However in the last 4-5 years, where several major funds buy in to reach for larger targets, the economy has witnessed some of the biggest companies in the world targeted by the PE players.

PE investments have played a visibly positive role in generating employment opportunities and especially BPOs have benefited tremendously as PEs put their money in these ventures. PE can also drive a company into good governance, bringing in transparency and professionalism across industry. The PE partners usually induct their representative at Board level to assist the management in executing the strategies. They also enable entrepreneurs achieve success that may otherwise have been beyond reach by providing resources over and above money.

The broad framework of PE deal:

1. Time Frame: Though time is a factor of flexibility, a typical PE transaction takes roughly about 3 months to conclude.
2. Monetary Aspects: Money can be availed through any other form of funding. But, money alone cannot catalyse the working of the organisation.
3. Mutual Interest: The PE deal has to be aligned with the interest of the Promoter, execution capability, mutual comfort and the like.
4. End Utility: The PE partners should be ensured of Performance linked convertible to bridge the expectation gap, if any.
5. Success Factor: Success of PE Fund is dependent on success of the venture. PE funds make sure that their star entrepreneur are helped with all the resources and learning which can be mustered by the fund to help him realise his dream.
6. Agreement: Shareholders and Subscription agreement is the crux of a PE deal and one must ensure the inclusion of the following:
• Minority protection rights
• Rights and obligations of each party
• Force majeure
• Exit proviso
• Tag along rights, etc
7. Exit of PE partner: The PE partners prefer IPO as the exit route but other exit routes such as trade sale are often practiced. This is because, PE funded companies enjoy higher PE multiple at listing, than their contemporary non PE funded companies.


Conclusion:

Essentially, PE funds raise money from high net worth individuals, financial institutions, etc. for a period of seven-ten years and then invest in opportunities as and when they arise, either in early-stage, maturing or even public companies. The work involves of course, valuing the companies and deciding how much of the company stake is actually worth, what the company’s growth prospects are, etc. Structuring the transactions for tax-efficiency and industry-specific reasons is also part of the job. Post-stake taking, day-to-day monitoring and growth plans are monitored by the fund, with a senior director taking a seat on the company’s board. Since the target is also to exit the investment in a few years and return money to investors, the deal teams also constantly monitor the capital markets for suitable times to do an Initial Public Offering or find a strategic investor to sell to.

COMMON SEAL – Relevance in Today’s Corporate World

The Common Seal – often referred to as the signature of the corporate entity is more often than not deemed as the substantial mark of identification for the corporate entity in question. However, in today’s computerized corporate scenario, Common Seal has lost its gloss and has come to exist more as a ritual than a requirement. Today, Common Seal hardly used in any document other than the Share Certificates and even this is been reduced on a day by day basis with the advent of “Demat Accounts”.

Common Seal and the Provisions in Law:

a) Section 34 of the Companies Act, 1956 specifies that every company on incorporation should have common seal for corporate use.
b) Article 84 of Table A of Schedule I of the Act also indicates that the board shall provide for a Common Seal and this seal shall be affixed on a document only on the authority of the Board or a Committee of the Board, and also specifies the process to be adopted for any such affixation.
c) Section 50 empowers the companies to have official seal for use outside India.
d) The guidance note on Compliance Certificate also specifies that the companies should maintain a register of documents sealed containing the information on date of sealing, details of the document, people in whose presence such document was sealed, etc.
e) Companies (Issue of Share Certificate) Rules, 1960, provides that all share certificates of a company are required to be issued under the Common Seal.
f) SS-8 Common Seal of the company has a very critical importance in the functioning of the company. It is the signature of the company to any document on which it is affixed and binds the company for all obligations undertaken in the document.

Rules and Regulations around the usage of Common Seal

1. At the first Board Meeting of the Company, the common seal of the company is adopted by means of a resolution.
2. The common seal of the company must be under the safe custody of authorised director/officer.
3. A Board Resolution should be passed for affixing the Common Seal in any instrument. A committee of directors may also authorise the affixing of Common Seal. The resolution must also authorise at least two directors and the secretary or other persons who shall sign the instrument in token of their presence.
4. The authorised person shall sign and affix the Common Seal on the document/ share certificate(s) in the presence of the authorised directors/secretary.

The provisions above indicate that the framers of law expected the management of companies to seal every document requiring the approval of the company in line with the then prevailing English Law. This might have been relevant and apt during the pre-computer era, but with the electronic communication gaining momentum and the rise of dematerialized share certificates, the need to have a Common Seal needs to be revised. The seal in fact, is a relic of the days when medieval barons used their rings to make a characteristic impression as their approval.

It is not compulsory that common seal should be of specific shape or metal but the company name should be engraved on it. The use of seals, whether in wax, lacquer or embossed on paper to authenticate documents is a practice as old as writing itself. Apart from preventing forgery, the presence of an unbroken seal indicated that the sealed document had not been tampered with.

A look into the purpose and usage of common seal in current transactions is warranted to examine the real need for the law to have the concept of Common Seal.

Although the Companies Act continues with the regulations for a Common Seal, it is clear that failure to affix the Common Seal on any deed or document by itself will not absolve the directors of their liability. Failure to affix the Common Seal cannot be a ground on which the company can escape its obligations.

For all practical purposes, the common seal is as good as dead. Eventually, it is the overall circumstances of a given case that would weigh with the courts and not the mere affixation or otherwise of the Common Seal on a document or an agreement. Thus, the Common Seal of a company is no more as revered as it used to be. According to the Apex court, merely due to the absence of a resolution, the contract could not have been held to be invalid or illegal. Panchanan Dhara & Others vs Monmatha Nath Maity (Decd.) thru L.RS. [2006] 131 Comp Cas 577 (SC).

The Act does not say that it is compulsory for a Company to have a Common Seal. If a company is floated without share capital or with shares in electronic form, then it is not illegal for such company to operate without a Common Seal. There is no concept of Common Seal in partnership form of businesses. But in company form of business, it denotes the signature of the company and every company shall have its own Common Seal. Limited Liability Partnership form of business may have its own Common Seal, depending upon the terms of the Agreement.

The transactions today are just a click–away where real-time execution of documents takes place across various time zones, without even the requirement of face-to-face meet of the parties involved. There are very few cases today, where one of the parties insists on affixing the Common Seal, but that is not necessarily based on the requirement of a statute. Of course, in some cases where pre-structured documents mandate affixing the Common Seal, the use of seal cannot be dispensed with, unless by mutual consent of the parties involved.

The Government is currently finalizing significant and widespread changes to the Companies Act, 1956 through Companies Bill, 2009 in line with recommendations from various committees. As a part of this process, the merits of retaining the Common Seal as part of the statute book can be reviewed and probably dispensed with, to be in line with the existing global practices. However, it may be noted that in the New Companies Bill, 2009 Section 48 of the Companies Act, 1956 is retained as clause 21, while Section 50 of the same Act is scrapped.

Enactment to Law – Need, Viability and Implementation

The other day I received an email forward detailing approximately 1074 Enactments in force in India. It took almost an hour just to read the title of the Act and understand the subject to which it relates. The number is mind boggling when we realize that each Enactment has sections, sub sections, explanations, provisions and amendments.

Given the background, it is not surprising if one wakes up a fine morning and finds himself receiving a notice for violation of law, a law that he has never heard of!!! It is highly impossible for human mind to keep a track of all the enactments that apply to him in personal/ professional life. Even an expert may fail at times to comply with the laws of the land in such complex scenario.

On a lighter vein, an erstwhile judge, Justice Nani Palkhiwala mentioned that the law is made difficult for the layman to enable the survival of legal professionals. But today, the number of Enactments has increased to such a number, that it is impossible even for a legal professional to survive without the threat of non-compliance.

The constitutional ideology of India believes in passing an Enactment for each and every trivial issue, thus increasing Enactments in high numbers. These Enactments when combined with amendments, press notes, circulars, notifications and the specific terminology used in these contexts, make it highly impossible for human minds to comprehend.

The complicated Indian law further complicates the process of legal drafting thus making it impossible for a common man to either understand the law or draft a legal document. The skill of draftsmen lies in making his draft very clear with simple language restricting the use of complicated legal terms. More often than not, a new draft is just a variation of a previously prepared draft with minimal changes in the particulars section.

The Indian Constitution and law were drafted way back when India became independent. Though the constitution was “inspired” by the British law, it was well applicable to the erstwhile independent India. However, the scenario in the country changed over the past 60 years wherein India witnessed a transformation from agriculture based country to an industry based country and now to a technological base for the world.

In this scenario, most of the rules, regulations, laws and Enactments enforced on 26th January 1950 have become obsolete in every sense. There was an Enactment drafted in 1956 with a cross reference to a different Act. However, the Act in question is not available in black and white even with the law houses. In this case, the Enactment could not be put into practical use without actually referring to the Act.

In view of the same, there is an urgent need to make Indian Law more practical and sensible to cope with the current state of affairs. However, the law makers of the country turn a blind eye towards implementing new laws in the place of obsolete ones because it works best to support their political motives. As a result, an “Amendment Act” was passed whenever a law was found unsuitable for a particular situation.

Adding to the woes, implementing of the Acts passed by the Parliamentarians is an achievement in itself. The members on the Committees formed to draft the Bill are drawn from different classes who, in most cases lack the practical knowledge about the industrial trends and hence, in most cases; such drafts seem to be a write-up rather than a practical law. The drafts are passed by the Parliament and Bills once passed are thrust upon the users who end up cracking their brains to understand the brains behind the law.

When such a law comes into force, there is a general unrest in the industry and the lead Associations of the particular industry make a representation to the Law-makers who come up with Amendment, Rules or Clarifications adding up to the bulk of already existing law books in India.

On the other side, when such Act is passed, non-compliant parties pool in their resources to find a loophole in the law and ward off punishment as the law makers have to find how to deal with such a situation. Law Breakers are intelligent than Law Makers – True in every sense.

This is the very reason why most of the MNCs would insist on adopting their law subject to the jurisdiction of a court in their country in case of disputes before inking a deal with Indian companies particularly in the IT and ITES sectors, where India is a stalwart. This is a proof of non-belief that global majors shared about the Indian legal system when they have complete faith in manpower and the intellectual resources of India.

Instead, it would be more prudent for the law makers to repeal the existing law, and pass a totally new Enactment corresponding to practical requirements to the industry. Before passing a Bill, a draft can be circulated to the persons of high standing in the society like Associations who can foresee the difficulties at the proposal stage itself. The suggestions received from such wider circulation, can be incorporated in the draft and then passed by the Parliament. Such an approach will, to a large extent reduce the requirement of passing the Amendments, or issuing Departmental Clarifications or the like.

Also, it would be prudent to conduct a critical review of the existing laws in India and take steps towards reducing the Acts by repealing the obsolete ones, consolidating the similar ones, draft a single Act in place of numerous Amendments and so on.

A shorter list of Acts applicable to an individual or an entity will be easier to implement and restrict non-compliances and escapades from law. This would pave way for clearing all the pending cases in various Indian courts and a belief in the Indian legal system could be reinforced lest Indian legal system becomes a laughing stock in the days when India is shining in the global market.

ADHERING TO NON-MANDATROY SECRETARIAL STANDARDS????

Secretarial Standards – recommendatory but not mandatory!!! This in itself provides adequate reason and scope for non-adherence to Secretarial Standards. And this is the common scenario in almost every company today where in the Executive Management decides to cut-down costs by doing away with the ‘recommendatory’ Secretarial Standards. However, Accounting Standards are followed to the point because these are ‘mandatory’.

In such situations, what should be the ideal response from a Company Secretary – to invoke legal parameters or implement ideal practices? The best-suited response should be a combination of both.

The Companies Act and rules are procedural legislations, which provide the following framework:
- What a company can do??
- How the same can be done?
- What is not allowed?

This has paved way for the emergence of a “technical solution”, which is a viable solution within the framework of the prevailing law and then may add what would be a prudent corporate practice in line with the high professional standards, ethics, and the Secretarial Standards.

The Company Secretary should be more of a Conscious Keeper of Corporate Standards than being an intelligent and glorified clerk who keeps an account of legal compliance technically. The role of a Company Secretary is to find out the best possible procedure to cater to the requirements of the company all the while being within the framework of the Companies Act. A balancing act between rules, regulations, laws and Secretarial Standards is the prominent role of a Company Secretary in today’s corporate world.

Most of the practices outlined in Secretarial Standards such as approving the accounts by Circular Resolution, are “legal but not ethical”. However, after the extensive deliberations, the consensus is in favour of giving the legal/technical solutions coupled with what should be prudent corporate/ good governance practice.

In the Indian corporate sector, the unspoken word from the Company Management to the Company Secretary is observing law is your job; earning profit is our job. In such situations, the right course of action for the Company Secretary would be to provide a legal solution and depending on the counter-party’s inclination, advising on the applicable prudent practice would be the right decision.

However, the crux of the job is to justify the need for implementation of the Secretarial Standards initiated for the first time by the ICSI. It is crucial to prove that the proper implementation of the Secretarial Standards will usher in uniformity in divergent corporate practices. It is essential to understand that Secretarial Standards will facilitate good corporate governance in the country. Further, it is critical to convince that adherence to the Secretarial Standards will elevate the company's reputation in the corporate sector.

In the era where Corporate Governance is the buzzword in the corporate sector, it is not difficult to convince the managements about the utility and results of adopting the Secretarial Standards in the functioning of the company.

If the Company Secretary profession is to grow, have a respectable place in the corporate world then one has to follow legal jurisprudence. The Profession of Company Secretaryship has grown from Government Diploma to a full-fledged course and professional membership.

The onus is on the Company Secretaries to establish the Secretarial Standards as not only a pioneering movement, but also a noble endeavor. Standardization of practices is the need of the hour to establish a professional outlook about the Indian Corporate Secretary in the global economy. The progressive Corporate Houses in the country tend to make special efforts to show that they practice good corporate governance and implementing the Secretarial Standards has been one of the significant components of these efforts.

With more and more companies opting to implement Secretarial Standards, it should be easier for ICSI to convince the regulators to take into consideration the real practices in the sphere and give statutory mandate for the same.

Commercial and Legal Standing of Executive Directors vis-à-vis Non-Executive Directors

As per practical definition, Non-executive Director means any director who is not paid a salary. However, the Managing Director is termed as an Executive Director, even if he is not entitled for any salary emoluments. In view of these definitions, is there actually any significant difference between the Executive Director and the Non-Executive Director?

On commercial parlance, many companies practice to designate employees as Executive Directors, who are actually not on the Board of the company. In the absence of clear definitions in the Companies Act, 1956, it is a general understanding that any employee who is also a Director is called an Executive Director. But according to the regulatory requirements, an Executive Director is an individual holding managerial position and bestowed with decision-making powers for his whole-time service to the company. Further, Form 25C is required to be submitted for appointing a person as Whole-time Directors and the same is not required for Executive Directors.

Explanation to section 197A, it is cleared that a Non-Executive Director does not undertake to devote his whole working time to the company. Whereas an Executive Director in the nature of a whole-time director, extends his professional service to the company


The latest trend in the corporate sector is the appointment of an “Associate Director” of a particular department. However, there is no clear explanation as to whether an Associate Director will join the Board of Directors, whether Form 32 needs to be filed, and is this individual considered a Whole-time Director as he is engaged in the day-to-day business activity of the company? As the company cannot induct all the top Executives to the Board or designate them as Whole-time Directors, the idea of a new role called Chief Executive Officer (CEO) was initiated.

In the absence of any provision in the Articles of Association of the company, the Non-Executive Director is not obligated to tender his resignation to the Board and seek the acceptance from the Board. To ward off any future complications, such Non-Executive Director can send a copy of the resignation to the relevant Registrar of Companies.

Remuneration:

1. The company can pay up to 1% of its profits as remuneration to the Non-Executive Director without breaching the provisions of Schedule XIII, as the this Schedule makes provisions for the remuneration to be paid to Managing Director, Whole-Time Director and Executive Director.

2. Also, in case there is more than one Executive Director, then as per Schedule XIII the total managerial remuneration should not exceed 10% of the profits. However, the corresponding tabular representation should be followed for each individual separately as per the terms of the appointment.

3. An approval from the Central Government is required if the remuneration paid to the Non-Executive Director exceeds the limit set forth in Schedule XIII. If any Director holds any key responsibilities in the company, the prime test for payment of remuneration would be to check whether such Director be considered as a Non-Executive Director; because by virtue of the nature of work, such Director will be automatically treated as an Executive Director.

4. Only a Whole-time Director or an Executive Director is eligible for Sweat Equity Shares as per the provision of Section 79A

5. The premium paid by the company on "Employer – Employee Insurance Policy" for its Executive Directors and handing over the same to such Directors after three years will be treated as perquisite and will for a part of the relevant Directors' remuneration.

Conclusion:

However, in practice the appointment of Non-Executive Independent Director has become a arrangement of convenience with the idea of “Good Corporate Governance” going for a toss. Unless such Independent Directors have significant stakes in the company, it will be naïve to assume that they would be allowed / willing to assert their independence. After all, Non-Executive Directors do get attractive remuneration, not to boast of a good standing in the corporate society, and they would not jeopardize this opportunity by being too assertive or independent in real sense. Also, only directors with real involvement will take active interest in the affairs of the company and contribute to its obligations to shareholders, employees, customers, suppliers, etc.

Green Revolution- the Road Ahead

Green Revolution, the concept which made Punjab self-sufficient in food supply was one of the most successful initiatives in post-independent India. However, the success of this imitative was short-lived primarily due to the uncertainty looming largely over the complete agricultural sector. Insufficient supply of fertilizers, seeds, and pesticides, antiquated farming practices, declining yield and productivity, exploitative middle men, and un-remunerative prices to name a few, have clouded the success of the First Green Revolution in a big way. The next phase of agricultural development, euphemistically called the Second Green Revolution, will hinge on `Sustainable Agriculture'. With the advent of a ‘Corporate Culture’ in the agricultural sector, profitability is one of the most important elements of `sustainable agriculture'.

Role of Corporate Sector

It is widely considered that large-scale corporate agriculture is more effective than the present system of peasant farming. It is believed to greater efficiency, higher private investment and higher output, income and exports. The radically changing scenario in the agriculture sector after the liberalization of the economy has brought about greater market focus in the whole gamut of agricultural activities.

Second Green Revolution has brought about the changes in the farming methodology by introducing new technology to the agricultural sector. Riding this wind of change are the bigwigs of India Inc, from the Reliance Group to the Bhartis to the Mahindras, Godrejs and MNCs like PepsiCo. All of these major Corporate Houses have enormous resources at their disposal and who have the technical know-how to change the face of Indian agriculture.

More importantly, with their big-ticket investments, these entrepreneur-farmers are all set to change the fortunes of an industry that has consistently lagged the GDP growth for decades but still employs 67% of the country's population. The Corporate Houses are targeting at all aspects of this value chain – research and development, distribution of seeds, fertilizers and pesticides, enabling farmers to employ latest technologies, providing market information and credit facilities, contract farming, processing the produce, setting up cold chains and warehouses, transportation, retailing and exporting the produce. And they are throwing in big money in what is being described as the "farm-firm-fork" triangle by most experts.

Corporate farming, most experts acknowledge, could be the answer to India’s agricultural crisis. This is true because it involves high expertise from the Corporate Houses that have the capability to manage risks and sustain losses as compared to small farmers. The biggest positive aspect of this approach is that is provides an assurance to the farmers that their produce will be purchased on a later date at a pre-determined price. This spreads the loss, if any, across to the Corporate Houses, who are well-equipped to manage the losses arising out of market and weather conditions.

Contract Farming – Future of Green Revolution

The future success of Green Revolution depends on the proper implementation and end-to-end acceptance of Contract Farming. This will ensure that the corporate sector will build backward linkages between agricultural research and development with seed selection and variety evolution and forward linkages between processors, marketers, retail chain, exporters, and consumers. It will generate gainful employment in rural communities and a steady source of income at the individual farmer's level with assured prices and markets.

The seasonality associated with rural employment will be neutralized with round-the-year agriculture-related activities, which in turn will reduce migration from rural to urban areas. Eventually, the food production in the country would increase making India less dependent on imports in the food sector.

The corporate sector will ensure that the farmers are exposed to world class technology, which would lead to better output of agriculture produce. It will also ensure crop monitoring on a regular basis to avoid untoward incidents arising out of pests and other malice. Uninterrupted and regular flow of raw material and protection from fluctuations in market pricing will be some of the other benefits of contract farming.

Regulatory Framework – Assured Success

A regulatory framework should be in place for implementing contract farming so that farmers are not short-changed by the big Corporate Houses. On the other hand, Corporate Houses should be assured of a return on their huge investment as a large number of small farmers come into the picture thus increasing the risk factor. Also, there is no comprehensive and deregulated crop insurance scheme in the country to secure farmers or Corporate Houses from the losses incurred on farming as a result of natural disasters.

Implementing tax deductions on investments made in creating extended services for participating farmers linked to the procurement of output will create new opportunities in the farming sector. The comprehensive legislation should be put in place to decide whether or not it is permissible to procure agricultural produce directly from the farmers. Waiving-off taxes or duties on import of agricultural equipment in a registered contract-farming program would introduce new technologies to a larger mass of people in the country. Measures have to be taken to abolish all fees, taxes, cess duties, and levies on procurement by a registered contract-farming program.

The number of corporations-domestic and MNC-making a beeline for the agriculture sector is on the rise. Making the most out of this new trend would ensure success of the metamorphic Second Green Revolution in India.

e-Choupal – Setting in new trends

Of all the changes that have been part of this new green revolution, perhaps the one that has made the biggest difference to the lives of the smaller farmers has been the induction of information technology. It was tobacco major lTC's e-Choupal model that broke new ground in the early 2000s, showcasing the power of IT to the farmers. By delivering real-time information about market prices and customized knowledge and resolving the crop related problems of farmers through its IT kiosks and information database, it has managed to build tremendous equity among farmers across the country. In addition, the new storage and handling system offered as part of the initiative preserves the identity of different varieties right through "the farm gate to the dinner plate".

The globalization of trade along with the rising need of most food retailers in the country for high-speed transportation means the emergence of a huge market for companies that specialize in supply logistics. Many companies are sourcing millions of dollars worth of fruits and vegetables all the year round as the market is very lucrative.

Conclusion

There is a visible change in the approach of the farmers, policymakers, intermediaries in the agricultural process and all other stakeholders for ushering in the `Second Green Revolution'. However, only those corporations that are equipped with technology, management expertise and financial resources are willing to face the challenges of the `Second Green Revolution'. Addressing the challenges would mean introducing a comprehensive legislative measure to create a win-win situation for the farmers and the Corporate Houses.

National Agricultural Policy, which envisages a big role for private sector through contract farming is expected to accelerate the capital inflow, which will assure a market for crop production within a fixed timeframe.

• U Padma Shenoy
• Company Secretary

LAW FOR MERGER AND ACQUISITION- A CRITICAL REVIEW

Introduction

The recent years has seen a considerable increase in the Merger and Acquisition (M&A) activity across the Indian Corporate Sector. India Inc., has emerged as the most strategic market for M&A for foreign players at the same when Indian Corporate bigwigs are eyeing major players on a global level. At the end of the day India, Inc., stands to be the largest gainer.

The M&A activity in India is governed by numerous cumbersome laws and regulations that it leaves ample space for misinterpretation. Even the largest of the Investment Banks lives in the fear of that it might overlook one of the basic rules of compliance and attract negative coverage in the media.

Recently, the Indian Income Tax Act, 1961 entered the Guinness book of world records for registering maximum number of amendments. The amendments to the Income Tax Act, 1961 is so cumbersome and unclear that it leads to many interpretations. In one of the high-profile cases a local tribunal erred in interpreting the judicial decision of a higher court and as a result the company had to file and re-file the tax applications. In the meantime, the permissions granted by other regulatory authorities lapsed and the company had to repeat the exercise resulting in enormous wastage of time and money.

Cases such as the above actually keep out the foreign players from being the strategic players in the M&A activity in India. In India, the M&A activity takes approximately six to seven months to reach completion. The reason being the long list of compliance requirements, which calls for liaising with various regulatory bodies to complete the M&A activity.

Overview of the Regulations

A broad overview of such compliance requirements includes the following:

The Ministry of Corporate Affairs: Regulates compliance under the Companies Act, 1956. The Ministry is governed and still dwells into law that was enacted five decades earlier and maintains a long list of documents for every small change in the nature of company and its management.

Rules of Taxation: Draws the power from the Indian Income Tax Act, 1961. The slabs for taxing the capital gains and treatment for accounting entries during M&A are very complicated. Ensuring compliance with all the listed provisions, sub-clauses, and amendments is a Herculean task.

SEBI: Regulates the Indian Stock Markets and draws power from the SEBI Act to ensure proper functioning of the Stock market. Ketan Parekh made a fortune by cheating the investors in a big way under the nose of the very watchful SEBI. During M&A activity, it becomes extremely necessary for the participating companies to comply with the SEBI rules with considerable time being devoted to be safe from “intelligent” people like Harshad Mehta and Ketan Parekh.

Competition Commission: Took over the ‘traditional’ MRTP Commission but Competition Commission is still in the budding stages and is always the target for carrying out trial and error process in a move to ensure healthy competition in the Indian Corporate Sector.

FEMA: Enactment that regulates Foreign Exchange in India with FIPB and the RBI being the regulatory Authorities. The regulated cap for foreign investment is highly volatile. In a recent case, a medical equipment company of US wanted to set up its base in India. Mid-way through the process the company realized that it missed out on the long list of reserved items in the SSI category. The company intended to make equipments made of stainless steel for use in the dental clinic, which is a reserved item for SSI. The company applied for exemption and the Ministry is yet to respond

Indian Stamps Act: Compliance with act is a difficult task for foreign investors as each State has its own set of enactment for Stamp duties. The Stamp-duty regulations change at regular intervals and the companies have to assess the deal regularly to be safe for mistaken under-valued registration of the deal. In certain cases, there are huge differences in stamp value between two states within Indian Territory.

Apart from the ones discussed above, there are several Labour Laws, Sales Tax, Custom Duties, etc. that require clearance at every stage. And compliance with sector specific regulators such as TRAI for Telecom industry and IRDA for Insurance sector, add up to the woes.

Each regulating body has its own set of enactment and regulating rules that makes compliances a real nightmare. Each Ministry issues a Press Note/ circular or notification, which are not in tune with those issued by their other relevant Ministry. This increases the chances of landing in a situation where compliance to the notification from one Ministry might end-up in non-compliance to the notification from another Ministry. Additionally, there exists clarification or corrigendum, which complicates the issue further. The requirement for approval from High Courts in addition to the approval of stakeholders, make the complete M&A activity in India a long-thought process.

Cause and Comparison

The governing laws in India today were drafted during the early days of Independence when India was not even an industrial nation lest being the emerging economic super power. All the laws and regulations were drafted in line with the prevailing conditions during late 1940s with a vision up to the early 1960s. India Inc., has come a long-way during these years and has gone on to become one of the leading players in the global corporate sector. The sad part is that the “good old” governing law prevailing today proves to be obsolete in many cases with the base matrix having evolved long ago.

This is not to say that there are no such laws and regulations in other countries. The laws and regulations may be many but the time take to complete the process is very easy in developed countries such as the US or the UK and even in emerging super powers such as China and Japan. Most of the countries follow a single-window concept to provide all the necessary clearances. Also, any amendments to the law are made only after assessing the total impact on all other related laws.

The Indian Law mandates a waiting period of 210 days after the Merger plan is reported to the government before completing the deal as against the 30 day waiting period in the US. The US law also provides for reducing the waiting period if there are no competitive problems and the parties request an early termination; such a provision is not available in the Indian law.

Required Initiatives

J J Irani Committee Report proposed upgrading the Companies Act three years ago; however it is yet to see the light. There have been many instances where the Company Law is in conflict with the Listing Agreement and there is an urgent need to address such overlapping issues.

A single window clearance system can resolve many issues related to clearances from various authorities and a dedicated body to provide such service to M&A activity can help improve the situation. Further liberalization of Indian economy is required to ensure smooth transitions during M&A activity. This can be achieved by abolishing sectoral caps and approval of FIPB for share swap.

The most important thing required in this chaotic scenario is regularizing Stamp Duty slabs. A single slab for Stamp duty must be introduced to ensure uniformity in M&A transactions across all the States in the Indian Republic. Simplifying the tax procedures and reducing the tax incidence would attract more foreign investment.

The new Competition Law is not yet properly in place and all the regulators discuss is that the new law is sure to pose a threat to commerce in the country. The regulators have failed to introduce strong governing laws to bring India's M&A control regime in line with prevailing global trends.