We are a multinational company operating in India and have heard that threatening calls have been made to certain individuals and companies demanding money. What steps should we take if we receive such threatening calls?

If you receive a threatening call, you must immediately contact your local police station and lodge a report of the incident.

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Any person making threatening calls is punishable under the Indian Penal Code, 1860, for extortion (if money or valuable security is demanded) and/or criminal intimidation (if you are threatened to do something that you are not legally bound to do or abstain from doing something you are legally entitled to do) with a term that may extend up to life imprisonment depending on the gravity of the actual threat. To handle the rising number of reported cases of extortion and criminal intimidation, the police departments of several state governments (including Mumbai and Delhi) have formed special Anti-Extortion Cells to efficaciously handle such cases. The Central Bureau of Investigation (CBI) also conducts investigations in serious cases. To assist the police/CBI in identifying and taking action against the extortionist and to protect you, you must provide the police/CBI with all information with you concerning such calls, such as the name of the caller, references made by the extortionist during the phone call, details of discussions, the threat and demand, time and duration of the call and the caller's identification number.

The police takes several steps to identify, arrest the extortionist and protect the victim, including registration of a first information report (FIR), surveillance of the victim's phone lines, protection to the victim and his family (if death or any other grievous bodily harm is threatened against the victim or his family), obtaining call records of the phone number from which such calls are made and identification of the voice of the extortionist. As a precautionary measure, you may consider availing caller-identification services on your land lines if you do not already have it. You may also consider hiring a private security agency for additional protection.

What are the liabilities of the directors of a company if improper dividends are paid to the shareholders?

Improper dividends is a term of wide amplitude and the liability of the directors of a company depends on the exact nature of the impropriety involved in the payment of dividend.

For example, the directors can be held liable for penalty up to Rs 5,000 and fine upto Rs 500 for each day of default if a company, in violation of the provisions of the Companies Act, 1956, fails to pay dividend only in cash or out of the profits of the company, after availing prescribed depreciation. Also, if dividend is not paid or the payment warrant is not issued within 30 days from the date of declaration of dividend at a shareholders meeting, the responsible directors are under the law liable to imprisonment up to three years and fine of Rs 1,000 for each day of default. Further, payment of dividend without transfer of prescribed percentage of profits to reserves under the Companies (Transfer of Profits to Reserves) Rules, 1975, may render directors liable to fine upto Rs 500 and Rs 50 for every continuing day (after the first day) of contravention. If dividends are paid out of reserves in excess of the rate and amount prescribed by the Companies (Declaration of Dividend out of Reserves) Rules, 1975, directors can be liable for a fine up to Rs 5,000 for every day of default.

The directors are also personally liable to compensate the company for any loss caused to the company and its creditors where it is found that the directors have deliberately paid or negligently been instrumental in paying dividends, for example, out of the company's capital or by accounting bad debts as assets of the company.

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