Types of Risk - Business hazard: a source of danger; a possibility of incurring loss or misfortune Definition
Legal Risk…..Definition a chance of encountering a situation in which one has to suffer loss or injury Common Usage peril, hazard or chance of loss Legal Parlance as a chance or probability of danger, loss, injury or other adverse consequence Oxford Dictionary
The DOJ, found Andersen guilty of obstructing SEC's proceedings.
The SEC revoked Andersen's license to audit public limited companies and ordered the firm to pay a fine of $1,000 for obstructing state investigation (this was the highest fine that a state board could charge).
The whole firm punished and its thousands of employees for the misdeeds of a handful of corrupt partners.
Andersen's fall can be seen as a perfect example of how even great institutions founded on integrity, value, stewardship and personal growth, could collapse in the absence of internal controls of management, a good work culture, and sound values.
Price Waterhouse Coopers independent auditors of the Company verified the accounts and approved it
The role of Price Waterhouse Coopers- the statutory auditors in “India’s Enron” comes under the spotlight amid allegations that large Indian companies regularly use misleading accounting techniques and bully analysts, accountants and auditors into staying quiet.
Drafting of Contract Confidentiality Public Domain Practical experience of technicalities in question No experience in the subject matter of the dispute Informal Arbitrators appointed by parties Formal No control over Judges ARBITRATION LITIGATION
Drafting of Contract….Contd Arbitrators can modify the contractual rights of the parties May substitute their discretion as rights expressly given by agreement Judges powers limited Determine and enforce the contractual rights of parties Costly affair Less costly than arbitration Less time Consuming Very Lengthy Process
Pertaining to the financial viability and internal regulations
Legal Review - Two types
Rights and Obligations of parties to the Contract
Credibility and contractual capacity
Contract Review…..Contd Private Limited- 2 Public Limited – 7 Shareholder Preferably odd number of directors Decisions taken by majority Directors Private Limited- Rs 1,00,000 Public Limited – Rs 5,00,000 Capital Structure Joint Venture Agreement Incorporation of Company in India Example Review every clause of the Agreement/Contract Substantive Review
Contract Review…..Contd Governments and other statutory authority/ies Example: Labour Laws Procedural Compliance relating to Securities laws i.e. Stock Exchange/ SEBI requirements Approval Domestic/Foreign FDI – Direct/Indirect RBI Approvals Financial Policy Appointment Remuneration Chief Executive Officer
Contract Review…..Contd Proper stamp duty been paid on the agreements Immovable property valuing Rs 100 or more Registration, admitted execution and registered by the registrar. Execution of Agreements
periodical audit to verify, check and confirm compliance by statutory laws including rules, guidelines, notifications and any amendments related to company laws, banking laws, property laws, securities laws, commercial laws, constitutional laws, consumer laws, taxation laws and other relevant laws depending upon the nature of business .
assessment on how likely it is that this risk will occur.
assessment of the impact that the occurrence of this risk would have on the project
spreadsheet, or a database system
identified risks, their severity, and the actions/steps to be taken
Risk Registers…Contd current risk or if risk can no longer arise and impact the project. Indicates Individual - for the ensuring this risk is appropriately managed and counter measures are undertaken Responsibility prevent, reduce or transfer the risk. Includes - production of contingency plans. Action