Inspection can be extended to documents in connection with appointment of former managing agents - Companies Law - Circular: No. 18/75,

Circular: No. 18/75, dated 12 ‑ 9 ‑ 1975. Subject:- Inspection can be extended to documents in connection with appointment of former managing agents The managing agency system was abolished with effect from 3‑4‑1970. It has been noticed that after the abolition, the former managing agents have been getting remuneration from the companies previously managed by them in one form or other by getting themselves appointed as technical consultants, advisers, etc., and also for performing a host of other services like management, economic, financial, statistical and marketing services. With a view to ensure that the former managing agents do not get themselves so appointed, especially where the so‑called services are not really needed by the companies, the amended provisions of section 209A provide restrictions on the appointment of former managing agents or secretaries and treasurers to any office in the company except with the previous approval of the company in general meeting as well as of the Central Government. It has come to the notice of the Department that some appointments made in this regard are only a cover for the continuation of the managing agency system. It is, therefore, necessary to ensure that the new appointments are not just a change of name or label for the old managing agents. For this purpose, it has been decided that while carrying out the inspection of the books of account of the company under section 209A, either by the Registrar of Companies or by the officers of the Inspection Wing, a detailed examination of the relevant documents and other materials connected with the appointment of the former managing agents should be made to see that the company really needed such technical services and such services have in fact been performed. It is also necessary to see that the former managing agents, etc., have the necessary personnel to be able to render any meaningful services and the remuneration paid is commensurate with the services rendered.