Powers and Restrictions for companies to make Inter-Corporate Loans or Investments as per the provisions of Section 186 of the Companies Act, 2013 read with Rules 11 to 13 of Companies (Meeting of Board and its Powers) Rules, 2014
In light of a lot of news relating to sham entities garnering funds through fraudulent investment schemes with promise of huge returns mainly in the name of property development and agriculture, SEBI has in the last few years, intensified its scrutiny of investment structures that raise domestic capital on an unregulated basis. Securities Appellate Tribunal recently passed an order upholding SEBI’s findings against Alchemist Infra Reality Limited. The SAT order along with recent pronouncement by the Supreme Court have probed unregulated investment arrangements to conclude whether or not they constitute CIS, as Schemes are required to be registered with SEBI in pursuance to Securities And Exchange Board Of India (Collective Investment Schemes) Regulations, 1999
Section 185 and 186 - Loans and Investments by CompanySaurabh Dugar
Investments by company - Section 185 and 186 of Companies Act, 2013
Procedural Aspects, carve outs, implication of violations, etc.
Have included the probe of the proposed changes of Companies (Amendment) Bill, 2016.
In light of a lot of news relating to sham entities garnering funds through fraudulent investment schemes with promise of huge returns mainly in the name of property development and agriculture, SEBI has in the last few years, intensified its scrutiny of investment structures that raise domestic capital on an unregulated basis. Securities Appellate Tribunal recently passed an order upholding SEBI’s findings against Alchemist Infra Reality Limited. The SAT order along with recent pronouncement by the Supreme Court have probed unregulated investment arrangements to conclude whether or not they constitute CIS, as Schemes are required to be registered with SEBI in pursuance to Securities And Exchange Board Of India (Collective Investment Schemes) Regulations, 1999
Section 185 and 186 - Loans and Investments by CompanySaurabh Dugar
Investments by company - Section 185 and 186 of Companies Act, 2013
Procedural Aspects, carve outs, implication of violations, etc.
Have included the probe of the proposed changes of Companies (Amendment) Bill, 2016.
In light of a lot of news relating to sham entities garnering funds through fraudulent investment schemes with promise of huge returns mainly in the name of property development and agriculture, SEBI has in the last few years, intensified its scrutiny of investment structures that raise domestic capital on an unregulated basis. SEBI regulates an investment scheme wherein several individuals come together to pool their money for investing in a particular asset(s) and for sharing the returns arising from that investment as per the agreement reached between them prior to pooling in the money under SEBI (Collective Investment Schemes ) Regulations, 1999
SEBI tightens compliances and disclosures for listed entities - Amends LODR R...Economic Laws Practice
SEBI has notified various amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) vide the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2023 (Amendment Regulations).
Process for Declaration & Payment of DividendLegalDelight
“Dividend” means a distribution of any sums to Members by the Company out of profits and wherever permitted out of free reserves available with the Company.
Dividend is basically a return on investment made by an investor in any Company. Generally when business of any company is thriving, Company either resorts to reinvest the profits into the business or distribute a part of their earning among the shareholders as dividend on shares.
Based on the profit or retained earnings, management of the Company may decide for quantum of the dividend to be paid.
In light of a lot of news relating to sham entities garnering funds through fraudulent investment schemes with promise of huge returns mainly in the name of property development and agriculture, SEBI has in the last few years, intensified its scrutiny of investment structures that raise domestic capital on an unregulated basis. SEBI regulates an investment scheme wherein several individuals come together to pool their money for investing in a particular asset(s) and for sharing the returns arising from that investment as per the agreement reached between them prior to pooling in the money under SEBI (Collective Investment Schemes ) Regulations, 1999
SEBI tightens compliances and disclosures for listed entities - Amends LODR R...Economic Laws Practice
SEBI has notified various amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) vide the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2023 (Amendment Regulations).
Process for Declaration & Payment of DividendLegalDelight
“Dividend” means a distribution of any sums to Members by the Company out of profits and wherever permitted out of free reserves available with the Company.
Dividend is basically a return on investment made by an investor in any Company. Generally when business of any company is thriving, Company either resorts to reinvest the profits into the business or distribute a part of their earning among the shareholders as dividend on shares.
Based on the profit or retained earnings, management of the Company may decide for quantum of the dividend to be paid.
Companies Act 2013 : Loans, Advances and Related Party Transactions (Sec. 185...Chintan N. Patel
Presentation to simplify the important and critical sections of Companies Act 2013 : Sec. 185, 186, 188 on Loans, Advances and Related Party Transactions
Inter Corporate Deposits and Related Party Transactions have been addressed differently by Companies Act, 2013. Corporate Captains having more than one entity faced difficulties in compliance. Government also addressed he difficulty though partially.
An introduction to pitching and presenting from my own experience. These slides were used during a workshop session for SEA XChange Algeria, a social entrepreneurship competition.
Certificate of deposit is a negotiable money market instrument which is issued in a dematerialized form or as a promissory note for funds deposited at bank. Banks are free to issue as many certificates as they require. The minimum amount for issuing certificate of deposit is Rs 1 lakh and thereafter it must be in multiples of Rs 1 lakh. Trusts, associations, companies and individuals can subscribe to certificate of deposit. These certificates are issued on a floating rate basis. In case of financial institutions the maturity period for a certificate of deposit is minimum 1 year and maximum 3 years. Banks can neither issue loans on the basis of certificate of deposit nor can they buyback these certificates before maturity. Physical certificate of deposit is freely transferable by endorsement or delivery while the dematted deposits can be transferred in the same manner as other dematerialized securities.
Objectives & Agenda :
Companies procure funds from various stakeholders by way of debentures, bonds, etc. In addition, they procure funds by way of inviting / accepting deposits from the public. In order to protect the interest of the depositors, stringent provisions are laid down in Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules. This webinar provides an overview of the term deposits, inclusions and exclusions, eligible companies to accept deposits, conditions for acceptance of deposits, procedural aspects, penal provisions and income tax implications.
Giving shares can be a great incentive but be aware that they can be difficult to buy back! For further information and advice, please contact ana.gresapico@ocsolicitors.com, or 0207 067 4300.
Giving shares can be a great incentive but be aware that they can be difficult to buy back! For further information and advice, please contact ana.gresapico@ocsolicitors.com, or 0207 067 4300.
Giving shares can be a great incentive but be aware that they can be difficult to buy back! For further information and advice, please contact ben.robson@ocsolicitors.com, or 0207 067 4300.
Giving shares can be a great incentive but be aware that they can be difficult to buy back! For further information and advice, please contact gabi.olson-welsh@ocsolicitors.com, or 0207 067 4300.
It is all about CARO 2016 in detailed observations and it is compared with CARO 2015 and this contains how to report for each clause in caro, thank u in advance for seeing this.
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Victims of crime have a range of rights designed to ensure their protection, support, and participation in the justice system. These rights include the right to be treated with dignity and respect, the right to be informed about the progress of their case, and the right to be heard during legal proceedings. Victims are entitled to protection from intimidation and harm, access to support services such as counseling and medical care, and the right to restitution from the offender. Additionally, many jurisdictions provide victims with the right to participate in parole hearings and the right to privacy to protect their personal information from public disclosure. These rights aim to acknowledge the impact of crime on victims and to provide them with the necessary resources and involvement in the judicial process.
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WINDING UP of COMPANY, Modes of DissolutionKHURRAMWALI
Winding up, also known as liquidation, refers to the legal and financial process of dissolving a company. It involves ceasing operations, selling assets, settling debts, and ultimately removing the company from the official business registry.
Here's a breakdown of the key aspects of winding up:
Reasons for Winding Up:
Insolvency: This is the most common reason, where the company cannot pay its debts. Creditors may initiate a compulsory winding up to recover their dues.
Voluntary Closure: The owners may decide to close the company due to reasons like reaching business goals, facing losses, or merging with another company.
Deadlock: If shareholders or directors cannot agree on how to run the company, a court may order a winding up.
Types of Winding Up:
Voluntary Winding Up: This is initiated by the company's shareholders through a resolution passed by a majority vote. There are two main types:
Members' Voluntary Winding Up: The company is solvent (has enough assets to pay off its debts) and shareholders will receive any remaining assets after debts are settled.
Creditors' Voluntary Winding Up: The company is insolvent and creditors will be prioritized in receiving payment from the sale of assets.
Compulsory Winding Up: This is initiated by a court order, typically at the request of creditors, government agencies, or even by the company itself if it's insolvent.
Process of Winding Up:
Appointment of Liquidator: A qualified professional is appointed to oversee the winding-up process. They are responsible for selling assets, paying off debts, and distributing any remaining funds.
Cease Trading: The company stops its regular business operations.
Notification of Creditors: Creditors are informed about the winding up and invited to submit their claims.
Sale of Assets: The company's assets are sold to generate cash to pay off creditors.
Payment of Debts: Creditors are paid according to a set order of priority, with secured creditors receiving payment before unsecured creditors.
Distribution to Shareholders: If there are any remaining funds after all debts are settled, they are distributed to shareholders according to their ownership stake.
Dissolution: Once all claims are settled and distributions made, the company is officially dissolved and removed from the business register.
Impact of Winding Up:
Employees: Employees will likely lose their jobs during the winding-up process.
Creditors: Creditors may not recover their debts in full, especially if the company is insolvent.
Shareholders: Shareholders may not receive any payout if the company's debts exceed its assets.
Winding up is a complex legal and financial process that can have significant consequences for all parties involved. It's important to seek professional legal and financial advice when considering winding up a company.
1. INTER-CORPORATE
LOANS & INVESTMENTS
UNDER COMPANIES ACT, 2013
Presented By:-
Deepak Ahuja
Image source : integritycapital.org
Section 186 read with Rules 11 to 13 of Companies (Meeting of Board and its Powers) Rules, 2014
2. Investment through Investment Companies Section 186(1)
Without prejudice to the provisions contained in this Act,
.
a company shall unless otherwise prescribed,
.
make investment through
.
not more than two layers of
.
investment companies
at times, Section 185 may prevail over this subsection
i.e. in a chain.
"layer" in relation to a holding company means its subsidiary
or subsidiaries
"investment company" means a company whose principal
business is the acquisition of shares, debentures or other
securities
3. Exemptions to section 186(1) Proviso to Section 186(1)
A company to acquire any other company
incorporated in another country
If such other company has investment subsidiaries
beyond two layers as per the laws of such country
A subsidiary company to have any
investment subsidiary to comply with the
requirements of any law or rule or
regulation framed under any other law
for time being in force
(i) (ii)
No such law
exists as of today
4. Restriction on making inter-corporate loans
A company shall not, directly or indirectly – exceeding the Ceiling Limit
Section 186(2)
Section 186(8) : A company in default of repayment of deposits or interest thereon, cannot make above transactions, till such default is subsisting.
Amounts Involved i.e. (Proposed Amounts + Existing Amounts) ≯ Ceiling Limit
(a) give any Loan (b) give any Guarantee
or provide Security in
connection with a loan
(c) acquire by way of
subscription, purchase or
otherwise, the Securities
5. Ceiling limit
Whichever is higher
60%
Paid up Share Capital
+ Free Reserves
+ Securities Premium Account
100%
Free Reserves
+ Securities Premium Account
or
“Free Reserves" means such reserves which are available for distribution as dividend.
.
Following shall not be treated as free reserves:
(i) Reserves representing unrealized gains, notional gains or revaluation of assets
(ii) Specific Reserves
Section 186(2)
6. Clarification in regards to loans & advances to employees
MCA General Circular No. 04/2015 Dated: 10/03/2015
Loans
and/or
Advances
Not governed by
requirements of
Section 186
If such loans/advances to employees are in accordance with
conditions of service applicable to employees
remuneration policy
7. Prior Approvals
Always
Consent of all
the directors
present in the
meeting
Board of
Directors
Amounts involved
(Present + Proposed)
> Ceiling Limit
Specify amount
up to which
BOD is
authorized
Special
Resolution
Term Loan is
subsisting
Not required if
• Amounts involved
≤ Ceiling Limit
• No default in
repayment
Public
Financial
Institutions
Section 186(5) Section 186(5)Section 186(3)
Rule 13
“Public Financial Institution" means LIC of India, Infrastructure Development Finance Co Ltd, Unit Trust of India, Others notified by CG.
8. Exemption from Section 186(3) Rule 11(1)
Provided to Wholly owned Subsidiary JointVenture
In case of
• Loan given
• Guarantee given
• Security has been provided
By Company to its wholly owned Subsidiary
.
• Acquisition
(by way of subscription, purchase or otherwise of, the securities)
by Holding company of its wholly owned subsidiary
• Loan given
• Guarantee given
• Security has been provided
By Company to its JointVenture Company
9. Rate of Interest
1
3 3
5 5 5 5
10 10 10 10 10
1.00 2.00 3.00 4.00 5.00 6.00 7.00 7.50 8.00 9.00 10.00 11.00
Tenor of Loan (Years)
_________
Term of Government
Securities to consider
for effective Yield
Rate of Interest not to be
lower than effective Yield
MCA General Circular No. 04/2015 Dated: 10/03/2015 Effective yield of Tax Free Bonds not to be considered
Section 186(7)
10. Disclosure in Financial Statements
The company shall disclose to the members in the financial statement
the full particulars of the
loans given,
investment made or
guarantee given or
security provided
and the purpose for which the above are proposed to be utilized by the recipient
Section 186(4)
11. Restriction on taking Inter-Corporate Loans/Advances
Companies registered under
Section 12 of Securities and Exchange
Board of India (SEBI) Act, 1992
Such class or classes of companies
as may be prescribed by CG in
consultation with SEBI
or
Section 186(6) Rule 11(3)
+ Make disclosure of such loans/deposit in financial statements pursuant to section 186(4)
shall take inter-corporate loan or deposits
exceeding the prescribed limit
shall take inter-corporate loan or deposits
exceeding the limits prescribed regulations applicable
12. Maintenance of Register Section 186(9) & 186(10)
Rule 12
Register of Loan, Guarantee, Security or Acquisition Form MBP2
• To be maintained at Registered Office
• In manual or e-Mode
• In custody of Company Secretary
• Transactions to be entered chronologically
• Within 7 days of transaction
• Authenticated by Company Secretary
To be open for inspection by Shareholders
Extraction by Shareholders
On payment of fees prescribed by AOA ≤ Rs. 10 per page
13. Exemption from Section 186(2) to 186(10)
Exemption
against
• Loan made,
• Guarantee given
• Security provided
• Acquisition
Exemption
to
In the ordinary course of its business
1. banking company
2. insurance company
3. housing finance company
.
Companies engaged in the business of
1. financing of companies
2. providing infrastructural facilities
1. Non-Banking Financial Company
(having principle business of acquisition of securities in respect of its investments)
2. A company whose principle business is
acquisition of securities
3. Through Right Issue u/s 62(1)(a)
4. In ordinary course of business by
Banking Company, Insurance Company and Housing
Finance Company
Section 186(11)
14. Non-Applicability of Section 186
MCA Exemption Notification Dated: 05/06/2015
Section 186 shall not be applicable to following Government Companies
a) Engaged in Defence Production b) Unlisted Companies
if prior approval is obtained from CG/SG,
as the case may be, for
i. making any Loan or
ii. giving any Guarantee or
iii. providing any Security
iv. making any Investment
under this section
15. Penalty Section 186(12)
In case of
Contravention
Company Officers of Company in default
Fine (in Rupees) 25,000 ≤ Fine ≤ 5,00,000 25,000 ≤ Fine ≤ 1,00,000
and
Imprisonment Term ≤ 2Years