Emerging opportunities for Overseas Investments Under FEMA

1 day workshop on Emerging opportunities for
Overseas Investments Under FEMA
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22 July 2010 JW Marriott, Juhu, Mumbai
31 July 2010 TAJ Westend, Bangalore
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Impact of liberalization has given best opportunities for Indian Corporate for selective investments abroad.Investments abroad may be necessary to establish a strategic alliance with foreign partners for the purpose of sourcing the best inputs or for penetrating untapped foreign markets or to build up the brand image abroad.

Most of the corporates are examining not only the possibilities of joint ventures abroad but also mega take overs and establishing a ‘wholly owned subsidiary’ abroad.

Indian Corporates like Tata’s, Welspun L&T etc who intend to expand globally have availed the opportunities in time.In the Global uncertainty of Finance there exists an interesting opportuniuty to invest abroad even now to take advantage of the lower values of EURO and Other currencies and explore.This programme aims to facilitate such endeavors corporates to go overseas and expand trade and investment.

This programme is specifically designed to focus all the relevant issues faced by the Indian investors starting from opening a Representative office abroad till establishing a wholly owned subsidiary.Relevant FEMA 1999 guidelines and Government Press Notes will be taken up for discussion.

To have a better understanding of the liberalized guidelines and to take the best advantage of the global opportunities,more practical case studies are developed and will be presented to the participants for discussion.
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Target Audience:
* Senior level executives and persons in charge of company’s expansion programmes abroad.
* Board Secretaries who takes care of Regulatory compliances
* Banking personnel who will be providing solutions to corporate clients in such matters.
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Session wise details
09.00 to 09.30 Registration

09.30 to 11.15 FEMA 1999 and the Capital Account transactions

11.15 to 11.30 Tea Break

11.30 to 13.15 Regulations relating to outbound investments –

13.15 to 14.00 Lunch

14,00 to 15.30 Regulations on outbound Investments – Contd.

15.30 to 15.45 Tea Break

15.45 to 17.15 Case study & Discussions

17.15 to 17.45 Question and Answers
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Faculty: Mr.K.Ramasubramanian,
General Manager Retd., Reserve Bank of India
* Faculty in International Trade and Finance
* He started his career as a banker and spent 43 years,
* He has now been practicing in the field of FEMA Implementation and consulting advisory services to corporates in India and abroad.
* Organizations with which he is professionally connected are HDFC Bank,World Trade Centre,International Chamber of Commerce (Panel Member),Institute of company Secretaries Institute of Chartered Accountants,various legal firms and corporates.
* He is also associated with S.P.Jain Institute of Management and Research on a regular basis as Associate Professor.
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Timings: 9:30 am - 5:45 pm , Registration begins at 9:00 am
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How to Register:
* Fees: Rs. 7,500/- +10.3 % service tax per person
* Please write to admin@princetona.in / Call -022 66976892
* Mention the name of participant, company, contact details .
* Cheque favouring Princeton Academy Mumbai II Pvt. Ltd. payable at Mumbai.
* Fees includes lunch, tea, course material etc.
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Princeton Academy Mumbai II
502 Shalimar Morya Park, Andheri Link Road, Andheri West, Mumbai- 400053.
Tel- 022-66976892, 67256200. Delhi- 9312715500. Fax- 26733060
email- admin@princetona.in
Service Tax No- AAECP5617MST001
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POSITION OF DIRECTORS IN A COMPANY

INTRODUCTION

The law relating to companies in India is contained in the Companies Act, 1956. The Companies Act, 1956 is a consolidation of existing laws, statutory rules and certain principles laid down in decisions of the Courts in India and England. The Act of 1956 substantially incorporates provisions of the English Companies Act, 1948.

A company means, a company formed and registered under the Companies Act, 1956 or under any of the preceding Acts[1]. The word company is used to denote an association of persons who have associated together to the conduct or to carry on a business for gain. The persons associating together will contribute some money for the conduct of the business and the amount is known as the share capital of the company. The association will be registered under the Companies Act and thereafter it will be a legal person having an artificial personality.

A company is a legal person who is leaving only in the eyes of law. It’s a creation of law which lacks both body and mind. It cannot act, just like a human being. It can act only through some human agency. Directors are those persons through whom company acts and does business. They are collectively known as Board of Directors.

Section 252 – 323 of the Companies Act, 1956 deal with the appointment of directors, remuneration of directors, disqualification of directors, vacation of office by directors, Meeting of Board of Directors.

Board of Directors is the brain and the only brain of the company which is the body, and the company can does act only through the board of directors. A director is a person who has control over the direction, conduct, management, or superintendence of the affairs of the company. Only an individual can be appointed as a director. An association or a firm cannot be appointed as director of a company.

POSITION OF DIRECTORS

It is not easy to explain the position that a director holds in a corporate enterprise. A director is not a servant of any master. He is the controller of the company’s affairs. Director of a company is neither an employee nor a servant to the company. They are professional people who were hired by the company to direct its affairs.

However there is no restriction under the Act, that a director cannot be an employee to the company. In Lee v. Lee’s Air Farming Ltd[2], it was held that, a director may, however, work as an employee in different capacity. There is no definite definition for director under the Companies Act, 1956. Director includes any person who is occupying the position of a director, whatever name called[3]. So in order to understand the position of a director in a company we have to look in to various decided cases.

In Judhah v. Rampada Gupta[4], it was held that, director of a company registered under this Act[5] are persons duly appointed by the company to direct and manage the business of the company. A director is sometimes described as agents, trustees, managing partners etc. But each of these expressions is used not as exhaustive of their powers and responsibilities, but as indicating useful points of view from which they may for the moment and for the particular purpose be considered.

DIRECTOR AS AGENTS

In Ferguson v. Wilson[6], the court clearly recognised that directors are in the eyes of law, agents of the company. It was held that, the company has no person; it can act only through directors and the case is, as regards those directors, merely the ordinary case of a principal and agent. When the directors contract in the name, and on behalf of the company, it is the company which is liable on it and not the directors.

In Elkington & Co. v. Hurter[7], where the plaintiff supplied certain goods to a company through its chairman, who promised to issue him a debenture for the price, but never did so and company went into liquidation, he was held not liable to the plaintiff. Similarly, a director was held to be personally not liable in a suit against a private chit fund company. Attachment of the property of the director was held to be not permissible[8].

Like agents, directors have to disclose their personal interest, if any, in any transaction of the company. In Ray Cylinders & Containers v. Hindustan General Industries Ltd[9], held that, the directors are the agents of the institution and not of its individual members, except when that relationship arises due to the special facts of the case. Also granted permission to file a suit against a company was not allowed to be treated as permission against directors as well.

In Sarathi Leasing Finance Ltd v. B Narayana Shetty[10], the articles of association empowered the managing director to represent the company in legal proceedings. It was held that a further authorization was not necessary to enable him to file a complaint for dishonor of cheque under Sec. 138 of Negotiable Instrument Act.

Directors are the agents of a company. They are acting on behalf of the company. So the directors cannot be held personally liable for any default of the company. It was held that, for a loan taken by a company, the directors, who had not given any personal guarantee to the creditor, could not be made liable merely because they were directors.

DIRECTOR AS TRUSTEES

Directors are the trusties of the company’s money, property and their powers and such must account for all the moneys over which they exercise control and shall refund any moneys improperly paid away, and shall exercise their powers honestly in the interest of the company and all the shareholders, and not their own sectional interest.

The directors of a company are trustees for the company, and for reference to their power of applying funds of the company and for misuse of the power they could be rendered liable as trustees and on their death, cause of action survives against their legal representatives[11]. Directors are those persons selected to manage the affairs of the company for the benefit of shareholders. It is an office of trust, which if they undertake, it is their duty to perform fully and entirely. This peculiar nature of their office is one of the reason why the directors been described as trusties.

In the real sense the directors are not trustees. A trustee is the legal owner of the trust property and contracts in his own name. On the other hand, director is a paid agent or officer of the company and contracts for the company[12]. In fact, the directors are commercial men managing a trading concern for the benefit of themselves and of all the shareholders in it.

To whom the directors are trustee? Whether to the company or to the individual shareholders. This principle was laid down in 1902 in Percival v. Wright[13], and still holds ground as a basic proposition. In this case the court held that, directors have no duty towards individual shareholders. From this it is very clear that, the directors are trustees to the company and not of individual shareholders. The principle of the case was reiterated in Peskin v. Anderson[14]. Ordinarily the directors are not agents or trustees of members or shareholders and owe no fiduciary duties to them.

Standard Form of Contract

INTRODUCTION

The law of contract has in recent time to face a problem, which is assuming new dimensions. The problem has arisen out of the modern large scale and widespread practice of concluding contracts in standardized form. People upon whom such exemption clauses or standard form contracts are imposed hardly have any choice or alternative but to adhere. This gives a unique opportunity to the giant company to exploit the weakness of the individual by imposing upon him terms, which may go to the extent of exempting the company from all liability under contract. It is necessary and proper that their interests should be protected. The courts have therefore devised some rules to protect the interest of such persons.

A valid contract requires offer and acceptance. It is in the essence of acceptance, that such acceptance must be a valid acceptance, that is to say, an acceptance made, fully conscious of and alive to the terms and conditions of the proposal. Of course, this is not to say that a man who signs an agreement blindfolded will be relieved from his obligations under that agreement, simply because he later chooses to discard the blindfold. However, what Section 2(b)[1] does require is that the acceptor must have a real opportunity to review the proposal and decide on whether to accept it or not.

A standard form contract is a contract between two parties that does not allow for negotiation, i.e. take it or leave it. Sometimes it is referred to an adhesion contract or boilerplate contract. It is often a contract that is entered into between unequal bargaining partners. It’s a type of contract, a legally binding agreement between two parties to do a certain thing, in which one side has all the bargaining power and uses it to write the contract primarily to his or her advantage.

Minor's Contract

Section 10 of the Indian contract act requires that the parties must be competent to contract. Competence to contract is defined in section 11.

Who are competent to contract-every person is competent to contract who is of age of majority according to the law he is subject, and who is of sound mind, and who is not disqualified from contracting by any law he is subject to.

MINOR

AGE OF MAJORITY

The age of majority is generally eighteen,except when a guardian of minor’s person or property has been appointed by the court, in which case it is 21 years.

NATURE OF MINORS AGREEMENT

Section 10 requires that the parties to a contract must be competent anr section 11 say that a minor is not competent. But neither section makes it clear whether if a minor enters into an agreement, the contract would be voidable at minor’s instance or void as such. Thus,causing a lot of confusion. This contriversy was resolved after the Mohoribibee v. Dharmodas Ghose case.

LORD NORTH observed –“The question whether a contract is is void or voidable presupposes the existence of a contract within the meaning of the act, which cannot arise in case of a minor.”

After this judgement the principle that minor’s contract is absolutely void was laid down.

This law is not merely to protect the child from fraudulent manipulations by others but also to provide him protection against his own ignorance and immaturity for a child may shoe poor judgement in making a particular contract. The generally accepted doctrine that man is the best judge of his own interests is not applicable in case of a minor.

The ruling of the Privy Council in the Mohoribibee case has been generally followed by the Indian courts and applied both to the advantage and disadvantage of the minors.

The Mir Sarwarjan v. Fakhruddin Mohd. Chowdhury is an example where the court ruled against the minor.

Facts – A contract to purchase certain immovable property had been made by guardian on behalf of a minor, and the minor sued the other party for recovering the possession. His action was rejected.

The court held- The manager of the minor’s estate or the guardian of the minor were not competent to bind the minor’s estate by a contract to purchase immovable property and therefore there was no contract and so the minor could not abstain specific performance of the contract.

But now as minors are coming to the forefront of society with the changing times the Privy Council has had to modify its previous decision through the Subrahmanyam v. Kurra Sabha Rao that the transfer of inherited property of a minor by his guardian pay off an inherited debt was binding on him being for his benefit.

EFFECTS OF A MINOR’S CONTRACT

A minor’s agreement being void should be wholly devoid of all effects. If there is no contract then there should be no contractual obligation on either side therefore all effects of a minor’s contract are worked out independently of any contract.

NO ESTOPPEL AGAINST MINOR

A minor who has made an agreement by representing his age can later disclose his age. There is no estoppel against him.

The Bombay High Court in a case held- Where an infant represents fraudulently or otherwise that he of age thereby inducing another to enter into a contract with him then he is not estopped from setting up infancy in an action founded on the contract.

NO LIABILTY IN CONTRACT OR IN TORT ARISING OUT OF CONTRACT

In England in the case of Johnson v. Pye it was laid own that “a minor who obtains a loan of money by misrepresenting his age cannot be made to repay the amount of the loan of money in form of damages for deceit.” Hence a minor cannot be held liable for anything which would be an indirect way enforcing his contract i.e. you cannot convert a contract into tort to enable you to sue an infant.

Indian courts too follow this principle. The Calcutta High Court refused to hold a minor liable in tort for money lent in bond in Hari Mohan v. Dulu Miya.

Where a tort is independent of contract, the mere fact that a contract is also involved will not absolve the minor from liability.

In Fawcett v. Smethurst a car was hired for the purpose of going to Cairn Ryan and back, but was in fact driven further. It was held that nothing was upon that further journey which made the defendant an independent tortfeasor and that if any damage was done to the car on the journey the defendant would only be liable if he was liable under the contract.

In Jennings v. Rundall , the defendant infant had hired a horse to ridden for a short journey but took it for a much longer journey as result consequence of which the horse was injured. The court held the minor not liable based on the grounds that the action was founded in the contract and that the plaintiff could not turn what was in substance a claim in contract to one in tort.

DOCTRINE OF RESTITUTION

If an infant obtains a property by misrepresenting his age, he can be compelled to restore it, but only so long as the property remains in his possession. This is known as the equitable doctrine of restitution

EXCEPTIONS

• If the minor has sold the goods or converted them he cannot be made to pay back the value of the goods as that would amount to enforcing a void contract.

• The doctrine of restitution is not applied where the infant has obtained cash instead of goods. Well known authority Leslie Ltd v. Sheill.

In this case- An infant succeeded in deceiving some money –lenders by telling them a lie about his age, and so got them to lend him 400 pounds on the faith of his being an adult. Attempt for restitution of amount and interest failed. The plaintiffs then claimed damages under quasi –contract to which the court held that “it was impossible to enforce in a roundabout way an unenforceable contract in form of an action quasi ex contractu.” Finally the money lenders relied on the doctrine of restitution which again was rejected by LORD SUMNER who said-“the minor might have spent the as his own and that there was no possibility of tracing it and no possibility of restoring the very thing got by fraud and that the would not hold the minor liable.

Where an infant invokes the aid of the court for the cancellation of his contract, the court may grant relief subject to the condition that he shall restore all benefits obtained by him under the contract or make suitable compensation to the other party.

My Dream Office !

A lawyer’s time and advice are his only stock in trade. But another important requisite to be a successful Advocate is a well-maintained Law office and its proper management. A systematic management of the law office could add to the efficiency and productivity of an Advocate. A well-managed office will also create a healthy working atmosphere and can attract many clients.

Management of Law-office involves various aspects like location, layout, library, registers, diary, case management, staff management, meeting and communication with clients, assignment of work to juniors, utilization of equipments like computer etc. As a final year student and as a part of practical training, chamber visit to an Advocate’s office, who has put up practice at least for ten years, is a requirement. The chamber visits have assisted to observe closely the various aspects of complexities of the office management and have given a clear picture of the office management. The following report is my comprehension and conceptions of law office management.

LAW OFFICE MANAGEMENT

Management means a process of managing or maintaining a proper methodology depending on the needs and demands of the nature of work. Law office management, in particular, is the continuous process of keeping, holding, checking, controlling, contriving, and maintaining various requirements of the profession. Thus, the requirements of the profession determines the structure, nature, management largely depends on the financial resources available and the attitude and devotion of an Advocate towards the profession.

Management of Law-Office involves Management of the following:

 Office’s location and layout

 Meeting and communication with clients

 Management of cases

 Management of Registers and Documents

 Maintenance of diary

 Maintenance of Library

 Management of the staff

 Management of accounts.

 Utilization of modern equipment like computer, and communication methods Internet etc

 Stationery

A. LOCATION & LAYOUT

Location of law office depends on various factors like availability of premises in the vicinity of the court, cost to be incurred for the office premises, convenience of Advocate and clients. It is always an added advantage to have a law office in the vicinity of the court premises or in a place like heart of the city where the people could have convenient and easy access. Location of the office in a peaceful atmosphere is a requisite of an office.

The layout of office covers the areas like:

 Chamber of Advocate

 Arrangement of furniture, and

 Accommodation for clients staffs and clients.

A separate chamber to the Advocate is a requirement, which has to provide comfortable sitting arrangements for an Advocate. This provides for a seclusion wherein the clients and Advocate could have confidential communications and unnecessary interference could be avoided. Arrangement of the furniture must be made in such a way that it makes the office tidy and fits into the space of the office in such a manner that requirement of all is met with.

Accommodation for the staff and clients is very important. Seating arrangements for the clients and staff have to be provided. Junior Advocates or assistant must be accommodated in such a way that the Advocate could easily direct them to do any work. An Advocate cannot attend all the clients at a time and clients may have to wait for him. Hence, providing a waiting room with proper furniture, newspapers and magazines is a requirement. Even on access to television could also be provided.