While investing for a home, it is very important to have clarity of thoughts. Some people want to invest in the ready to move flats in Noida, but they end up investing in a project which is either yet to begin or is in the midway. In this field, Exotica Housing is one such company which maintains a complete transparent relationship with the investors and want that they should get their homes ready to move.
Appointment of directors and kmp under 2013 act https _www.icsi.edu_web_modu...APS1974
The key points from the document are:
1. The Companies Act, 2013 defines key managerial personnel as the CEO, managing director, whole-time director, company secretary, and chief financial officer of a company.
2. Appointment of managing director, whole-time director or manager requires board approval, shareholder approval, and in some cases government approval. The maximum term is 5 years.
3. Companies meeting certain criteria must appoint a CEO/manager, company secretary, and chief financial officer as whole-time key managerial personnel.
Indian Company Law - Key Aspects and Procedures for ForeignersAnil Chawla
This document provides an overview of key points related to company law in India for foreign nationals and non-resident Indians doing business in India. It covers topics such as the definition of a foreign resident, requirements for resident directors and managing directors, attending board meetings, one person companies, financial years, promoters, officers in default, control of companies, associate and subsidiary companies, authorized capital, additional matters that can be included in articles of association, and merging an Indian company with a foreign company. The document aims to help foreigners understand India's legal system and requirements for operating companies in India.
The document provides steps for creating a private or public company in India. It explains that a private company requires a minimum of 2 directors and 2 shareholders while a public company requires a minimum of 3 directors and 7 shareholders. It outlines the process which involves applying for director identification numbers and digital signature certificates, reserving a company name, drafting legal documents, filing forms electronically, paying fees, and receiving final approval and certificate of incorporation from the Registrar of Companies. A separate section provides details on incorporating a One Person Company which can only have one member and director.
Buzz on Corporate Laws: eNewsletter: May 2014 issuePrakash Pandya
Buzz on Corporate Laws, an eNewsletter of P. K. Pandya & Co.: May 2014 issue - covers legal updates. To subscribe http://newsletter.pkpandya.com/?p=subscribe&id=1
3rd Labour-Law-Primer for Multinational Companies in IndiaSinghania2015
With increasing trade relations between India and the World, cross-border movement of employees from and out of India has increased quite considerably. In India, employees enjoy the protection of diverse laws and regulations.
The business model of the companies is increasingly service centric and it is essential for employers to have the most efficient human resource and to grant them their legal rights and entitlements. However, in a country like India, the complex legal regime usually leave the employers facing typical issues related to interpretation of the large number of labour and employment laws governing the industry. These issues prove even more challenging when one of the parties involved is a foreign national.
Hence, this primer highlights the basic requirements of labour laws both from the perspective of Indian and foreign nationals employed in India. While throwing light on the appointment/ secondment of foreign nationals by Indian employers, the primer covers issues like taxation, working conditions, various social security benefits, issues related to termination of employees, importance and enforceability of non-solicitation clauses, retrenchment, various statutory registrations etc. With increasing concern for the security of female employees, employers have also been conferred with the duty to ensure protection against sexual harassment of women at the workplace.
Further, the primer also addresses the most common concern of all employers while entering into employment contracts, like the enforceability of clauses related to confidentiality, competition, poaching employees and soliciting clients. Keeping this in view, the primer would discuss the common controversies that arise from clauses in employment contracts and the caution that should be kept in mind in drafting an enforceable employment contract.
The key object is to enable the employers to familiarize themselves with the vast labour law regime of India.
Allotment of DIN (Director Identification Number)LegalDelight
Here, LegalDelight present its new PPT on the topic of Allotment of DIN. Under this PPT, a reader would get to know about the What is DIN No.?, How to Apply DIN? and Who can apply DIN and Forms to be filed for DIN? Timeline for allotment of DIN?, Reason of Rejection of DIN?, Penalty for non compliance of DIN provision etc.
Pursuant to few amendments in Companies Act 2013, the document Loans under Companies Act 2013 has been revised and updated as Version 2.0 and is available at http://expertspanel.in/?qa=blob&qa_blobid=12209470514712245845
Earlier in the year the document Deposits under Companies Act 2013was also updated as Version 5.0. The same is available at http://expertspanel.in/?qa=blob&qa_blobid=10452760937625173148.
I hope both the documents are of use.
Warm Regards
CA Pramod Jain
Appointment of directors and kmp under 2013 act https _www.icsi.edu_web_modu...APS1974
The key points from the document are:
1. The Companies Act, 2013 defines key managerial personnel as the CEO, managing director, whole-time director, company secretary, and chief financial officer of a company.
2. Appointment of managing director, whole-time director or manager requires board approval, shareholder approval, and in some cases government approval. The maximum term is 5 years.
3. Companies meeting certain criteria must appoint a CEO/manager, company secretary, and chief financial officer as whole-time key managerial personnel.
Indian Company Law - Key Aspects and Procedures for ForeignersAnil Chawla
This document provides an overview of key points related to company law in India for foreign nationals and non-resident Indians doing business in India. It covers topics such as the definition of a foreign resident, requirements for resident directors and managing directors, attending board meetings, one person companies, financial years, promoters, officers in default, control of companies, associate and subsidiary companies, authorized capital, additional matters that can be included in articles of association, and merging an Indian company with a foreign company. The document aims to help foreigners understand India's legal system and requirements for operating companies in India.
The document provides steps for creating a private or public company in India. It explains that a private company requires a minimum of 2 directors and 2 shareholders while a public company requires a minimum of 3 directors and 7 shareholders. It outlines the process which involves applying for director identification numbers and digital signature certificates, reserving a company name, drafting legal documents, filing forms electronically, paying fees, and receiving final approval and certificate of incorporation from the Registrar of Companies. A separate section provides details on incorporating a One Person Company which can only have one member and director.
Buzz on Corporate Laws: eNewsletter: May 2014 issuePrakash Pandya
Buzz on Corporate Laws, an eNewsletter of P. K. Pandya & Co.: May 2014 issue - covers legal updates. To subscribe http://newsletter.pkpandya.com/?p=subscribe&id=1
3rd Labour-Law-Primer for Multinational Companies in IndiaSinghania2015
With increasing trade relations between India and the World, cross-border movement of employees from and out of India has increased quite considerably. In India, employees enjoy the protection of diverse laws and regulations.
The business model of the companies is increasingly service centric and it is essential for employers to have the most efficient human resource and to grant them their legal rights and entitlements. However, in a country like India, the complex legal regime usually leave the employers facing typical issues related to interpretation of the large number of labour and employment laws governing the industry. These issues prove even more challenging when one of the parties involved is a foreign national.
Hence, this primer highlights the basic requirements of labour laws both from the perspective of Indian and foreign nationals employed in India. While throwing light on the appointment/ secondment of foreign nationals by Indian employers, the primer covers issues like taxation, working conditions, various social security benefits, issues related to termination of employees, importance and enforceability of non-solicitation clauses, retrenchment, various statutory registrations etc. With increasing concern for the security of female employees, employers have also been conferred with the duty to ensure protection against sexual harassment of women at the workplace.
Further, the primer also addresses the most common concern of all employers while entering into employment contracts, like the enforceability of clauses related to confidentiality, competition, poaching employees and soliciting clients. Keeping this in view, the primer would discuss the common controversies that arise from clauses in employment contracts and the caution that should be kept in mind in drafting an enforceable employment contract.
The key object is to enable the employers to familiarize themselves with the vast labour law regime of India.
Allotment of DIN (Director Identification Number)LegalDelight
Here, LegalDelight present its new PPT on the topic of Allotment of DIN. Under this PPT, a reader would get to know about the What is DIN No.?, How to Apply DIN? and Who can apply DIN and Forms to be filed for DIN? Timeline for allotment of DIN?, Reason of Rejection of DIN?, Penalty for non compliance of DIN provision etc.
Pursuant to few amendments in Companies Act 2013, the document Loans under Companies Act 2013 has been revised and updated as Version 2.0 and is available at http://expertspanel.in/?qa=blob&qa_blobid=12209470514712245845
Earlier in the year the document Deposits under Companies Act 2013was also updated as Version 5.0. The same is available at http://expertspanel.in/?qa=blob&qa_blobid=10452760937625173148.
I hope both the documents are of use.
Warm Regards
CA Pramod Jain
1. The petitioner filed a criminal complaint regarding offenses allegedly committed by the directors, auditors and others related to First Leasing Company of India Limited.
2. An FIR was registered for offenses of cheating, criminal breach of trust, forgery, fraud and under the Companies Act based on the petitioner's allegations about the company's financial affairs and representations to investors.
3. The petition seeks a fair and impartial investigation into the FIR, alleging the accused persons misrepresented the company's financial position and performance to attract investors and raise funds.
The document discusses the key provisions around acceptance of deposits and issue of securities by companies under the Companies Act, 2013. It provides 10 exclusions for what does not constitute a 'deposit' according to the Act. It also outlines the conditions stipulated under Section 73 for a company to accept deposits from members, including issuing a circular, maintaining a deposit repayment reserve account, and obtaining credit ratings. Specific additional conditions are provided for eligible companies to restrict the amount of deposits accepted.
The document provides a curriculum vitae for Kulkarni Amit Arun. It details his educational qualifications including passing the CS-Final exam in 2006 and LL.B. in 2004. It also outlines his work experience as Assistant Company Secretary and Senior Executive Legal & Compliance at HSBC Software Development India since 2011, prior roles as Company Secretary at Indo Schottle Auto Parts and KBK Chem-Engineering, and a traineeship at Shree Renuka Sugars. His responsibilities have included secretarial work, legal compliance, contract negotiations, and company registrations.
This ppt was presented at WIRC Annual Regional Conference, 2016 held at Indore. In this presentation, discussion was held mainly in context of how Company Secretaries have contributed to the growth of startups since ages and also dealt with Startup India initiative of the Govt. of India and Key aspects of CSR in context of company secretaries.
Section 185 of the Companies Act 2013 prohibits public companies from making loans or providing guarantees to their directors and other related parties like firms/companies where the director has an interest. It allows for some exceptions including loans as part of employment terms or approved by shareholders. Contravention can attract fines and imprisonment. Clarification was issued that section 185 would not restrict guarantees by holding companies for loan taken by subsidiaries as allowed under previous law until section 186 takes effect.
This document is a consolidated second amended class action complaint filed in United States District Court against Qudian Inc. and several of its directors and officers. It alleges that the company's IPO registration statement contained materially false and misleading statements and omissions regarding Qudian's business practices, planned use of IPO proceeds, and launch of a new auto financing business called Dabai Auto. It asserts claims under Sections 11, 12 and 15 of the Securities Act for violations of the strict liability provisions.
The document discusses various exemptions provided to private companies through a notification issued by the Ministry of Corporate Affairs on June 5, 2015. Some of the key exemptions for private companies include exemption from sections 43 & 47 relating to share capital, exemption from section 188(1) relating to related party transactions, reduced timelines for right issues, ability to purchase own shares subject to conditions, liberalized rules for accepting deposits from shareholders, and exemption from filing certain board resolutions with the registrar of companies. The notification aims to reduce compliance requirements for private companies to make them more efficient.
Exemptions to private companies under companies act 2013 impact analysisFCS BHAVIK GALA
The document discusses exemptions provided to private companies under the Companies Act 2013 that reduce compliance burdens. Key exemptions summarized are:
1) Private companies are exempt from filing board resolutions with the Registrar of Companies, reducing a significant compliance burden.
2) Private companies can purchase their own shares without a reduction in capital, subject to certain conditions like no other corporate investment and borrowing limits.
3) Private companies have flexibility in issuing shares with differential voting rights if allowed by memorandum and articles of association.
4) The definition of related party transactions excludes holding, subsidiary and associate companies for private companies, simplifying approval requirements.
Section 185, 186 and 188 of THE COMPANIES ACT, 2013 prohibit and restrict companies from providing loans, guarantees or securities to their directors and other related parties like firms in which a director is a partner. Section 185 prohibits loans to directors, Section 186 provides limits and restrictions on loans/investments by companies and Section 188 deals with related party transactions. The presentation discusses the applicable provisions, rules and regulations governing these sections of the Companies Act, 2013.
SBA. Paycheck Protection Program.Frequently Asked Questions. May 3George Benaroya
40. Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?
Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.
This document is a draft red herring prospectus for an initial public offering of 21,467,610 equity shares of Puravankara Projects Limited, representing 10.05% of the company's post-issue paid-up capital. The issue price per share will be between [X] and [Y] rupees. Some of the key risks mentioned include this being the company's first public issue so there is no formal market established for its shares, and investments in equity and equity-related securities involve risk. The book running lead managers for the issue are DSP Merrill Lynch Limited, Citigroup Global Markets India Private Limited, and Kotak Mahindra Capital Company Limited.
MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATIONitachii2
The document provides definitions and explanations of a Memorandum of Association and Articles of Association. It explains that the MOA and AOA are the two key legal documents that define a company's limitations and governance. The MOA establishes the company's objectives and acts as its charter, while the AOA outlines rules for company operations, leadership, financial procedures, and shareholder rights and meetings. The document reviews the typical contents and requirements of a valid MOA under Indian law.
This document provides an overview of IDBI Federal Life Insurance Company, including its sponsors and joint venture partners. IDBI Federal is a joint venture between IDBI Bank, Federal Bank, and Ageas, a European insurance giant. IDBI Bank owns 48% equity, while Federal Bank and Ageas each own 26% equity. The company offers life insurance and retirement products through the branches of IDBI Bank and Federal Bank, as well as advisors and partners. As of January 2011, the company had over 2.68 lakh policies with Rs. 14,230 crores of sum assured. The sponsors, IDBI Bank and Federal Bank, are described as leading Indian banks.
The document is a summer internship project report submitted by Shil J. Shambharkar to Trinity Institute of Management and Research in Pune. The project examines consumer perception of life insurance policies offered by Reliance Nippon Life Insurance. The report includes an introduction to life insurance in India, classification of insurance, needs for life insurance, and benefits of life insurance. It also provides details about Reliance Nippon Life Insurance such as its head office location and branch offices in Punjab. The report outlines premium payment options and settlement choices available upon death.
This overview has been prepared and complied by experts of Revera Consulting Group on basis of Belarusian legislation as of Februrary, 2012 for informational purposes only.
The information in this overview should not be considered as legal advice or a substitute for legal advice as it draw out only most significant points.
Reproduction of any content is strictly prohibited without prior consent from Revera Consulting Group.
This document discusses various methods of financing a company, including issuing shares or debentures to the public. It outlines the key regulations around securities offerings in Malaysia, including the requirement to register a prospectus with the Securities Commission to disclose all relevant information to potential investors. The prospectus must contain specific disclosures about the company and securities as well as a general duty to disclose all material information. Exemptions from these requirements are possible if compliance is deemed unnecessary for investor protection or would impose an unreasonable burden.
The document provides an overview of the legal framework governing liaison offices established by foreign companies in India.
[1] A liaison office allows foreign companies to understand the Indian business environment without undertaking commercial activities. They are regulated by the RBI and must maintain themselves through inward remittances. [2] The legal framework includes FEMA, RBI regulations, the Companies Act, and the Income Tax Act. Liaison offices must register with RBI and the ROC and are restricted in their permitted activities. [3] Their accounts are subject to audit and taxability will depend on whether any income is deemed to accrue or arise in India per the Income Tax Act.
This document summarizes the key regulations regarding establishing a liaison office in India by a foreign company. It discusses that a liaison office allows a company to explore business opportunities without full commercial operations. Key points include:
1) Liaison offices can only perform representative and communicative functions, not commercial activities.
2) The Reserve Bank of India regulates liaison offices through regulations that require approval and ongoing compliance.
3) Establishing a liaison office has low costs and regulatory requirements compared to forming an Indian subsidiary company.
A précis of the companies (amendment) bill, 2017CS Rahul Jain
The document provides a section-wise comparison of key provisions of the Companies (Amendment) Bill, 2017 and the existing Companies Act, 2013. Some of the major amendments proposed include expanding the definition of related party, associate company and small company. The definition of debenture, net worth and turnover were also amended. A new section regarding liability of members in case the number of members falls below the statutory minimum was inserted. The period for which the Registrar can reserve a name was reduced from 60 to 20 days. Companies were also allowed to adopt a model memorandum.
1. The petitioner filed a criminal complaint regarding offenses allegedly committed by the directors, auditors and others related to First Leasing Company of India Limited.
2. An FIR was registered for offenses of cheating, criminal breach of trust, forgery, fraud and under the Companies Act based on the petitioner's allegations about the company's financial affairs and representations to investors.
3. The petition seeks a fair and impartial investigation into the FIR, alleging the accused persons misrepresented the company's financial position and performance to attract investors and raise funds.
The document discusses the key provisions around acceptance of deposits and issue of securities by companies under the Companies Act, 2013. It provides 10 exclusions for what does not constitute a 'deposit' according to the Act. It also outlines the conditions stipulated under Section 73 for a company to accept deposits from members, including issuing a circular, maintaining a deposit repayment reserve account, and obtaining credit ratings. Specific additional conditions are provided for eligible companies to restrict the amount of deposits accepted.
The document provides a curriculum vitae for Kulkarni Amit Arun. It details his educational qualifications including passing the CS-Final exam in 2006 and LL.B. in 2004. It also outlines his work experience as Assistant Company Secretary and Senior Executive Legal & Compliance at HSBC Software Development India since 2011, prior roles as Company Secretary at Indo Schottle Auto Parts and KBK Chem-Engineering, and a traineeship at Shree Renuka Sugars. His responsibilities have included secretarial work, legal compliance, contract negotiations, and company registrations.
This ppt was presented at WIRC Annual Regional Conference, 2016 held at Indore. In this presentation, discussion was held mainly in context of how Company Secretaries have contributed to the growth of startups since ages and also dealt with Startup India initiative of the Govt. of India and Key aspects of CSR in context of company secretaries.
Section 185 of the Companies Act 2013 prohibits public companies from making loans or providing guarantees to their directors and other related parties like firms/companies where the director has an interest. It allows for some exceptions including loans as part of employment terms or approved by shareholders. Contravention can attract fines and imprisonment. Clarification was issued that section 185 would not restrict guarantees by holding companies for loan taken by subsidiaries as allowed under previous law until section 186 takes effect.
This document is a consolidated second amended class action complaint filed in United States District Court against Qudian Inc. and several of its directors and officers. It alleges that the company's IPO registration statement contained materially false and misleading statements and omissions regarding Qudian's business practices, planned use of IPO proceeds, and launch of a new auto financing business called Dabai Auto. It asserts claims under Sections 11, 12 and 15 of the Securities Act for violations of the strict liability provisions.
The document discusses various exemptions provided to private companies through a notification issued by the Ministry of Corporate Affairs on June 5, 2015. Some of the key exemptions for private companies include exemption from sections 43 & 47 relating to share capital, exemption from section 188(1) relating to related party transactions, reduced timelines for right issues, ability to purchase own shares subject to conditions, liberalized rules for accepting deposits from shareholders, and exemption from filing certain board resolutions with the registrar of companies. The notification aims to reduce compliance requirements for private companies to make them more efficient.
Exemptions to private companies under companies act 2013 impact analysisFCS BHAVIK GALA
The document discusses exemptions provided to private companies under the Companies Act 2013 that reduce compliance burdens. Key exemptions summarized are:
1) Private companies are exempt from filing board resolutions with the Registrar of Companies, reducing a significant compliance burden.
2) Private companies can purchase their own shares without a reduction in capital, subject to certain conditions like no other corporate investment and borrowing limits.
3) Private companies have flexibility in issuing shares with differential voting rights if allowed by memorandum and articles of association.
4) The definition of related party transactions excludes holding, subsidiary and associate companies for private companies, simplifying approval requirements.
Section 185, 186 and 188 of THE COMPANIES ACT, 2013 prohibit and restrict companies from providing loans, guarantees or securities to their directors and other related parties like firms in which a director is a partner. Section 185 prohibits loans to directors, Section 186 provides limits and restrictions on loans/investments by companies and Section 188 deals with related party transactions. The presentation discusses the applicable provisions, rules and regulations governing these sections of the Companies Act, 2013.
SBA. Paycheck Protection Program.Frequently Asked Questions. May 3George Benaroya
40. Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?
Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.
This document is a draft red herring prospectus for an initial public offering of 21,467,610 equity shares of Puravankara Projects Limited, representing 10.05% of the company's post-issue paid-up capital. The issue price per share will be between [X] and [Y] rupees. Some of the key risks mentioned include this being the company's first public issue so there is no formal market established for its shares, and investments in equity and equity-related securities involve risk. The book running lead managers for the issue are DSP Merrill Lynch Limited, Citigroup Global Markets India Private Limited, and Kotak Mahindra Capital Company Limited.
MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATIONitachii2
The document provides definitions and explanations of a Memorandum of Association and Articles of Association. It explains that the MOA and AOA are the two key legal documents that define a company's limitations and governance. The MOA establishes the company's objectives and acts as its charter, while the AOA outlines rules for company operations, leadership, financial procedures, and shareholder rights and meetings. The document reviews the typical contents and requirements of a valid MOA under Indian law.
This document provides an overview of IDBI Federal Life Insurance Company, including its sponsors and joint venture partners. IDBI Federal is a joint venture between IDBI Bank, Federal Bank, and Ageas, a European insurance giant. IDBI Bank owns 48% equity, while Federal Bank and Ageas each own 26% equity. The company offers life insurance and retirement products through the branches of IDBI Bank and Federal Bank, as well as advisors and partners. As of January 2011, the company had over 2.68 lakh policies with Rs. 14,230 crores of sum assured. The sponsors, IDBI Bank and Federal Bank, are described as leading Indian banks.
The document is a summer internship project report submitted by Shil J. Shambharkar to Trinity Institute of Management and Research in Pune. The project examines consumer perception of life insurance policies offered by Reliance Nippon Life Insurance. The report includes an introduction to life insurance in India, classification of insurance, needs for life insurance, and benefits of life insurance. It also provides details about Reliance Nippon Life Insurance such as its head office location and branch offices in Punjab. The report outlines premium payment options and settlement choices available upon death.
This overview has been prepared and complied by experts of Revera Consulting Group on basis of Belarusian legislation as of Februrary, 2012 for informational purposes only.
The information in this overview should not be considered as legal advice or a substitute for legal advice as it draw out only most significant points.
Reproduction of any content is strictly prohibited without prior consent from Revera Consulting Group.
This document discusses various methods of financing a company, including issuing shares or debentures to the public. It outlines the key regulations around securities offerings in Malaysia, including the requirement to register a prospectus with the Securities Commission to disclose all relevant information to potential investors. The prospectus must contain specific disclosures about the company and securities as well as a general duty to disclose all material information. Exemptions from these requirements are possible if compliance is deemed unnecessary for investor protection or would impose an unreasonable burden.
The document provides an overview of the legal framework governing liaison offices established by foreign companies in India.
[1] A liaison office allows foreign companies to understand the Indian business environment without undertaking commercial activities. They are regulated by the RBI and must maintain themselves through inward remittances. [2] The legal framework includes FEMA, RBI regulations, the Companies Act, and the Income Tax Act. Liaison offices must register with RBI and the ROC and are restricted in their permitted activities. [3] Their accounts are subject to audit and taxability will depend on whether any income is deemed to accrue or arise in India per the Income Tax Act.
This document summarizes the key regulations regarding establishing a liaison office in India by a foreign company. It discusses that a liaison office allows a company to explore business opportunities without full commercial operations. Key points include:
1) Liaison offices can only perform representative and communicative functions, not commercial activities.
2) The Reserve Bank of India regulates liaison offices through regulations that require approval and ongoing compliance.
3) Establishing a liaison office has low costs and regulatory requirements compared to forming an Indian subsidiary company.
A précis of the companies (amendment) bill, 2017CS Rahul Jain
The document provides a section-wise comparison of key provisions of the Companies (Amendment) Bill, 2017 and the existing Companies Act, 2013. Some of the major amendments proposed include expanding the definition of related party, associate company and small company. The definition of debenture, net worth and turnover were also amended. A new section regarding liability of members in case the number of members falls below the statutory minimum was inserted. The period for which the Registrar can reserve a name was reduced from 60 to 20 days. Companies were also allowed to adopt a model memorandum.
This document outlines the corporate disclosure practices and code of conduct for the prevention of insider trading at The Limited corporation. It defines key terms related to insider trading such as price sensitive information, securities, and specified persons. It prohibits dealing, communicating, or counseling on insider information. It establishes procedures for disclosure of shareholdings and interests, and preventing insider trading through maintaining confidentiality, restricted trading windows, and pre-clearance of trades. Non-compliance may result in penalties.
This document summarizes key aspects of the new Prohibition of Insider Trading Regulation introduced by SEBI in 2015, including expanded definitions. It notes that the regulation aims to close loopholes, address changes in business and technology, and curb rampant insider trading by giving SEBI more power. Key definitions expanded include "connected person" to include a wide variety of individuals who may have access to unpublished price sensitive information, and "insider" to include anyone with access to such information. The definition of unpublished price sensitive information is also expanded beyond financial results to include other strategic business information.
Cross border merger and acquisitions in india with special reference to femaFarhan Neguive
This document discusses inbound cross-border mergers and acquisitions (M&As) in India and how they are regulated under the Foreign Exchange Management Act (FEMA). It notes that FEMA and related regulations govern foreign investment in India and allow non-residents to purchase shares of Indian companies under the Foreign Direct Investment Scheme. It also discusses rules for rights issues, share transfers, and M&As involving share issuances to non-resident shareholders under FEMA. Inbound M&As are an important type of foreign investment in India that FEMA aims to facilitate while regulating cross-border financial flows.
This document contains a presentation by Sudhakar Saraswatula, Vice President of Corporate Secretarial at Reliance Industries Limited, about related party transactions. The presentation defines related parties and related party transactions according to the Companies Act, SEBI regulations, and accounting standards. It discusses how to determine if a transaction is a related party transaction and the key aspects of related party definitions such as control, significant influence, and accustomed to act. The essence of related party definitions is that they aim to cover direct and indirect subsidiaries, enterprises under common control, and those over which key managers exercise influence.
The document summarizes new rules notified in India that permit cross-border mergers through a scheme sanctioned by the National Company Law Tribunal. Key points:
- Section 234 of the Companies Act 2013 and new Rule 25A allow an Indian company to merge with a foreign company or vice versa, as long as the foreign company is from a recognized jurisdiction.
- Mergers require compliance with Sections 230-232 of the Act, RBI approval, valuation of both companies by qualified valuers, and regulations on foreign investments into India if an Indian company merges with a foreign one.
- If an Indian company merges into a foreign one, regulations on overseas investments will apply to the resultant foreign company.
The SEBI has notified new listing regulations that consolidate existing listing rules and align them with the Companies Act of 2013. The regulations replace all previous listing agreements and will be effective 90 days after publication. Two provisions regarding related party transactions and reclassification of promoters will apply immediately. The regulations divide content into substantive provisions and procedural schedules. Listed companies must sign a new shortened listing agreement within six months and the regulations apply to all listed securities on stock exchanges.
White Paper On Place Of Effective Management Ricky Chopra
“Place of effective management” has been defined to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made.
Finance Act, 2015 (FA 2015) has brought about a paradigm shift by introducing the ‘Place of Effective Management’ (POEM) rule to determine residency of overseas companies, in India.
For any querries or to read more vist http://www.rickychopra.co/
Headquartered in Philadelphia, VSBLTY (OTCQB: VSBGF) (CSE: VSBY) (Frankfurt: 5VS) (OTC: VSBGF) (“VSBLTY”) is the world leader in Proactive Digital Display™, which transforms retail and public spaces as well as place-based media networks with SaaS-based audience measurement and security software that uses artificial intelligence and machine learning. Its proprietary technology effectively integrates with other digital retail solutions, including QR codes and mobile applications. The firm is also recognized for its leadership role in the growing Store as a Medium movement that enables brands to reach customers when and where buying decisions are being made while producing a new revenue stream for retailers.
Insider Trading_Provisions Offence & Penalty_IICA_07 01 2013_MKManoj K
1) The document summarizes key provisions of SEBI's Prohibition of Insider Trading Regulations regarding insider trading, including definitions of insiders, connected persons, unpublished price sensitive information, prohibited activities, disclosure requirements, and penalties for violations.
2) It outlines the process for investigations into suspected insider trading, including the powers of SEBI to inspect books and records and issue directions. SEBI can issue directions like not dealing in securities or recovering profits.
3) It discusses disclosure requirements for substantial acquisitions and shareholding changes by promoters, directors and other insiders. Timelines of 2 working days are specified for different forms based on the transaction.
The document provides guidance on determining a company's place of effective management (POEM) for tax residency purposes under recent changes to India's Income Tax Act. It outlines factors for assessing whether a foreign company's POEM is in India, such as where senior management is located and strategic decisions are made. The determination of POEM is based on an analysis of management and control over time, rather than isolated events, in order to prevent tax avoidance through artificial shifting of management outside India.
Section 185,186,188 of companies act, 2013arpit1314
The document discusses related party transactions, loans to directors, and loans/investments by companies under the Companies Act 2013. It defines related parties and key managerial personnel. It outlines the limits and approval processes for related party transactions involving sale/purchase of goods, property transactions, service contracts, and appointments. It also discusses the provisions around loans to directors and other persons in whom a director is interested, and the penalties for non-compliance. Finally, it covers the limits, approvals and disclosures required for loans and investments made by companies.
This document provides an overview of insider trading regulations and practices in India. It discusses the history behind insider trading regulations, defines key terms like who qualifies as an insider and what constitutes unpublished price sensitive information. It also outlines the regulatory aspects of prohibiting insider trading in India according to SEBI regulations. Finally, it summarizes some notable insider trading cases in India involving companies like HLL, Rakesh Agarwal and Samir Arora.
The document discusses the provisions related to cross border mergers under the Companies Act 2013 and FEMA regulations. It provides details about inbound and outbound mergers, valuation requirements, deemed approval process, reporting obligations and income tax implications. Key highlights include:
- Cross border mergers can involve an Indian company merging with a foreign company or vice versa.
- The foreign company jurisdiction needs to be specified in Annexure B of Rule 25A of the Companies Act.
- Valuation of the companies needs to be done according to internationally accepted principles by qualified valuers.
- Certain transactions and asset/liability transfers are permitted to facilitate the merger while ensuring compliance with FEMA regulations.
- Capital gains tax exemptions for transfer of assets
The document summarizes a proposed transaction involving the transformational combination of Housing Development Finance Corporation Limited (HDFC Limited) with HDFC Bank Limited (HDFC Bank). Key points include:
- HDFC Limited, India's largest housing finance company, will merge into HDFC Bank, India's largest private sector bank.
- The transaction is expected to be completed within 18 months, subject to regulatory approvals.
- Post-closing, existing HDFC Limited shareholders will own 41% of HDFC Bank and it will be 100% publicly owned.
- The combination creates a large full service financial conglomerate with a total balance sheet of INR 17.87 trillion and net worth of INR 3.
Foreign exchange management (transfer or issue of security by a person reside...pgcinternational
This document outlines amendments made to regulations governing foreign exchange management in India. It defines key terms related to foreign ownership and control of Indian companies. It provides guidelines for calculating total foreign investment in an Indian company, including directly by non-residents and indirectly through downstream investments by Indian companies. It also outlines when government approval is required for transferring ownership or control of an Indian company to non-resident entities in sectors with investment caps.
This document discusses related party disclosures as per Indian Accounting Standard 24. It provides definitions of key terms like related party, key management personnel, significant influence. It explains the objectives of IAS 24 which is to ensure financial statements contain necessary disclosures about related party transactions. The types of related parties according to Companies Act 2013 are described along with examples. Disclosure requirements as per IAS 24 and SEBI regarding nature of relationships, transactions, outstanding balances with related parties are summarized.
Mergers_ Tool to Survive the Second Wave of Covid19 3.pdfmyLawyerAdvise
One of the main objectives of an entity is GOING CONCERN. Many business organisations shut down as a result of covid due to lack of resources in operating their routine transactions. The most suitable solution for small scale businesses post covid is merger. Mergers will lead to expansion of resources, retention of employment, fund rotation, adequate balance of demand and supply etc. As the firms emerge from the pandemic, mergers would be the best way to come out of the financial stress for small businesses. It will help leaders gain economies of scale or at least the potential to run more efficiently. Once the economy recovers and accelerates out of recession, the small businesses can take advantage of the environment to execute its strategic acquisition agenda and to position the business to exceed industry-average growth. Mergers are a great way to lock down your business and create job opportunities, allowing customers to access your products and services. It will be a mutually beneficial situation
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This document provides guidelines for calculating total foreign investment in Indian companies, rules for transferring ownership and control of Indian companies to non-resident entities, and rules for downstream investment by Indian companies. It defines key terms, outlines a methodology for calculating direct and indirect foreign investment, and establishes approval processes for foreign investment in sectors with caps. The annex attached provides more detailed definitions and guidelines.
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Addis Bleaching Mixed use Apartment- Documentation 6.pdf
Ready to Move Flats in Noida | exoticahousing.in
1. RELATED PARTY TRANSACTIONS
BY
Exotica Housing
CENTRAL COUNCIL MEMBER – THE INSTITUTE OF COMPANY
SECRETARIES OF INDIA
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2. Under the Companies Act, 2013, the
scope and coverage of related party
transactions has been made more complex
and intricate – besides strict procedural
compliances have been foisted. In this
Article, an attempt has been by the author
to explain and amply the coverage, scope
and intent of “Related Party Transactions”.
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3. 2: It would be beneficial to understand the scope
and intent of Section 184, 188 and other applicable
provisions of Companies Act, 2013 (hereinafter
called Act) and rules made there under. The
Section 2(76) defines “Related Party” with
reference to a company, means:
i): a director or his relative;
ii): a key managerial personnel or his relative;
iii):a firm, in which a director, manager or his
relative is a partner;
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4. iv): a private company in which a director or
manager is a member or director;
v): a public company in which a director or
manager is a director or holds along with his
relatives, more than two percent of its paid
up share capital;
vi): a body corporate whose Board of Directors,
Managing Director or manager is accustomed
to act in accordance with the advice,
directions or instructions of a Director or
Manager;
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5. [
vii): any person whose advice, directions or
instructions a director or manager is accustomed
to act;
Provided that nothing in sub-clauses (vi) and (vii)
shall apply to the advice, directions or instructions
given in a professional capacity;
viii): A company which is :-
A) A holding, subsidiary or associate company of
such company or;
B) A subsidiary of a holding company to which it
is also a Subsidiary;
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6. 3: As per Section 2(77) of Act, a person shall be treated as a
“Relative” to another if (i) they are member of HUF (ii)
they are husband and wife (iii), they are related to each
other in any of the following manner:-
1. Father (including step-father)
2. Mother (including step-mother)
3. Son (including step-son)
4. Son’s wife
5. Daughter (including step-daughter)
6. Daughter’s husband
7. Brother (including step-brother)
8. Sister (including step-sister)
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7. 4: In Section 2(76), sub-clause (vi) and (vii), (i.e.
in the definition of Related Party), the three words
i.e. “accustomed to act” are appearing and one needs
to know the meaning and scope of these words. To
some extent, two judgments, as follows, amplify
these three words:-
4.1: The SEBI in final judgment in the case of
Sahara India Real State Corporation Ltd
MANU/SB/0045/2011 observed, while defining the
words ”accustomed to act”, in the following words:
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8. 11. In reply to Show Cause Notice dated May
20, 2011 Mr. Subrata Roy Sahara, inter alia
stated that he is only a shareholder and
neither a director nor hold any executive,
managerial or other position in either of the
said two companies. Hence, he mentioned
that the notice is unwarranted and liable to be
withdrawn.
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9. However, Mr. Subrata Roy Sahara, apart
from being the founder of Sahara India Group, is
admittedly a major shareholder (holding about
70% of capital in each of the two companies). He
can be reasonably regarded as a person in
accordance with whose directions or instructions,
the Board of Directors of the two Companies were
accustomed to act and therefore fall within the
ambit of "officer in default". Furthermore, with the
70% ownership or holding in the two Companies,
he is definitely in a position of control and has the
power direct the management policy and appoint
the majority of directors to the Board.
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10. 4.2: The Hon’ble Supreme Court in the case of K. K.
Birla Vs. R. S. Lodha MANU/SC/1693/2008, while
defining” accustomed to act ” has observed as
under:
After the death of late Madhav Prasad
Birla in or about July, 1990 the deceased who has
had no formal education relied and continued to rely
on the petitioner and reposed and continued to
repose complete trust and confidence in the
petitioner in the matters pertaining to all her
financial affairs by reason whereof, the petitioner
was at all material times, privy to all information
concerning the personal and financial affairs of the
deceased.
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11. The deceased also sought and obtained advice
from the petitioner with regard to her assets,
savings and investments and with regard to and in
the management and affairs of several companies
and institutions where the deceased had a stake in
the shareholding and/or management and the
deceased was at all material times accustomed to
act as per the wishes and dictates of the petitioner.
The petitioner is and was at all material times
aware of the same.
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12. 4.3: Further, The Ministry of Corporate
Affairs, has also come out with “The
Companies (Accounting Standards) Rules,
2006 dated 07.12.2006, (Accounting
Standards -18) which, inter-alia, as is
relevant for our purposes reads as under:-
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13. 14. Key management personnel are those
persons who have the authority and responsibility
for planning, directing and controlling the activities
of the reporting enterprise. For example, in the
case of a company, the managing director(s),
whole time directors), manager and any person in
accordance with whose directions or instructions
the board of directors of the company is
accustomed to act, are usually considered key
management personnel.
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14. A non-executive director of a company is not
considered as a key management person under
this Standard by virtue of merely his being a
director unless he has the authority and
responsibility for planning, directing and
controlling the activities of the reporting
enterprise. The requirements of this Standard are
not applied in respect of a non executive director
even if he participates in the financial and/or
operating policy decisions of the enterprise, unless
he falls in any of the categories in paragraph 3 of
this Standard.
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15. SCOPE OF SECTION 188(1)
5: Section 188(1) says that no company
(both public or private) shall enter into
“contract” or “arrangement”, except with
the consent of the Board of Directors of the
Company, with a related a party. The
contract or arrangement of a company may
be with respect to any of the following:-
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16. SECTION 188(1)
(a) sale, purchase or supply of any goods or
materials.
(b) selling or otherwise disposing of, or
buying, property of any kind.
(c) leasing of property of any kind.
(d) availing or rendering of any services.
(e) appointment of any agent for purchase or
sale of goods, materials, services or
property.
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17. (f) appointment to any office or place of
profit in the company or its subsidiary or
associate company as defined and
reproduced in the illustration above.
(g) underwriting the subscription of any
securities or derivatives thereof of the
Company.
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18. WHAT IS THE MEANING OF WORD
“ARRANGEMENT”
5.1: In Section 188(1), the words appearing are
“contract or arrangement”. The difficulty arises in
understanding the meaning the word
“arrangement”. The Hon’ble Bomaby High Court in
the case of Bank of India Vs. Ahmadabad
Manufacturing & Calico Printing Co Ltd
MANU/MH/0077/1971 = 1972 (42) Company
Cases 211 (Bom), while interpreting the word
“arrangement” as appearing in Section 390 of the
Companies Act, 1956, has observed as under:-
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19. The word "arrange" has, as one of its
meaning, in the Shorter Oxford Dictionary, 3rd
edition, "to come to an agreement or
understanding", and the word "arrangement" has,
as its primary meaning, "the action of arranging".
As a matter of plain language it would, therefore,
follow that the term "arrangement" means any
agreement or understanding between the parties
concerned.
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20. 5.2: The Hon’ble Division Bench of Karnataka
High Court in the case of KV Kuppa Raju Vs.
Government of India MANU/KA/0624/1999 has
noted the report of an Expert Group to
rationalize and simplify Income Tax law had
given the following report (see
MANU/TN/0288/1996 : [1997]224 ITR 169
(Mad):In the said report, the word
“arrangement” has been defined:-
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21. Sub-section(2): In this section,
'arrangement' means any scheme, trust,
grant, understanding, covenant, agreement,
disposition, transaction and includes all steps
by which it is carried into effect.
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22. WHAT IS THE MEANING OF WORD “GOODS”:
5.3: The Hon’ble Supreme Court in the case of
Vikas Sales Corporation Vs. Commissioner of
Commercial Taxes MANU/SC/0519/1996 = AIR
1996 SC 2082 has explained the words” Goods”
and Property” in the following words:-
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23. 13. Clause (7) in Section 2 of the
Sale of Goods Act, 1930 defines the
expression "goods" thus: "'goods' means
every kind of movable property other than
actionable claims and money; and
includes stock and shares, growing crops,
grass, and things attached to or forming
part of the land which are agreed to be
severed before sale or under the contract
of sale" (Emphasis added).
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24. Since the said definition defines the "goods"
to mean, "every kind of movable property other
than actionable claims and money", it would be
appropriate to notice the definition of "property" in
Clause (11). It reads : "'property' means the
general property in goods, and not merely a
special property". It is noteworthy that both these
definitions seek to spread the net as wide as
possible. While the definition of goods includes
every kind of movable property within its ambit,
the definition of property says that it includes not
merely special property, but general property in
goods as well.
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25. The General Clauses Act, 1897 defines
"movable property" to mean "property of
every description except immovable
property". The expression "immovable
property" is defined to "include land,
benefits to arise out of land and things
attached to the earth or permanently
fastened to anything attached to the
earth".
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26. MEANING OF WORD “SERVICE”
5.4: We will have to understand the meaning of
word “service”. The “Service” has been defined in
few judgments delivered by the Hon’ble Supreme
Court.
5.5: The term 'service' as appearing in the
Consumer Protection Act, 1986, came up for
consideration before the Hon’ble Supreme Court
in Lucknow Development Authority v. M.K.
Gupta, MANU/SC/0178/1994 : AIR 1994 SC 787
wherein it was observed as under:-
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27. The term has variety of meanings. It
may mean any benefit or any act resulting
in promoting interest or happiness. It may
be contractual, professional, public,
domestic, legal, statutory etc. The concept
of service thus is very wide. How it should
be understood and what it means depends
in the context in which it has been used in
an enactment.
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28. 5.6: The Hon’ble Supreme Court in the case of
Union of India & Ors. v. M/s. Martin Lottery
Agencies Ltd., MANU/SC/0739/2009 : (2009) 12
SCC 209, noticed the dictionary meaning of the
word 'Service', inter alia, meaning as "work done
or duty performed for another or others; a
serving; as, professional services, repair service,
a life devoted to public utility service".
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29. 5.7: The Section65B(44) of Finance Act, 2012
defines “Service”, (for the purpose of levy of
Service Tax) as follows:
(44) Service means any activity carried out by a
person for another for consideration, and
includes detailed service, but shall not include
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30. (A) An activity which constitutes merely:
(i) a transfer of title in goods or immoveable
property, by way of sale, gift, or in any other manner, or
(ii) such transfer, delivery or supply of any goods
which is deemed to be a sale within the meaning of
Clause (29A) of Article 366 of Constitution or;
(iii) a transaction in money or actionable claim;
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31. 5.8: In view of the above discussions, it is manifestly
clear that the definition of word “Service” is extremely
wide and expansive and would include any “act” “deed” or
“step” done by a person for another on payment of
consideration either in cash or kind or for forbearance.
Hence, “service” so defined in the preceding paras would
fall under Section 188(1)(d) Companies Act, 2013.
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32. WHAT IS THE MEANING OF WORD “PROPERTY”
5.9: As per Salmond's Jurisprudence, the word
"property" means - in its widest sense, property
includes a person's legal rights, of whatever
description. A man's property is all that is his in
law. This usage however, is obsolete at the present
day, though it is common enough in the older
books.5.10 Section 2(v) of Prevention of Money
Laundering Act defines “property” to read as
follow:-
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33. "property" means any property or assets of every
description, whether corporeal or incorporeal, movable or
immovable, tangible or intangible and includes deeds and
instruments evidencing title to, or interest in, such property
or assets, wherever located.
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34. 5.10: The Section 2(1)(t) of SARFAESI Act defines "property"
and read as under:-
"(t) "property" means-
(i) immovable property;
(ii) movable property;
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35. (iii) any debt or any right to receive payment of money,
whether secured or unsecured;
(iv) receivables, whether existing or future;
(v) intangible assets, being know-how, patent, copyright,
trade mark, licence,franchise or any other business or
commercial right of similar nature;"
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36. 5.11: The 11 Member Bench of the Hon’ble Supreme Court in
the case of R C Cooper Vs. Union of India,
MANU/SC/0111/1970 = AIR 1970 SC 564, has defined the
“property” to say as under:-
In it normal connotations, “property” means the highest
right a man can have to anything, being that right which one
has to lands or tenements, goods or chattels which does not
depend on others’ courtesy.
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37. It includes ownership, estates, and interests in
corporeal things and also rights, such as, trade-marks,
copyrights, patents and even right in personam capable of
transfer or transmission, such as debts, and signifies a
beneficial to, or a thing considered as having a money
value, especially with reference to transfer or succession,
and to their capacity of being injured.
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38. WHAT IS THE MEANING OF WORD
“IMMOVEABLE PROPERTY”.
5.12: The Hon’ble Supreme Court in the case of DLF
Universal Ltd Vs. Appropriate Authority
MANU/SC/0350/2000 = AIR 2000 SC 1985 as defined the
“Immoveable Property”.
If we concentrate on the relevant provisions of
Chapter XX-C as applicable in the present appeals,
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39. it will be seen that immovable property means any
right in or with respect to any building or part of a building
which is yet to be constructed which right accrues or arises
from any transaction including that by way of any agreement
or any arrangement of whatever nature or being a
transaction by way of sale exchange or lease of such building
or part of a building. "Transfer" in relation thereto means
the doing of anything including by way of an agreement or
arrangement which has the effect of transferring or enabling
the enjoyment of such immovable property.
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40. 6: The first proviso to Section 188(1) read with Rule 15 of the
Companies (Meetings of Board and its Powers) Rules, 2014.
(i) A company having a paid-up share capital of rupees
ten crore or more shall not enter into a contract or
arrangement with any related party; or
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41. (ii) a company shall not enter into a transaction or transactions
with a related party, where the transaction or transactions to
be entered into –
(a) as contracts or arrangements with respect to clauses (a) to
(e) of sub-section (1) of Section 188 with criteria, as
mentioned below:-
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42. (i) sale, purchase or supply of any goods or materials directly
or through appointment of agents exceeding twenty-five percent
of the annual turnover as mentioned in clause (a) and clause (e)
respectively of sub-section (1) of section 188;
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44. (iv) availing or rendering of any services directly
or through appointment of agents exceeding ten
percent of the net worth as mentioned in clause
(d) and clause (e) of sub-section (1) of Section
188;
(b)appointment to any office or place of profit in the
company, its subsidiary company or associate
company at a monthly remuneration exceeding two
and half lakh rupees as mentioned in clause (f) of
sub-section (1) of section 188; or
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45. .
(c) remuneration for underwriting the subscription
of any securities or derivatives thereof of the
company exceeding one percent of the net worth as
mentioned in clause (g) of sub-section (1) of section
188.
Explanation: (1) The turnover or net worth referred
in the above sub-rules shall be on the basis of the
Audited Financial Statement of the preceding
financial year.
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46. MEANING OF THE WORD”INTEREST”
7:The word “interest” appearing in Sections 184 and
188 means personal interest. However, it may not
be restricted to financial interest only but may also
include interest arising out of fiduciary duties or
closeness of relationship. The interest may be direct
or indirect. In simple words,
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47. the interest should be an “interest” conflicting with
that of his duty as a Director – Public Prosecutor Vs.
T.P. Khaitan (1957) 27 Comp. Cas. 77 (Mad.).
Further, a relationship of a mere friend with a
director who is interested in a contract or
arrangement. A reference may be made to the case
reported as Needles Industries Ltd Vs. Needles
Industries Newey (India) Holding Ltd AIR 1982 SC
1298.
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48. 8: The next question arises as to whether all the
transactions with related party have to bear the
scrutiny and compliances of Section 188 of Act. To
find answer, we may have to look to third proviso to
Section 188 (1) of the Act which is in the nature of
exemption clause - the same is reproduced below:-
Provided also that nothing in this sub-section
shall apply to any transactions entered into by the
company in its ordinary course of business other
than transactions which are not on an arm’s length
basis.
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49. 9: The word “in its ordinary course of business” has not
been defined under the Companies Act, 2013 and
hence its meaning, intent and scope has to be
gathered from judgments of various High Courts.
10: The Hon’ble Division Bench of Delhi High Court
in the case of Onassis Axles (P) Ltd Vs.
Commissioner of Income Tax MANU/DE/0445/2014,
was examining the genuineness of the investments
made by the shares by three independent entities and
after examination, negatived the contentions of the
assessee that the investment by way of shares are
genuine in the following words:-
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50. It is not mere co-incidence that all the three
parties located at two different places in Delhi
went to the same Bank on the same day at the
same time and got the Pay Orders for requisite
amounts in the same series. It will not be
possible in the ordinary course of business that all
the three persons would go to Noida for purchase
of pay orders from the same bank at the same
time and with the same running serial numbers.
M/s. Hub Services P. Ltd. is located at Laxmi
Nagar, New Delhi. There is no dearth of banks in
Laxmi Nagar or Pusa Road Delhi. It has to be
understood as to why anyone would go for
purchase of pay orders from a bank located at
long distance in Noida.
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51. 11: The Division Bench of Karnataka High
Court, (in the case of BNP Paribas Vs. United
Breweries Ltd – MANU/KA/3008/2013) while
dealing with Section 562 of Companies Act, 1956,
on the issue of disposition of property, during
the pendency of winding up petition before the
Company Judge, has defined the words “in the
ordinary course of business, and observed as
under:-
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52. Honest dispositions made in the ordinary course of
business are usually allowed. While passing orders, the
Court considers whether the transaction in question is
in furtherance of the company's business and/or in the
interest of the company in liquidation and/or its
creditors. Before a winding up petition is presented, it is
in the ordinary course of business for a company to pay
all its debts and incidentally to give security to its
bankers for any overdraft or loan it may arrange. But
after a petition is presented the situation is different.
Prima facie all debts will have to be paid pari passu.
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53. Therefore, it is no longer in the ordinary course of business
to pay one creditor in full to the detriment of his fellow
creditors. However, it is difficult to lay down that all dispositions
of property made by a company during the interregnum i.e.,
between the presentation of a petition for winding up and the
passing of the order for winding up would be null and void. If
such a view is taken the business of the company would be
paralyzed, for, the company may have to deal with very many
day-to-day transactions, make payments of salary to the staff and
other employees and meet urgent contingencies.
.
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54. 12: The Hon’ble Allahabad High Court in the case
of Darshan Agroils Ltd Vs. Commissioner of Trade
Tax (UP) MANU/UP/0060/2014 has observed as
under:-
In the present case the purchases were shown to
have been made by firms at Ghaziabad and Noida but
the said firms were found closed when subsequent
queries were made and the notices were issued to
them. The transaction of payment through bank
account is also not in the ordinary course of business
inasmuch as the firms claiming their addresses at
Noida and Ghaziabad,
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55. opened their accounts at Aligarh, collected
cheque money and withdrawn the same in quick
succession of two to three days and that too in
cash. Thirdly the alleged transport companies
whereby huge quantity of oil and tin containers
were claimed to have been transported from
Ghaziabad and Noida to Aligarh, were found non-
existing and bogus.
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56. 13: The Division Bench of Orissa High Court
in the case of Dilip Kumar Swain Vs. Executive
Engineer, Cuttuck Municipal Corporation
MANU/OR/0136/1996 has defined “ ordinary
course of business” in the following words:
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57. In the context Section 32(2) of Indian Evidence Act,
1872 (in short, 'Evidence Act') may be noted.
Expression "in the ordinary course of business" means "
on the ordinary course of a professional avocation or
currant routine of business" which was usually followed
by the person whose declaration it is sought to be
introduced. Expression "in the ordinary course of
business" means in the usual course of routine of
business. It is used to detect current routine of business.
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58. It is trite law that definition or interpretation
given in respect of a particular entry has to be judged in
the background of that statute itself and cannot always
throw a guiding light in respect of other statutes. It has
to be judged in the background and context in which it
is used in a particular statute.
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59. 14: At the same time, we may also examine another point
which may also come for interpretation as to whether what is
the meaning of the word “arms length transaction”? The
“arms length transactions” have been defined as follows:-
15: The Three Member Bench of Income Tax Appellate
Tribunal, in the case of IndusInd Bank Vs. Addl
Commissioner of Income Tax MANU/IU/0262/2012, has
defined “arms length transaction” in the following words.
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60. The amount for which an asset could be
exchanged between a knowledgeable, willing
buyer and a knowledgeable, willing seller in an
arm's length transaction.'
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61. 16: The Ministry of Corporate Affairs has issued a
Notification No GSR 179(E) dated 03.03.2011 Companies
(Accounting Standards) (Amendment) Rules, 2011 in which
“arms length transaction” has been implicitly explained in the
following words:
Fair value is the amount for which an asset
could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm's length transaction
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62. (b) the expression "arm's length transaction"
means a transaction between two related parties
that is conducted as if they were unrelated, so that
there is no conflict of interest.
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63. 17: PROCEDUREAL COMPLIANCES:
17.1: For the purpose of entering into a contract(s) or
arrangement(s) by a company with a related party, such
contract or arrangement can be entered into by the company
only with the prior consent of the Board given at a meeting
subject to such conditions as may be prescribed. It may be
please be noted contract can either be oral or in writing -
Section 7 Indian Contract Act,1872. In other words, the
approval of the Board of Directors cannot be obtained by
way of circular resolution. The law specifically requires that
resolution can be passed in a duly convened meeting of the
Board of Directors and only thereafter contract or
arrangement can be entered into.
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64. 17.2: The agenda of the Board meeting at which the resolution
is proposed to be moved shall disclose –
(a) name of the related party and nature of relationship;
(b) nature, duration of the contract and particulars of
the contract or arrangement;
(c ) material terms of the contract or arrangement
including the value, if any;
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65. (d) any advance paid or received for the contract or
arrangement, if any;
(e) manner of determining the pricing and other commercial
terms, both included as part of contract and not considered
as part of contract.
(f) whether all factors relevant to the contract have been
considered, if not the details of factors not considered with
the rationale for not considering those factors; and
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66. (g) any other information relevant or important for
the Board to take a decision on the proposed
transaction.
In case any director is interested in any contract
or arrangement with a related party, such director shall
not be present at the meeting during discussions on the
subject matter of the resolution relating to such contract
or arrangement.
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67. 17.3: In case of company having paid up share capital of
Rs.10 Crore or more, such contract or arrangement shall
be entered into only after seeking prior approval of the
shareholder of the company by way of Special Resolution
– first proviso to Section 188(1). The related party, if he
is a member of the Company, shall not take part in the
voting on Special Resolution – second proviso of Section
188 (1).
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68. EXEMPTED CONTRACTS/ARRANGEMENTS
18: The following contracts/arrangements shall fall outside the
purview of Section 188 of the Companies Act, 2013
a) In the case of contract or arrangement has been entered into in
the ordinary course of business or arms length transactions.
According to 'Black's Law Dictionary', 8th Edition, the phrase“
arm's length" means, "of or relating to dealings between two
parties who are not related or not on close terms and who are
presumed to have roughly equal bargaining power.".
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69. In the 'Advanced Law Lexicon' by Ramanatha Aiyar, the
phrase "arm's length" is defined as "a transaction negotiated and
entered into by unrelated parties, each of whom acts in his or
her own best interest using fair market values", and the phrase
"arm's length price" is defined as "the price at which a willing
seller and an unrelated willing buyer will freely agree a
transaction". The Division Bench of the CESTAT in the case of
Commissioner of Central Excise Vs. TFL Quinn India (P) Ltd
2011(267) ELT 641 has observed as under:-
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70. Their lordships had ordered that prompt payment
discount did. not form part of the assessable value in terms of
Section 4. We find that in an arms length transaction,
conditions for payment & delivery remaining same, the value
for assessment of excisable goods did not undergo change on
introduction of the 'transaction value'. The relevant value is the
net consideration exchanged for delivery of the goods at the
place of removal in an arms length transaction.
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71. b): Where a contract or arrangement has been entered into
two between companies and where any of the directors of one
company or two or more of them together holds or hold not
more than two percent paid up share capital in the other
company.
c): The company has paid up share capital below Rs.10 Crores,
can enter into a contract with a related party provides the
following conditions are fulfilled.
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72. CONSEQUENCES OF NON-COMPLIANCES
The Section 188(3) lays down the consequences
arising out of non-compliances. In the event a director or the
other employee enters into a contract or arrangement with a
related party (a) without obtaining the consent of the Board of
Directors by way of a resolution in a meeting of the Board of
Director or (b) without obtaining prior approval of the
shareholders by way of Special Resolution at a general meeting
or (c) where contract or arrangement has not been ratified
within a period of three months from the date of entering into
contract or arrangement, the following consequences shall
ensue:-
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73. (i) The contract or arrangement is not void but voidable.
The contract or arrangement shall be voidable at the
option of the company.
(ii) In terms of Section 188(4) of the Act, the directors or
other employees shall indemnify the company against
any loss incurred by the company. In the event of
company initiating any legal proceedings, i.e. suit for
recovery of money in the court of law for claiming losses
and damages, the directors shall be liable to pay the
amount adjudicated and determined by the court.
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74. (iii) A person shall not be entitled to be appointed as a Director by
virtue of Section 164(1)(g) of the Companies Act, 2013 upon such
director being convicted of an offence dealing with related party
transactions under Section 188 of the Act at any time during the
preceding five years.
(iv) In case of a listed company, both on directors and
employee of company shall be liable to (a) imprisonment upto
one year or fine upto Rs.5 lac but not less than Rs.25,000/- or
both (b) in case of company whose shares are not listed, fine up
to Rs.5 lacs but not less than Rs.25,000/-.However, there is no
imprisonment prescribed.
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