Power of Attorney (PoA) - nice FAQ

As a Power of Attorney may relate to substantial
monetary dealings, clarity on the nature of the
document is vital

— Photo: H. Vibhu

Care and caution: A Power of Attorney becomes an
important document in property transaction.

A Power of Attorney, especially, when relating to real
estate transactions, is a very important document. As
it may relate to substantial monetary dealings,
clarity on the nature of the document is vital. Many
queries have also been raised with regard to the Power
of Attorney. Attempt is made to address these issues
in this FAQ.

1.What is a Power of Attorney?

A Power of Attorney is a document under which one
person known as "Principal" or "Donor" grants an
authority to another person, known as "Agent",
"Attorney" or "Donee" to do or undertake the acts,
deeds and things specified in the document, on behalf
of the Principal or Donor.

2.What are the various types of Powers of Attorney?

There are many types of Powers of Attorney. A broad
classification would be General Powers of Attorney and
Special Powers of Attorney. A General Power of
Attorney confers substantial powers for effecting the
transactions contemplated. A Special Power of
Attorney, on the other hand, is given for specific
purposes only and is often restrictive in scope.

3.What are the ingredients for grant of a valid Power
of Attorney?

The Principal and the Agent must be competent to
contract. It has to be given voluntarily. The Power of
Attorney should be given for legal purposes. It must
be duly stamped, notarised or registered or
adjudicated, as the case may be. Powers of Attorney
executed abroad may also be authenticated by a
Consulate Officer. Minors and other persons
disqualified by law cannot grant a Power of Attorney.
There are certain acts which can be done only by the
persons concerned. For these acts, Powers of Attorney
cannot be granted.

4.What are the acts which can be done only by persons
concerned, referred to above?

These are acts which a person concerned alone can
perform. For example, take the case of a singer or a
musician contracting to perform. The performance has
to be given by the singer or musician only and
obviously cannot be performed by a Power of Attorney.
This is an extreme example to give a broad idea as to
what the personal acts can be. There are any number of
such matters which are to be performed or executed by
person concerned only.

5.Is registration of Power of Attorney mandatory for
exercising the powers?

A Special Power of Attorney under which the Principal
authorizes the Agent to present for registration, a
document executed by the Principal has to be
compulsorily registered. In other cases, it is
sufficient if the power is notarised or authenticated
by an Indian Consul or Vice Consul or by a Court,
Judge or Magistrate. However, in respect of local
Powers of Attorney, it is advisable to have the same
registered as notarization or authentication may not
meet market acceptance.

6. Can a Company grant a Power of Attorney?

If so authorised by its Memorandum and Articles of
Association, a Company can grant a valid Power of
Attorney.

7.Can a Partnership Firm grant a Power of Attorney?

This can be given. Subject to the terms contained in
the Partnership Deed, it may be binding on all
partners, if given by one of the partners.

8.What are the important features of a Power of
Attorney?

One would have noticed that in matters relating to
commercial transactions, there is usually a payment or
passing of consideration. For a Power of Attorney to
be valid, no consideration is required. Further, many
documents would be irrevocable in nature. However, a
Power of Attorney can be normally revoked.

9.Is there a type of Power of Attorney called
"Irrevocable Power of Attorney"?

As already stated, normally a Power of Attorney can be
revoked. In matters where the Agent has acquired an
interest, the Power of Attorney is known as a power
coupled with interest and cannot be revoked without
the express consent of the Agent. This is an usual
parlance referred to as an "Irrevocable Power of
Attorney". In certain cases, the Power of Attorney may
amount to a conveyance and these Powers of Attorney
can also be brought within the ambit of Irrevocable
Powers of Attorney.

10.How are the wordings in a Power of Attorney
construed?

This depends on the clarity of the wordings employed.
The general construction is that the Agent is
empowered to do or undertake only acts which are
clearly authorised. However, certain incidental powers
can be inferred to give effect to the terms contained
in the Power of Attorney. If the Power of Attorney
confers power of sale, then it can be inferred that it
includes necessary powers for completing the sale
transaction. In the same case, though the Agent may
have the power to sell, the Agent, unless,
specifically authorised, will not be entitled to
mortgage the property.

12.What are the matters to be noted in respect of
Powers of Attorney executed abroad?

The Power of Attorney can be executed in a green sheet
or a white sheet and stamped or adjudicated, within
three months after receipt in India. It has to be
authenticated by an Indian Consul, Vice Consul or a
Notary.

In many cases, the Power of Attorney executed abroad
is sent with only last page signed by the Principal.
This practice is not desirable and every page has to
be signed by the Principal. This will save a lot of
time and avoid unnecessary delay and expense.

13.While dealing with an immovable property, is it
sufficient only to take a Power of Attorney
containing, among other powers, the power to sell?

Considering that the nature of the Power of Attorney
is such that it can be revoked, it is advisable to
back this Power of Attorney with a proper Agreement.
This will be give better rights in matters relating to
commercial dealings.

14.What the general precautions to be taken while
granting a power?

Please check the wordings. Understand the
implications. If the Power of Attorney contains power
to mortgage, one has to exclude personal liabilities
wherever the intention is not to undertake such
personal liabilities. Try and get periodical feedback
from the Agent. If you are revoking the power,
consider all the facts and circumstances and the
impact that this may cause before venturing into this.

15.What are the general precautions to be taken while
acting as an Agent?

Understand the scope of the power. Note that you are
actually acting on behalf of somebody else and protect
the interest of the Principals. Do not exceed the
powers granted under the document. Provide periodical
feedback to the Principal. Get necessary further
documentation to ensure that the Agent does not suffer
on account of unexpected revocation. In case of death
of Principal, act promptly to obtain suitable
documentation to cover the situation. If possible, get
periodical confirmations of the validity of the power.
Powers of Attorney, especially those covering
commercial transactions, are intended for short
durations and keeping the powers unused for a long
time may not be in the best interest of the Agent.

The author is Partner, RANK Associates, Advocates.

SEBI allows Short Selling

Sell it ! even if you don't own it.....this is what our SEBI says....

Now, the broad framework for "Short selling and securities lending and borrowing" has been prescribed by SEBI.

Extract is here,

1. Pursuant to the recommendations of the Secondary Market Advisory Committee (SMAC) of SEBI and the decision of the SEBI Board, it has been decided to permit all classes of investors to short sell subject to the broad framework specified in Annexure-1.
2. In order to provide a mechanism for borrowing of securities to enable settlement of securities sold short, it has also been decided to put in place a full-fledged securities lending and borrowing (SLB) scheme for all market participants in the Indian securities market under the over-all framework of “Securities Lending Scheme, 1997” of SEBI specified by SEBI vide circular No. SMD/POLICY/SL/CIR-09/97 dated May 07, 1997. Such a regulatory framework shall be subject to the broad framework specified in Annexure-2.
3. The Stock Exchanges shall issue the necessary guidelines in this regard and shall put in place systems to operationalise the above mechanisms for short selling and SLB. The stock exchanges shall also ensure that all appropriate trading and settlement practices as well as surveillance and risk containment measures, etc. are made applicable and implemented in this regard.
4. The Stock Exchanges and the Depositories are advised to put necessary systems in place so as to distinguish the lending and borrowing transactions executed in the framework specified in the annexure from the normal market transactions in the demat system.
5. The date of implementation of this circular will be communicated by SEBI subsequently.

6. The Stock Exchanges and the Depositories are also advised to :
6.1. test the necessary software/systems and remove any glitches in its operation well before the commencement date to avoid any problems in the live environment.

6.2. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

6.3. bring the provisions of this circular to the notice of the member brokers/clearing members, depository participants and also disseminate the same on their website.

6.4. communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report.
7. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 and Section 19 of the Depositories Act, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

See @ http://www.sebi.gov.in/Index.jsp?contentDisp=WhatsNewScroll&FilePath=/circulars/2007/shortselling.html

24% investment cap on SSIs removed - FDI

Dear All,

24% investment cap on SSIs removed - FDI

As per existing provisions, FDI is allowed upto 24% of capital in SSI units, if SSI units wants to take additional FDI over and above 24%, then it needs to sacrifice SSI status and can go to upto the sectoral cap as specified under FEMA Regulations for that particular business/industry.

As per recent announcement by Commerce Ministry, 24% of Investment cap is removed for SSI. So that now SSI can go upto sectoral cap as specified under FEMA regulation under automatic route without losing their status as SSI..

Extract from BS – 19-12-2007

In a development, which is likely to increase participation of foreign players and big companies in small-scale industries (SSIs), the government has formally announced doing away with the 24 per cent investment cap in the sector.

However, industry sources remained sceptical about the move as cheap imports from countries like China has made production of many goods exclusively reserved for the sector unviable.

To make this move effective, the government has taken a decision to repeal a restrictive clause, which limits equity participation in SSIs to 24 per cent.

Announcing the development, Commerce Minister Kamal Nath said: "This will lead to technology infusion in the sector as more and more foreign players and large companies set up their own SSI units."

The government notification will enable big industrial houses, both from the country and abroad, to set up SSI units in the sector, which has been restricted because of a limit of 24 per cent equity participation by other companies.

An industrial unit is classified as an SSI when the investments is within Rs 5 crore. At present, there are 114 goods that are exclusively reserved for the sector.

"The doing away of the investment limit means that the de-reservation process of SSIs, which started in 1967, is complete. Thus large corporate houses will be able to set up SSI units in both reserved and unreserved products," said Anil Bhardwaj, secretary general of Federation of Indian Micro and Small and Medium Enterprises.

But he also added that this move is inconsequential in terms of effective benefits for the SSI sector: "Cheap imports have made production of many reserved items unviable. Indian SSIs are not able to compete with international companies in the domestic market."

Reserved items in the sector include electric tea and coffee maker as well as pens, which are being imported in large quantities.

Thanks & Regards

Alagar
Karvy
Moble: 919884731993

Interesting Judgement..Whether CLB is a court under Contempt of Courts Act ?

Important Jugement by High court answering following queries..

Whether CLB is a court under Contempt of Courts Act ?
Whether CLB is subordinate court to High Court under Contempt of Courts Act?
Whether High Court can take suo-moto cognizance of contempt of CLB without any reference made to it?

Read more it ....http://www.taxmann.net/DispCitation/ShowPages.aspx?fn=http://www.taxmann.net/WhatnewNews/[2007]080SCL0405(AP).htm&ctid=-333

FEMA- FDI - Refund of Advance Remittances

Dear All,


Foreign Direct Investments (FDI) – Issue of shares under FDI and refund of advance remittances

The RBI vide AP DIR Circular No 20 dated 14^th December 2007 has made the following changes in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 in connection of refund of consideration from a person resident outside India towards investment in equity shares / compulsorily convertible preference shares and compulsorily convertible debentures (equity instruments).

As per existing provisions of FEM (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 a person resident outside India can purchase equity shares / compulsorily convertible preference shares and compulsorily convertible debentures (equity instruments) issued by an Indian company under the FDI policy and the Indian company is allowed to receive the amount of consideration in advance towards issue of such equity instruments, subject to the terms and conditions laid down therein. The Indian company is required to report the receipt of the amount of consideration within thirty days of receipt of the inward remittance or the date of debit of the NRE / FCNR (B) account of the foreign investor with a AD category – I bank in India, to the Regional Office concerned of the Reserve Bank, in accordance with the prescribed procedure. The money received from foreign Investor can be kept as share application pending for allotment and allotment of shares can be done at any point of time before 7 years of receipt so as avoid transfer such money to IEPF.

The matter has been reviewed in consultation with the Government of India and it has been decided that, with effect from November 29, 2007, the equity instruments should be issued within 180 days of the receipt of the inward remittance. In case, the equity instruments are not issued within 180 days from the date of receipt of the inward remittance or date of debit to the NRE/FCNR (B) account, the amount of consideration so received should be refunded immediately to the non-resident investor by outward remittance through normal banking channels or by credit to the NRE/FCNR (B) account, as the case may be. The AD Category – I banks may allow such outward remittances after satisfying themselves with the bonafides of the transactions and that no part of the remittance represents interest on the funds received as advance. Non-compliance with the above provision would be reckoned as a contravention under FEMA and could attract penal provisions.

In exceptional cases, refund of the amount of consideration outstanding beyond a period of 180 days from the date of receipt may be considered by the Reserve Bank on the merits of the case. Accordingly, AD Category – I banks may apply to the Regional Office concerned of Foreign Exchange Department of the Reserve Bank for refund of such advance.

In all cases where, as on November 28, 2007, 180 days have elapsed since receipt of funds and the equity instruments have not been issued, the companies are required to approach the Foreign Exchange Department of the Regional Office concerned of the Reserve Bank through their AD Category - I bank with a definite action plan either for allotment of equity instruments or for refund of the advance, with full details, for specific approval.

It is clarified that the advances against equity instruments may be received only where the FDI is allowed under the automatic route.

For more info http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/82142.pdf

Thanks & Regards

Alagar
Karvy Investor Services Limited
Moble: 919884731993
for more information about cschennai visit to
http://groups.google.com/group/cschennai

CRLP last minute Guide, full procedure on Mergers & Amalgamations

The heat is on for Company Secretary Exams.

Yes, Thanks to CAClubindia for this, very exhaustive procedure of Mergers, Amalgamation, Demerger, etc....as Companies Act, 1956 doesn't differentiate all these terms, the procedures for all are same.

Find in http://thisisvj.googlepages.com/TooExhaustiveMergersAmalgamationsPro.doc

This may help you to write CRLP exams.

Nice Presentation of Amalgamation Procedure by Mr. Sunil. This is the standard answer that you can write for most of the Corporate Restructuring including Mergers, Demergers, Amalgamations, Slump Sale, etc... as the Companies Act considers all as same. http://thisisvj.googlepages.com/AMALGAMATIONProcedure.pdf

Supreme Court on Takeover Valuation may be one of the most expected CS Final Question this time, Credits to the Author http://thisisvj.googlepages.com/SCTakeoverValuation.pdf

Enjoy Passin.... Keep Communicatin the joyous Results.

Enjoy with CS.

SEBI - CM & WTM - ICSI also asked to recommend

It seems to be raining in great news folks...

Institute of Company Secretaries of India (ICSI) has been asked by Ministry of Finance (Dept. of Eco. Affairs,Capital market Division ),to recommend name of its members who will be considered for the post of Chairman and Whole time members of SEBI..

Read more at....
http://www.thehindubusinessline.com/2007/12/08/stories/2007120852991000.htm

IDRA-Monthly Production Returns to DIPP

Credits to Dr. KS Ravichandran, PCS, Coimbatore

The industrial units covered under the Industries (Development & Regulation) Act, 1951, are hereby informed that the Centre for Monitoring Indian Economy (CMIE) had been collecting monthly production data on behalf of the Department of Industrial Policy and Promotion (DIPP) as per the agreement signed between DIPP and CMIE. The term of this agreement has come to an end in November, 2007. Therefore, the concerned industrial units are requested to henceforth, send the Monthly Production Return directly to the Director, Industrial Statistics Unit, DIPP, Udyog Bhawan, New Delhi-110 107 by the 10^th of every month by post /Fax (No.011-23063564)/e-mail (ipp_dir-stat@nic.in). The performa of the Monthly Production Return (MPR) can be downloaded from the hyperlink “Forms” available in the main page of the website: www.dipp.nic.in.

Also refer http://dipp.nic.in/isu/NoticeMonthlyProduction_Report.doc

FEMA - Transfer of Shares (A Compendium)

Note on Provisions of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 regarding transfer of shares of an Indian Company

Ready hand Referencer & Compendium in http://thisisvj.googlepages.com/TransferofSharesFEMA.doc

1. Automatic route means there is no approval required for transfer of shares of an Indian Company.
2. Automatic route with FC-TRS means where the transfer of shares from resident to non resident and vice versa, before effecting the such transfer in the Company books, the transferee / transferor shall file form FC –TRS with concerned AD and get approval from them.

Thanks & Regards

Alagar

Karvy Investor Services Limited
09884731993

Great news Buddies..CS Pay Skyrockets...

We present the News-makers here... Influencing the history of ICSI. Yes, Company Secretaries can compete with the best pays too. Yes, the Base Price for Fresh Company Secretaries has been set now.

Scanned Copy http://thisisvj.googlepages.com/CSScan.pdf

Its a great news & it can be the greatest if you view it here...

As per the article published in "Business Standard" the company secretaries pay package has been raised upto 60% comparing to last year.

"So student members complete the course as soon as possible and continue your pursuits further to achieve professional excellence ( the motto of our institute)..."

Regards

R Anand

Manager

Corporation Finance Department

Division of Issues and Listing

Securities and Exchange Board of India

(: +91-22 26449343

7: +91-22 26449016

Email: anandr@sebi.gov.in;anandracs@yahoo.co.in;

Mobile: +91 -99206 55285.

Read more at .....http://www.business-standard.com/common/storypage.php?autono=306801&leftnm=6&subLeft=0&chkFlg

The Government Securities Act, 2006 will come into force W.e.f. 01-12-07

The Government of India has notified December 1, 2007 as the appointed date on which the Government Securities Act, 2006 will come into force. Government Securities Regulations, 2007 will also come into effect from the same date, i.e., December 1, 2007.

It may be recalled that with a view to consolidating and amending the law relating to Government securities and its management by the Reserve Bank of India, the Parliament had enacted the Government Securities Act, 2006 (the Act). The Act received the assent of President of India on August 30, 2006 and was published in the Gazette of India, Extraordinary, Part II – Section I on August 31, 2006 for general information.

The Act applies to Government securities created and issued, whether before or after the commencement of the Act, by the Central or a State Government. Accordingly, the Public Debt Act, 1944 will cease to apply to the Government securities. The Indian Securities Act, 1920 has been repealed.

The new Act and Regulations would facilitate widening and deepening of the Government securities market and its more effective regulation by the Reserve Bank in various ways, such as:

(i) Stripping or reconstitution of Government securities;

(ii) Legal recognition of beneficial ownership of the investors in Government securities through the Constituents' Subsidiary General Ledger (CSGL);

(iii) Statutory backing for the Reserve Bank's power to debar Subsidiary General Ledger (SGL) account holders from trading, either temporarily or permanently, for misuse of SGL account facility;

(iv) Facility of pledge or hypothecation or lien of Government securities for availing of loan;

(v) Extension of nomination facility to hold the securities or receive the amount thereof in the event of death of the holder;

(vi) Recognition of title to Government security of the deceased holder on the basis of documents other than succession certificate such as will executed by the deceased holder, registered deed of family settlement, gift deed, deed of partition, etc., as prescribed by the Reserve Bank of India.

(vii) Recognition of mother as the guardian of the minor for the purpose of holding Government Securities; and

(viii) Statutory powers to the Reserve Bank to call for information, cause inspection and issue directions in relation to Government securities

For relevant Act please go to http://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=17582

Thanks & Regards
Alagar
Karvy Investor Services Limited
Chennai - 09884731993

SEBI amends DIP Guidelines : Rating requirements for Corporate Bonds simplified

In order to reduce the cost of of issuance of debt securities and for developing the debt market by affording the issuer with the desired flexibility of structuring of Debt Issues, SEBI has amended provisions of DIP guidelines relating to Debt instruments. Now,rating of only one CRA is required and bonds below investment grade can also be issued..

read more at ...http://www.sebi.gov.in/Index.jsp?contentDisp=WhatsNewScroll&FilePath=/press/2007/2007312.html