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Finalisation of accounts: CSE on a sticky wicket

Jayanta Mallick

KOLKATA, Aug. 16

THE governing committee of the Calcutta Stock Exchange (CSE) is on a sticky wicket in finalising the accounts for the financial year 2000-2001.

The principal problem revolves around the accounting treatment of the drawals from the general reserves to the tune of around Rs 19 crore during the payment crisis in March.

The drawals had to be made to make smooth payouts, which were insisted upon by the Securities Exchange Board of India (SEBI).

The drawals which were made following a governing committee resolution, have also to be ratified by the shareholders or member-brokers.

The CSE's move to postpone the AGM for 2000-2001 is linked to the resolution pertaining to the drawal from the general reserves.

According to Mr N. Dasgupta, the newly-appointed acting Executive Director of CSE, the Registrar of Companies has approved in principle the extension of the AGM till December 31.

Incidentally, Mr Dasgupta's appointment was approved by SEBI on Thursday with effect from August 13 to December 31.

Meanwhile, the convenor of the Calcutta Stock Brokers' Association and a former President of CSE, Mr Ajit Day, told Business Line that the broker-members would not approve a resolution for adjusting drawals from the general reserves.

``It has income-tax implication also'', he pointed out. He felt that the CSE is a company, governed under Section 11 of the Companies Act, which allows use of general reserves only for certain specific purposes.

The exchange has initiated legal proceedings against three main defaulters and their entities for recovery. But the committee is not clear whether the money will be appropriated against the general reserves or treated as a loss.

It has sought the opinion of the statutory auditors, S. S. Kothari & Associates. Depending on the treatment, the exchange will close the books with a loss of around Rs 12 crore or a surplus.

Related links:
CSE postpones AGM by 3 months
Brokers likely to contest CSE move to defer AGM

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