Suo Moto Statement On HLL"s Bonus Debentures Proposal
The company has no plans to abandon the proposal to issue bonus debentures. We had indicated in our earlier Press Release of February 28, 2002, that we await the finalisation of the proposal relating to deduction of tax on dividends, given the current proposal of the Finance Bill, 2002, following which an appropriate action will be taken by the company on its Debentures Scheme (presently pending before the High Court of Bombay, Mumbai). It is important to have clarity on deduction of tax on dividends since ‘bonus debentures’ are construed for tax purposes as ‘deemed dividend” and need to be taxed accordingly. If a material change is required in the Scheme due to changes in tax laws or otherwise then the company will go back to the shareholders to seek their approval to such changes.
Auditors have no role, at present, in the debenture matter. Auditors scrutinise accounts. The outflow on the proposed debentures may become part of “accounts” only after the scheme is executed, after the approval of the High Court of Bombay, Mumbai. The issue of bonus debentures, which was approved by the Board of Directors, has been overwhelmingly approved by HLL’s shareholders at the Extraordinary General Meeting held on December 12, 2001. The role of auditors in bonus debentures will be restricted to commenting on its proper accounting as and when the scheme is executed after judicial approval.
Hindustan Unilever Limited
B. D. Sawant Marg,
Chakala, Andheri (E),
Mumbai - 400 099.