Home > Cost Reduction possibilities, Financial Management Services > ISSUES TO BE COVERED BY THE PROPOSED COMPANY LAW


I am herewith presenting some of my personal views to be discussed with regarding the Company Law.

      The Company Law has to consider the following issues:  

    1. FACE VALUE OF SHARES: There should be uniformity face value of forms @ Rs.10/- each and should not have any other face values so as to have an operative analysis with regarding RONW, EPS Book Value, PE Ratio, ROC, etc.,
    2. ACCOUNTING YEAR: All the Companies should have a uniform of Financial Year from April to March for the purpose of uniformity.
    3. INTERNAL MANAGEMENT: Every Sections of the Company has to be under the control of accountable, professional who is responsible for organization in the process of Internal Administration. The International Management should have standardized form for smooth functioning and proper information of the management on uniform basis.
    4. COST ANALYSIS: Every Company has to disclose the cost analysis and overheads in the process of comparison with overheads of industrial performance.
    5. VALUATION OF ASSETS: All the Assets and Liabilities periodically on the basis of rate of inflation for correct calculation of RONW.
    6. REMUNERATION TO MANAGEMENT: All Companies should allocate specified portion of its profits as remuneration to the management who are the persons behind successful functioning of the Company. So that the remuneration in the form of sharing profits will give the encouragement to the efficiency and punishment to the inefficiency.
    7. CHANGE OF MANAGEMENT: When there is a company incurs losses consecutively for 3 years or more, there should be the change of management. So that the organization will be protected and the interest of Creditors, employees and all other connected activities will be protected instead of closing of the unit and handling over to Financial Institutions.
    8. CAPITAL PROPORTIONS: The Management should have minimum @51% of capital of the company so that they can enjoy the success in the form of more profits and feel the pinch in case of loss.
    9. PLACEMENT: Every employment of the company has to be accommodated with persons of accountability, persons of quality and performance irrespective of any caste, religion, social backwardness.
    10. INFORMATION TO THE SHAREHOLDERS: Every company should be asked to provide information in uniform format regarding the annualized values of the share, RONW, EPS, PE Ratio, ROC and Liabilities of the Company. So that Investors can compare with industrial performance.
    11. INDEPENDENCE: Board of Directors, Advisors and others more importance should be given to their efficiency rather than independence, because all the Companies are performing for commercial values.
    1. SHARE IN PROFITS: Every Company should prescribe some percentage of profits to the shareholders in the form of dividends and the dividend disclosure need not be at the discretion of the Management.
    2. ACQUISITION AND MERGERS: Every Company should be asked to have tie up agreement for acquisition or merger with any other Company instead of going for liquidation, since the liquidations leads to erosion of entire share of capital, loss of employment and loss of opportunities to the Dependent Activities.
    3. DE-LISTING: No Company should be allowed to duelist from the stock exchange since that is the only option available to the investor who wants to enter or exit into the share capital of the company at reasonable prices.
    4. INFORMATION: Every Company should provide the basic information to the investor with regarding the Return on Net worth, Book Value, EPS, PE, Ratio, ROC etc., of the Shares and all that can regularly adjusted and annualized for quarterly results.
    5. ACCURACY OF INFORMATION: Every Company should provide accurate information to the shareholder and any difference has to be seriously explained by the International Management.
    1. RESOURCES: Every Company has to maximize the Productivity of the Resources utilized in the process of Manufacturing, Marketing, Expenditure etc., The Resources may be in any form like Raw Material, Labor, Capital of the Investors, Management Capabilities and Administrative Performance.
    2. WELFARE: The Company has to look after the Welfare of its Employees, Customers and Society at large, in the form of helping the needy by providing Health, Education, and Employment Opportunities to the deserved.
    3. POLLUTION: Every Company has to maintain the echo balance by not creating loss to the environment and maintaining echo balance.
    4. MARKETING: The Company should not indulge any window dressing practice and should be based on the quality of its Product and Price to the customer’s satisfaction i.e., it should not spend more on Advertisement and not to increase the Sale Price.
    5. LAW OF THE LAND: Every Company has to maintain, oblige and Co-operate with the Rules and Regulations made by the Government for Collection of Revenues i.e., Taxes and Utilizing of Resources, Payment of Dividends to Investors, Remuneration to Workers, Reward to Efficiency of Management and all other Sections of the Society.
    6. INVESTORS PROTECTION: Every company has to look after the interest of the investors by assuring them regular income, safety of investment and opportunity to withdraw with minimum loss. Investor’s confidence is more important.
    7. VALUATIONS: The companies should not be allowed to value its net worth for calculating premiums, at the time of new issues, mergers, acquisitions, public issues, borrowings, exports, etc. The valuations have to be made independent authorities which are not known to the management, selected from independent source, independent panels from those who are associated with the company. Investors lost huge money due to overvaluations, disclaimers, incorrect information’s, incorrect projections, etc. The above issues may be considered, if feel appropriate, to communicate to concerned authorities.
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: