Sebi hearing
Shubhangi Patil
(Querist) 30 September 2011
This query is : Resolved
A chairman of the listed company receives a notice from SEBI to appear for hearing. On receiving the notice the chairman immediately appoints his family solicitor to appear with him for the hearing.
The directors of the listed company have objected to both the chairman's upfront arrangement with his family solicitor and the chairman providing to lawyer the company documents for the purpose of the hearing.
In the given case,
1. Whether the objection of the directors is valid?
2. In the given circumstances will the lawyer able to obtain his retainer fees from the company?
3. Whether the chairman is at risk of potential liability for providing company documents to the lawyer?
R.Ramachandran
(Expert) 30 September 2011
Generally the affairs of the Company are driven by Board Resolution.
I do not think except saying/approving that the interests of the Company should be protected by putting up a defence, the Board will go to the extent of saying who should be appointed as lawyer etc.
If not this lawyer, any other lawyer would also get the documents, in case he has to defend the actions. So what is the great deal?
Once the procedural aspects as per the requirements of the Companies Act is taken care of, I don't think the Chairman has done anything illegal.
Shubhangi Patil
(Querist) 30 September 2011
Thank you Sir for helping me with your advise.
Thanks
Shubhangi Patil
(Querist) 03 October 2011
What happens in the situation where there is no board resolution authorizing the chairman to appoint a lawyer?
In such a case will the chairman be liable of any potential risk for appointing the lawyer as well as providing him with the company documents?
R.Ramachandran
(Expert) 03 October 2011
Now coming to your latest query:
1. First and foremost one has to know whether the hearing is against the Company or against the Chairman in his individual capacity?
2. If the hearing is against the Company, then the Board Resolution is necessary.
3. Whether the Chairman is an Executive Chairman or a non-executive Chairman?
4. If he is an executive chairman, he has authority to act and no separate board resolution is necessary.
5. If he is a non-executive Chairman, he has no authority to act without the Board Resolution.
Sailesh Kumar Shah
(Expert) 03 October 2011
I have similar opinion as Shri R. Ramachandran. He has left no room to say.
