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MANAGERIAL remuneration payable by companies having no profits or inadequate profits is discussed in Schedule XIII, part II, section II.

It lays down the limits to what a company may pay as remuneration to a managerial person by way of salary, dearness allowance, perquisites and any other allowances, when it has no profits or its profits are inadequate, in any financial year during the currency of tenure of the managerial person.

A new clause has been added by a recent notification from the Department of Company Affairs that makes amendment to Schedule XIII of the Companies Act, 1956. And it is applicable to special economic zones (SEZs).

The ceiling is "not exceeding Rs 2,40,00,000 per annum or Rs 20,00,000 per month" in respect of companies in SEZs as notified by the Department of Commerce from time-to-time.

Conditions are: that these companies have not raised any money by public issue of shares or debentures in India; and that such companies have not made any default in India in repayment of any of its debts (including public deposits) or debentures or interest payable thereon for a continuous period of 30 days in any financial year. Unlike the other clauses, the new one does not depend on `effective capital' of the company. (Notification No GSR 565(E) dated August 14, 2002)

Notice knocked down

Policy relating to import of kits by joint venture car manufacturers has undergone a change in view of removal of quantitative restrictions (QRs) on import of CKD/ SKD kits/components with effect from April 1, 2001.

The Director-General of Foreign Trade (DGFT) has notified withdrawal of the earlier Public Notice No 60 dated December 12, 1997. However, export obligation incurred by the MoU signatories in respect of imports made up to the end of 2001 fiscal shall be fulfilled by them within the stipulated period unless extended by the Government for `good and sufficient reasons'. (Notification No 36(RE-2000)/1997-2002)

Booster dose

The Health Department has prepared a set of draft rules with regard to drugs and cosmetics since "the Central Government is of the opinion that circumstances have arisen which render it necessary to make rules without consulting the Drugs Technical Advisory Board". Powers to do so are in Sections 12 and 33 of the Drugs and Cosmetics Act, 1940, and the draft rules seek to amend the Drugs and Cosmetics Rules, 1945. Accordingly, in Schedule D, after item 5, a new one has been added to encompass "drugs imported for manufacture and export by units situated in SEZs as notified by the Government of India from time-to-time". (Notification No GSR570 (E) dated August 14, 2002)

New listing norms

The governing board of the Bombay Stock Exchange (BSE) has amended the `direct listing' norms for companies listed on other stock exchange (s) and seeking listing on BSE. These norms are applicable with immediate effect. The company should have a minimum issued and paid-up equity capital of Rs 3 crore.

It should have a profit-making track record for the last three years. The revenues/profits arising out of extra ordinary items or income from any source of non-recurring nature should be excluded while calculating distributable profits.

It specifies a minimum net worth of Rs 20 crore (and net worth includes equity capital and free reserves excluding revaluation reserves). Minimum market capitalisation of the listed capital should be at least two times of the paid-up capital.

The company should have a dividend paying track record for the last three consecutive years and the minimum dividend should be at least 10 per cent. Minimum 25 per cent of the company's issued capital should be with non-promoters shareholders as per Clause 35 of the Listing Agreement.

Out of above non-promoter holding no single shareholder should hold more than 0.5 per cent of the paid-up capital of the company individually or jointly with others except in case of banks/financial institutions/FIIs/OCBs (overseas corporate bodies) or NRIs. The company should have at least two years' listing record with any of the regional stock exchanges. It should sign an agreement with CDSL & NSDL for demat trading. (Notice No 20020808-14 dated August 8, 2002)

Delisting draft

Recently the committee constituted by SEBI to study delisting finalised its report. It was under the convenorship of Mr Pratip Kar, Executive Director, SEBI, and had representation from investor associations, chambers of commerce and industry, stock exchanges, and DCA.

Part I of the report has recommended comprehensive provision for delisting which includes exit price mechanism, setting up of central listing authority, abolition of the concept of regional stock exchange and so on. To invite "comments/suggestions/views of the public and others concerned in this regard" the report has been put on SEBI's Web site. The committee plans to submit its recommendations on the review of listing agreement in Part II of its report. (SEBI's press release No PR 153/2002 dated August 13, 2002)

D. Murali

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