Fundraising for businesses was an arbitrary practice without any formal guidelines and regulations before Companies Act 2013. Due to lacunae of legal provisions in Companies Act 1956, many a times, corporate with fraudulent mindset have found their way to dupe investors and public of their hard-earned money. It has created many legal disputes and controversies.
Now, new Companies Act and the consequent rules have formally covered all the modes of fund-raising and have tried to fill in the loopholes of old law. Stringent rules and cumbersome compliances are to ensure safeguard of the public money and restrict the malpractices. But these provisions have created confusion in respect of implementation and compliances. The easy availability of funds for businesses in real need has also dried up. MCA must come out some clarification to give breathing time to companies specifically for private companies.
Key Takeaways:
- Provisions dealing with set-off and carry forward
- Inter-head and Inter-Source Set-off of Losses
- Carry Forward and Set-off of Losses in Special Cases
Powerpoint slides on Securitization Act 2002. This a financial term. This powerpoint will create good awareness regarding securitization. how this does happen, who have right to do this process etc. people get to know how do banks manage their NPAs.
Key Takeaways:
- Provisions dealing with set-off and carry forward
- Inter-head and Inter-Source Set-off of Losses
- Carry Forward and Set-off of Losses in Special Cases
Powerpoint slides on Securitization Act 2002. This a financial term. This powerpoint will create good awareness regarding securitization. how this does happen, who have right to do this process etc. people get to know how do banks manage their NPAs.
Liquidation process under the IBC is dedicated towards ensuring that the assets of the insolvent company are properly valued. Sold and the profits of it are properly distributed among the claimants. Read through this blog and know about its process.
Liquidation process under the IBC is dedicated towards ensuring that the assets of the insolvent company are properly valued. Sold and the profits of it are properly distributed among the claimants. Read through this blog and know about its process.
Corporate Governance is not only a legal compliance but is necessary for the optimum growth of a business. A transparent and well-governed company is perceived to be doing business in honest way and contributing in the development and wellness of society. Therefore businesses should adapt system of Corporate Compliance Management to establish and maintain Ethics, Integrity and Accountability in their routine. सत्यं वद, धर्मं चर (Forever Speak the Truth and Follow the Dharma) has been the mantra of good people and same applies to Corporate and Business.
Today I was at Assocham’s 2nd National Conference on Corporate Compliance Management to give my view on the quest for Corporate Governance and necessity of Corporate Compliance Management.
Company Secretaries- Adding Value through TechnologyPavan Kumar Vijay
With the advancement of IT and Internet-based systems and tools, the scope of corporate and legal consultancy has widened; we can easily provide services to bigger and global clients. But the competition will also be with global players. So Company Secretaries have to learn and adapt new technologies to provide speedy solutions with collaboration of Human Intelligence and Internet based knowledge.
With resolution of Central Government for reforms, transparency and governance in Corporate Sector, sentiments in the Capital Market has turned positive. Companies Act 2013 has also helped in reinstating the confidence of small shareholders in Capital Market.
As the capital market has grown global, it has generated ample need and huge opportunities for pools of ready money for investments in specific sectors. In such a scenario, several new Investor and Market friendly laws like AIF/ REITs and InvIT have been introduced. SEBI has also recently simplified some norms of AIFs. These type of funds will help in rapid development and growth of various sector of the country.
Technology: Challenges and Opportunities for Company SecretaryPavan Kumar Vijay
Technology and mainly Information Technology has made the knowledge available in digital form and we have easy access to information for reference at any time. This brought both challenges and opportunities for the professionals like Company Secretaries.
As the law has permitted the use of IT in many procedures such as compliance, payments etc., it also expects proficiency in knowledge and efficiency in work from the professionals. Now the mantra of survival and success of a Company Secretary is proper application and management of knowledge, resources and time to compete. There is limitless scope of expanding the horizon for the profession.
Corporate Governance is the practice of transparency in operations and transactions expected from Corporate Houses. सत्यं वद, धर्मं चर (Forever Speak the Truth and Follow the Dharma) has been our old age mantra for high standard of living and governance practices. To imbibe Corporate Governance norms in the structure of a business, leaders have to have vision and inclination towards Ethics, Integrity and Accountability. History has shown that Companies who followed these practices have earned the faith of world at large. Well governed and transparent companies have fared well in their business and also contributed to maintain the inclusive development and growth of society.
How to Begin Secretarial Audit (Compliance of All Applicable Law )Pavan Kumar Vijay
My Presentation at ICSI on 13/03/2015- "How to Begin- Secretarial Audit".
Secretarial Audit is a process to check compliance with –
• the provisions of various laws and Rules/Regulations/Procedures,
• maintenance of books, records etc,
• by an independent professional to ensure that the company has complied with the legal and procedural requirements and also followed due processes.
• the Board of Directors has to give explanation in the Board’s Report to every qualification and observation or other adverse remark made by the Secretarial Auditor.
•So we can say that the Board of Directors has to ensure that there should be a system in the company through which Compliance Officer can Control on all compliances under all applicable Laws.
Read more...
Hostile Takeover Strategies with Analysis of Case StudiesPavan Kumar Vijay
Hostile Takeover, acquisition of a business by making unsolicited bids and giving attractive offers to the stakeholders to amass the controlling share and then bid to take control of the business and the management. The acquirer attempts to acquire a business by convincing small shareholders and financial institution of bright future prospects and also give them much larger premium for their shares. This is done to get an upper hand in that specific segment of Industry as well as market by acquiring an established business with proven track records.
How much negative this kind of takeover may look, there are many positive outcomes too. A bid of hostile takeover compels the management to work efficiently, true value of a business comes to fore, shareholders get an opportunity to sell their stake at a good premium etc.
Corporate Governance - Initiatives and AccountabilityPavan Kumar Vijay
I gave a lecture at ICSI on GOVERNANCE - Initiative and Accountability.
I believe that Corporates are expected to use their Capacity, Knowledge and Resources towards Maximization of stakeholders' value and well-being and progress of humankind.
There are four parts of this presentation-
1. Strengthening Board Framework
2. Stakeholder Interest Protection
3. Transparency and Disclosure
4. Impact of Change
This presentation focuses on various aspects related to NCDs like under Companies Act,2013; SEBI Guidelines; RBI Circulars; Tax and Stamp Duty Implications.
The procedure to acquire shares of an individual in India and an NRI as per the Companies act,1956.
The procedure of transfer of shares between the shareholders.
substantial acquisition of shares and its meaning.
stock broker and client relationships.
A brief description on the acquisition of assets.
Sebi (lodr) regulations obligations on listing of id rs & securitised de...DVSResearchFoundatio
Key Takeaways:
Equitable treatment to IDR holders
Terms / Structure of IDRs
Information to stock exchange / investors
Terms of Securitised Debt Instruments
Similar to Fund Raising- Combat for Corporate Houses (20)
All about CS Profession: Excellence Independence Professional Ethics Quality Pavan Kumar Vijay
All about Company Secretaries (CS) Profession by Pavan Kumar Vijay (pkvijay), past President of ICSI: A catalyst in Corporate Growth, an extended arm of Government/ regulators, the conscience seeker,
Points Discussed:
Why IT?
e-governance
Challenges for CS,
e - transformation
Opportunities for CS
Digital Signature Certificates,
Encryption & Decryption
WHY IT IS IT ESSENTIAL FOR CS WHAT IT CAN DO FOR US
IT Facilitate -GLOBALIZATION, Telecommunications, Advancement, Transportation Facilities, Information Technology & Knowledge Sharing,
Transparency & Good Governance
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
4. Ambit of Private Placement
Preferential
Offer
Issuance of
Redeemable
Preference
Shares
Issuance of
Redeemable
Debentures
Section 42 read with
Rule 14 of the Companies
(Prospectus and Allotment of Securities) Rules, 2014
Bible for all types
of issues to a
specific group of
persons
Section 62 read with Rule 13
of the Companies
(Share Capital and Debentures) Rules, 2014
Section 55
read with
Rule 9 & 10
the
Companies
(Share
Capital and
Debentures)
Rules, 2014
Section 71 read with Rule 18
the Companies (Share Capital
and Debentures) Rules, 2014
5. Framework Governing Issuance of specific class of Securities
If the Company proposes to issue Redeemable Preference Shares, then it is required
to comply:
1.Conditional Based Provisions:
Section 42 read with Rule 14 of the
Companies (Prospectus and Allotment of Securities)
Rules, 2014
2. Procedural Based Provisions:
Section 55 read with read with Rule 9 & 10 the
Companies (Share Capital and Debentures) Rules,
2014
7. Private Placement as per Section 42 of the Act
For the 1st time in Indian legal history, the term “Private Placement” has been
defined under the Companies Act 2013
Private Placement has been specifically defined to mean any offer of securities or
invitation to subscribe securities to a select group of persons by a company (other
than by way of public offer) through issue of a private placement offer letter.
Securities as defined in clause (h) of Section 2 of the
Securities Contracts (Regulation) Act, 1956
Securities Securities as defined in clause (h) of Section 2 of the
Securities Contracts (Regulation) Act, 1956
Companies Act, 2013 seeks to regulate issue of all types of securities and not just
shares and debentures
8. Securities as per Securities Contract (Regulation) Act, 1956
As per Clause (h) of Section 2, Securities include:
(i) shares, scrips, stocks, bonds, debentures, debenture stock or other
marketable securities of a like nature in or of any incorporated company
or other body corporate;
(ia) derivative;
(ib) units or any other investments issued by any collective investment
scheme to the investors in such schemes;
(ii) Government securities;
(iia) such other instruments as may be declared by the Central
Government to be securities; and
(iii) rights or interest in securities.
Use of term ‘securities’ instead of ‘shares’ - Use of the term shares in the Companies Act,
1956 restricted the dictatorial roof for issuances of various other instruments by Company to
raise funds. Companies manipulated this loophole by using other terminology or
nomenclature for instruments used to raise funds, thereby easily escaping the
regulatory oversight.
10. Why Stringency in Provisions??
· Lacunae in the legal provisions of the Companies Act, 1956 regarding private placement
have lead to increase in malpractices. :
o Provisions of the Companies Act, 1956 were narrow and covered under its ambit
only shares and not all securities, while SEBI defines the term ‘securities’
o While a private placement could be made only to a maximum of 49 persons at one
go, there was no provision to prevent companies from convening multiple board
meetings to approve such allotments. As a result, companies started calling several
meetings and made allotment to 49 allottees at each such meeting, thereby
manipulating the law.
o Companies also took advantage of the overlapping of powers between the MCA and
SEBI to make multiple private placements.
The landmark judgment in the Sahara Case has set the direction for private placement code and
the Companies Act, 2013 draws heavily out of the principles enunciated by the Apex Court
11. Ambit of Listed Companies as per Companies Act, 2013
A company which has any of its securities listed on any recognized
stock exchange.
Meaning thereby
The company even if having its debentures/preference share listed on
any recognized stock exchange is now deemed to be considered as
the Listed Company.
For the Preferential offer, the Listed Companies are required to comply with
SEBI (ICDR) Regulations, 2009 in addition to Section 42.
12. Private Placement in terms of Section 42 of the Act:
A Stringent Regime governing all types of Companies
Offer in One FY
• 200 investors excluding QIB and ESOP
Limit would be reckoned
individually for each class of
security (i.e. Equity, Debentures,
Preference Shares, )
Conditions related to Private
Placement
• Prior approval of Shareholders is required to be obtained via Special Resolution
For Non-Convertible Debentures, a previous special resolution in respect of all
the offers during one year can be obtained.
• Justification or basis for the offer price to be disclosed in the Explanatory Statement
calling General Meeting
• * Minimum face value investment size of Rs 20,000 per person
• Cash receipt prohibited
The above mentioned limit of 200 investors and Rs 20,000/- Face Value of Investment shall not be applicable to:
•NBFC Companies; and
•Housing finance companies;
Provided they comply with the Regulations made in respect of offers on private placement basis, by RBI or National Housing Board.
However, if RBI or NHB have not specified any similar regulations, even such companies would be required to comply with the
provisions of these Conditions.
13. Private Placement in terms of Section 42 read with Rule 14 of
the Companies (Prospectus and Allotment of Securities) Rules, 2014
Conditions related to Private
Placement
• Maintenance of complete database of the persons to whom the offer to subscribe to the
securities is proposed to be made
• Offer of Securities will be made only through personalized offer letter to such persons
whose names are recorded prior to the invitation to subscribe
• Maintenance of Record of the Bank Account of the Applicants
• Allotment to be made within 60 days from the date of receipt of application money, else
refund within 15 days from the date of completion of 60 days
• In the event of non-refund within the stipulated time period, repay with 12% interest p.a.
from the expiry of sixtieth day.
• Minimum gap between two offers to be not less than 60 days
• No fresh offer to be made unless previous offer is completed
• Share application money to be kept in Separate Bank Account.
• * Transfer of securities is permitted
14. Disclosures Required under Offer Document
• General Information about the Company
• Factors that directly impact the business of the Company
• Details of default, if any, including therein the amount involved, duration of default and present status,
in repayment of –
I. statutory dues;
II. debentures and interest thereon;
III.deposits and interest thereon;
IV.loan from any bank or financial institution and interest thereon.
• Details of Issuance of Securities
• Disclosures with regard to interest of Directors, Litigation etc.
• Financial Information of the Company
15. Preferential Offer
As per Explanation to Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014,
‘Preferential Offer’ means an issue of shares or other securities, by a company to any select person or
group of persons on a preferential basis and does not include shares or other securities offered through a
public issue, rights issue, employee stock option scheme, employee stock purchase scheme or an issue of
sweat equity shares or bonus shares or depository receipts issued in a country outside India or foreign
securities.
“shares or other securities” means equity shares, fully convertible debentures, partly convertible
debentures or any other securities, which would be convertible into or exchanged with equity shares at a
later date.
Section 62 read with Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014
pertaining to issuance of Equity Shares & other convertible securities.
Provides Procedural Framework
16. Main Highlights of Section 62 read with Rule 13 of the
Companies (Share Capital and Debentures) Rules, 2014
Main Highlights of Preferential Offer
• Prior approval of Shareholders is required to be
obtained via Special Resolution
• Allotment to be made within 12 months from the date of
Special Resolution
• Mandatory Disclosures in the Explanatory Statement to
the Notice calling General Meeting:
a. intention of the promoters, directors & KMPs
b. Change in control, if any, consequent to the
preferential offer
c. Justification for the allotment proposed to be made for
consideration other than cash
d. Details of the proposed allottees along with post
preferential shareholding
e. Basis on which price is arrived along with the report of
Registered Valuer
17. Who are presently covered under the ambit of
Registered Valuers
Till the time provisions related to Registered Valuers are not notified,
Valuation of Stock, shares, debentures, securities, etc.
Shall be done by an Independent Merchant Banker or
by Independent Chartered Accountant in Practice
having minimum experience of 10 years.
18. Registered Valuers as per Section 247 of the Companies Act, 2013
(Yet to be Notified)
Registered Valuers as per Section 247 of the
Companies Act, 2013
Financial Valuer Technical Valuer
Stock, Shares,
Debentures,
Securities,
Goodwill
Stock, Shares,
Debentures,
Securities,
Goodwill
Property
Persons eligible to apply for being Registered as
• A Chartered Accountant, Company
Secretary or Cost Accountant in
whole time practice or retired
member of Indian Corporate law
Service or any other person as
prescribed.
• A Merchant Banker registered with
SEBI and which has in employment
under it CA/CS/CWA for carrying out
(signing) Valuation by such qualified
persons.
Valuer
• Member of the Institute of
Engineers or Member of the
Institute of Architects in whole
time practice.
• A person or firm or LLP or
Merchant Banker possessing both
qualifications may act in dual
capacity.
Shall have 5
Years of
Continuous
Experience,
Post
Qualification
Shall have 5
Years of
Continues
Experience, Post
Qualification
Registered
Valuer to be
appointed by
Audit
Committee or in
its absence by
the Board of
Directors.
19. Issuance of Redeemable Preference Shares
Section 55 read with Rule 9 of the Companies (Share Capital and Debentures) Rules, 2014
pertaining to issuance and redemption of preference shares.
Provides Procedural Framework
Main Highlights for issuance of Redeemable Preference Shares:
a.Prior approval of shareholders via Special Resolution is required for issuance of
Redeemable Preference Shares;
b.Maximum tenure for redemption of preference shares shall not exceed 20 years;
c.Enhanced disclosure requirement in the Explanatory Statement to the Notice calling
General Meeting of the Shareholders;
d.Specific requirement of making disclosures of certain parameters in the shareholders’
resolution that have a direct bearing on the interest of shareholders’.
20. Relaxation for Issuance of Redeemable Preference Shares by
Infrastructure based Companies
Company Engaged in Infrastructural Projects
May Issue
Preference Shares for a maximum period of 30 years.
Provided option be given to preference shareholder for
redemption of a minimum 10% preference shares per year
from the 21st year onward or earlier.
21. Issuance of Redeemable Debentures
Section 71 read with Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014
pertaining to issuance and redemption of Debentures
Provides Procedural Framework
Main Highlights for issuance of Redeemable Debentures:
a.Creation of Charge or mortgage on securities;
b.Maximum tenure for redemption of Debentures shall not exceed 10 years;
In case of Company engaged in setting infrastructure projects, maximum tenure
for redemption is 30 years.
22. Procedural Aspects under Private Placements
• Filing of Form MGT 14 with ROC: In compliance with the provisions of Section 117(1) of
the Companies Act 2013, a copy of special resolution along with the Explanatory Statement
is required to be filed within 30 days from the date of passing of the said resolution.
• Preparation of a private placement offer letter in terms of Form PAS-4: In terms of
Rule 14(1)(a) of the Companies (Prospectus and Allotment of Securities) Rules,
2014: A Company may make an offer or invitation to subscribe to securities through issue of a
private placement offer letter in Form PAS-4.
• Filing of private placement offer document in Form PAS-5 within 30 days from the
date of circulation of the private placement offer: In terms of Section 42(7) read with proviso
to Rule 14(3) of the Companies (Prospectus and Allotment of Securities) Rules,
2014
• Filing of Form PAS 3 with ROC within 30 days of allotment of securities: As per Section
42(9) of the Companies Act, 2013 read with Rule 14(4) of the Companies
(Prospectus and Allotment of Securities) Rules, 2014
• Maintenance of Register of holders of securities in compliance with the provisions of Section 88 of
the Companies Act, 2013
23. Penal Provisions for contravention with the stipulations of
Private Placements
If a Company makes an offer or accepts monies in contravention with the provisions of
Section 42, its promoters & directors shall be liable for a penalty which may extend to:
(a)The amount involved in the offer or invitation; or
(b)Rupees 2 Crores,
And
Whichever is higher
The Company shall also refund all monies to subscribers within 30 days of the order
imposing the penalty.
24. Industry Concerns with the promulgamation of New Provisions
Nowadays, one of the major dilemma that Corporate Houses are facing as to how to
deal with the application money outstanding in the books of accounts as on 1st
April, 2014?
As per Section 42(6) of the CA’13,
“A company making an offer or invitation under this section shall allot its securities within sixty days from
the date of receipt of the application money for such securities and if the Company is not able to allot the
securities within that period, it shall repay the application money to the subscribers within fifteen days from the
date of completion of sixty days and if the Company fails to repay the application money within the aforesaid
period, it shall be liable to repay the money with interest at the rate of twelve percent per annum from the
expiry of the sixtieth day.”
As per Rule 1(c)(vii) of The Companies (Acceptance of Deposits) Rules, 2013:
Deposits does not include
“any amount received and held pursuant to an offer made in accordance with the provisions of the
Act towards subscription to any securities, including share application money or advance towards
allotment of securities pending allotment, so long as such amount is appropriated only against the
amount due on allotment of securities applied for”.
25. Industry Concerns with the promulgamation of New Provisions
Contd…
Explanation: For the purpose of this sub-clause, it is hereby clarified that-
(a)Without prejudice to any other liability or action, if the securities for which application money or advance
for such securities was received cannot be allotted within sixty days from the date of receipt of the application
money or advance for such securities and such application money or advance is not refunded to the
subscribers within fifteen days from the date of completion of sixty days, such amount shall be treated as a
deposit under these rules.”
Further, Clause 6 of General Clauses Act, 1897 that clearly demonstrates that unless a different intention
appears, the Repeal shall not affect any right, privilege, obligation or liability acquired, accrued or incurred
under any enactment so repealed.
On applying the principles of harmonious construction, can it be construed
that the intent of the statute is to regulate only the application money received
under this Act?
26. Industry Concerns with the promulgamation of New Provisions
Section 42(7) of the Act mandates the Companies that the offer shall be made only to
those persons whose names are recorded prior to invitation to subscribe and only
such persons should receive the offer. The said provisions would lead to practical
difficulties in raising funds via Qualified Institutional Placement, a route prescribed by
SEBI ICDR Regulations.
As per SEBI ICDR Regulations, the Company can make offer to
“n” no. of QIBs and if they find potential in the Company’s
business, they will accept the offer accordingly.
27. Industry Concerns with the promulgamation of New Provisions
SEBI presently allows listed Companies to come out with Warrant issues, however,
Companies Act restricts the issuance of warrants as the term securities does not cover
issuance of Warrants. In such scenario, what would be the status of Warrants that have
already been issued by the Listed Companies. Would it also tantamount to outstanding
share application money?
If Company is having its Debt Securities Listed then whether such Company is
required to comply with the SEBI ICDR Regulations or Rule 13 of the Companies
(Share Capital and Debentures) Rules, 2014 for issuance of Equity or other
convertible Securities?
As per FEMA, the allotment to be made to foreign investor within 180 days from the
date of receipt of Share Application Money whereas as per Companies Act, 2013, the
allotment is required to be made within 60 days from the date of receipt of application
money. Whether the allotment is supposed to be made within 60 days or 180 days from
the receipt of application money from Non-Resident?
29. REGULATORY FRAMEWORK FOR PUBLIC ISSUE AS PER COMPANIES
ACT 2013
Part I of Chapter III: Prospectus & Allotment of Securities
Section 23 to 40 of the Act read with
•The Companies (Prospectus & Allotment of Securities) Rules, 2014
30. Public Issues
• Source of Promoter’s contribution in prescribed manner
• * Summary of Reservation or adverse remark of auditors and the related
party transaction since last five financial year
• * Acts of material frauds committed against the company in the last 5
years, if any,
• Any litigation or legal action pending or taken by any Statutory Body
against the Promoters during last 5 years.
Disclosure in
Prospectus –
Sec 26
Offer of Sale
– Sec 28
• Offer for sale now specifically defined in the 2013 Act
• A document for OFS shall be deemed to be prospectus
• Persons desiring to make an OFS shall authorise company to
take necessary actions for OFS and reimburse all the expenses
• No option to get physical allotment of shares in IPO
• Shares to be compulsorily allotted in Demat form by a company
making an IPO and other prescribed classes of companies
• Advertisement of prospectus to specify main objects, liability of
members, amount of share capital, details of subscribers to MOA and
Capital Structure
31. Liability for Mis-statements
Mis-statement
Untrue
Statement
Misleading
Statement
Liability
Civil - Sec 34 Criminal -Sec 35
Min 6
mths
Max 10
Yrs
Min Amt
Involved
Max 3x Amt
Involved
Compensate
those who have
suffered loss or
damage
Withdrawal of consent after issue but before allotment now not a
defense
In case of a fraud every person involved personally liable without
limitation of liability
Civil Liability for
Mis-statements
32. Impersonation – Sec 38
Impersonation
Fictitious Name
Multiple Applications
Different Names Different Combination
Shall be punishable as fraud under Section 447
Imprisonment: Min. 6 months &
Max 10 years, subject to Min. term
of 3 years where public interest is
involved.
Fine: May extend to 3 times of the
amount involved in the Fraud.
For the first time, the provisions related to money siphoning are introduced
33. Public Issues…..
Fraudulent Inducement for Investing money -Sec 36
• Scope of section extended to obtaining credit facilities
from banks or financial institutions
• The offence made non compoundable
• Stringent punishment prescribed under section 447
Allotment of Securities – Sec 39
• Return of allotment to be filed for issue of any kind of security
• Power given to SEBI to modify the minimum amount to be paid
on application which shall not be less that 5% of the nominal
amount
• Minimum subscription to be received in 30 days as against
earlier 120 days. Power to SEBI to modify the same
34. Variation in terms of Contracts or Objects – Sec 27
I want to change the terms of
contracts referred to in
prospectus or objects of the
Issue ?
Its easy pass an
ordinary resolution in
general meeting
Its no
longer easy
Revised Process
36. Concerns pursuant to the enactment of new provisions governing
Public Issue
As per Section 26(2)(b) of the Companies Act, 2013, in the event of Follow-up Public Offer
(FPO), the provisions governing the content of Prospectus will not apply.
That means the Companies coming out with FPO are primarily required to comply
with SEBI norms only and are not required to comply with the Parent Law.
In Rule 5 of the Companies (Prospectus & Allotment of Securities) Rules, 2014, the
word “issue of shares and debentures” is used whereas Chapter III deals with
“issuance of securities”
The free use of terminologies will lead to anomaly and open the avenues for
malpractices.
38. Companies Act 2013:
A Breather for Companies for raising funds via Rights Issue
o Dispensation from the provision that the Company can raise funds only
after the expiry of 2 years from incorporation or 1 year from date of 1st
allotment post formation, whichever is earlier;
o Now the maximum time period for acceptance of offer is 30 days
(i.e. min 15 days & max 30 days);
o The requirement to dispatch letter of offer either registered post or speed
post or through electronic mode to all the existing shareholders at least 3
days before the opening of the issue.
39. Rights Issue:
Proposed Relaxation for Private Companies
Taking into consideration the shareholders’ base in Private Companies, it is
proposed to relax the time period stipulated for giving offer to the existing
shareholders :
Stipulation as on date for all
Companies
Proposed stipulation for Pvt. Cos.
Minimum: 15 days
Maximum: 30 days
Minimum: 7 days
Maximum: 15 days
40. Rights Issue:
May be considered as another egress for excavating Scams
On one hand, to plug all the loopholes that existed under the extant 1956 Act,
the Regulators thought it prudent to make stringent conditions, so that the
managements are left with no excuses to flout the laws.
This has been very well reflected in the Private Placement code
prescribed under the New Act
But then why there appears to be a lenient approach when it
comes to right issue?
Merely, because the fund raising is from existing shareholders or
the law makers have not given a thought as to how this route
can also be used for siphoning money from innocent investors.
41. Whether the New Provisions are acting as a Barrier for the Growth of the
Industry??
Scams that took place in the recent past have paved the way for framing
stringent provisions under Companies Act, 2013.
But that stringency in the provisions have exaggerated the practical concerns in
Raising funds by the Corporate Houses.
Govt. intervention would be required to chalk out a path
that leads to a win-win situation of resolving problem of
fund raising by Corporate Houses on one hand and
protection of interest of stakeholders on the other.
42. Thank You
Pavan Kumar Vijay
Corporate Professionals Capital Private Limited
09/20/14
D-28, South Extension –I, New Delhi-110 049
Ph: +91.11.40622200; Fax: +91.11.40622201; E: pkvijay@indiacp.com