Milaap - 2014

The Institute of Company Secretaries of India is a

premier national professional body constituted under
an Act of Parliament namely the Company Secretaries
Act, 1980 (Act No. 56 of 1980), to develop and regulate
the profession of Company Secretaries in India. The ICSI
functions under the jurisdiction of Ministry of Corporate
Affairs. The Institute has on its rolls about 30,000
members including members holding certificate of
practice. The number of current students is over 2.87
lakh.
THE INSTITUTE:
Has its Headquarters at New Delhi, 4 Regional
Councils at Chennai, Kolkata, Mumbai and New
Delhi, 68 Chapters located in various cities all over
India and the Center for Corporate Governance,
Research and Training (CCGRT) at Navi Mumbai.
Registers students with 10+2 and graduate
qualifications for Foundation and Executive
Program of Company Secretaryship respectively,
with course contents in Law, Management,
Accounting and Finance disciplines;
Conducts Company Secretaryship examination
twice a year in June and December, at 66 centers
spread all over India and one overseas center at
Dubai;
Provides postal/oral coaching and training enabling
students to qualify as Company Secretaries;
Provides e-learning for students through Web
Based Training, Video Based Training and Live
Virtual Classroom;
Arranges practical training for
Executive/Professional
Program pass students in Companies/with
Practicing Company Secretaries especially
empanelled for the purpose;
Enrolls qualified persons as Associate/Fellow
members of the Institute and issues Certificate of
Practice to members taking up practice;
Conducts Post Membership Qualification Courses
for members of the Institute;
Conducts ICSA, UK Exams for members of the
Institute;
Publishes Chartered Secretary, a professional
journal popular among all professionals;
Publishes Student Company Secretary and C.S
Foundation Program Bulletin for the benefit of
students;
Publishes Online 'CS update' containing current
Notifications and circulars relating to various
corporate and related laws;
Exercises professional supervision over the
members of the Institute, both in employment and
in practice in matters pertaining to professional
ethics and code of conduct;
Undertakes research in Law, Management, and
Finance and Capital Market disciplines and brings
out research publications and guidance notes;
Issues Secretarial Standards and brings out
Guidance Notes thereon;
Gives expert advisory opinion to members on
intricate issues relating to various corporate laws;
Organizes Professional Development Programs and
International / National / Regional Conventions
and Conferences.
Organizes Professional Development Programs in
collaboration with Chambers of Commerce,
Department of Public Enterprises, Sister
Professional Institutes and other Professional
Development / Management Bodies.
Interacts with various National and Regional
Chambers of Commerce with regard to various
Government Policies and Legislations.
Interacts with the Central and State Governments
and Regulatory Authorities on matters of
professional interests;
Interacts with CS Institutions of other countries in
respect of the International Federation of CS;
Bestows ICSI National Award for Excellence in
Corporate Governance to best governed
Companies; Bestows Life Time Achievement Award
on one eminent corporate personality for
Translating Excellence in Corporate Governance
into Reality.
Founder Member of the National Foundation for
Corporate Governance.
Founder Member of International Federation of
Company Secretaries.


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The Bangalore Chapter of The Institute of Company
Secretaries of India (ICSI) is one among the 15 Chapters
functioning under the jurisdiction of Southern India
Regional Council of the Institute. The Bangalore Chapter
is an A+ Grade Chapter of the ICSI and has about 1500
members in total who are occupying important
positions as Company Secretaries in the corporate
sector and around 300 members in whole-time Practice
as Company Secretaries. The Chapter has about 8000
students who are currently pursuing the Company
Secretary ship course.

The Bangalore Chapter has won the Best Chapter of the
Institute award in the A-1 and A Grade for the year
2004, 2005 & 2007 and 2008, respectively.

The Bangalore Chapter:

Conducts Professional Development Programmes;
Seminars/Workshops; National/ Regional
conference for the Members and Students on the
topics of current interest to Company
Secretaries/Professionals/ Students.

Conducts Professional Development Programmes
in collaboration with Chambers of Commerce,
Department of Public Enterprise, Sister
Professional Institutes and other Professional
Development/ Management Bodies.

Conducts Study Circle Meetings on topics of
relevance to Company Secretaries.

Does instant registration of students for
Foundation, Executive and Professional
Programme and issues course material on the
spot.

Accepts the examination and other application
forms (except de novo) submitted by the
students and forwards them to the ICSI, New
Delhi.
Conducts coaching classes for the students and
provides them with all assistance and guidance to
excel in the profession.

Conducts Moot Court Competition, Company Law
Quiz and other competitions for Students.

Conducts the Student Induction Programme (SIP)
which is mandatory for student registered for the
Executive Programme before appearing for the
Executive Programme examination.

Conducts Professional Development Programmes
(PDP) which is mandatory for students undergoing
their Management / Apprenticeship Training.

Conducts Executive Development Programme (EDP)
which is mandatory for students, before they
undergo Management Training / Apprenticeship
Training. The objective of EDP isto help the students
in acquiring knowledge and exposure about the
environment and functions of the corporate sector,
and prepares them to gain the maximum benefit
from their training.

Organises the Management Skills Orientation
Programme (MSOP). The thrust of this Training
Programme is to appraise students with the
practical aspects of important areas of the
Profession and expose them to Corporate and
General Management techniques and latest
developments in Corporate Legal World.

Provides service in the area of placement of
students for training and employment. Students,
who approach the Chapter, looking for training, are
given information in person, by email or by phone
on the suitable opportunities available based on the
requirements informed to the Chapter by
companies and Company Secretaries in Practice.

BANGALORE CHAPTER

V Vi is si it t: : w ww ww w. .i ic cs si i. .e ed du u/ /b ba an ng ga al lo or re e

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AJAY MADAIAH B.B;
CHAIRMAN;
MYSORE CHAPTER OF
ICSI.
C S. S. C. SHARADA;
CHAIRMAN;
BANGALORE CHAPTER OF
THE ICSI.
MESSAGES

Milaap symbolises the spirit of the novice meeting the experienced, students
meeting members, hinterland meeting the mainland, culturals meeting the
intellect, education meeting entertainment, fun meeting learning, technology
meeting tradition, oral meeting the written communication skills, innovation
meeting discipline, preparation meeting performance and minds meeting hearts !
Over the last decade, Milaap has grown stupendously and is today a signature
student event of the Bangalore chapter, that is a confluence of youthful energy
and experienced wisdom- a platform for acquiring management and leadership
skills on the ground, hands-on.
Kudos to the contributors towards the e-souvenir of Milaap 2014. I raise a toast to
Milaap 2014 and congratulate all the students and organizers for their sustained
and dedicated efforts. I have no doubt that this will be a successful and
memorable celebration for years to come.
Wishing lots of enjoyment, excitement and education!!
Cheers !

Dear Readers,
Greetings from the Mysore Chapter of ICSI!
Congratulations to all the participants, the e-souvenir editorial team members and
to the students who have contributed, to this e-souvenir with their quality
contents.
It is always exciting to see Milaap with its various avatars, exceeding ones
expectations every time with new and innovative means to educate and entertain
the students who come from various parts of the state.
It is very essential to have a platform which will bring students from various places
together and unite them for various reasons. Milaap is one such event, which will
provide students an understanding of our profession, organizing and managing a
quality event of this magnitude, with various challenges faced by them. It is also
interesting to note Milaap has kept evolving, to suit the changing needs and
requirements of the students and being successful in achieving its objective.

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ICSI BANGALORE CHAPTER MANAGING COMMITTEE
FOR THE YEAR 2014-15.

MS. S. C. SHARADA MR. H.M.DATTATRI MR. HARI BABU THOTA MR.R SRINIVASAN
(CHAIRMAN) (VICE CHAIRMAN) (SECRETARY) (TREASURER)


MR.G.M. GANAPATHI MR. M. MANJUNATHA MR.S. KANNAN MR. DWARAKNATH.C.REDDY
(MEMBER) (MEMBER) (MEMBER) (EX-OFFICIO)


MR. GOPALAKRISHNA HEGDE MR. NAGENDRA. D. RAO MR. M.R.BHAT
(EX-OFFICIO) (EX-OFFICIO) (CO-OPTED MEMBER)


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KUSUMA. G SOWMYA SUNNY SHILPA. R
CS Professional CS Executive Prog. CS Professional
Programme CA Article at Programme
C. Murali Naidu & Co.








Dear Readers,
Discovery consists of seeing what everybody
has seen & thinking what nobody has
thought.- Albert Von Szent-Gyorgyi.
Albert Szent was a Hungarian physiologist who
won the Nobel Prize in Medicine in 1937. He is
credited with discovering vitamin C and
reactions of the citric acid cycle.
This year has been about taking a step to the
fore & giving new meaning to the known &
familiar.
The events & days leading towards the making
of Milaap 2014 & its E-souvenir, holds a special
value & importance to all its organizers.
The step forward being-this year Milaap 2014-
Meeting of minds-the Annual State level CS
students conference, conducted by the
Bangalore Chapter of
ICSI is celebrating its
10
th
year since
inception in 2004;
While with the
passing of the long-
awaited Companies
Bill 2012 in the Rajya
Sabha on 8th August
2013, we will see the
existing Companies Act, 1956 being replaced
with the brand new & simpler Companies Act
2013, when formally notified into law. The Act
was widely welcomed from across the finance
professional community, the industry bodies &
consultants.
To all fellow students, Innovation is key!
Our discussions & brain storming sessions was
necessitated & fuelled by the very simple
phenomenon of Innovation, Change & Progress -
of thinking & be doing things. Thoughts & ideas
saw a free flow- both from the student members
to their mentors, vice-versa & also from other
active participating members.
Change is imperative. Innovation is key,
inspiring, stirring, and invaluable & innovators
strive to break the mold. It is critical to be a
doer!
In signifying the
same, on invite for
articles for
publication in the E-
souvenir, it was a
pleasure to have
received such an
overwhelming
response from the
NOTE FROM THE EDI TORS

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student community
(from students
pursuing other
professional courses,
as well) with a
submission of 64
articles comprising
of, from students in Bangalore to upwards from
Northern India. It was notably a stiff contest
amongst them, competing for a spot, in the Top
3 Best Articles of Milaap 2014. Also, from
amongst the screened lot, 33 articles were
selected for publication.
We are thankful to the students for their article
contributions ranging across subject lines &
also, their employers for being the supportive &
encouraging factor, behind their contributions.
We express our sincere thanks & gratitude to
the 10 CS Member editors, who formed an
integral part of the editorial team, by carrying
out the second level of screening the articles &
also, the Judging committee, comprising of CS
Karthik. S.N, CS Sanjeev & CS Harish B.N ,who in
giving their valuable time, have assessed &
adjudged the 3 Best articles.
We also express our gratitude, to CS Vinod
Raman, who has sponsored the cash award for
the 3 Best articles of Milaap 2014.
We extend our thankfulness, to the Mysore
Chapter for their congratulatory message, the
other members for their valuable inputs,
various other Milaap teams for their helping
hand & the Managing Committee of the
Bangalore Chapter, for their continued support.
A special thank you to CS H.M. Dattatri sir & CS
S.C. Sharada Mam, who in the light as
educators, steered us with their supervision &
valuable insight at all stages - allowing us to
foster our creativity & bring forth newer
concepts.
The editorial note
would be incomplete
without special
mention of our
mentor - Mr.
Dhikshit Prabhu,
who true as our
mentor, was our guiding factor, through the
making of the e-souvenir, with his consistent
support, encouragement & direction.
Thank you Sirs & Mam!
Congratulations to the winners & other
published authors!

So much is written about change &
innovation
Embrace inquisitiveness as a trait.
Do not confine yourselves to the cocoons of
the tried & tested. Pursue your dreams, not
only for the love of fame, success & money, but
to be an innovatorto be a pioneer!
Make a difference!

Up till next year!

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E-SOUVENIR: DATA SHEET

NO. OF ARTICLES RECEIVED: 64
NO OF ARTICLES PUBLISHED: 33

MENTOR: Dhikshit Prabhu. U
(Advocate)

STUDENT EDITORS:

Kusuma.G.
Sowmya Sunny.
Shilpa.R.

MEMBER EDITORS:
CS Swetha Bhandari.
CS Sravanthi.G.
CS Sidharth Iyer.
CS Bharatraj Panchal.
CS Sumukha Bhat.
CS Ratnamala Hegde.
CS Parameshwar G Bhat.
CS Omkar Gayatri.
CS Nethra Sridhar.
CS Kasturi. S
JUDGES:
CS. Sanjeev Rao CS Karthik.S.N CS. Harish B.N.

Cash award
sponsored By:
Cs VInod raMan


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TABLE OF CONTENTS
SL. NO TITLE OF ARTICLE PAGE NO.
1. Compounding as a remedy for contraventions under FEMA, 1999 9
2. Foreign Direct Investment - In single brand retailing 12
3 Role of key Managerial persons in Anti corruption 15
4 Vast opportunities for CS with advocacy skills 18
5 Joint Venture and foreign collaboration 21
6 Money laundering 24
7 Investor protection 26
8 Credit rating 29
9 Acquisitions strategy 32
10 Committees under Companies Act,2013 35
11
Gender equity on Corporate boards A culture shift on the
horizon
38
12 A gift from god 41
13 Safety of women at work place 43
14
Responsibilities of company secretary as compliance officer of the
company under Listing Agreement
46
15 Role of Company Secretary as per Companies Act, 2013 49
16 Smart trading 51
17 Foreign direct investment (FDI) 53
18
Class of Action-Section 245 of the Companies Act,2013
55
19
Independent directors in Companies Act, 2013
58
20
Financial & legal aspects of Corporate Dividend decisions-An
outlook
60
21
Bitcoin The pioneer virtual currency
63
22
Tax Audit u/s 44B of Income Tax Act, 1961
66
23
Forensic Auditing Tool to Investigate fraud
69
24
Registered Valuer
72
25
Women Director
75
26
Concept of Whistle Blower and the Role of Governance
Professional
77
27
Corporate Criminal Liability in India
80
28
External commercial borrowings [ECB]-
An instrument for capital gearing to the Indian companies
82
29 Listing and Issue of Capital by SMEs 86
30 Employee Provident Fund 90
31 Yes Bank Board Conflict 93
32 Drafting of Lease Agreements 95
33 Analysis of section 185 of the Companies Act, 2013 98
34 A sneak peek into Day 1 & 2 of Milaap14 101

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RAJEEV.T.S;
CS PROF. PROGRAMME;
HEMANTH, BISWAJIT & CO.

COMPOUNDING AS A
REMEDY FOR
CONTRAVENTIONS UNDER
FEMA, 1999


COMPOUNDING OF CONTRAVENTION UNDER
FEMA IN BRIEF
Contravention is a breach of the provisions of
the Foreign Exchange Management Act (FEMA),
1999. As per the Dictionary, Compound
means to settle a matter by a money payment,
in lieu of other liability. In short, Compounding
of an offence is a settlement mechanism, by
which, one is given an option to pay money in
lieu of his prosecution, thereby avoiding a
prolonged litigation. Compounding refers to the
process of voluntarily admitting the
contravention, pleading guilty and seeking
redressal.

The Government of India has, in consultation
with the Reserve Bank placed the responsibility
of administering compounding of
contraventions with the Reserve Bank, except
few occasions. Accordingly the Reserve Bank is
empowered to compound any contraventions
as defined under FEMA, 1999.

WHAT ARE COMPOUNDABLE OFFENCES?
Only those contraventions which do not attract
imprisonment as a mandatory penalty are
compoundable. In other words, offences which
are specifically punishable with imprisonment
only or imprisonment and fine are not
compoundable.




CONSEQUENCES OF NON-COMPLIANCE OF
FEMA PROVISIONS
Non compliance of FEMA provisions and rules
and regulations made there under would attract
the penal consequences.

If any person contravenes any provision of
FEMA, 1999, or contravenes any rule,
regulation, under the said act, he shall, upon
adjudication, be liable to a penalty up to thrice
the sum involved in such contravention where
the amount is quantifiable or up to Rupees Two
lakhs, where the amount is not quantifiable and
where the contravention is a continuing one,
further penalty which may extend to Rupees
Five thousand for every day after the first day
during which the contravention continues.



Offences which are specifically
punishable with imprisonment only
or imprisonment and fine are not
compoundable.




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PRE-REQUISITES FOR COMPOUNDING
PROCESS
In respect of a contravention committed by any
person within a period of three years from the
date on which a similar contravention
committed by him was compounded under the
Compounding Rules, such contraventions would
not be compounded. Any second or subsequent
contravention committed after the expiry of a
period of three years from the date on which
the contravention was previously compounded
shall be deemed to be a first contravention.

Contraventions relating to any transaction
where proper approvals or permission from the
Government or statutory authority concerned,
as the case may be, have not been obtained,
such contraventions would not be compounded
unless the required approvals are obtained
from the authorities concerned.


COMPOUNDING PROCESS STEP BY STEP
UNDER FEMA:

A duly completed application, in duplicate,
for compounding of a contravention under
FEMA, 1999 may be submitted to the
Compounding Authority
(CA) on being advised of a
contravention under
FEMA, 1999, either
through a memorandum
or suo moto on being
made or on becoming
aware of the
contravention.
Incomplete applications
shall be liable to rejection
by the Reserve Bank and
appropriate action for the
contravention of the
FEMA shall be taken
accordingly. The
application once made cannot be
withdrawn.

The Reserve Bank makes a scrutiny of the
application and will examine and decide if
the contravention is technical, material or
sensitive in nature. If technical, the
applicant will be issued a cautionary
advice. If the contravention is material, it
will be compounded by imposing a penalty
after giving an opportunity to the
contravener to appear before the
compounding authority for a personal
hearing. If the contravention is sensitive in
nature requiring further investigations, the
same would be referred to the Directorate
of Enforcement (DOE) for further
investigation/ action under FEMA, 1999, or
Anti- Money Laundering Authority
instituted under the Prevention of Money
Laundering Act (PMLA), 2002 or to any
other agencies, as deemed fit .

After getting the hearing notice, the
contravener or any authorized person on
his behalf may appear before the
compounding authority to make his
submissions.

Non-submission of relevant
information/document during the
processing of the compounding application

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would be considered as willful and
intentional suppression of the material fact
and the compounding application would
be liable for rejection and appropriate
action for contravention under the FEMA.

The Compounding Authority may pass
an order indicating details of the
contravention and the provisions of
FEMA, 1999 that have been
contravened. The sum payable for
compounding the contravention is
indicated in the compounding order.
The contravention is compounded by
payment of the penalty imposed.

The sum for which the contravention is
compounded as specified in the order
of compounding is payable by way of a
demand draft in favor of the Reserve
Bank of India within fifteen days from
the date of the order of compounding
of such contravention.

On realization of the sum for which
contravention is compounded, a
certificate shall be issued by the
Reserve Bank indicating that the
applicant has complied with the order
passed by the Compounding Authority.

In case of failure to pay the sum
compounded within the time specified
in the compounding order, it shall be
deemed that the contravener had never
made an application for compounding
of any contravention.

As compounding is based on voluntary
admissions and disclosures, there
cannot be an appeal against the order
of the Compounding Authority. The
compounding process is normally
completed within 180 days from the
date of receipt of the application
complete in all aspects, by the Reserve
Bank.

To conclude, provisions for compounding of
offences under FEMA, 1999 saved the parties
from spending their hard earned money and
time in lengthy legal proceedings.





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FOREIGN DIRECT INVESTMENT
SINGLE BRAND RETAILING


pening up of Indian economy due to the
impact of Globalization, Foreign
Investment was introduced in 1991
under Foreign Exchange Management Act
(FEMA) driven by the then finance minister Mr.
Manmohan Singh. Being an Economist, Mr.
Singh led the Indian economy towards the
world market after elected as the prime
minister.

The less known side of this story is that by
signing investment treaties, governments are
giving away the sovereign right to regulate in
the interest of people and the environment.


The United Nations Conference on Trade and
Development (UNCTAD), 2012 projected India
as the second most important Foreign Direct
Investment destination (after China) for
transnational corporations during 20102012.
As per the data, the sectors which attracted
higher inflows were:
a) Services
b) Telecommunication
c) Construction activities and
d) Computer software and hardware.

The leading countries as source of FDI:
Mauritius
Singapore
US and UK

WHAT IS FOREIGN DIRECT INVESTMENT-A
SHORT DEFINITION?

Foreign Direct Investment (FDI) is the net inflow
of investment to acquire a lasting management
interest (10 percent or more of voting stock) in
an enterprise operating in an economy other
than that of the investor.

Mathematically,
It is = equity capital + reinvestment of earnings
+ other long term capital + short term capital as
shown in the balance of payments


The World Bank Data indicating the amount (in USD) of net inflows in India over the years :
2009 2010 2011 2012
35,581,372,930 27,396,885,034 36,498,654,598 23,995,685,014

O
RITU CHANDAK;
CS PROF. PROGRAMME;
MANAGEMENT TRAINEE,
HEMANTH, BISWAJIT & CO.

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Milaap - 2014

DARK SIDE OF THE INVESTMENTS:

Signing international investment treaties, in the
hope of attracting foreign investments, has
been a central strategy for governments looking
to improve economic development. The less
known side of this story is that by signing
investment treaties, governments are giving
away the sovereign right to regulate in the
interest of people and the environment. They
also expose themselves to the risk of spending
millions in law suits that could have been used
to serve public needs. Its time that the dark
side of investment is put under the spotlight.

To develop, you need growth > to grow, you
need FDI > to attract FDI you need to protect
investors > the only way to protect investors is
by signing investment agreements.

For the last 2 decades: Governments around
the world adopted the recipe wholesale and
Investment Treaties

THE INDIAN SCENE:

A. PROCEDURE OF RECEIVING FDI:
1. Automatic Route
2. Approval Route

B. Forms in which business can be conducted:
1. Incorporate a company under the
Companies Act, 1956/2013, as a Joint
Venture or a Wholly Owned Subsidiary
2. Set up a Liaison Office/Branch
Office/Project Office under FEMA

C. Instruments of foreign investment:
1. Equity and others:
a) Any foreign investment into an
instrument issued by an Indian
company which:
i. gives an option to the
investor to convert or not
to convert it into equity or
ii. does not involve upfront
pricing of the instrument
b) Equity shares , fully and
mandatorily convertible preference
shares and fully and mandatorily
convertible debentures

2. External Commercial Borrowings (ECB)

THE SINGLE BRAND RETAILING SAGA:

Until 2011, Ownership in single brand retail in
India was allowed upto 51% and that too
through a heavy bureaucratic process.

In January 2012, India approved reforms for
single-brand stores welcoming anyone in the
world to innovate in Indian retail market with
100% ownership, but imposed the
requirement that the single brand retailer
source 30 percent of its goods from India.

In July 2013, the Government eased the norm

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for single brand retailing by allowing entry
under Automatic Route up till 49% ownership,
beyond which Government approval will be
required.















STORES THAT YOU CAN FIND IN INDIA

IKEA is a privately held, Dutch company
with Swedish origins that designs and
sells ready-to-assemble furniture,
appliances, and home accessories. The
company is the world's largest furniture
retailer.

Italian high-end accessories brand Furla
plans to expand its presence in
the Indian market once the government
clears its joint venture with Genesis
Luxury fashion

Securing an address in Delhi is the main
goal of the Manhattan-based Brooks
Brothers, an iconic label known for its
suits and shirts

Italian leader in manufacturing and
marketing high-end jewellery, Damiani

made its maiden foray into the Indian
market with its first flagship boutique in
New Delhi.

As India is progressing in Information
Technology, approvals from various Statutory
Bodies like Foreign Investment Promotion
Board or Reserve Bank of India made simple. A
common man can approach the Government
through online applications and related
formalities.

By allowing FDI in single brand in India, we may
have access to world class quality products and
at the same time it may create new job
opportunities to the locals.


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Milaap - 2014


ROLE OF KEY MANAGERIAL PERSONS
IN ANTI CORRUPTION






INTRODUCTION
Growing a successful and sustainable business
requires at least three things: an
uncompromising devotion to developing
products and services that contribute real value
and allow clients to achieve their goals;
passionate leadership that attracts and inspires
the best of the class; and an unwavering
commitment to act as a responsible player in
the community, nurturing the public trust and
support on which all businesses ultimately
depend. Corruption erodes each of these pillars
of business success. It means compromising
corporate and individual integrity, and it means
consenting to, and propping up, a business
environment in which, entrusted public power
is routinely abused for the sake of private gain.
The leading case for this can be the Wal-Mart
corruption, wherein the bribe was taken by
one of the managers of their Company. The
former executive gave names, dates and bribe
amounts. He knew so
much, he explained,
because for years he had
been the lawyer in
charge of obtaining
construction permits for
Wal-Mart de Mexico. The
view point being corruption can be done by
KMPs of the Company and can even be
stopped by them.
The level of corruption in the private sector
remains disturbingly high. It is not uncommon
for domestic firms and multinationals to pay
bribes to secure public contracts, nor unusual
that powerful corporate entities exerting undue
pressure to capture institutions and influence
regulations to elicit favorable investment
conditions. Stamping out corruption and
strengthening corporate integrity is a
challenging agenda, but one with ample
opportunities for engagement. One important
strategy is to Establish and implement
normative frameworks against corruption. At
the domestic level, most countries already have
anti-corruption laws and policies in place.
Unfortunately, these are rendered ineffective
by weak enforcement and implementation. The
comparable framework at the international
PAREKH NIDDHI R;
CS PROF. PROGRAMME.



15
Milaap - 2014

level is the United Nations Convention against
corruption, which needs to be embraced fully
by signatory countries. A third strategy asks us
to utilize the forces of civil society and public
opinion to fight corruption in the corporate
sector that can help the state to design
appropriate strategies.

Power does not corrupt. Fear corrupts...
perhaps the fear of a loss of power.
The bottom line is clear:
we need to deal with
corruption in the private
sector creatively, at all
levels, not just through
different channels of
intervention and
regulation but also by
encouraging the private
sector towards voluntary
initiatives. A threefold
shifting strategy and
action is required to
address corruption in the
sector more effectively.
Firstly, most stakeholders must join business
executives and regulators in tackling corruption
in business. These allies include owners,
investors and workers, financial intermediaries
and auditors and, in the broader business
environment, the media, citizens as consumers
and last but not least civil society. Taken
together, they constitute corporate integrity
systems, providing a web of vital checks,
balances and incentives that make corporate
integrity sound and sustainable. Conflicts of
interests, a lack of whistleblower protection,
insufficient disclosure and reporting and other
obstacles; all of these needs to receive more
attention in a policy debate. Secondly, the focus
of attention has to go beyond setting rules and
pledging commitment to issues of
implementation, monitoring and accountability
for results to be achieved. Commitments, codes
and laws matter, but they are only as good as
their verifiable enforcement. Thirdly, collective
action and collaboration need to be better
recognized as essential principles in addressing
corruption challenges in business - stimulating
learning, protection against free-riding and
creating peer pressures that are instrumental in
rooting out bribery in competition for contracts.
Joint pressure allows investors and consumers
to bundle their influence in holding business to
account. More cooperation among small and
medium enterprises enables them to pool their
resource and defenses against corruption, while
more collaboration among national regulators
can help close transnational loopholes.

The surest way to corrupt a youth is to
instruct him to hold in higher esteem those
who think alike than those who think
differently.
ROLE OF KMP:
The fundamental task of the KMP is to create
the performance with integrity and culture. A
Culture that entails shared principles (values,
policies and attitudes) and shared practices
(norms, systems and processes). If need be, it
can also include some elements of deterrence
(violation of norms will lead to punishment), it
must also, at the end of the day, be affirmative
(people want to do the right thing because
leaders make this a real Company imperative).
A corruption risk assessment identifies
corruption risks not mitigated by controls.
KMPs should understand the entitys

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Milaap - 2014

corruption risk philosophy and concur with the
entitys risk appetite. They should know the
extent to which management has established
effective corruption risk management. Critically,
this culture of fundamental integrity must be
uniform and Global: it should be applied in
every Nation and must not be bent by corrupt
local practices, even if it means losing business
in the short run.


PRINCIPLES FOR AIDING BUSINESS LEADERS:

The core principles those are important for
aiding business leaders on high performance
with high integrity:

Committed and Consistent Leadership -
Makes performance with integrity, the
foundation of the Corporation;
Managing performance with integrity as a
business process builds the integrity
infrastructure;
AdoptingGlobal ethical standards beyond
what the law requires (e.g. no bribery in either
public or private sectors anywhere);
Using early warning systems to stay ahead of
Global trends and expectations;
Fostering employee awareness, knowledge
and commitment through stimulating,
systematic
Education and training;
Giving employees voice through legal systems
that treat concerns professionally, fairly and
promptly and prohibit retaliation;
Recognizing that the top Staff Leaders the
CFO, General Counsel and HRM must be
partners to the business leadership as well as,
guardians of the corporation; and
Designing compensation systems so that top
business leaders are paid not just for
performance but for the performance with
integrity.

THE PREVENTION:

Without robust implementation of these
principles, high integrity and culture will not
exist and the business leadership will just
eyewash. Only when a corporation has this
comprehensive, systematic approach,
commitment to good-faith implementation and
to high performance with integrity, can the
Companys anti-corruption programme be
effective. A strong anti-corruption programme
requires a strong cultural commitment to do
the right thing; and strong, centralized
processes to ensure that hard cases are decided
on the right side of the line. It should
implement this so that accountability is clearly
fixed. Then there must be due diligence relating
both of them to all the stakeholders. Companies
and Industries getting rich from corruption,
bribery, buying elections, buying legislators,
purchasing government subsidies or tax breaks
or handouts or bailouts. It is so much more
cost-effective than actually making something
worthwhile and slowly building an industry
based on quality and good service to customers
that it is replacing the old, more honest
business model.

I do think people have to be held accountable for actions, but then punishing wrongdoers should be
accompanied by an examination of the organizational structure that contributed to the problem.
Simply replacing the people is not enough.


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VAST OPPORTUNITIES FOR CS WITH ADVOCACY SKILLS




With the Constitution of proposed NCLT,
a fresh CS may need to appear before NCLT
/NCLAT very frequently. As such, we as a
students pursuing CS should anticipate
the future and embrace the great opportunity
while climbing our Professional ladder.




INTRODUCTION:

The establishment of NCLT/NCLAT shall offer
various opportunities to Company Secretaries
as they have been authorized to appear before
the Tribunal/ Appellate Tribunal. Therefore,
Company Secretaries would for the first time be
eligible to appear for matters which were either
to dealt with by the High Court vizMergers,
Amalgamation under Section 391 to 394 and
Winding up proceedings under the Companies
Act, 1956. Areas opened up for Company
Secretaries under NCLT/NCLAT.

Opportunity does not knock, it presents itself
when you beat down the door. - Kyle Chandler

Advocacy Definition: Active support especially
the act of pleading or arguing for something.








ADVOCACY MEANING:

Advocacy is a set of actions whose main
objective is to sensitize with a view to
influencing decisions about a cause or
policy in a stated direction.
It is done through pleading/arguing in
favor of something and operates on the
assumption of a collective set of values
and common good on behalf of
another.

A BRIEF ABOUT COMPANY SECRETARY (CS):

COMPANY SECRETARY:
Play a very important role in Corporate
World and advises the Company on
Compliance of Corporate Regulations.

Undertakes Secretarial Work regarded
as an officer in default.

Takes more responsibility especially
while CS in whole time employment in
Company.

WHY ADVOCACY?

Apart from routine functions and
responsibilities CS do present the case.
TUKARAM N JADHAV;
M.COM, LLB(PURSUING);
CS PROF. PROGRAMME;
HAVERI .

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Milaap - 2014


On behalf of the Company before
various forums- CLB/SEBI/Stock
Exchange/FEMA/Import and Export
authorities/DOE.

Proposed NCLT in future and many
other regulatory bodies.

OPPORTUNITY:

Want to be CS or CS with Advocacy?

Corporate Professionals lay so much
emphasis on presenting cases before
forums like CLB rather their traditional
work.

The thorough knowledge and
specialization in Corporate related
subjects gives the Unique opportunity
to Corporate Professional like
o CS to better advocate a
Company dispute or matter
before CLB/NCLT/NCLAT.

TODAYS FORUM:

Presently CLB and Company Court
discharges its responsibility as DRM
under the provisions of Companies
Act,1956.

Cases like Oppression and
Mismanagement goes to CLB.

Cases like Mergers and Amalgamation
and Winding up, are entertained by the
High Court.

Todays Status of CS on Representing Cases:

New Companies provisions of
NCLT/NCLAT to deal with all matters
related to Companies Act.

Presently CS is not permitted to appear
before High Court- But CS can represent
many Company disputes Under
Company Law before NCLT/NCLAT.

A great opportunity for CS (including
students pursuing CS) - One should lay
special emphasis on Advocacy and
knowledge of basic GL in addition to
specialization in Company.

WHAT IS STORED FOR FUTURE?

NCLT/NCLAT would be in place.

All members related to Companies Act
would be at this forum only.

CS without Law qualification would
be able to represent appear and
handle cases with NCLT/NCLAT.

If one to be in Advocacy it would be a
full time job or practice.

WHAT CS DOES TODAY?

Currently complicated Company
matters application by the Minority
Share Holders under section 397/398 of
Act are handled by the
Advocates/Corporate Lawyers than CS.

CS handles simple applications seeking
condonation of non-compliance of
corporate regulations and those
applications are allowed in most cases

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with some fine. It is also true that some
CS do appear in complicated matters
i.e. Application under section 397/398
of the Act.

Barring specialized Corporate Lawyers,
CS is accustomed to Corporate
regulations involve in Incorporation of
Companies, Corporate Advisory Services
and Compliance of Corporate
regulations.

Corporate Lawyers V/s Company Secretary:

When we are CS, we should lay special
emphasis on the new opportunities and
responsibilities before the NCLT/NCLAT.

Advocacy is an art needs to be
practiced.

If we could observe manner in which a
Corporate Lawyer presents a case
before CLB and the manner in which
the case is presented by the CS, we can
find the glaring differences.

Corporate Lawyers do matters:
- In a systematic manner
- In an aggressive way and
- When situation warrants

CONCENTRATION ON TO BE ON:

Responsibility of Corporate Lawyers, in
most cases, is confined to discussion
with the client drafting a brief, ensuring
the filing of required papers with the
forum and presenting the case before
the Board pressing for the order prayed
for.

Conversely a CS would discharge variety
of responsibilities.

In view of abundant opportunities
before the proposed NCLT, we as a
student pursuing CS should concentrate
on certain things specially like:
1) Language especially clear and
grammatically good English
2) Drafting.
3) Legal drafting.
4) Presenting a case before the Court or
the Forum.
5) A basic knowledge of established
Legal procedures.

COMPANY SECRETARY REQUIREMENTS:

Good writing skills.

Understanding of operations know
what we are writing about and relevant
requirements.

Sensitivity to issues.

Strong ethical grounding.

Well organized and process driven.

Diplomatic, reflective, knowledgeable
and respected.

CONCLUSION:

With the Constitution of proposed
NCLT, a fresh CS may need to appear
before NCLT/NCLAT very frequently. As
such, we as a students pursuing CS
should anticipate the future and
embrace the great opportunity while
climbing our Professional ladder. The
Company Secretaries should
standardize their competencies with
the global benchmarks to provide value
added services in assisting the Tribunal
in dispensation of justice and speedier
disposal of matters like Merger,
Amalgamation, Restructuring, Revival
and Rehabilitation of Sick Companies
and Winding up of Companies.

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Milaap - 2014

JOINT VENTURE AND FOREIGN COLLABORATION







INTRODUCTION
In an era of competition and growth, it is a
challenging task for any business entity to
emerge as a powerful business house and to
make a mark of success in the world of
business. With this kind of competition and
expansion spree in the economic world, Joint
ventures and Foreign Collaborations
emerged as a successful mechanism.
It holds a status of a business
strategy that could make bigger
goals achievable by coming
together. Furthermore it routed
foreign investments into the
growing economies and one such
growing economy in the world is
India.

MEANING

A Joint venture (herein after
referred as JV) is an association of
two or more individuals or business entities
who come together to pool their respective
expertise, financial resources, skills and
experience etc without losing their separate
identity. In India, there is no legal definition for
JV; however the guidelines prescribed by
Government of India and its agencies draw a
line of difference between JVs and other
entities. The JV in India usually comprises of
two or more individuals or








companies, where one of the partners may be
non-resident; they form JV by entering into an
agreement called as a JV agreement and form
an Indian Private or Public limited Company,
where each partner decides to hold certain
portion of share holding.

MODES OF JOINT VENTURE

1. EQUITY JOINT VENTURE
The parties to the JV agreement agree to
provide foreign currency/other resources as
their contribution towards assets or capital
of the legal entity formed . These types of
ventures are called as Incorporated Joint
ventures.

RAKSHITA TATA
SATHYANARAYANA;
CS PROFESSIONAL STAGE;
HEMANTH BISWAJIT AND CO.


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Milaap - 2014

2. CONTRACTUAL JOINT VENTURE
This kind of JV is suitable for projects which
involve a specific task or a task for limited
period and are more suitable for
establishing business in countries where
domestic laws do not permit the foreign
citizens to own the property in the country.
Thus it is similar to Partnership. These types
of ventures are also called as
Unincorporated Joint Ventures. And such
agreements are governed by Indian
Partnership Act, 1932.

Therefore JV can take a legal form of a
company or a partnership firm or joint
working agreements.




APPROVALS FOR ESTABLISHMENT:

In India JVs can be established with or without
Government approvals. These approvals are
categorized in two sections.

Automatic Route.
Approval Route.


1. If a foreign partner or an NRI is involved
then Government approvals are
required. The approvals can be
obtained from either RBI or Foreign
Investment Promotion Board.

2. The Government has provided more
than 30 high Priority areas covering
most of the Industrial sectors.
Investments up to 50%, 51%or74% in
certain areas such as
telecommunications, drugs and
pharmaceuticals , hotel and Tourism or
advertisement receive automatic
approval .

3. The investments which are higher than
50%, 51% or 74% and also fall outside
the high priority areas, require
Government approval. Such approval
should be obtained by making an
application to either Foreign
Investment Promotion Board (FIPB) or
the Secretariat of Industrial Approvals
(SIA).

4. In case of Foreign Institutional Investors
(FII), the aggregate investments in the
share capital of the company is
permitted to the extent of 24% of
issued and paid up capital of the
company, however the Indian Company
can permit Investment up to 30% of its
share capital by passing Special
resolution, where such resolution
should be passed by shareholders
having 75% shares with voting rights in
the company.

Usually, Foreign Companies are main
investors of JVs, thus foreign investors
seek higher equity percentages . In
Indian Joint ventures the breakup of
equity between Foreign Ally and Indian
Party will be 51% - 49% respectively.

PRE FORMATION CONSIDERATION:
Any two business parties, having taken up to a
joint venture as a development strategy need to
deliberate upon certain material factors like:

A. OBJECTIVE
A well defined Objective plays a pivotal
role since the investments and
resources involved are huge and lack of
clarity in this aspect may incur huge
losses at a later stage.


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B. CAPITAL STRUCTURE.
It is very important to define the Capital
structure, return on investment capital,
management control and
administration of the enterprise to
avoid future disputes among the
parties.

C. PERPETUITY OF JOINT VENTURE.
The JV is an agreement of continuity, if
any party opts to pull out from JV then,
such party makes a first option to sell its
interest to other existing party or the
outgoing party should be able to get in
new party to JV on same terms and
conditions as it was between existing
party and outgoing party. This element
in JV agreement helps the party to be in
safer side when other party pulls itself
out of the JV.

FOREIGN COLLABORATION AGREEMENTS

These agreements are alliance agreements of
JV. This has become quite popular in country
like India which has been using collaboration as
a strategy to bridge the technological gaps
between the countries. The gaps may be of a
nature of Technical Knowhow, technical designs
and drawings, and for training of Technical
personnel of their company.

SURVEY ON FOREIGN COLLOBRATION IN
INDIAN INDUSTRY

There has been a down trend in the number of
Foreign Collaborations (hereinafter referred as
FC) happening as per the Survey made by RBI.
This was 8
th
Round of Survey.
The survey has categorized companies in two
sections Foreign Technical Collaboration
Companies and All Companies (Having
Technical and/or Non-Technical Collaboration)
The Survey says that, out of the survey
conducted with 836 Indian Companies, 158 of
them have 160 technical collaboration
agreements in FTC Companies alone. The survey
depicts that there is a decline in foreign
collaborations compared to previous survey and
also decline of profits earned by companies and
of the 836 Companies 111 were associates,672
were Subsidiaries, and 53 were other category
Companies.

When we analyse the Survey by considering all
the aspects like Coverage, Industry-wise
distribution of agreements ETC., (Having
Technical and/or Non-Technical Collaboration)
the Industries are having collaboration mostly
with their subsidiaries and not with other
outside companies. There is decline of FCA in
Manufacturing Sector when compare to Service
Sector as there is a growth in Service Sector per
se. India has to plan and execute rapidly to
match the top economies like USA, Germany,
UK and Japan. The declination of know how
agreements is matter to be worried as Indian
industry still have not equipped with enough
technical research and required of such
technical is on high Priority. The restrictive right
which has been reduced in manufacturing
sector is alarming as that means there is less
protection to Indian parties.

CONCLUSION:

The subject of Joint Venture and Foreign
Collaborations being a huge one, an attempt is
being made to briefly explain the concept in this
article. The awareness of JV and FC is also
important to all the companies in the Industry,
because we can see through survey that most
of the Indian Companies are inclined towards its
subsidiaries rather than getting into agreements
with other FC.
Sources: Wikipedia, Study Material of Company
Secretary Professional Stage, Articles from
Majumbdar and Co International Lawyers, Circular
on Survey Issued by Reserve Bank of India, Helpline
Law.com.


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MONEY LAUNDERING

Money Laundering is the process by
which Large Amount of illegally Obtained
Money (from drug trafficking, terrorist activity
or other serious crimes) is given the appearance
of having originated from a Legitimate Source.

It has become increasingly more
difficult for lawbreakers to conceal their illegally
obtained funds through criminal business
practices. Criminals are being forced to hide
their money from government institutions to
avoid taxation and investigations into their
business dealings. One way criminals choose to
hide this ill gotten cash is to launder their
money through banks, brokerage houses,
investment firms and many other financial
businesses to make it appear as if the money is
clean and obtained legally.

PROCESS OF MONEY LAUNDERING

The process of money laundering can
be classified into three stages namely:
Placement
Layering
Integration

In the placement stage of money laundering,
the launderer introduces his illegal profits into
the financial system, by breaking up large
amount of cash into smaller sums of cash that
are then deposited directly into the bank
account. Or by purchasing monetary
instruments that are later collected and
deposited into accounts at another location.

After the funds entered into the
financial system, the Layering takes place. In
this stage, the launderer engages in a series of
conversions or movements of the funds to
distance them from their sources.












After completing the first two stages
the processing of criminal profits, the launderer
moves them to integration. In this stage the
funds re-enter the legitimate economy. The
launderer might choose to invest the funds into
real estate, luxury assets, or business.





IMPACT OF MONEY LAUNDERING

The social, economic and political
effects of money laundering, if left unchecked
or deal with in effectively are serious. Through
the process of money laundering, organized
crime can infiltrate financial institutions,
acquire control of large sectors of the economy
through investment, or offer bribes to public
officials and indeed governments. Thus the
economical and political influence of criminal
organization can weaken the social fabric,
ethical standards and ultimately the democratic
institutions of the society.

UMESH. M. NAVADE;
CS EXECUTIVE PROGRAMME;
DHARWAD.


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Milaap - 2014


PREVENTION MEASURES OF MONEY
LAUNDERING

Preventing money laundering will be
most effective if the Government, the private
sector, and the public work together.
Governments can play their role by
empowering authorities to take action on this
issue and imposing regulations on the industries
that criminals rely on. Businesses can show
their commitment by making relevant
preventive efforts in addition to those required
by law. If citizens are given a means to provide
information, they can assist by exposing illegal
activity and new money laundering methods.

Government can display its dedication
to prevent money
laundering by
setting up a task
force. Large
corporations, such
as banks and
wiring services,
should also have
departments that
are dedicated to
this cause. It is
important for these public and private labor
forces to work together on a national and
international basis.

The Prevention of Money Laundering
Bill 1998 was introduced in the Parliament on
the 4
th
August 1998. The bill was referred to the
Standing Committee on Finance, which
presented its Report on the 4
th
March 1999, to
Lok Sabha. After incorporating the
recommendation of the standing committee,
the Government introduced the Prevention of
Money Laundering Bill 1999 in the Parliament
on 29
th
October 1999. The bill received the
assent of the President and became Prevention
of Money Laundering Act, 2002 on 17
th
January
2003. The Act has come in force with effect
from 1
st
July 2005.

The Financial Action Task Force (FATF) on
Money Laundering has identified certain
choke points in the money laundering process
that the launderer finds difficult to avoid and
where he is vulnerable to detection. The initial
focus has to be on these areas if the war against
the launderer is to proceed successfully.

The following are the choke points
identified as below:
a. entry of cash into the financial system;
b. transfers to and from the financial
system; and
c. Cross-border flows of cash.

The UKs system of reporting suspicious
transactions to the authorities along with the
procedures adopted by deposit-takers are
powerful weapons against
money launderers. In
particular, the emphasis being
placed on the importance of
deposit-taking institutions
knowing their customer has
severely curtailed this activity
to such an extent that one of
the favorite methods for
money launderers to place
their money is to smuggle the
money out of the country. There are penalties
attached to the various money laundering
offences for the deposit-taking institutions and
these have provided for a powerful incentive
for reporting suspicions to the National Criminal
Intelligence Service (NCIS).

These measures overcome the
difficulty of custom officers coming across large
amounts of cash with no reasonable
explanation for their export/import but, at the
same time, with no hard evidence of links to
drug trafficking, it allows the detention of the
cash pending an investigation. Due to this,
couriers limit the amount they carry out of the
country at any one time and the risk is seen as
being less than passing the money into a
financial institution.

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Milaap - 2014

INVESTOR PROTECTION




Risk comes from not knowing what youre
doing, says Warren Buffett.
Investor education and protection are one of
the most important necessities for any market
to grow. Investment is an indicator of the
development of any country. Investment plays
very important role for an economic growth.
For capital accumulation there should be an
increase in an investment. Investment shows
the level of an economy in the world
economies. To encourage more investors to
invest, more protection for investors is needed.
An investor is a person who allocates capital
with the expectation of a financial return.
The term investor protection defines the
entity of efforts and activities to observe
safeguard and enforce the rights and claims of a
person in his role as an investor. This includes
advice and legal action. The assumption of a
need of protection is based on the experience
that financial investors are usually structurally
inferior to providers of financial services and
products due to lack of professional knowledge,
information or experience. Investor Protection
is needed for true capital formation.
Investor The Companies Act, 2013 goes a long
way in protecting shareholders' interests and
removes administrative burden in several areas.
The Act brings modern regulations for the
corporate sector and attempts to align with
international requirements.
The Act promises to substantively raise the bar
on governance and purports to deal with
relevant themes such as investor protection,
fraud mitigation, inclusive agenda, auditor
accountability, reporting framework, director
responsibility and efficient restructuring.
Investor education and protection was gaining
focus mainly after the Ketan Parekh scam
(2001) and the UTI crisis (1998 and 2001).
This article shows the role of regulatory bodies
for the protection of investors money.
Securities and Exchange Board of India (SEBI)
has been established with the prime mandate
to protect the interest of investors in securities.
It is also mandated to promote the
development of, and to regulate the securities
market. The Primary function of Securities and
Exchange Board of India under the SEBI Act,
1992 is the protection of the investors interest
and the healthy development of Indian financial
markets. SEBI had issued guidelines for the
protection of the investors through the
Securities and Exchange Board of India
(Disclosure and Investor Protection) Guidelines,
2000. These Guidelines have been issued by the
Securities and Exchange Board of India under
Section 11 of the Securities and Exchange Board
of India Act, 1992. The Securities and Exchange
DIVYA SANGHAVI;
CS PROF. PROGRAMME;
BANGALORE.

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Milaap - 2014

Board of India Act, 1992 (the SEBI Act) was
amended in the years 1995, 1999 and 2002 to
meet the requirements of changing needs of
the securities market and responding to the
development in the securities market.

OBJECTIVES OF SEBI:
Some of the objectives of SEBI are as follows:
Investor protection, so that there is a steady
flow of savings into the Capital Market.
Ensuring the fair practices by the issuers of
securities, namely, companies so that they can
raise resources at least cost.
Promotion of efficient services by brokers,
merchant bankers and other intermediaries so
that they become competitive and professional.

Simply put, investor protection is the effort to
make sure that those who invest their money in
regulated financial products are not defrauded
by brokers or other parties. Its important to
note that unlike government insurance for
monetary deposits, investor and customer
protection does not extend to covering losses
when the securities or products decrease in
value. Investor protection focuses on making
sure that investors are fully informed about
their purchases that insider activity does not
threaten the worth of some portfolios for the
enrichment of others, and those holdings are
not simply lost in instances of brokerage
failure.
INVESTOR PROTECTION MEASURES BY SEBI
Section 11(2) of the SEBI Act contains measures
available with SEBI to implement the legislated
desire of investor protection. The measures
available with SEBI include the following:
regulating the business in Stock Exchanges
(SEs) and any other securities markets
registering and regulating the working of
intermediaries like stock brokers, sub-brokers,
share transfer agents, bankers to an issue,
trustees of trust deeds, registrars to an issue,
merchant bankers, underwriters, portfolio
managers, investment advisers etc. associated
with securities markets
registering and regulating the working of the
depositories, participants, custodians of
securities, foreign institutional investors, credit
rating agencies and other intermediaries
prohibiting fraudulent and unfair trade
practices relating to securities markets
prohibiting insider trading in securities
regulating substantial acquisition of shares
and takeover of companies
promoting investors education and training
of intermediaries of securities markets
Carry out inspection/ audits of the SEs /
intermediaries etc.
call for information from any bank / any
authority / corporation / agencies in respect of
any transaction in securities which is under
investigation or inquiry by SEBI
performing such functions and exercising such
powers under the Securities Contracts
(Regulation) Act, 1956 (SCRA)
levying fees or other charges
conducting research
performing such other functions as may be
prescribed.

ACTION AGAINST DIRECTORS OF VANISHING
COMPANIES

Emergence of Vanishing companies has shaken
investors faith to the core. Matter was
campaigned and representations made to
ensure that such cases do not occur in future,
resulting in SEBI forming a committee
examining and exploring various courses of
action such as including authenticated
photographs, passport numbers, PAN number
etc. of the promoters / directors at the time of
incorporation and in the prospectus along with
monitoring the end use of funds.


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Aiming to help those having suffered losses due
to irregularities in the capital markets, SEBI on
9
th
January, 2014 notified new norms that
would allow it to utilise IPEF (Investor
Protection and Education Fund) funds for the
purposes of refund to aggrieved investors. The
new norms have been included in SEBI's
regulations for 'Investor Protection and
Education Fund (IPEF)'.

So far, the IPEF funds
was utilised for the
purposes of protection
and education of
investors including
activities like
seminars, training, for
aiding investor
associations and
refund of the security
deposits, among
others .
Moreover, SEBI said
"that no claim for
restitution from the disgorged amounts in a
specific case shall be admissible after a period
of seven years from the date of invitation of
claims for disgorgement in the said case by the
Board (SEBI)".
Following the amendments these norms will be
called the 'Securities and Exchange Board of
India (Investor Protection and Education Fund)
(Amendment) Regulations, 2014'. The new
norms were approved by the market
regulator in December, 2013. The IPEF includes
funds contributed by SEBI and grants and
donations from the central and state
governments.

To bring greater accountability in stock market,
SEBI is now holding individuals also accountable
along with their companies for any misdeeds.
The market regulator has lined up numerous
regulations to ensure effective execution of
these powers along with safeguards against any
possible misuse. SEBI has made it mandatory
for all major schemes of arrangement involving
listed companies to get "approval of the
majority of minority shareholders". This
concept has come in and this is a very
significant concept and gives a clear-cut
message to the whole world that small
investors cannot be taken for a ride by the
promoters or other large shareholders. India's
new stock exchange
MCX-SX has launched
four new service
centres to promote
investor education and
protection. The
Investor Service
Centres (ISCs) have
come up at
Ahmedabad,
Hyderabad, Indore and
Kanpur. This initiative
has not only increased
the exchange's reach to
investors and market
participants, but also made it convenient for
them to get their grievances redressed. ISCs
have investor grievance redressal committees
and also function as regional arbitration
centres. They facilitate complaint registration
and speedy resolution to investors, in addition
to making available educational material and
providing general awareness to visitors.
Hence, from above we can see that the
regulatory authority is taking various measures
for the investors education and protection and
also investors are required to take active steps
and initiatives for their education regarding
investments which will in turn act as a
protective shield for safeguarding their hard
earned money and will also improve the
economy.


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CREDIT RATING



Credit Rating is an activity of assessing &
evaluating the credit worthiness of a company
or a government or an individual. Credit rating
involves, evaluating the ability of a debtor to
repay the debts borrowed by him and the
possibility of failure to pay. This activity is
known as credit rating if done upon a company
or a government, & is known
as credit reporting if done
upon an individual.
Credit rating is done
by credit rating agencies like,
Credit Rating Information
Services of India Limited
(CRISIL) & Investment Information and Credit
Rating Agency of India Limited (IICRA), whereas
credit reporting is done by credit bureaus or
credit reporting agencies like, Credit
Information Bureau (India) Limited (CIBIL) &
Equifax Credit Information Services Private
Limited (ECIS). Apart from these, three top
global agencies dealing in credit ratings are
Moody's, Standard & Poor's (S&P's) and Fitch
Ratings.
Before deciding whether to invest into a
debt security from a company or foreign
country, it is significant in resolving whether the
prospective entity will be able to meet its
obligations. A credit rating agency enables in
doing this. Providing independent, objective
assessments of the credit worthiness of
companies and countries, a credit rating agency
helps investors decide how risky it is to invest
money in a certain country and/or security.
Credit rating is assigned upon those entities
which seek borrowings and such entities require
paying, to credit rating agencies for getting
credit rating for their equity or a debt issue.
There are credit rating
scales and credit scores
for credit rating and credit
reporting respectively. As
the credit ratings are
given by credit rating
agencies, such ratings will
have to undergo agency's calculation of
qualitative and quantitative data for a company
or government, including private data acquired
by the credit rating agencies' analysts.
Credit ratings can be assigned to short-
term and long-term debt obligations as well as
securities, loans, preferred stock and insurance
companies. Long-term credit ratings tend to be
an indicative of a country's investment
surroundings and/or a company's ability to
honor its debt responsibilities.
A poor credit rating indicates the credit
rating agency's opinion that the company or the
government may likely make a default, based
on the agency's investigation of the entity's
history and of the long term economic visions.
PRATAP SHEKHAR AGADI;
CS FOUNDATION PROGRAMME ;
DHARWAD.
A credit rating agency helps
investors decide how risky it is
to invest money in a certain
country and/or security.

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Credit ratings are not equal to or the same as
buy, sell or hold recommendations. Credit
ratings measure an entity's ability and
willingness to repay debt.
It is important to gain insight into
different investment environments and to
understand the risks and advantages these
environments pose. Measuring the ability and
willingness of an entity - which could be a
person, corporation, security or country - to
keep its financial commitments or its debt,
credit ratings are essential tools for making
investment decisions.

A Sovereign
credit rating is the
credit rating of a
sovereign entity, i.e.,
a national
government. The
sovereign credit
rating indicates the
risk level of the investing environment of a
country and is used by investors looking to
invest abroad. It takes political risk into
accounts. A. M. Best defines "country risk"
as the risk that country-specific factors
could adversely affect an insurer's ability to
meet its financial obligations.

A Short-term credit rating is a probability
factor of an individual going into default
within a year. This is in contrast to long-
term rating which is evaluated over a long
timeframe.

A Corporate credit rating is that, which is
concerned with corporations, which are
usually of a corporation's financial
instruments i.e. debt security such as a
bond, but corporations themselves are also
sometimes rated.
As stated earlier, Standard & Poor's,
Moody's and Fitch Ratings are the popular
credit rating agencies as of now. They use letter
designations such as A, B, C. Higher grades are
intended to represent a lower possibility of
default.
The ratings lie on a scale ranging
between highest credit quality on one end and
default or "junk" on the other. Long-term credit
ratings are
denoted with
a letter: a
triple A (AAA)
is the highest
credit quality,
and C or D
(depending
on the
agency
issuing the
rating) is the
lowest or
junk quality.
Within this
scale there are different degrees of each rating,
which are, depending on the agency,
sometimes denoted by a plus or negative sign
or a number.
CREDIT RATING
AGENCIES IN INDIA
SMERA
CRISIL
CARE Ratings
ONICRA Credit
Rating Agencies
Fitch Ratings
ICRA

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The following chart gives an overview of the different rating symbols that Investment
Information and Credit Rating Agency of India Limited (IICRA) issues:
SL. NO. SYMBOL DESCRIPTION OF THE SYMBOL
1 AAA Highest Safety
2 AA High Safety
3 A Adequate Safety
4 BBB Moderate Safety
5 BB Inadequate Safety
6 B High Risk
7 C Substantial Risk
8 D Default

In contrast, following chart depicts the various rating symbols that Moody's and
Standard & Poor's issue:








Credit rating is a useful instrument for both the investors and entities looking for investment, as well. An
investment-grade rating can put a security, company or country on the global radar, attracting foreign
money and boosting a nation's economy. Indeed, for emerging market economies, the credit rating is
key to displaying their worthiness of money from foreign investors. And because the credit rating acts to
facilitate investments, many countries and companies will strive to maintain and improve their ratings,
hence ensuring a stable political environment and a more transparent capital market.

BOND RATING
GRADE RISK MOODY'S STANDARD &
POOR'S
Aaa AAA Investment Lowest Risk
Aa AA Investment Low Risk
A A Investment Low Risk
Baa BBB Investment Medium Risk
Ba, B BB, B Junk High Risk

Caa/Ca/C CCC/CC/C Junk Highest Risk
C D Junk In Default

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ACQUISITIONS STRATEGY












Acquisitions have become major strategic
levers, purchase by one company of controlling
interest the share capital, of another company.
A takeover may be friendly or hostile,
depending on the offeror companys approach,
and may be affected through agreements
between the offeror and the majority
shareholders, purchase of shares from the open
market, or by making an offer for acquisition of
the offerees shares to the entire body of
shareholders.

TYPES OF ACQUISITIONS:

I. FRIENDLY TAKEOVER
It involves an acquisition of the
target company through negotiations between
the existing promoters and prospective
investors. Kingfisher and Air Deccan is the best
example for this kind of takeover.

II. HOSTILE TAKEOVER
If the board rejects the offer, but
the bidder continues to
pursue it or the bidder
makes the offer without






informing the board beforehand.

III. LEVERAGED BUYOUTS
The acquisition is funded by
borrowed money. Often the assets of the target
company are used as collateral for the loan. The
TATA-Coros Deal, one of biggest takeover by an
Indian Company.

IV. BAILOUT TAKEOVERS
It is an another form of takeover is a
bail out takeover in which a profit making
company acquires a sick company. Here again
we can consider the example of UB Group,
where Diaegeohas acquired the controlling
stake in pursuance to an agreement to finance
the ailing Kingfisher Airlines.

V. INDIRECT TAKEOVER:
It refers to those companies where
the acquirer gains control by default due to the
reason that the acquirer has- taken control in
the holding company. The takeover involving
Gillete is the best example over here,



KEY CORPORATE AND
SECURITIES LAWS
CONSIDERATIONS:

1) COMPANIES ACT,
1956.

AKASH. R;
CS EXECUTIVE PROGRAMME;
BANGALORE.


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The Companies Act does not make a reference
to the term acquisition per se. However, the
various modes used for making an acquisition of
a company involve compliance with certain key
provisions of the Companies Act. The modes
most commonly adopted are a share acquisition
or an asset purchase.

I. ACQUISITION OF SHARES:
A share acquisition may take place by
acquisition of all or some of the existing shares
of the target by the acquirer, or by way of
subscription to new shares in the target so as to
acquire a controlling stake in the target...

ii. Asset / Business Purchase
An asset purchase involves the sale of
the whole or part of the assets of the target to
the acquirer.

2) SECURITIES LAWS

i. Securities and Exchange Board of India (Issue
of Capital and Disclosure Requirements)
Regulations, 2009:
On August 26, 2009, Securities and
Exchange Board of India notified the Securities
and Exchange Board of India (Issue of Capital
and Disclosure Requirements) Regulations,
replacing the erstwhile Securities and Exchange
Board of India (Disclosure and Investor
Protection) Guidelines, 2000.

As per the ICDR Regulations, if the acquisition of
an Indian listed company involves the issue of
new equity shares or securities convertible into
equity shares (Specified Securities) by the
target to the acquirer, the provisions of Chapter
VII (Preferential Allotment Regulations)
contained in ICDR Regulations will be
applicable. Some of the highlighted provisions
of the Preferential Allotment Regulations.

A. Pricing of the Issue
B. Lock-in
C. Exemption

II. TAKEOVER CODE:

A. OPEN OFFER REQUIREMENT
If an acquisition is contemplated by way of issue
of new shares, or the acquisition of existing
shares, of a listed company, to or by an
acquirer, the provisions of the Takeover Code
may be applicable.


B. VOLUNTARY OFFER
Any acquirer whose shareholding / voting rights
in a company is between 25% and 75% is
permitted to voluntarily make a public
announcement of an open offer for acquiring
additional shares of the company subject to
their aggregate shareholding after completion
of the open offer not exceeding 75%.

C. PRICING OF THE OFFER

The offer price shall be the highest of:
a) The highest negotiated price per share of the
target company.
b) The volume-weighted average price paid or
payable for acquisitions.
c) The highest price paid or payable for any
acquisition, by the acquirer or by any person
acting in concert with him, during the twenty-
six weeks immediately preceding the date of
the public announcement.

TAKEOVER AND COMPLIANCE WITH MINIMUM
PUBLIC SHAREHOLDING

A recent informal guidance issued by the
Securities and Exchange Board of India deals
with the questions pertaining to the
intersection of the SEBI Takeover Regulations of

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Milaap - 2014

2011 and the process of complying with the
minimum public shareholding in listed
companies. In the case involving R systems
International Limited, the acquirer made an
open offer and acquired certain shares of the
target company so as to hold 34.82% shares. On
the other hand, the promoters of the company
held 50.17%, thereby leaving the public
shareholding at 15%, which is less than the
required minimum of 25%. In this case, an
additional fact of relevance was that the
acquirer was not in any way connected with or
acting in concert with the promoters.

With regard to Reg. 7(4) of the SEBI
Takeover Regulations, the acquirer was
required to reduce its shareholding so as to
ensure that the target company complies with
the minimum public shareholding norms. After
a consideration of the various legal provisions,
SEBI came to conclusion the acquirer was to be
treated as part of the public, thereby fulfilling
the minimum public shareholding norms. The
acquirer was therefore not required to reduce
its shareholding in the target.

While this ruling favours potential acquirers, it
leaves some possibilities and questions open.

For example, it may be possible for single
holder to hold nearly 35% and still be treated as
part of the public. Moreover, the question as
to whether such a large shareholding would
amount to control has not been specifically
answered, one can deduce from the results of
the informal guidance that SEBI does not
believe this to amount to control. This
appears to depart to some extent from its
stance in other cases such as Subhkam
Investments, but that may also be relatable to
the facts of the specific case where the
promoters held 50%. In other words, the
implication is that a shareholder holding a
significant percentage of shares many not have
much control if that persons shares are held in
the shadow of a much larger group of
shareholders such as promoters.

CONCLUSION:

Even though the issues raised in the
informal guidance are somewhat technical and
microscopic in nature, they may signal some
broader trends in the regulatory thought-
process.

REFERENCES:


1) THE GAZETTE OF INDIA .
2) WEB- http://www.sebi.gov.in
3) http://pxvlaw.wordpress.com


Either Write Something Worth Reading or Do Something Worth Writing Benjamin Franklin


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Milaap - 2014

RAKESH KRISHNAN
CS PROF. PROGRAMME.

COMMITTEES UNDER COMPANIES ACT






The Companies Act, 2013, marks a major step
forward and appreciates the current economic
environment in which companies operate. The
Act has focused on the following points
Reporting Framework, Higher Accountability,
Management Responsibility and Investor
Protection. This article contains brief structure
and requirement of various committees under
Companies Act, 2013.
I. INTRODUCTION
MEANING OF COMMITTEE:
A group of people officially delegated to
perform a function, such as investigating,
considering, reporting, or acting on a matter.

V VA AR RI IO OU US S C CO OM MM MI IT TT TE EE ES S
I IN N A A C CO OM MP PA AN NY Y
The Companies Act,
2013, read with the
draft rules, prescribes
the formation of
different committees of
the Board of Directors
of a Company for
different purposes. The
Committees mandated by the new Act are:
1. Corporate Social Responsibility(CSR)
Committee - Section 135
2. Audit Committee - Section 177
3. Nomination and Remuneration
Committee Section 178
4. Stakeholders Relationship Committee
Section 178
Other than these four committees, there are
few other committees formed under different
legislations for good corporate governance:
a) Internal Complaints Committee (Sexual
Harassment of Women at Workplace
(Prevention, Prohibition and Redressal)
Act, 2013)
b) Committee under Labour Law
c) Any Committee as Required by the
company
II. COMMITTEES
UNDER
COMPANIES
ACT, 2013
C Co or rp po or ra at te e s so oc ci ia al l
r re es sp po on ns si ib bi il li it ty y
( (C CS SR R) ) c co om mm mi it tt te ee e
- - S Se ec ct ti io on n 1 13 35 5

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The guiding principle behind this committee is
the Corporate Social Responsibility of a
company. CSR is a way of conducting business,
by which corporate entities visibly contribute to
the social good. Socially responsible companies
do not limit themselves to using the resources
for engaging in activities that increase only their
profit. They use CSR to integrate economic,
environment and social objectives of a
companys operation with growth.
A AP PP PL LI IC CA AB BI IL LI IT TY Y: :
As per Section 135 of the Act, companies with a
specified net worth or turnover or net profit are
required to mandatorily spend 2 percent of its
average net profit made during the three
immediately preceding
financial years towards
specified CSR activities.
Every company having a net
worth of INR 500 crore or
more, or a turnover of INR
1000 crore or more or a net
profit of INR 5 crore or more
during any financial year will
have to comply with the CSR
provisions by constituting CSR
Committee
If the above criteria is met,
they are required to spend at least 2 % of the
average net profit of the past three financial
years on specified CSR activities.
Note - While the threshold limit of net worth
criteria and the turnover criteria are kept
higher, the net profit threshold limit of a mere
INR 5 crore will bring majority of companies
under the CSR net.
A AP PP PO OI IN NT TM ME EN NT T O OF F C CS SR R C CO OM MM MI IT TT TE EE E: :
Every qualifying company needs to constitute a
CSR committee. The provisions under the Act
require a minimum of 3 directors out of which
at least 1 director shall be an independent
director.
The mandate of the said CSR committee shall
be:
To formulate and recommend a CSR policy to
the Board;
To recommend the amount of expenditure to
be incurred on CSR activities and monitor CSR
policy.
R RE ES SP PO ON NS SI IB BI IL LI IT TY Y O OF F T TH HE E B BO OA AR RD D: :
The Board of every qualifying company is
required to hold the following responsibilities:
To approve the CSR policy;
To ensure that the CSR activities are
undertaken by the company;
To ensure 2 % spending on CSR activities;

A AU UD DI IT T C CO OM MM MI IT TT TE EE E - - S SE EC CT TI IO ON N 1 17 77 7
Role of audit Committee has sharpened specific
responsibilities including recommending
appointment of auditors and monitoring their
independence and performance, approval of
related party transactions, scrutiny of inter-
corporate loans and investments, valuation of
undertaking/assets etc.
As per the Act, every listed company
and public company having paid up
capital of one hundred crore rupees or

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Milaap - 2014

more; or which has, in aggregate,
outstanding loans or borrowings or
debentures or deposits exceeding two
hundred crore rupees shall constitute
an Audit Committee
Committee shall consist of a minimum
of 3 directors with majority of
Independent Directors

S ST TA AK KE EH HO OL LD DE ER R S S R RE EL LA AT TI IO ON NS SH HI IP P C CO OM MM MI IT TT TE EE E
S SE EC CT TI IO ON N 1 17 78 8
The board of directors of a company which
consists of more than 1,000 shareholders,
debenture-holders, deposit-holders and any
other security holders at any time during a
financial year shall constitute a Stakeholders
Relationship Committee consisting of a
chairperson who shall be a non-executive
director and such other members as may be
decided by the board. Further, the section
under sub-section 6, recognizes the concept of
the Stakeholders Relationship Committee which
is required to consider and resolve the
grievances of security holders of the company
(section 178 of the 2013 Act).

N NO OM MI IN NA AT TI IO ON N A AN ND D R RE EM MU UN NE ER RA AT TI IO ON N
C CO OM MM MI IT TT TE EE E S SE EC CT TI IO ON N 1 17 78 8
Mandatory in case of listed companies and
other prescribed classes of companies.
Composition 3 or more Non-Executive
Directors of which at least shall be
Independent Directors. The Chairperson of the
company can be a member of the committee,
but cannot be a chairperson of the committee.
This committee shall, amongst other things:
Identify persons who are qualified to be
directors and who can be appointed.
Recommend to the Board, policy relating to
remuneration to directors, KMP and other
employees keeping in mind an appropriate
performance bench mark.
Be responsible for evaluation of every director
of the Board.

III. OTHER MANDATORY COMMITTEES UNDER
DIFFERENT ACTS
I IN NT TE ER RN NA AL L C CO OM MP PL LA AI IN NT TS S C CO OM MM MI IT TT TE EE E ( (P PO OS SH H
C CO OM MM MI IT TT TE EE E) )
The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act,
2013 is a legislative act passed by the Lok Sabha
and Rajya Sabha in India on September 3, 2012
and on February 26, 2013 respectively. The Act
has been enacted with the objective of
providing women with protection against sexual
harassment at the workplace and for the
prevention and Redressal of complaints of
sexual harassment.
The Act requires every employer of a
workplace, by an order in writing, to constitute
a Committee to be known as the Internal
Complaints Committee at each office or branch
of an organization employing at least 10
employees. In case the offices or administrative
units of the workplace are at different places or
divisional or sub-divisional level, the Internal
Committee shall be constituted at all
administrative units or offices.
IV. CONCLUSION
Each board must determine which committee
structure works best for it. The committee
structure should be flexible and meet the
changing needs of the organization. There are
a variety of options to choose from and board
should be willing to experiment, keeping in
mind that committees are only tool to the
boards to get their work done.

The right tool for today may not be the right tool for tomorrow. The challenge is in knowing
which tool will get the job done.

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PREETHA REDDY
Apollo which is the biggest healthcare groups in Asia. She joined it
as Joint Managing Director in 1989 and then became the
Managing Director of the Group.
Gender Equity on Corporate Boards
A Culture Shift on the horizon



Although the constitution of India has granted
men and women equal rights, we still find that
India ranks 28th in terms of the presence of
women in Board level positions. Women
constitute less than 7% of the total number of
Board members in 2013 while the total women
workforce is to the tune of nearly 40% in India.
Today Indian women find presence in almost all
sectors of employment and it is an opportune
time to place themselves in positions of
authority.
With the new Companies Act mandating
women's representation on boards , we are
bound to see
a gender-diverse board of directors and senior
leadership team who will help in leading and
managing sustainable corporations enabling
effective business strategies and balanced
policies.
WHY FOCUS ON WOMAN DIRECTORS?
In India , we have high quality women entering
the workforce but there is a lot of leakage at
the middle management level, which is creating
an imbalance in the work arena. Hence, it is
imperative to have effective role models in the
top management who will retain talent and
control employee (women) turnover.
Once the gender balance is created across all
levels in the Organization, then most women
related issues plaguing the country will
automatically subside leading to a better,
progressive and a secure nation.
WHAT ARE THE PROVISIONS OF ACT ?
The provisions relating to appointment of
directors are covered in Section 149 of the Act,
2013. It deals with the provisions relating to
appointment of directors and matters such as
the minimum and maximum number of
directors, type / class of directors to be
appointed. Elaborately it deals with attributes
of an independent directors and time limit of
one year within which the provisions have to
be complied for achieving employment of
woman directors and minimum number of
independent directors on the board.
LAVANYA. L;
CS EXECUTIVE PROGRAMME;
BANGALORE.

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PROVISIONS RELATING TO WOMEN
DIRECTORS:
Proviso to Section 149(1) stipulates that
Companies with such criteria to be announced
shall appoint woman directors. Rules currently
displayed on the MCA web site for comments
indicate the following for appointment of
women directors on the boards of companies:

a. Every listed company shall appoint at least
one woman director within one year from the
commencement of the second proviso to
Section 149(1).
b. Every other Public company:
- having paid up capital of 100 crores or more
or
- a turnover of 300 crores or more
have to compulsorily appoint within 3 years
from the commencement of second proviso to
Section 149(1) of the Act.
Time limit of one year is provided to fall in line
with the new requirement. A search for right
kind of women directors has
to be made and it is certainly
a time consuming exercise.
Will woman directors
make an impact?
In most organizations, the
process of identifying and
grooming potential women
directors is not a structured
or formal one. The talent
management process must
work toward developing the
required skills / competencies
and create a pipeline of
potential women directors.
However , we already have a lot many women
occupying key posts in many large
Organizations and reputed private banks.
Women namely Nainalal Kidwai, Chanda
kochhar, Sheekaswarup, Kalpana Morparia
have earned a reputation for leading
successfully the banks as executives can also
make an impact as woman directors.
There is vast talent but the mindset of
corporate world needs change and must come
forward to appoint women in Senior
Management positions. With this mandatory
provision for representation to women on the
Boards, India Inc is likely to have more
talented women on the boards of their
companies in the near future.
The new mandate has evoked a mixed
reaction in the corporate sector. There are
some who feel that too little has been done
towards giving women their rightful place in
companies.
Heres what some of the other heavyweights
of corporate India have to say on the subject:

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Milaap - 2014

According to Zia Mody, the founder of
Mumbai-based AZB & Partners, ideally, a
board should have at least two women
directors to have a quality discussion.
It is a good start by the government to
mandate at least one director on the board of
companies. I truly believe that once these
companies fulfill these mandatory
requirements, they will start witnessing the
merit of women directors on the board. I think
that women directors will bring diversity to
the boards of Indian companies. They can
bring richer corporate governance standards
and can improve the quality of discussions on
the board rooms says Kalpana Morparia who
is a member of JP Morgans global strategy
team and also serves as an independent
director on the boards of several leading
Indian companies.
Akhila Sivadas, Executive Director, Centre for
Advocacy and Research, said the need to
have a rule was felt because women are
bringing a lot of strength to many businesses.
Anasuya Gupta, chairman and managing
director, CICO Technologies, said she was
happy because at least the government had
taken the first step. If we see universally, in
India women are far, far below compared to
where women globally are, she adds.
Arun Duggal, chairman, Shriram Capital, who
has started an initiative to train women
directors, felt this decision is a good small
step.
He, however, pointed out that the bill does
not say whether woman director also meant
independent woman director. If it has meant
so then we might end up seeing wives and
relatives of businessmen becoming board
directors. But that will not solve the
problems.
Duggal added: The number of women
representation is very low. Sixty percent of
BSE 500 companies do not have any woman
director. Just having a law without preparatory
work could lead to a scramble to get women
on the board.
I believe there are fantastic people out there
who can add value to the board. You are
talking about 6,000 companies and you can
surely find out 6,000 women to be on the
boards of these companies, says Amit Tandon,
founder and managing director of Institutional
Investor Advisory Services India Ltd.
The Gender Equity facilitated by the legislation
will bring in a cultural shift in our Corporate
governance in the time to come. The success
of this initiative will set a landmark towards
the overall development of women and
ensuring their due rights and safety which is
the immediate need of the hour.

Let us sincerely hope that each competent woman will stand up to the challenge, which will
greatly benefit the future generation of women who are out there to succeed.


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Milaap - 2014

VIJAYA KUMAR;
CS PROFESSIONAL PROGRAMME;
TRAINEE AT DWARAKANATH .C


A GIFT FROM GOD




Human life is a very beautiful gift that has been
given by God to us to prove ourselves. Have you
ever accepted it in the way he is expecting us to
take it? Do you really know what is he
expecting? He just expects us to love the gift
that has been granted by him to us. Confusing?
Yes, do you ever love your life? Have you ever
tried to fall in love with yourself?
From the day we were born and got the
maturity to think, we also learnt simultaneously
the word called Expectations i.e., mainly from
others and not from ourselves! In the process of
loving others, have you ever felt that you have
forgotten to think how much you are important
to yourself?
It is in the human nature to show care and
affection to others which brings the joy of
loving others rather than oneself. Is it not
strange to hear? But people hardly find time to
realize this you may succeed in this task but
do you really feel happy with this. Are you
satisfied with the way you are leading your life?
There is a famous quote You cannot love
others until you love yourself but this dictum I
dont believe it to be true. I know people, and
for years I could count myself among them, who
do not love themselves yet make choices to
love others, some even heroically. It is more
correct to say, the more youre able to love and
accept yourself, the better, you will love others.
You might be highly successful in your career
front, but think once are you really satisfied
with what you are today? Have you met the
expectations which are expected from you
today? Are you making an effort to give back
what you have learnt to the society?
Example: "Since I need your attention and
approval to feel good about myself, it's okay for
me to do whatever I can, to get what I need -
such as being nice, getting angry, blaming
others or withdrawing my love from others."
These kinds of things will never let you be
successful in corporate world.
Life is a journey with full of expectations around
you; difficulties which you might have to face in
the long way but surely you will learn a lesson
from this walk either it might be good or bad.
The most fundamental thing to learn in this
journey is to love yourself which is the key to
happiness. If you start creating an environment
wherein you can love yourself then you will
have the power to create a life of your choice
and the way you want. Always remember one

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cannot find peace in oneself until and unless he
enjoys life and takes it the way it comes.
If one does not know how to love oneself then
it can be severely debilitating. At the very least
case, youre plagued by indecision and self
doubt. In more intense cases there is
depression and self hatred,
which cripples you in every
area of your life and there
will be an inner war in
yourself which will be
going on that divides your
energy and sabotages your
efforts to move toward
happiness.
A few examples where you
are confused or not loving
yourself/your profession
"There is something wrong in what I am
doing. Ive really messed it up."
"I was pushed into this profession for
which I have no passion."
"Im incompetent. I dont know what I
am doing."
"Im not good (smart, attractive, rich,
etc.) enough."
"I should have ----."
"I can never get into that job."
"Ill never be able to do this. I dont
have the capabilities of what it
requires."
At a deeper level, you might hear:
"I dont deserve to be successful. I dont
deserve to have what I want."
"I deserve to be punished. I dont
deserve to be forgiven."
Lack of loving oneself can also get projected out
as: "No person in this world likes me."
A good first step in learning how to love
yourself is to periodically check in with yourself
through the day and notice how youre feeling
happy, alive and open? Closed, contracted or
Neutral?
If you are feeling negative,
trace back to when you first
started feeling that way.
Chances are really good that
somewhere at that juncture
you told yourself something
negative about yourself.
What might first come to
your awareness is a negative
thought about something else. However, if you
look closer youll find that somewhere along the
way the part that really got you feeling bad was
a negative thought about yourself. This negative
self-talk is a symptom that shows up chronically
until you learn how to love yourself with the
profession you have.
Never let your feelings rule your life nor any
kind of emotions rule your profession, try to
respect your profession and dont think that
you are giving yourself in front of others.
A few tips to love yourself in your profession:
1. Be kind and great to yourself.
2. Work on forgiving yourself
3. Never compromise with your principles-
those will carry you to the top.
4. Say goodbye to unethical practices.
5. Respect other profession with kindness
but dont love it.
Be very much thank full and great full to what you are today!

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INTRODUCTION:
Sexual harassment in the workplace is a serious
bone of contention that renders womens
involvement at work unsafe and affects the
right to work with dignity. It is an unwelcome
verbal, visual or physical conduct of a sexual
nature that is severe or pervasive and affects
working conditions or creates a hostile work
environment. Generally sexual harassment is a
sexually oriented conduct that may endanger
the victims job, negatively affect the victims
job performance or undermine the victims
personal dignity. Each such incident results in
violation of the fundamental rights of 'Gender
Equality' and the 'Right to Life and Liberty'. It is
a clear violation of the rights under Articles 14,
15 and 21 of the Constitution. It may manifest
itself physically or
psychologically.
However it may
also assume
blatant and ugly
forms like leering,
physical grabbing
and sexual assault
or sexual
molestation.
VISHAKHA AND OTHERS Vs. STATE OF
RAJASTHAN:

Vishakha and other women groups filed a Public
Interest Litigation (PIL) against the State
of Rajasthan and the Union of India to enforce
the fundamental rights of working women
under Articles 14, 19 and 21 of the Constitution
of India. The petition was filed after Bhanwari
Devi, a social worker in Rajasthan was brutally
gang raped for stopping a child marriage. The
court decided that the consideration of
"International Conventions and norms are
significant for the purpose of interpretation of
the guarantee of gender equality, right to work
with human dignity in Articles 14, 19(1)(g) and
21 of the
Constitution
and the
safeguards
against sexual
harassment im
plicit therein."

SAFETY OF WOMEN AT
WORK PLACE
TULASI .V .HALASAGI ;
CS PROF. PROGRAMME;
J. SUNDHARESAN & ASSOCIATES.


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The Supreme Court in Vishaka v. State of
Rajasthan for the first time recognized,
acknowledged and explicitly defined sexual
harassment as an unwelcome sexual gesture
or behaviour aimed at or having a tendency to
outrage the modesty of a woman directly or
indirectly. Defining sexual harassment as an act
aimed towards gender based discrimination
that affects womens right to life and livelihood,
the Supreme Court developed broad based
guidelines for employers. These mandatory
guidelines, known as Vishaka guidelines, are
aimed towards resolution and prevention of
sexual harassment. These guidelines bring in its
purview all employers in organized and
unorganized sectors by holding them
responsible for providing a safe work
environment for women. Expressly prohibiting
sexual harassment at the
work place, these legally
binding guidelines put a
lot of emphasis on
appropriate preventive
and curative measures.
The guidelines include
the following as acts of
sexual harassment:
physical contact and
advances, showing pornography, a demand or
request for sexual favours, any other
unwelcome physical and verbal/non T verbal
harassment such as whistling, obscene jokes,
and comments about physical appearances,
threats, innuendos, and gender based
derogatory remarks.

LEGAL REMEDY:
However, before 1997, women experiencing
sexual harassment at the workplace had to
lodge a complaint under Section 354 of the
Indian Penal Code that deals with the criminal
assault of women to outrage womens modesty,
and Section 509 of the IPC that punishes an
individual or individuals for using a word,
gesture or act intended to insult the modesty of
a woman. These sections left the interpretation
of outraging womens modesty to the
discretion of the police officer. The entire
scenario changed in 1997 with the introduction
of the Vishaka guidelines.

The Sexual Harassment of Women at Work
Place (Prevention, Prohibition and Redressal)
Act, 2013:

It is a legislative act in India that seeks to
protect women from sexual harassment at their
place of work. It was passed by the Lok Sabha
on 3 September, 2012. It was passed by
the Rajya Sabha on 26 February, 2013. The Bill
got the assent of
the President on
23 April, 2013. The
Act came into
force from 9
December 2013.
The Act will ensure
that women are
protected against
sexual harassment
at all the work places, be it in public or private.
This will contribute to realisation of their right
to gender equality, life and liberty and equality
in working conditions everywhere. The sense of
security at the workplace will improve women's
participation at work, resulting in their
economic empowerment and inclusive growth.

COMPLAINT MECHANISMS UNDER THE 2013
ACT:

The Act contemplates the constitution
of Internal Complaints Committee (ICC) (Sec.
4) at the work place and Local Complaints

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Committee (LCC) at district and block levels
(Sec. 6). A District Officer (District Collector or
Deputy Collector) shall be responsible for
facilitating and monitoring the activities under
the Act. Every workplace employing 10 or more
employees is required to constitute an ICC. The
ICC is required to consist of at least four
members, and its presiding officer is required to
be a woman employed at a senior level.
Provisions have been made in case no senior
woman employee is available, to nominate a
woman presiding officer from another office,
administrative unit, workplace, or organisation.
Further, one half of the members must be
women. LCCs are to be set up by the
appropriate government which shall receive
complaints in respect of establishments that do
not have ICCs on account of having fewer than
10 employees and to receive complaints from
domestic workers.

THE DUTIES OF AN EMPLOYER:

The Act makes it the duty of every employer to:
a) provide a safe working environment at the
workplace which shall include safety from all
the persons with whom a woman comes into
contact at the workplace; b) display at any
conspicuous place in the workplace, the penal
consequences of sexual harassment and the
order constituting the ICC; c) organise
workshops and awareness programmes; d)
provide necessary facilities to the ICC for
dealing with complaints and conducting
inquiries; e) assist in securing the attendance of
the respondent and witnesses before the ICC; f)
make available such information to the ICC or
LCC, as it may require; g) provide assistance to
the woman if she so chooses to file a criminal
complaint; h) initiate criminal action against the
perpetrator; i) treat sexual harassment as a
misconduct under the service rules and initiate
action for such misconduct;
and j) monitor the timely
submission of reports by the
ICC.

PENALTIES:

Where the employer fails to
comply with the provisions
of the Act, he shall be liable
to be punished with a fine
which may extend to Rs.
50,000. In case of a second or subsequent
conviction under this Act, the employer may be
punished with twice the punishment prescribed
or by cancellation of his license or withdrawal of
his registration.

BIBLIOGRAPHY:

Introduction To The Constitution Of
India by Durga Das Basu.
Constitution of India by Dr. J. N. Pandey
The Sexual Harassment of Women at
Workplace (Prevention, Prohibition and
Redressal) Act, 2013 Published in The
Gazette of India.
The Sexual Harassment Bill undermines
the innovative spirit of Vishaka" Naina
Kapur, Lawyer and Equality
Consultant". Bar and Bench.
Vishaka and others V. State of
Rajasthan and others (AIR 1997
SUPREME COURT 3011)


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RESPONSIBILITIES OF COMPANY SECRETARY AS COMPLIANCE
OFFICER UNDER LISTING AGREEMENT

NANDAN SHANBHAG;
LL.B, CS PROFESSIONAL
TRAINEE.




Company Secretary as Compliance Officer:
The Clause 47 of the Listing Agreement provides
for appointment of Company Secretary to act as
Compliance Officer who will be responsible to
report the Companys Board in each meeting,
monitor the share transfer process, coordinate
with various authorities such as SEBI, Stock
Exchanges, Registrar of Companies, Registrar
and Transfer Agents, Credit Rating Agencies etc.
and investors with respect to investor
grievances.
The Listed companies are required to make
continual disclosures to stock exchanges to
safeguard and promote the interest of investors
in India.
CATEGORIES OF COMPLIANCES:
The compliances under the Listing Agreement
can be divided into two parts i.e. periodical
compliances and event based compliances.

The Company Secretary plays a vital role as a Compliance
Officer under Listing Agreement. Non compliance of any
clauses/conditions of Listing Agreement may not only result
in high amount of fine and penalties on the Company but may
also lead to suspension and revocation of trading of shares
listed.
Meaning of Listing Agreement:
The Company who is willing to get their
shares listed on stock exchange has to enter
into an agreement with the stock exchange.
Such an agreement is called Listing
Agreement.


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PERIODICAL COMPLIANCES:
SL.
NO
.
PARTICULARS
CLAUSE
OF LA
DUE DATE
1
Corporate Governance Report signed by the Compliance Officer of
the Company to SE within 15 days from end of each quarter
49
15th July, 15th October,
15th January & 15th April.
2.
Shareholding Pattern of the Company within 21 days from end of
each quarter in the prescribed format to SE.
35
21st July, 21st October,
21st January & 21st April.
4
Submit Certificate obtained from Practicing Company Secretary
certifying that all certificates have been issued within 15 days of
lodgment for transfer, sub-division etc. to SE within 30 days from
end of each half year.
47 (c ) 30th October & 30th April.
5
Notice to SE for holding of Board Meeting in which quarterly
results (Unaudited/audited) of Company is to be approved.
41
7 clear calendar days prior to
the meeting (excluding the
date of the intimation and date
of the meeting).
6
Publication of notice of BM in which quarterly results are to be
approved. In 2 Newspapers (one English language circulating in
substantially whole of India and in one Regional Language
newspaper of the State in which Registered Office of the Company
is situated ).
41
The next day after SE had been
intimated of the same.
7
Submission of Financial Results with the SE(Audited Financial
Results or Unaudited financial results + a copy of limited review
report)
41
Within 15 minutes of
conclusion of the Board
Meeting.
8
Publication of approved quarterly results. In 2 Newspapers (one
English language circulating in substantially whole of India and in
one Regional Language newspaper of the State in which
Registered Office of the Company is situated )
41
Within 48 hours of Board
Meeting.
9 Payment of Annual Listing Fees 38 30th April
10
Six copies of the Statutory and Directors Annual Reports, along
with Form A(Un-qualified / Matter of Emphasis Audit Report) or
Form B (Qualified/ Subject to Audit Report), as applicable, Balance
Sheets and Profits & Loss Accounts and one copy each to all the
recognized stock exchanges in India.
31
Promptly and without
application.
11
Dispatch copy of full annual report containing its Balance Sheet,
Profit & Loss account and Directors Report to all shareholder(s)
32 Promptly.
12
Advance notice of Closure of Transfer Book/Record date fixed for
the purpose of corporate benefits like mergers, de-mergers, split ,
bonus, dividend, rights etc
16 7 working days.
13
Send Copy of the proceedings of Annual General Meeting of the
Company to SE
31(d) Within a reasonable time.

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EVENT BASED COMPLIANCES:
SL.
NO
.
PARTICULARS
CLAUSE
OF LA
TIME PERIOD
1.
Prior intimation to SE about BM in which decisions relating to Buy
Back, Dividend, Rights Issue, Bonus Shares is to be made.
19 2 working days in advance.
2.
The Company has to intimate the outcome of the board meeting
(as intimated under clause 19).
20 Within 15 minutes.
3
Any increase in share capital, the reissues of forfeited shares or
securities.
22
Within 15 minutes of the closure of
the board meeting.
4
The Company has to file any scheme/petition proposed to be filed
before any Court or Tribunal under sections 391, 394 and 101 of
the Companies Act, 1956, with the stock exchange, for approval.
24 (f)
At least 1 month before it is
presented to the Court or Tribunal.
5
If any change in the form or nature of any of its securities that are
listed on SE or in the rights or privileges of the holders.
28 21 days prior notice.
6
Any proposed change in the general character or nature of its
business.
29 Promptly notify.
7 Any change in BODs, MD, Secretary or Auditors. 30 Immediately after the change.
8
Submit to the SE six copies (one of which will be certified)
amended Memorandum and Articles of Association.
33
As soon as adopted by the
members in general meeting.
9
Any capital restructuring of the company resulting in a change
exceeding +/-2% of the total paid-up share capital.
35 Within 10 days of such a change.
10
The Company has to intimate to the SE about the material events
which will have a bearing on the performance / operations of the
company as well as price sensitive information both at the time of
occurrence of the event and subsequently after the cessation of
the event.
36
Immediately on occurrence and
after such events.
11 Submission of copy of MOU executed with RTA. 47(e)
Within 48 hours of keeping at
Registered Office for public
inspection.

CONCLUSION: All disclosures/announcements
to NSE and BSE have to be made through online
platforms. The user name and password will be
provided to the Company by NSE and BSE.
The above compliance checklist is prepared
keeping in view the latest Listing Agreement of
NSE and BSE and circulars issued by SEBI
recently. However, these are subject to change
from time to time.

BIBLIOGRAPHY:
Listing Agreement
NSE and BSE
Company Law Ready
Reckoner -Dr. D.K.
Jain, Bharat Law
House
WEBSITES:
www.nseindia.com
www.bseindia.com


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ROLE OF COMPANY SECRETARY UNDER
THE COMPANIES ACT, 2013












SMT. RAJESHWARI S;
CS PROFESSIONAL PROGRAMME;
HEMANTH BISWAJIT & CO


The new Companies Act 2013 has defined
the role of Company Secretaries with
definitive terms. He/she is a key managerial
person or compliance officer.

A Company Secretary is responsible for the
efficient administration of a company,
particularly with regard to ensuring
compliance with statutory and regulatory
requirements and for ensuring that
decisions of the Board of Directors are
implemented.

As per Section 2 (24) of the Companies Act,
2013 (Act) company secretary or
secretary means a company secretary as
defined in clause (c) of sub-section (1) of
section 2 of the Company Secretaries Act,
1980 who is appointed by a company to
perform the functions of a company
secretary under this Act;

Sub section 51 to Section 2 of the Act
defines a Company Secretary is one of the
key managerial person of the company.

Section 203 of the Act prescribes that every
company belonging to such class or classes
of companies shall have the following
persons as whole-time key managerial
personnel,

1. Managing director, or Chief
Executive Officer or manager and in
their absence,
a whole-time director;
2. Company Secretary; and
3. Chief Financial Officer.


Times have changed. A company secretary is a
much more important person nowadays ... He is
an officer of the company with extensive duties
and responsibilities.

Lord Denning and Lord Justice Salman in
Panorama Developments (Guild Ford) Limited V/s
Fidellis Furnishing (U. K. 1971)



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STATUTORY STATUS TO THE SECRETARIAL
STANDARDS

Explanation to section
205 prescribes that
Secretarial Standards
means Secretarial
Standards issued by the
Institute of Company
Secretaries of India
constituted under
section 3 of the
Company Secretaries
Act, 1980 and approved
by the Central Government.

INTRODUCTION OF SECRETARIAL AUDIT:

Based on the recommendations made by
Parliamentary Standing Committee,
Secretarial Audit is introduced for the first
time in India.

According to Section 204 of
the Companies Act, 2013, the provisions
relating to Secretarial Audit are as follows:
a) Every listed company and a company
belonging to other class of companies as
may be prescribed shall annex with its
Boards Report a Secretarial Audit
Report, given by a Company Secretary in
Practice, in such form as may be
prescribed.
b) The company will be obliged to give all
assistance and facilities to the Company
Secretary in Practice for auditing the
secretarial and related records of the
company.
The Board of Directors, in their report
shall explain in full, any
qualification or
observation or other
remarks made by
the Company Secretary
in Practice in his
report.
As the importance of
effective corporate
governance continues to
be critical in todays
environment, there has been increased
focus on the role of the company secretary
in corporate world. The New Companies
Act, 2013 provides for the prominence role
of the company secretary in whole time
practice or in whole time employment by
recognizing the expertise he or she has
gained by undergoing training, experience
and in-depth knowledge of various
enactments.

*********************************
Source: Companies Act, 2013
FUNCTIONS OF A COMPANY SECRETARY:
As per section 205 a Company Secretary
shall
Report to the Board about compliance with
the provisions of this Act, the rules made
there under and other laws applicable to
the company;
Ensure that the company complies with the
applicable secretarial standards;
Discharge such other duties as may be
prescribed.



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SMART TRADING






POOJA T R
CS PROFESSIONAL PROGRAMME;
J. SUNDHARESAN & ASSOCIATES.

WHO ARE INSIDER TRADERS?
Under the SEBI Prohibition of Insider Trading
regulation 2 (e); an insider is a person who is
connected with the company, who could have
the Unpublished price sensitive information or
receive the information from somebody in the
company.
Insiders may be corporate officers, directors
and employees who traded the
corporations securities after learning the
significant, confidential corporate
developments.
Friends, business associates, family
members, and other types of such officers,
directors, and employees, who traded the
securities after receiving such information.

WHO CAN BE A CONNECTED PERSON?
It could be director of the company, or is
deemed to be a director by virtue of sub-clause
(10) of section 307 of the Companies act 1956.
He /She could be an officer or professional of
the company or holding a business relationship
with the company. Connected person can also
be from intermediaries like the Stock Exchange,
Merchant Bank, Transfer agent, debenture
trustee, Bankers & relatives of a promoter or of
a BOD.
WHAT IS PRICE SENSITIVE INFORMATION?
The Price sensitive information is defined in
Regulation 2(h) (a) of the prohibition of Insider
Trading. It means any information which
relates directly or indirectly with the company
& which if published is likely to materially affect
the prices of the securities of the company.
REGULATORY ASPECT OF INSIDER TRADING:
Prohibition of Insider Trading SEBI
prohibition of Insider Trading Regulation
1999.
Section 195(1) of Companies Act 2013
provides prohibition on Insider Trading.

WHY IS THERE A NEED FOR THE PROHIBITION
OF INSIDER TRADING?
As per SEBI, the Prohibition of Insider
Trading is required to make Securities
Market: Fair & Transparent
To have a level playing field for all the
participants in the market.
For free flow of information & avoid
information asymmetry.

As per Section 195 of the Companies Act
2013, no director or key managerial
personnel of a company should engage in
insider trading which would include
subscribing or selling the securities or
WHAT IS INSIDER TRADING?
Insider trading essentially denotes dealing in a
companys securities on the basis of unpublished price
sensitive information relating to the company to make
profit. It is fairly a breach of fiduciary duties of officers
of a company or connected persons as defined under
the SEBI regulations, 1992, towards the shareholders.


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providing any price sensitive information to
any person.

DISCLOSURE FOR PROHIBITION OF INSIDER
TRADING:
Initial Disclosure as per regulation 13(1) of the
SEBI (Prohibition of Insider Trading)
Regulations, 1992:
Any person who holds more than 5% shares or
voting rights in any Listed Company shall
disclose to the Company in Form A within 2
working days of acquiring the shares or voting
rights.
Continual Disclosure as per regulation 13(3) of
the SEBI (Prohibition of Insider Trading)
Regulations, 1992: Any person holding more
than 5% shares or voting rights in any listed
Company shall disclose
to the Company in
Form C the number of
shares or voting rights
held or any change
exceeding 2% of total
shareholding or voting
rights in the Company
within 2 days of
acquisition.
PENAL PROVISION:
As per the Companies Act 2013, section 195(2),
if any person contravenes the provisions of this
section, he shall be punishable with
imprisonment for a term which may extend to
five years or with fine which shall not be less
than five lakh rupees but which may extend to
twenty-five crore rupees or three times the
amount of profits made out of insider trading,
whichever is higher, or with both.
MODEL CODE OF CONDUCT FOR PROHIBITION:
A compliance officer is required to be appointed
by the company. Pre-clearance of trade by the
officer of designated employees. Designated
employees- Employees from top 3 layers of
Management. All Employees of finance dept.
irrespective of designation & grade. Employee
designated by BOD from time to time to whom
the trading restriction shall be applicable.
Trading window is closed 7 days prior & 24
hours post event for the connected persons
during the UPPSI activities like RESULTS, IPO,
CAPEX, BUY BACK, etc.

Interesting Judgment on Insider Trading
RAKESH AGARWAL vs. SEBI
A famous case highlighting the vulnerability of
the SEBIs 1992 regulations. Rakesh Agarwal,
MD of ABS Industries Ltd was involved in
negotiations with Bayer A.G, regarding their
intention to takeover ABS. As per SEBI, Rakesh
Agarwal had access to the unpublished price-
sensitive information. Rakesh Agarwal
contended that he did this in the interests of
the company. Pursuant to Bayers
condition to acquire at least 51%
shares of ABS, he, through his
brother-in law, bought the shares
and later sold them to Bayer. The
SEBI directed Rakesh Agarwal to
deposit Rs 34,00,000 with Investor
Education & Protection Funds of
Stock Exchange, Mumbai and NSE.
SAT held that the SEBI order
directing Agarwal to pay Rs 34 lakh
couldnt be sustained, on the
grounds that Rakesh Agarwal did that in the
interests of the company.
OBSERVATION: INABILITY OF SEBI IN PROVING
ITS CASES:
Wide definition of Insider Trader as defined in
the 1992 Act. Proving Insider Trading a
bizarrely difficult task.
1. Lack of assistance from Central
Economic Intelligence Bureau (CEIB) to
investigate the cases.
2. Absence of an adequate remedy
available to the investors at large.

Therefore, traders should avoid engaging in
insider trading in order to protect their own
interests as well as the interests of others.

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FOREIGN DIRECT INVESTMENT

MEETAL .M. JAIN;
CS PROF. PROGRAMME;
MANAGEMENT TRAINEE;
HEMANTH, BISWAJIT & CO.

INDIA AN IDEAL FDI
DESTINATION:
India enjoys a strong position as
a global investment hub, with
high economic growth figures
even during the peak of financial
meltdown. As a result, overseas
investors get attracted towards
Indian economy which
eventually boosts the foreign
direct investments (FDI) in India.
A major portion of FDI inflow in
India is in the service sector.
India is the seventh largest exporter and
eleventh largest importer in the world.
FDI POLICY IN INDIA: Foreign Investment in
India is governed by the FDI policy announced
by the Government of India and the provisions
of the Foreign Exchange Management Act,
(FEMA) 1999. The Reserve Bank of India (RBI)
in this regard had issued a notification, which
contains the Foreign Exchange Management
(Transfer or issue of security by a person
resident outside India) Regulations, 2000 (this
notification has been amended from time to
time). The Ministry of Commerce and Industry,
Government of India is the nodal agency for
monitoring and reviewing the FDI policy on
continued basis and changes in
sectoral policy/ sectoral equity
cap. The FDI policy is notified
through Press Notes by the
Secretariat for Industrial
Assistance (SIA), Department of
Industrial Policy and Promotion
(DIPP).
FDI CAN BE IN THE FORMS OF:
(i) Financial and technical
collaborations.
(ii) Joint ventures or strategic
alliances
(iii) Capital markets via Euro issues; and
(iv)Private placement or preferential allotments

FDI: ENTRY STRATEGIES
I. As an incorporated entity: Wholly owned
subsidiary and joint ventures.
II. As an unincorporated entity: Liaison office,
Project office and Branch office.

WHY FDI? (i) Lower cost of capital in
comparison with the domestic cost of capital.
(ii) Foreign investors bring along with them
other scares productive factors such as
THE SEA CHANGES IN THE TRADE AND INVESTMENT
POLICIES AND THE REGULATORY ENVIRONMENT IN THE
PAST DECADE, INCLUDING TRADE POLICY AND TARIFF
LIBERALIZATION, EASING OF RESTRICTIONS ON FOREIGN
INVESTMENT AND THE DEREGULATION AND PRIVATIZATION
OF MANY INDUSTRIES, HAS PROBABLY BEEN THE MOST
SIGNIFICANT CATALYST FOR FDIS EXPANDING ROLE IN
INDIA.

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Milaap 2014

technical know-how, global business experience
etc.
FDI: PROHIBITED SECTORS: FDI is allowed in all
sectors except under the following prohibited
sectors:
(a) Retail Trading (except single brand product
retailing)
(b) Lottery Business including Government
/private lottery, online lotteries, etc.
(c) Gambling and Betting including casinos etc.
(d) Business of chit fund
(e) Nidhi company
(f) Trading in Transferable Development Rights
(TDRs)
(g) Real Estate Business or Construction of Farm
Houses
(h) Manufacturing of Cigars, cheroots, cigarillos
and cigarettes, of tobacco or
of tobacco substitutes
(i)Activities / sectors not
opened to private sector
investment including Atomic
Energy and Railway Transport
(other than Mass Rapid
Transport Systems). Besides
foreign investment in any
form, foreign technology
collaboration in any form
including licensing for
franchise, trademark, brand
name, management contract is also completely
prohibited for Lottery Business and Gambling
and Betting activities.
FDI ROUTES:
AUTOMATIC ROUTE: FDI virtually for all
items/activities can be brought in through the
automatic route under powers delegated to the
RBI, and for the remaining items/ activities
through government approval. FDI up to 100%
is allowed for new and existing companies, joint
ventures, firms under automatic route for all
items except for those which fall under
government approval route. Entry under
automatic route only requires a post entry
notification to the regional office concerned of
the RBI within 30 days of receipt of inward
remittance in India and to notify in form FC-GPR
within 30 days of the issue of shares to the
nonresident investor and no prior approval is
required.

APPROVAL ROUTE: FDI in activities not covered
under the automatic route, requires prior
Government approval and are considered by
the Foreign Investment Promotion Board (FIPB).
Approvals of composite proposals involving
foreign investment/foreign technical
collaboration are also granted on the
recommendations of the FIPB. Application for
all FDI cases, except Non-Resident Indian (NRI)
investments and 100% Export Oriented Units
(EOUs), should be submitted to the FIPB Unit,
Department of Economic
Affairs (DEA), Ministry of
Finance. Application for NRI
and 100% EOU cases should
be presented to SIA in
Department of Industrial
Policy & Promotion.

CONCLUSION: India has
liberalized foreign investment
regulation in key sectors,
opening up commodity
exchanges, credit information services and
aircraft maintenance operations. The foreign
investment limit in single brand retail sector has
been increased to 100% from the earlier
51%.But the proposal that the foreign direct
investment (FDI) policy to allow foreign airlines
to buy 49% stake in Indian carriers will be a
major boost to the cash-strapped aviation
industry. This move may allow domestic carriers
access to capital and technical expertise.
Overseas carriers too may become interested to
take part in the Indian aviation market. Foreign
airlines are currently barred from investing in
Indian carriers though foreign investors are
allowed up to 49% stake.

SOURCE: RBI CIRCULAR ON FOREIGN
DIRECT INVESTMENT & INTERNET.


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CLASS OF ACTION SECTION 245 OF THE COMPANIES ACT, 2013







VINAYAK HEGDE;
CS PROFESSIONAL PROGRAMME
M/S. GANAPATHI & MOHAN -
COMPANY SECRETARIES.




SECTION 245-COMPANIES ACT, 2013
OVERVIEW:

This is a new section and seeks to provide that
in case of Company having a share capital not
less than one hundred members of the
company or not less than such per cent as may
be prescribed of the total number of its
members, whichever is less, or any member or
members holding not less than such percent as
may be prescribed of the issued share capital of
the company, and in the case of a company not
having a share capital, not less than one fifth of
the total number of its members may file an
application before the Tribunal if they are of the
opinion that the management or control of the
affairs of company are being conducted in a
manner prejudicial to the interests of the
company or its members or depositors to
restrain the company from oppression or
mismanagement.
I. SECTION 245 (1) READS:

Such number of member or members,
depositor or depositors or any class of them, as
the case may be, as are indicated in sub-section
(2) may, if they are of the opinion that the
management or conduct of the affairs of the
company are being conducted in a manner
prejudicial to the interests of the company or its
members or depositors, file an application
before the Tribunal on behalf of the members
or depositors for seeking all or any of the
following orders
a) to restrain the company from committing
an act which is ultra vires the articles or
memorandum of the company;
b) to restrain the company from committing
breach of any provision of the Companys
memorandum or articles;
c) to declare a resolution altering the
memorandum or articles of the company as
THE COMPANIES ACT 2013, HAS INTRODUCED A NEW
FEATURE - CLASS ACTION. THIS IS NEW PROVISION &
COMES UNDER CHAPTER XVI PREVENTION OF
OPPRESSION AND MISMANAGEMENT, & COVERED
SECTION 245 OF THE COMPANIES ACT, 2013, HOWEVER;
CLASS ACTIONS ARE EVIDENTLY NOT THE SAME AS
PETITIONS AGAINST OPPRESSION/MISMANAGEMENT.
RULES GOVERNING APPLICATIONS IN RESPECT OF
OPPRESSION/MISMANAGEMENT (SECTION 397-398 OF
THE COMPANIES ACT, 1956) ARE FOUND IN SECTION 241-
244: SECTION 245 INTRODUCES A DISTINCT REGIME OF



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void if the resolution was passed by
suppression of material facts or obtained
by mis-statement to the members or
depositors;
d) to restrain the company and its directors
from acting on such resolution;
e) to restrain the company from doing an act
which is contrary to the provisions of this
Act or any other law for the time being in
force;
f) to restrain the company from taking action
contrary to any resolution passed by the
members;
g) to claim damages or compensation or
demand any other suitable action from
or against

(i) The company or its
directors for any
fraudulent, unlawful or
wrongful act or
omission or conduct or
any likely act or
omission or conduct on
its or their part;
(ii) the auditor including
audit firm of the
company for any
improper or misleading
statement of particulars
made in his audit report or for any fraudulent,
unlawful or wrongful act or conduct; or
(iii) Any expert or advisor or consultant or any
other person for any incorrect or misleading
statement made to the company or for any
fraudulent, unlawful or wrongful act or conduct
or any likely act or conduct on his part;
h) To seek any other remedy as the Tribunal
may deem fit.
i)

II. DEPOSITORS:

Sub -section 2 of Section 245 of the Companies,
Act 2013 is deals with depositors, this section
says that where the members or depositors
seek any damages or compensation or demand
any other suitable action from or against an
audit firm, the liability shall be of the firm as
well as of each partner who was involved in
making any improper or misleading statement
of particulars in the audit report or who acted in
a fraudulent, unlawful or wrongful manner.

As per the provisions of subsection 3 of Section
245 of the Companies Act, 2013 the requisite
members are as follows:

a) In the case Company having a Share Capital:
1) Not less than 100 members, or
2) Not less than such percentage of the total
number of its members as may be
Prescribed whichever is less:
3) Not less than such percentage of the total
number of depositors as
may be prescribed,
whichever is less, or
b) In case of a Company
not having a share
capital, not less than
one fifth of the total
number of its members.

III. PROCEDURE SET OUT IN
SECTION 245(4) & 245(5):

As per the provisions
Section 245 (4) of
Companies Act, 1956, the Tribunal while
considering a Class Action filed under Section
245 (1), shall take into account the following -
a) whether the member or depositor is
acting in good faith in making the
application for seeking an order;
b) any evidence before it as to the
involvement of any person other than
directors or officers of the company on
any of the matters provided in clauses (a)
to (f) of sub-section(1);
c) whether the cause of action is one which
the member or depositor could pursue in
his own right rather than through an
order under this section;
d) any evidence before it as to the views of
the members or depositors of the

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company who have no personal interest,
direct or indirect, in the matter being
proceeded under this section;
e) where the cause of action is an act or
omission that is yet to occur, whether the
act or omission could be, and in the
circumstances would be likely to be
(i) Authorized by the company before it
occurs; or
(ii) Ratified by the company after it
occurs;
f) Where the cause of action is an act or
omission that has already occurred,
whether the act or omission could be, and
in the circumstances would be likely to
be, ratified by the company.

In the event that a class action is admitted by
the Tribunal, Section 245 (5) sets out a
procedure that is required to be considered

Public notice to all the members or
depositors of the class in prescribed
manner to be served on the admission of
the Class Action.
All similar applications prevalent in any
jurisdiction should be consolidated into a
single application and a Lead Applicant be
appointed from amongst them.
Ensure no two class action against same
cause of action is allowed.
Cost or expenses connected with the
application for class action are paid by the
Company
and any
other
person
responsible
for the
oppressive
act.


CONSEQUENCES:
An order passed by the Tribunal under Section
245(1) is a binding order on the company as
well as on all the members, depositors and
auditors including the audit firm or expert or
consultant or advisor or any other person
associated with Company.

As per the sub- section (7) of section 245 0of
the Companies, 2013, any Company which fails
to comply with order passed by the Tribunal
under this section shall be punishable:

1. with fine, not be less than 5 Lakh to
maximum Rs.25 lakhs; or

2. punishable with Imprisonment for a term
which may extend to 3 years with fine shall not
be less than Rs.25,000 but which may be
extended to Rs. 1,00,000/-.

IV. CONCLUSION:

The provisions of section 397 & 398 of the
Companies Act,1956 are set out under section
241 to 244 of the Companies Act,2013 and
section -245 in contrast introduces a different
regime of class of Actions .Companies are likely
to face increased threat of litigation posed by
Class of Action and other multi clement
proceedings seeking significant relief against
Companies, their Directors, depositors, Auditor
including Audit Firm, Expert, Consultant,
Advisors or
any other
persons
associated
with
Company.


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The primary role of corporate governance is always to ensure
the independence of the board of directors (BOD) in a
company. Independent directors on the board predominantly
enhance the monitoring and supervising of the management
and the promoters of a company.

INDEPENDENT DIRECTORS IN COMPANIES ACT, 2013





SONAM DUNGARWAL;
CS PROF. PROGRAMME;
MANAGEMENT TRAINEE;
HEMANTH, BISWAJIT & CO.
SECTION 149 (6) CONTAINS THAT
An independent director in relation to a
company, means a director other than a
managing director or a whole-time director or a
nominee director,
a. who, in the opinion of the Board, is a person
of Integrity and possesses relevant expertise
and experience;
b (i) Who is or was not a promoter of the
company or its holding, subsidiary or associate
company;
(ii) Who is not related to promoters or
directors in the company, its holding, subsidiary
or associate company ;
c. who has or had no pecuniary relationship
with the company, its holding, subsidiary or
associate company, or their promoters, or
directors, during the two immediately
preceding financial years or during the current
financial year;
d. None of whose relatives has or had pecuniary


relationship or transaction with the company,
its holding, subsidiary or associate company, or
their promoters, or directors, amounting to two
per cent. or more of its gross turnover or total
income or fifty lakh rupees or such higher
amount as may be prescribed, whichever is
lower, during the two immediately preceding
financial years or during the current financial
year;
e. who, neither himself nor any of his
relatives

Meaning/Definition of Independent
Director:
As per Section 2(47), independent
director means an independent
director referred to in sub-section (5) of
section 149;


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(i) holds or has held the position of a key
managerial personnel or is or has been
employee of the company or its holding,
subsidiary or associate company in any of the
three financial years immediately preceding the
financial year in which he is proposed to be
appointed;
ii) is or has been an employee or proprietor or a
partner, in any of the three financial years
immediately preceding the financial year in
which he is proposed to be appointed, of
(A) A firm of auditors or company secretaries in
practice or cost auditors of the company or its
holding, subsidiary or associate company; or
(B) Any legal or a consulting firm that has or had
any transaction with the company, its holding,
subsidiary or associate company amounting to
ten per cent Or more of the gross turnover of
such firm;
(iii) Holds together with his relatives two per
cent or more of the total voting power of the
company; or
(iv) Is a Chief Executive or director, by whatever
name called, of any nonprofit organization that
receives twenty-five per cent. or more of its
receipts from the company, any of its
promoters, directors or its holding, subsidiary or
associate company or that holds two percent Or
more of the total voting power of the company;
or
f. who possesses such other qualifications
as prescribed below:
An independent director shall possess
appropriate balance of skills, experience and
knowledge in one or more fields in disciplines
related to the companys business.

TERM OF OFFICE OF INDEPENDENT DIRECTOR

An independent director shall hold office
for a term up to 5 consecutive years on
the Board of a company, but shall be
eligible for reappointment on passing of a
special resolution by the company and
disclosure of such appointment in the
Boards report.
No independent director shall hold office
for more than 2 consecutive terms, but
such independent director shall be
eligible for appointment after the
expiration of 3 years of ceasing to
become an independent director
provided that he shall not, during the said
period of 3 years, be appointed in or be
associated with the company in any other
capacity, either directly or indirectly.
Any tenure of an independent director
on the date of commencement of this
Act shall not be counted as a term
under the above provisions.
Applicability to Companies:
Following class of companies are
required to appoint at least 1/3 of
total number of directors on their
Board of Directors as independent
directors:
Listed Companies,
Public Companies having paid
up share capital of one hundred
crore rupees or more; or
Public Companies having
turnover of three hundred
crore rupees or more;
Public Companies which have,
in aggregate, outstanding loans
or borrowings or debentures or
deposits, exceeding two
hundred crore rupees.



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MR. PAVANKUMAR
KULKARNI;
CS PROFESSIONAL
PROGRAMME.


FINANCIAL AND LEGAL ASPECTS OF
CORPORATE DIVIDEND DECISIONS
- AN OUTLOOK

INTRODUCTION:
Dividend plays an important role in corporate
sector and investors. Being one of the criteria
for fluctuations in market price of shares of the
company and market capitalization,
the corporate entities should take
care of its market capitalization by
taking appropriate decision on
dividend declaration and satisfying
its investors. On the other hand,
since the dividend is tax free in the
hands of investors they invest their
money in the shares of a company.
Therefore, by paying
dividend to the shareholders of the
company, the shareholders will be
satisfied, the companys goal of
wealth maximization is fulfilled and
the market capitalization of the company will
also increase accordingly.
The company needs to follow the
provisions under Section 205 of the Companies
Act, 1956 and the rules made there under. The
listed companies are also required to comply
with the Clause 16, 19, 20, 21 and 22 of Listing
Agreement for payment of dividend.
FINANCIAL ASPECTS OF DIVIDEND DECISION:
Dividend is the corporate profit
distributed among shareholders. Since the
payment of dividend is expenditure to the
company, while declaring the dividend the
company needs to calculate cost to be incurred
and should take care of financial stability before
and after payment of dividend.
The decision of declaring dividend is the
challenging task to the company since it
involves internal and external effects on the
company such as cash instability, payment of
tax on dividend, high fluctuation of share price
in the market, etc. Hence
the financial manager
should take utmost care
before declaring dividend.
For this purpose, there are
several theories of
dividend policies, the study
of which is essential to
take dividend decision.
THEORIES OF DIVIDEND
DECISION:
Broadly there are 2
theories of dividend
decision which are proved by various
researchers. These are:

1) RELEVANCE OF DIVIDEND:

This theory states that the payment of
dividend affects the market price of its shares.
The two theories that prove this method are:
a) Walters Model
b) Gordons Model


Dividend Decision
Relevance of Dividend
Irrelevance of Dividend

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a) WALTERS MODEL:

This was developed by Prof. James E.He proved
that when the firm can earn more from its
retained profits than its shareholder is able to
earn, then it is better to retain the profit instead
of distributing among its shareholder.
TO PROVE HIS THEORY, HE PROVIDES THE
FOLLOWING FORMULA:




P= D+ [(r/K
e
)(E-D)] / K
e

Where,
P = Price of shares
D = Dividend per share
E = Earnings Per Share
r = Retained Earnings
K
e
= Cost of Equity


b) GORDONS MODEL /
DIVIDEND CAPITALIZATION MODEL:

This model was developed by Grahm
and Dodd Myron Gordon. This model is
almost same as that of Walters Model
except that he assumes growth rate will
have a bearing on the market price of
shares. Symbolically,
P = E(1-b)/k
e
br
Where,
P= Market price per share
E = Earnings per Share
1-b = Dividend Payout Ratio
K
e
= Cost of equity
br = Growth rate
2) Irrelevance of Dividend:

Under this method Prof. Modigliani and
Miller have proved that payment of dividend
will not affect the market value of the firm.
In my opinion, this theory can be understood
as below.

Step:1 Market price per share at the
end of the year (P
1
) is to be calculated first
assuming the market price at the beginning
of the year (P
0
) is equal to the present value
(1/1+k
e
) of proposed dividend (D
1
) and
market price per share at the end of the year
(P
1
), Symbolically,

Step: 2 Calculate
the additional financing
to be made by the
company and additional
shares to be issued as
below:

nP1 = I (E - nD1)
n = nP1/P
1


Step: 3 Finally by using following
formula we can ascertain the Value of the
Firm:
nP0 = (n+ n)P
1
-I+E/(1+k
e
)

By following these steps you can come to
the conclusion that the value of the firm
doesnt affected by declaration of dividend.
Here,
D
1
= Dividend to be declared
P
1
= Price per share at the end of the period
P
0
= Price per share at the beginning of the
period
K
e
= Cost of equity
I = Investment opportunities
E = Earnings available
P
0
= (1/1+k
e
)(D
1
+P
1
)

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LEGAL ASPECTS OF DIVIDEND DECISION:
The legal aspects of dividend decision
are covered under Section 205 to 207 of the
Companies Act, 1956 and Section 123 to 127 of
Companies Act, 2013. The provisions of these
sections are briefly outlined hereunder.
SECTION 205 TO 207 0F COMPANIES ACT, 1956
AND RULES MADE THERE UNDER:
We can split the compliances in 2 parts, namely:
a) Requirements before declaration
b) Requirements after declaration

a) Requirements before declaration:

- The company can pay dividend only out of
the profits;
- Ensure that the company has charges the
depreciation;
- It can pay dividend only after the payment
of deposits due along with interest.
- If the dividend declared is more than 10%,
transfer certain amount of profit to general
reserves compulsorily as given in the
Companies (Declaration of Dividend) Rules
1975.

b) Requirements after declaration

- Deposit the amount of dividend in a bank
account within five days of declaration.
- Transfer unpaid/unclaimed dividend to
unpaid dividend account within seven
days after 30 days of declaration.
- The aforesaid account shall be maintained
by the company for a period of seven
years.
- After seven years it shall be transferred to
Investor Education and Protection Fund
Account.
- If the company fails to comply with any of
the provisions as aforesaid, the company
and every officer of the company will be
punishable with fine up to Rs.5000/- per
day of default.
- If the dividend declared by the company is
not paid within thirty days,

every director of the company who is
in default shall be liable to a
punishment of simple imprisonment
up to three years AND a fine of Rs.
1000/- per days of default;
the company is liable to pay the
dividend with interest at 18% for the
period the default continues.

SECTION 123, 124, 125, 126 AND 127 OF
COMPANIES ACT, 2013:
These sections are not yet notified by
the MCA except Section 127 in the place of
Section 207 of the 1956 Act. In Section 127 the
changes are made in imprisonment which was 3
years in the old Act is now decreased to 2 years
and all other provisions remains same.


CONCLUSION:
After studying financial and legal aspects of
dividend decision, in my opinion the companys
decision on dividend declaration has a major
impact on its market value and accordingly the
companys motive of shareholders wealth
maximization will also satisfied. But the decision
of dividend declaration is subject to the internal
and external strengths of the company for
which it should take utmost care. When the
company satisfies its shareholders, the
companys market capitalization will
automatically increase.

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BITCOIN- THE PIONEER VIRTUAL CURRENCY





ANUP MALASHETTI;
CS PROFESSIONAL PROGRAMME;
M/S. MNRS & ASSOCIATES.


Bitcoin is an
electronic form
of currency.
Creation and
supply is based
on computer
programs and
unlike other currencies they are not controlled by any
government or central banks, rather managed
collectively by the network and it is a peer to peer
currency.
On January 3, 2009 the creator generated
himself the first 50 bitcoins (BTC), which came
to be known as Genesis block. Bitcoins are
mined or generated by solving mathematical
algorithms; they get complex and tricky as more
people join the network to
solve and to get rewarded
for solving the algorithms
and in the mean while, also
generating more bitcoins.
Currently 12 Million BTC
are available in the market
but the maximum BTC that
will be generated will be
slightly lower than 21
million and that will be
generated around
year 2140.
The BTC will be
generated in
phases, first
phases of each
210,000 block
shall have 50 BTC, 25 for next 210,000 blocks
and then 12.5 BTC, 6.25 BTC and so on and the
gradual decrease in block creation is the reason
that the whole lot of BTC will be only generated
in 2140. Like other currency BTC are divisible
and can be divided down to 8 decimals i.e.
0.00000001 is the smallest currency that could
be traded.
FUNCTIONING OF BITCOIN:
Now the biggest question
being how does it functions
without involving banks and
government?
Generating of bitcoins is
briefly stated above, however
prior to that, the persons
willing to mine or buy shall
have Bitcoin Wallet to store
the coins and also to trade
IF THE INTERNET AND MONEY HAD A CHILD, IT WOULD BE
THE BITCOIN
IT WAS IN NOVEMBER 2008, A MAN NAMED SATOSHI
NAKAMOTO, WHO REVEALED LITTLE ABOUT HIM, POSTED
A RESEARCH PAPER DESCRIBING THE DESIGN OF A DIGITAL
CURRENCY CALLED AS BITCOIN. THE CONCEPT PROPOSED
WAS BASED ON CRYPTOGRAPHIC CURRENCY THAT WAS
DESCRIBED BY WEI DAI AS B-MONEY AND BY NICK SZABO
AS A BIT GOLD, BACK IN 1998.




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from there. The bitcoin
network is sharing a public
ledger called Block chain
which shall record every
transaction of bitcoin and
enabling to examine and
validate the transaction.
The person willing to trade
for bitcoin shall provide
information of his wallet and
person willing to buy shall transfer the bitcoin
to vendors wallet but the remitter shall not
reveal his identity to anyone. The transaction
shall be recorded in the block chain and can be
viewed by the public, resulting in transparency
and along privacy to the remitter.
EVOLUTION AND REVOLUTION OF BITCOIN:
New liberty standards published for the very
first time, the exchange rate of 1,309.03 BTC for
a US Dollar in October 2009 but however, it was
only in May 2010, the first bitcoin commercial
transaction happened, Mr. Laszlo Hanyecz, a
Florida Programmer, spent 10,000 bitcoins to
get two pizzas delivered from Papa Johns and
later in July,Mt. Gox commenced and what
went to become the largest and most well-
known Bitcoin exchange.
The roller coaster for Bitcoin started on August
6, 2010 when the major vulnerability in the
system was spotted- evolving transactions
weren't verified and were also included in the
public ledger. Within 10 days, 184 billion BTC
were generated, however within hours the
cause was addressed and this was the only
major security flaw, in the Bitcoin history.
In February 2011, bitcoin rose to the extent of
achieving Dollar parity per BTC and further
surged to $8.89 per BTC when Forbes published
story on the new crypto currency. In June
2011, it saw another rise after Gawker
published a story about the popularity among
online drug dealers for digital currency, which
resulted in the exchange rate to jump to $27
per BTC.
In June 2011, Mt.Gox, Bitcoin exchange user
table leaked around 60,000 customer
information and some of users used the same
username at Mybitcoin, a popular Bitcoin wallet
,resulting in balances being stolen from
MyBitcoin account and the exchange rate
coming down to $0.01. Mt.Gox announced a
halt of trade for 7 days, to bring the system into
order.
In 2012 many first things happened to Bitcoin
like: First Bitcoin Magazine, Website's like
Wordpress.com started accepting BTC and even
the first law suit was filed. Bitcoin celebrated its
first Halving day in November 2012, that
roughly occurs every four years, the reward for
mining a new block gets halved.
A glittering year for Bitcoin was in 2013, as it
had increased both in usage and the value
appreciated by 5,000% in less than a year and it
also gained popularity in India. In February one
BTC was worth more than one ounce of silver
and in March it surpasses the milestone of $ 1
Billion market cap. In April, 2012 the exchange
rate hit $ 100 and it went on to $ 200 in the
same month.
In September 2013, FBI, a Governmental agency
belonging to the US Department of Justice took
down on Silk Road, an online marketplace that

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sold illegal goods for payment made in BTC. The
FBI seized BTC around 1,74,000 BTC over two
wallets.
November and December of 2013 were two
months when the exchange rate cruised from $
200 to $ 1240 showing its character of extreme
volatility and the risk involved in it with equal
opportunity. One- BTC is now more than
300,000X ,as much as they did in the first ever
public bitcoin trade in 2010.
REGULATIONS ACROSS THE GLOBE:
The development of Bitcoin poses a huge
challenge for the authorities around the world
to amend/ enact the laws that were not
designed for the digital world issuing virtual
currency.
The opinions and stands are divided among
nations and also the fact that most of them are
confused cannot be denied, while many other
states have adopted a wait and watch policy,
few nations like Korea have denied bitcoin as a
legal currency, while some like Norway,
Germany treat it as an asset and charge a
capital gains tax, while Switzerland treats as any
other foreign
currency and while
Canada already
taxes gains on
trade in bitcoins.
Nations of
European Union,
India and China
have stated no
specific regulations
governing the use of virtual currency; however
European Union and India's Reserve Bank have
issued caution and warning to consumers
highlighting the risks of using virtual currencies.
China however recently prohibited banks to
operate in bitcoins while permitting individuals
to freely trade and exchange bitcoins.
CONCERNS AND FUTURE OF BITCOIN:
In case you assume that Bitcoin is the only
virtual currency in existence, then you are
wrong. They are many virtual currencies floated
across the globe but the Bitcoin surge has
caught everyones eye and brandished.
The rise of virtual currencies may have started
out as an effort to avoid government
interferences, but with greater acceptance
comes increased regulation and norms to
stabilize the volatile and risk associated.
When we talk about the world as one global
village, all thanks to the technology, why
not have a common currency 'bitcoin' to
represent oneness. Today, we need a strong
technically strong body to control the
currency and its technology and along to
control end use of them in a legal manner.




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TAX AUDIT
The Tax Audit was introduced by Section 11 of
the Finance Act, 1984, which inserted a new
section 44AB with effect from 1
st
April, 1985
(Assessment year 1985-86). This section makes
it obligatory for a person carrying on business
to get his accounts audited by a chartered
accountant and to furnish by the Specified
Date the report in the prescribed form of such
audit, if the total sales, turnover /gross receipts
in business in the relevant previous year exceed
or exceeds the prescribed limit (Rs.1 Crore for
Business & Rs. 25 lacs for Profession w.e.f A. Y
2013-14).
PROVISIONS OF SECTION 44AB
Audit of accounts of certain persons carrying
on Business or Profession
Section 44AB every person-
a) Carrying on
business shall, if
total sales,
turnover or gross
receipts, as the
case may be, in
business exceed
or exceeds one
crore rupees
w.e.f A Y 2013-14.
b) Carrying on profession shall, if his gross
receipts in profession exceed Rs. 25lacs w.e.f
A.Y 2013-14.




c. Carrying on business shall, if the profits &
gains from the business are deemed to be the
profits & gains of such person under Section
44AD & he has claimed such income to be lower
than the profits & gains so deemed to be the
profits & gains of his business & his income
exceeds the maximum amount which is not
chargeable to income tax in previous year.
PROFESSION & BUSINESS EXPLAINED:
The Term Business is defined in Section 2(13)
of the Act, as under:-

Business includes any trade, commerce or
manufacture. The word business is one of wide
import & it means activity carried on
continuously & systematically by a person by
the application of his labour or skill with a view
to earning an income.

Section 2(36) of the Act defines profession to
include vocation; profession is a word of wide
import & includes
vocation which is
only a way of living.
CIT v. Ram Kripal
Tripathi (1980) 125
ITR 408 (ALL).

SPECIFIED DATE &
TAX AUDIT:

The Due Date of
filling of Income Tax Return of an assessee liable
to get his Tax Audit done under Section 44AB is
30
th
September. In case of corporate assesses
who are required to furnish a report under
Section 92E for international transactions the
HEMADRIBAI ;
CS PROF.PROGRAMME;
HOSPET, BELLARY DISTRICT.
TAX AUDIT U/S 44B OF
THE INCOME TAX ACT,
1961


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due date is 30
th
November. For all other
assesses who are not liable to get their Tax
Audit done under Section 44AB the Due date
of filling of the Income Tax Returns is 31
st
July.



TAX AUDIT E-FILING:
As per Notification No. 34 Dated 1
st
May, 2013,
e-filing of Tax Audit report is mandatory from
the Assessment year 2013-14 onwards.
However, the CBDT wide F. No.
225/117/2013/ITA.II Dated 26
th
Sept has
decided to relax the
requirement of e-filing of
Tax Audit Report. The
CBDT has announced that
the assesses having
difficulties in uploading the
tax audit reports online
may furnish the same
manually before the
jurisdictional officer. This
report shall however be
submitted electronically
on or before 31
st
Oct.
As per Rule 6G tax audit
report is to be furnished in
FORM 3CA & FORM 3CB
and the particulars
required to be furnished along with these tax
reports should be in FORM 3CD.
1. FORM 3CA & FORM 3CD These forms are
used in case where the accounts of the
business/profession of a person have already
been audited under any other law.
2. FORM 3CB & FORM 3CD These forms are
used in case where the accounts of the
business/ profession have not been audited
earlier.
COMPUTATION OF TOTAL TURNOVER FOR THE
PURPOSE OF TAX AUDIT:
1. Where a person is carrying on 2 business/ 2
professions the total turnover of both the
business shall be clubbed together & tax
audit shall be liable to be conducted if the
Total Turnover exceeds Rs. 1 Crore / Rs. 25
lacs as the case may be;
2. Where a person is carrying on business as
well as profession & the Turnover of his
business is Rs. 1.2 Crore & the gross receipts
of the profession is
Rs. 22lacs. In such a
case, assessee is
liable to get the Tax
Audit done on both
the business as well
profession because
the gross receipts
from the business
exceed the limit of
Rs. 1 crore. However
if his total turnover
was Rs. 95 lakhs &
gross receipts from
business was Rs. 22
lacs he would not be
Non compliance of the provisions
of this act shall attract penalty
under Section 271B of the Income
Tax Act. If any person required to
get his audit done under Section
44AB fails to do so before the
specified date shall be liable for
penalty of % of the turnover
/gross receipts subject to a
maximum penalty of Rs. 1,50,000.

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required to get his Tax Audit done.
3. In case where a person has a total turnover
of Rs. 98 lacs & has sold a car for Rs. 8 lacs.
In such a case, the total amount on adding
up becomes Rs. 1.06lacs i.e. above 1 crore.
Confusion arose whether the person is
liable to get an audit done in this case, the
clarification in this regard is that the
turnover will not include any amount on the
sale of the fixed asset as it was held by the
person for business use & not for the
purpose of sale.
4. The amount received from the following
items shall not be included while computing
the Total Sales / Total Turnover / Gross
Receipts:
- Sale proceeds of Fixed Assets
- Sale proceeds of Assets held as
Investments
- Rental Income
- Income by way of Interest unless
assessable as Business Income
- Any Expense which is reimbursable to
the agent by the client

PENALTY FOR NON COMPLIANCE OF SECTION
44AB:
Non compliance of the provisions of this act
shall attract penalty under Section 271B of the
Income Tax Act. If any person required to get
his audit done under Section 44AB fails to do so
before the specified date shall be liable for
penalty of % of the turnover /gross receipts
subject to a maximum penalty of Rs. 1,50,000.
However, Section 273B states that no penalty
shall be levied under Section 271B if there is a
reasonable cause for such failure. Some
instances which have been accepted by the
Tribunals/ Courts as Reasonable Cause are-
Resignation of the Tax Auditor &
consequent delay
Death or physical inability of the partner in
charge of accounts
Labour problems such as strikes, lock-outs
for a long period
Loss of Accounts because Fire/Theft etc.
beyond the control of the assessee.
REVISION OF TAX AUDIT REPORT:
Tax Audit Report e-filed cannot be revised
under normal circumstances. However, in case
the Accounts are revised in the following
circumstances, the Audit Report e-filed can also
be revised-
1. Revision of accounts of a company after its
adoption in the Annual General Meeting
2. Change in law with Retrospective effect
3. Change in interpretation of law
In case the Tax Audit Report e-filed is revised,
the auditor shall state that its a Revised Report
& shall also state the reasons for the same.
CONCLUSION:

The goal of an audit is to form and express an
opinion on financial statements. The audit is
performed to get reasonable assurance on
whether the financial statements are free of
material mismanagement. An audit also
includes assessing the accounting principles
used and the significant estimates made by the
management.




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NARESH KUMAR .B.R;
CS PROF. PROGRAMME;
BANGALORE.
FORENSIC AUDITING









INTRODUCTION

The word "forensic" refers to something that
could be (or will be) used in a court of law.
Thus, forensic accounting is a subset of
accounting that is completed to standards
suitable for legal review, and ultimately dispute
resolution through the
integration of auditing,
investigatory and
standard accounting
measures.
Corporations, law
enforcement and
government agencies,
insurance companies,
courts and others hire
forensic accountants
for purposes of
investigating potential
financial wrongdoing
and, more and more, to assist the company in
preventing such wrongs.

The body of forensic accounting literature that
has emerged since the 1990s has mirrored the
changing scope of concerns about this topic. A
number of articles have focused on the
increasing demand for accountants to conduct
forensic accounting activities. The academic
literature has focused on descriptive studies of
university offerings. Some universities have
integrated fraud or forensic accounting
throughout the accounting curriculum while
others offered individual fraud or forensic
accounting.
NEED FOR FORENSIC ACCOUNTING

"Forensic accounting" is a growing area of
practice in which the knowledge, skills and
abilities of advanced accounting are combined
with investigative expertise and applied to legal
problems. Forensic accountants are often asked
to provide litigation
support where they
are called on to give
expert testimony
about financial data
and accounting
activities. In other
more proactive
engagements, they
probe situations using
special investigative
accounting skills and
techniques. Some
even see forensic
accounting as practiced becoming a part and
parcel of most financial audits _ an extra quality
control step in the auditing process that will
help reduce financial statement fraud.

When the AICPA formed a committee to
develop its Certified in Financial Forensics (CFF)
certification program in June 2008, the goal of
the committee was to award 900 credentials by
the end of year one. That goal was quickly
realized and surpassed. By the end of
September 2009, the AICPA had awarded more
than 3,500 CFF certifications, which is more
than four times the number of certifications
projected.

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THE ROLE OF FORENSIC ACCOUNTANT

A forensic accountant can uncover theft, fraud
or waste through careful, systematic
securitization of a company's or individual's
financial records. They are trained to recognize
patterns that are indicative of account
falsification, manipulation and deletions in
records. An audit and the follow up report can
consist of any number of steps depending on
the complexity of the records being
investigated. A forensic accountant will
summarize transactions, trace assets, perform
regressions or other statistical analyses as
called for and present findings. After
completing audits, a forensic accountant's other
primary responsibility is to appear in court as an
expert witness. A forensic accountant is often
retained to analyze, interpret, summarize and
present complex financial and business
information in a manner, which is both
understandable and properly supported.

AREAS COVERED BY FORENSIC ACCOUNTING:

1. Certain engagement related to civil disputes
viz. disagreements related to company
acquisitions like business valuation,
calculating and quantifying losses and
economic damages through breach
contracts etc.

2. Shareholders and partnership disputes
involving detailed analysis of numerous
years accounting records to quantify the
issues in dispute.

3. Cybercrimes like credit card frauds, ATM
card frauds, cyber extortion, cyber stalking,
phishing i.e. sending unsolicited e-mails &
collection of sensitive information by simple
techniques.

4. Forensic accounting also deals with areas of
professional negligence claims, involving
assessment and reporting on work of other
professionals. This involves investigating
whether breach of 'generally agreed
accounting and/or auditing principles' has
occurred.
5. Engagement involving criminal matters,
involving assessment of accounting systems
and accounts presentation, where forensic
accountants are hired by the law
enforcement agencies.

6. Business investigations involving fund
tracing, asset identifications and recovery,
forensic intelligence gathering and due
diligence reviews.

7. Employee fraud investigations involving
procedures to determine existence, nature
and extent of fraud and may involve
identification of the clauses etc

8. Business Economic losses viz. contract
disputes trademark and patent
infringements, losses arising from breach of
non-compete clauses etc.

9. Cases involving medical insurance claims,
medical malpractices resulting in economic
losses.

10. Mediation arbitration in alternative dispute
resolution mechanisms due to familiarity of
forensic accountants with legal issues and
procedures, helping individuals and
businesses resolve disputes with minimum
disruption and loss of time.

The forensic accountant can thus be of
assistance in various ways that include
investigation accounting, review of the factual
situation and suggestions, regarding possible

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courses of actions, assisting the professionals
and recovery of assets and co-ordination with
other experts, viz. private investigators, forensic
document examiners, consulting engineers etc.

TERMINOLOGIES USED PERTAINING TO
FORENSIC ACCOUNTING:

1. FORENSIC INVESTIGATION:

This refers to using specialized investigative
skills to undertake inquiry in such a manner that
outcome shall have application in court of law.
Forensic investigation may be grounded in areas
like accounting, medicine or engineering.

2. FORENSIC AUDIT:

This refers to investigation of a fraud or
presumptive fraud with a view to gathering
evidence that could be presented in courts of
law. It is essentially a blend of propriety,
investigative, regularity and financial audits. The
Objective is to ascertain whether true business
value has been reflected in the financial
statement and during the course of
examination to find whether any fraud has
taken place.

DETECTION TECHNIQUES USED IN FORENSIC
ACCOUNTING:

1.CRITICAL POINT AUDITING(CPA)

In CPA, symptoms of fraud are filtered out from
regular transactions where they may be
concealed. Scrutiny for CPA purpose may
involve: use of

A. Trend analysis
B. Checking unusual debits/credits in the
accounts
C. Discrepancies in receivable /payable
/inventory balances evidenced from financial
records corresponding subsidiary records.
D. False credits to boost sales with
corresponding debits to non-
existent/dummy personal accounts.

2. PROPRIETY AUDIT (PA):

A. PA is conducting by supreme audit
government accounts prepared are in order
, in terms of approvals and sanctions of
expenditures incurred, whether the
expenditure incurred was need-based and
that the revenues have been realized in
time and properly credited to government
accounts.
B. The analogy of "value for money audit" is
applied to forensic audits whereby
financials frauds are unearthed saving
wasteful and unwarranted expenditures.

BENEFITS:

Companies that employ forensic accountants
enjoy many benefits. Accountants can work to
prevent fraud from occurring through
monitoring financial records and transactions,
allowing companies to further investigate and
top illegal or ethical activities early. This not
only benefits a company in terms of avoiding or
minimizing legal action; it can also result in
substantial monetary savings. In addition to
their ability to scrutinize revenue streams,
incomes and business expenditures of
individuals and businesses, forensic accountants
also help courts as expert evidence to present
information succinctly in court. During the
course of auditing, forensic accountants can
help uncover not only theft, but also instances
of wasteful spending and fraud.

CONCLUSION:

Forensic accounting is the fastest growing area
in accounting. Various agencies fighting
corruption worldwide will need to engage the
services of forensic accounting experts to
complement the efforts of other professionals
in reducing fraudulent activities and installing
fraud proof internal control system in business
organizations. It is beyond doubt that the role
of forensic accountants will become more
crucial in the days to come.

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REGISTERED VALUER




Registered Valuer is one among the very new
concepts introduced by Companies Act, 2013. It
provides for a proper mechanism and methods
for valuation of assets and liabilities relating to
a company; standardizes and eases the
procedure thereof. By introducing this concept,
it helps to clear the doubts regarding the
valuation made and also provides assurance to
various stakeholders of the company and
various authorities on the genuineness of the
valuation made. It further provides a new area
to bloom for professionals in various
competitive fields.

DEFINITION (RULE 17.1):

Registered Valuer means a person registered
as a valuer under the provisions contained in
chapter XVII of the Act.
REGISTRATION AS VALUERS [RULE 17.2]:

A person who is registered as Valuer in
pursuance of Section 247 of the Act, with the
Central Government or any authority,
institution or agency, as may be notified by the
Central Government and whose name appears
in the register maintained with any of the
authorities or Central Government as
mentioned above can act as Registered Valuer.
An application can be made in Form 17.1 by
individuals and firms and Form 17.2 by others
along with the prescribed fees.

The valuation report by a registered valuer shall
be approximately and shall contain such
information as set out in Form 17.3 [Rule 17.7]

BRIEF CONCEPT ON REGISTERED VALUER:

Explanation: For this purpose, a person shall be
considered in Whole-time Practice, when
individually or in partnership or in LLP or in
merchant banker with other persons in practice
who are members of other professional bodies,
he in consideration of remuneration received or
to be received:
1) Engages himself in the practice of
valuation; or

2) Offers to perform or performs services
involving valuation of assets with the
object of arriving at financial value of the
asset being valued; or

3) Renders professional services or assistance
in or about matters of principle or detail
relating to valuation.




ANKIT PORWAL;
CS PROF. PROGRAMME;
BANGALORE.

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FURNISHING OF PARTICULARS IN CERTAIN
CASES BY A REGISTERED VALUER [RULE 17.3]:

Where any person registered as valuer or has
made an application for registration as valuer
under Section 247 is, at any time thereafter,-
a) Sentenced to a term of imprisonment
for any offence; or
b) Found guilty of misconduct in his
professional capacity by any association
or institute or other body which he is a
member or with which he has
registered
He shall immediately after such conviction,
intimate to the Central Government, institution
or agency with whom he is registered as valuer
and cease to act as valuer, unless
Permitted by the Central
Government, institute or agency
with which he is registered as
valuer, or
The order imposing penalty/
sentence has been stayed by the
competent authority.

REMOVAL AND RESTORATION OF NAMES OF
VALUERS FROM REGISTER [RULE 17.4]

The name of the valuer can be removed from
the register by an order of the Central
Government, or any other authority, if they are
satisfied;
That his name is entered in the register by
error or on account of misrepresentation or
suppression of material fact; or
Has been convicted of any offence and
sentenced to a term of imprisonment or has
been guilty of misconduct in his
professional capacity, which the Central
Government , or any authority, renders his
name as unfit to act as valuer
That his performance is such that his name
should not remain on the register of
valuers, satisfied, after giving an
opportunity to be heard and conduct
enquiry, as it thinks fit.

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The Central Government, or any competent
authority may appoint one or more competent
persons as enquiry officer and they shall have
the powers as vested in civil court under the
Code of Civil Procedure, 1908. They can also call
various experts from different fields.

The Central Government, or any other
competent authority, May on application and
on sufficient cause being shown and on being
satisfied, restore the name of the person
removed from the register.
The aggrieved person shall make an appeal
against the order of Central Government to the
tribunal. [Rule 17.5]

METHODS OF VALUATION [RULE 17.6]:

The valuer shall consider the following points
while undertaking valuation:
a) Nature of business and the history of the
company
b) Economic outlook in general and outlook of
the specific industry in particular
c) Book value of the stock and financial
condition
d) Earning capacity
e) Dividend payment capacity
f) Goodwill or other intangible value
g) Sales of stock and size of the stock to be
valued
h) Market prices of stock of the corporations
engaged in the same or similar line of
business
i) Contingent Liabilities or substantial legal
issues, within India and abroad, impacting
the business
j) Nature of instrument proposed to be
issued, and nature of transaction
contemplated by the parties.
k)
The registered valuer can use the following
methods for valuation purpose:

a) Net Asset Value Method
b) Market Price Method
c) Yield Method
d) Discounted Cash Flow Method:
e) Comparable Transaction Multiples Method
f) Price of Recent Investment Method
g) Sum of the parts of valuation
h) Liquidation Value
i) Weighted Average Method
j) Any other method accepted by RBI, SEBI or
IT authorities
k) Any other method(s) which the valuer may
deem fit to adopt in the given
circumstances, provided that proper
justification for use of such method(s) is
given.

The Registered valuer shall make a valuation of
any asset as on valuation date, in accordance
with the applicable standards, if any, as may be
stipulated for this purpose

Valuation date means the date on which the
estimate of value is applicable, it can be
different from the date of valuation report or
the date on which investigations were
undertaken or completed.

AREA OF SERVICES BY REGISTERED VALUER:

1) Valuation of assets,liabilities,shares etc. for
Merger and amalgamation
2) Valuation during reconstruction process of
a company
3) Valuation of shares for FEMA compliances
4) Valuation of property
5) Credit rating of a company

CONCLUSION: By introducing this new concept
of Registered Valuer, there is a beginning of
new area of interest for professionals to choose
and bloom in the respective field. Further it also
enlarges the scope for various professionals - in
terms of work, knowledge and value creation,
thereby adding another area/service in the
armory of the professionals in whole- time
practice


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WOMEN DIRECTOR







Increasing the participation of women on a
Corporate Board inspires heated debate around
the world, with some countries even adopting
legislation to enforce their presence. Research
has shown that the inclusion of female directors
has a direct and positive impact on a companys
profits and risk management. Women board
directors also broaden a companys market
knowledge as well as raise its profile.

While increased gender diversity on corporate
boards has been examined from many different
angles, IFC(International finance Corporation)
decided to add a fresh perspective to the
debatethe perspective of male directors, as
most boards are overwhelmingly male.
According to Governance Metrics International,
men comprise over 90 percent of all
directorships globally, and as a result heavily
determine the composition of the boardroom.

Women have proven themselves to be capable
leaders in every field. Indeed, more and more
women are emerging as CFOs and VPs of small
to large multinational corporations and there
are relatively few women in the role of an
entrepreneur leader. Such women are
successful primarily because of their strong
leadership skills, product knowledge and strong
affinity to technology. The growing economic
power and independence of a woman in todays
corporate world has made her to enter the
Boardroom.

By virtue of the Companies Act 2013,the
appointment of a woman Director has been
made mandatory for every listed company and
every other public company having paidup
share capital of one hundred crore rupees or
more; or turnover of three hundred crore
rupees or more., as per proviso no 1 to section
149(1).
The number of women in board positions has
increased significantly over the last decade.
'Many women have leadership skills and
experience that reflect the changing needs of
business, so this, in turn, should be reflected on
boards. While not all studies agree that women
on boards make companies better, most do
acknowledge that the presence of women on
boards changes the behavior of male board
members and often has an effect on the
decisions the board ultimately arrives at. For
example, a 2008 study by professors Rene
Adams of the European Corporate Governance
Institute and Daniel Ferreira of the London
School of Economics found that women tend to
have better attendance records at board
meetings than their male counter parts. In fact,
the more women on the board, the more mens
attendance record improves, says Richard
Leblanc, associate professor of corporate
governance at York University. The study also
found that women are more likely than men to
VADIRAJA P.S. ;
CS PROF. PROGRAMME;
BANGALORE.

75
Milaap - 2014
sit on audit, governance and nominating
committees (monitoring committees). Gender-
diverse boards allocate more time and effort to
monitoring, and diverse boards are more likely
to hold CEOs accountable for poor stock-drive
performance, Leblanc notes. Such an
atmosphere of accountability will undoubtedly
change the decisions the board makes.
The appointment of a woman director on Board
is a strategic tool for the company. Further a
Boards strategic involvement relates to its
involvement in and the contribution towards
the articulation of the firms mission, the
development of the firms strategy and the
setting of guidelines for implementation and
effective control of the chosen strategy.
Research shows that not only women possess
the skills which organizations increasingly need,
but that when they are employed in leadership
roles within organizations, they can make a
transformational difference to its
performance.This Catalyst study demonstrates
the very strong correlation between corporate
financial performance and gender diversity. We
know that diversity, well managed, produces
better results. And smart companies appreciate
that diversifying their boards with women can
lead to more independence, innovation, and
good governance and maximize their companys
performance.The latest Report found that
higher financial performance for companies
with higher representation of women board
directors in three important measures:
Return on Equity: On average, companies with
the highest percentages of women board
directors outperformed those with the least
by 53 percent.
Return on Sales: On average, companies with
the highest percentages of women board
directors outperformed those with the least
by 42 percent.
Return on Invested Capital: On average,
companies with the highest percentages of
women board directors outperformed those
with the least by 66 percent.
Now from the below data let us see the
percentage of women(strength in Board Room
across various countries and legislations.
DID YOU KNOW?
Brazil24% of senior management positions are
held by women as of2011, but only 5.1% of
board seats. Brazils dynamic stock exchange,
BM&F BOVESPA, has two women on its
executive boardone of whom holds the
position of a risk management officer.
UK
12.2% of the boards of FTSE (Financial Times
and the London Stock Exchange) 100 companies
were composed of women in 2010. The 2011
government review recommends that FTSE 100
boards aim for a minimum 25% female
representation by 2015.

USA
70.8% of the 1763 U.S companies rated by GMI
(Governance Metrics International) had at least
one woman director, but only 9.7% of these
companies had at least three women directors,
in 2011. Cathy Hughes became the first African
American woman to head a firm publicly traded
on a stock exchange in the United States when
Radio One listed on NASDAQ in 1999.
It has examined the benefits of diversity on the
board of directors and concluded that
traditional business experience is not the only
skill of value to a board that seeks to represent
its shareholders and customers effectively.
Appointing directors from other sectors and
backgrounds can be seen to have some positive
and valuable advantages to the company. She
has driven herself to the moon and has stepped
into the Board Room and is leading in the
corporate world.

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RAKSHA. B.R;
CS PROF. PROGRAMME;
TRAINEE AT J SUNDHARESAN
& ASSOCIATES.







INTRODUCTION
More similar like the managerial aspects of
control planning and organizing that forms an
integral part of every organization whistle
blowing is a conscience act of keeping the
company within the Compliance realm. It is a very
challenging task for any organization to establish
the task of whistle blowing in the corporate
environment. However the entire concept of
whistle blowing revolves around the term whistle
blower. According to the Oxfords Advanced
Learners Dictionary a whistle blower is a person
who informs people in authority or the public
that the company he/she works for is doing
something wrong or illegal. An essential feature
of the Whistle Blower
Policy is that it provides
adequate safeguards
against victimization of
the employee who avails
of the mechanism.
Without these
safeguards, a whistle
blower policy would be a
damp squib.
The need for the concept
of whistle blowing policy
arose due to the worst
debacle of the
corporates in Western
World at the end of the 20
th
century, be it the
Enron or WorldCom and the courtesy goes to the
Whistle blowers of the respective companies.
And this is the reason why the concept of whistle
blowing has gained importance in the
governance aspect and to ensure that the
company intending to carry on a business does
with openness, fairness, transparency, integrity
and in an honest manner.
As on December 2013, India did not have a law to
protect whistleblowers; however, Whistle
Blowers Protection Bill, 2011 was approved by
the Cabinet of India as part of a drive to eliminate
corruption in the country's bureaucracy. The Bill
is still pending before the Rajyasabha. The Public
Interest Disclosure Act was
passed in the year 1998 in
United Kingdom which
encouraged people to raise
concerns of the malpractices
generally arising in the
workplace and ensured that
the organisation responded by
addressing the message
rather than the messenger
and resist the temptation to
cover the malpractice. This is
a comprehensive means to
achieve excellence in the
concept of whistle blowing in
WHISTLE BLOWING AND THE ROLE OF
GOVERNANCE PROFESSIONAL

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India.
The position of whistle blowing is a blended
combination of both the US and UK systems. The
revised clause 49 of the listing agreement as
initially introduced in August, 2003 based on the
recommendations of the Narayanamurthy
Committee had provided for the mandatory
setting up of a Whistle Blower Policy. The
Committee made two mandatory
recommendations as follows:
1. Personnel who observe an unethical or
improper practice should be able to approach
the audit committee without necessarily
informing their supervisors. Companies shall
take measures to ensure that the right of
access is communicated to all employees
through means of internal circulars, etc. The
employment and other personnel policies of
the company shall contain provisions
protecting whistle blowers from unfair
termination and other unfair prejudicial
employment practices.

2. Companies shall annually affirm that they
have not denied any personnel access to the
audit committee of the company and that
they have provided protection to whistle
blowers from unfair termination and other
unfair or prejudicial employment practices.
India Inc. was, however, clearly unhappy with
these recommendations and opposed them
intensely and SEBI decided to make this concept
of whistle blowing optional. Further, the role of
the Audit Committee would also include
reviewing the functioning of the Whistle blowing
policy in case the same exists.
The World suffers a lot not because of the
violence of bad people but because of the silence
of good people. Economic Volatility, Global
Competition, Growth Risk Appetite demands the
governance professionals to prioritize their role
as whistle blowers. CS being a part of the top
management and Board of Directors, are
expected to have a strong conscience; and strong
sense of professional responsibility in performing
the following roles in the capacity of a Whistle
Blower.
To ensure the effective running of the
activities of the Board and its Committees,
compliances of all listing rules, other
regulatory codes and acts. Keep under review
all legal and regulatory developments
affecting the company operations and make
sure that directors and management are
properly informed of the same.
To assess, manage the compliances in the
governance domain, governance processes,
tracking of outcomes of governance
processes and disseminate the information
and documents for proper governance.
Development of Board framework and to
determine the level of Independence.
Monitoring and reporting on the
Independence of Audit Committee

Participating in Strategic Planning process,
Risk Management process, Internal Control
process, MIS, Corporate Communications,
Succession Planning, Board performance
evaluation process, maintenance of a Board
Charter.

He shall act in the capacity that ensures high
level corporate administration in accordance

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with best governance practices which results
to well run, governed and sustainable
business for the benefit of stakeholders at
large.
Company Secretary can be useful aid to
implement whistle blowing as an internal
regulator for ensuring good corporate
governance in spirits. As he is a part of Board
decisions process and recipient of all important
information flowing in the organisation, he can
easily smell the rat. He can also support the
ombudsman function with the Board by
establishing a relationship between the
governance and compliance. He can make
allegations internally to other people or
committees i.e. Chairperson of Audit Committee
or any hotline developed by company or can
make allegations to external agencies like
regulators, law enforcement agencies etc.
PRACTICAL CHALLENGES FOR CS AS WHISTLE
BLOWER
CS as a key recipient of almost all information can
face retaliation, sometimes at the hands of the
organisation or group, which he accused,
sometimes under law. There is often a fear of
losing their relationship at work or outside work.
They may get punished, terminated, suspended
at a risk of their own well being.
Few instances where
whistleblowers have to
face harsh consequences
to the extent of losing
their life:
Satyendra Dubey Fate
(2003), Manjunath
Shanmugham Incident
(2005), the case of
sudden demise of
colleague CS Shasheendran (2011) and
Charudatta Despande (2013). To encourage
whistle blowing as an indispensable ingredient for
ensuring good corporate governance in spirit,
proper law should be enacted in India. Whistle
blowing should be made mandatory requirement
under Listing Agreement and even disclosures on
corporate fraud risks should be made mandatory
by Directors in Directors Responsibility Statement
annually.
Under US Corporate Governance law, Sarbanes-
Oxley Act, 2002 has made it criminal offence,
which is punishable by fine and up to 10 years in
prison, for taking any action harmful to a person
who provides truthful information about a federal
offence to a law enforcement officer. There
should be strict rules for hiding identity of
Whistle Blowers, Ombudsman should be
appointed by the company for dealing with such
allegations who will directly report to
Shareholders.
To put it very candidly, while employees are the
people best placed to raise the concern and so
enable the risk to be removed or reduced.
Without this confidence, employees may stay
silent where there is a threat, even a grave one,
to the employer or its stakeholders. Such silence
denies organizations a fail-safe opportunity to
deal with a serious problem before it causes real
damage. The cost
of such a missed
opportunity can be
huge, fines,
compensation,
higher insurance
premiums,
damages,etc.


79


CORPORATE CRIMINAL LIABILITY IN INDIA




NO SOUL TO DAMN, NO BODY TO KICK. Legal Maxim has become obsolete and
applicability of lifting the corporate veil has
unveiled the sheath.
In this Article, I have tried to concisely present a
comprehensive analysis of present status of
India on Corporate Criminal Liability and how
judicial decisions are with the legal provisions.
The apex courts decision under various matters
reflects the gravity of the concerned problem
i.e. being faced by the aggrieved parties.
In modern world, the strong effect of activities
of corporations is incredible on the society. In
the day to day activities, corporations progress
and its products and services not only act as a
blessing for the society
but also many a times
proves disastrous
which even falls under
the category of crimes.
For instance, the
Bhopal Gas tragedy,
Satyam scandal or
thousands of scandals
especially the white
collar and organized
crimes can come
within the category
that requires
immediate concern. Despite so many disasters,
the law was unwilling to impose criminal
liability upon corporations for a long time. This
was basically for the following two reasons:
Corporations cannot have the Mens Rea
or the guilty mind to commit an
offence; and
Corporations cannot be imprisoned.
Although the general rule as stated above is
applicable to all criminal cases but the criminal
law Jurisprudence has seen one exception to
the above said concept in form of Doctrine of
Strict Liability in which one may be made liable
in absence of any guilty state of mind. This
happens in cases of
mass destructions
through pollution,
gross negligence of
the company
resulting in
widespread damages
like in the Bhopal Gas
tragedy, and so on.
Until recently, courts
in India were
hesitant to attribute
criminal liability to a
company for an
offence that requires a criminal intent. Further,
courts were of the opinion that they could not
prosecute companies for offences that entailed
a mandatory sentence of imprisonment.
In, Assistant Commissioner in Bangalore &
others V/S Velliappa Textiles, the Supreme
Court held that the respondent company could
not be prosecuted for offences under certain
sections of the ITA because each of these
sections required the imposition of a mandatory


SOWMYA S;
CS PROFESSIONAL PROGRAMME;
E. S. & ASSOCIATES, MYSORE.


Milaap - 2014
term of imprisonment coupled with fine. The
sections in question left the court unable to
impose only a fine. Indulging in a strict and
literal analysis, the Court held that a
corporation did not have a physical body to
imprison and therefore could not be sentenced
to imprisonment. Further, the Supreme Court
was of the view that the legislative mandate
was to prohibit the courts from deviating from
the minimum mandatory punishment
prescribed by the Act. The Court also noted that
when interpreting a penal statute, if more than
one view is possible, the court is obliged to lean
in favor of the construction that exempts an
accused from penalty rather than the one that
imposes the penalty.
In Kusum Products Limited v/s S.K. Sinha, ITO,
Central Circle-X, Calcutta it was clearly stated
that, a company being a juristic person cannot
possibly be sent to prison and it is not open to
court to impose a
sentence or fine or allow
to award any
punishment if the court
finds the company guilty,
and if the court does it, it
would be altering the
very scheme of the Act
and usurping the
legislative function.
If a corporate body is
found guilty of the
offence committed, the court, though bound to
impose the sentence prescribed under law, has
the discretion to impose the sentence of
imprisonment or fine as in the case of a
company or corporate body, the sentence of
imprisonment cannot be imposed on it and as
the law never compels to do anything which is
impossible. In such cases, the court has to
follow the alternative and impose the sentence
of fine. This discretion could be exercised only
in respect of juristic persons and not in respect
of natural persons. There is no blanket
immunity for any company from any
prosecution for serious offences merely
because the prosecution would ultimately entail
a sentence of mandatory imprisonment. The
corporate bodies, such as a firm or company
undertake series of activities that affect the life,
liberty and property of the citizens. Large scale
financial irregularities are done by various
corporations. The corporate vehicle now
occupies such a large portion of the industrial,
commercial and sociological sectors that
amenability of the corporation to a criminal law
is essential to have a peaceful society.
CONCLUSION:
Corporate bodies reap all the advantages
flowing from the acts of the directors and they
act to the detriment of the public in the name
of the corporate bodies.
Corporate Criminal liability is in existence since
the corporate form of
business started. The
legislature remained
mum when the question
of imposing punishment
arose with respect to
corporate liability. With
the evolution of various
theories, the most vital
issue with regard to
corporate criminal
liability is now settled
i.e., the issue of Mens
rea, vicarious and strict liability is an important
aspect of corporate criminal liability.
The criminal law jurisprudence relating to
imposition of criminal liability on corporations is
settled on the point that the corporations can
commit crimes and hence be made criminally
liable. However, the statutes in India are not in
pace with these developments and the above
analysis shows that they do not make
corporations criminally liable and even if they
do so, the statutes and judicial interpretations
impose no other punishments except for fines.

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EXTERNAL COMMERCIAL BORROWINGS [ECBS]
AN INSTRUMENT FOR CAPITAL GEARING TO THE
INDIAN COMPANIES










SWATI .S HEGDE
CS PROFESSIONAL PROGRAMME;
TRAINEE UNDER T. SATHYA PRASAD.

ECBs refers to commercial loans in the form of
Bank loans, Buyers Credit , Suppliers credit,
securitized instruments (e.g. floating rate notes
and fixed rate bonds, non-convertible,
optionally convertible preference shares)
availed from non- resident lenders with a
minimum average maturity of 3 years.

ENTRY ROUTES AVAILABLE FOR INFUSION OF
THE FOREIGN FUNDS:

1. Automatic Route
2. Approval Route

A. ELIGIBILITY TO ACCESS THE ECB:
The following borrowers are eligible to access
the ECB:
Corporate houses ,
Infrastructure Finance Companies
(IFCs),
Financial Institutions (FIs), Housing
Finance Companies (HFCs) and Non-
Banking Financial Companies(NBFCs),
Non-Government organization (NGOs)
engaged in micro finance activities,
Special Purpose Vehicles(SPVs) as per
Reserve Bank of India(RBI)Circular on
3rd December 2013, for project use in
SPVs with the conditions mentioned
below:
SPV should carry the infrastructure
business activity.
SPV can be raised up to 3 years after
the Commercial Operations

EXTERNAL COMMERCIAL BORROWING (ECB) IS A
MECHANISM WHICH FACILITATES, TO ACCESS FOREIGN
EXCHANGE BY INDIAN COMPANIES. ECB IS A MODE OF
FINANCIAL ASSISTANCE PROVIDED BY FOREIGN ENTITY
TO AN INDIAN COMPANY OR WHOLLY OWNED INDIAN
SUBSIDIARY. IT CAN BE SECURED OR UNSECURED AS
PER THE TERMS AND CONDITIONS OF ECB AGREEMENT
BETWEEN THE PARTIES.

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Cases falling outside the purview of the
automatic route and in the general
corporate purposes (subject to the
conditions that minimum paid-up
equity of 25 per cent should be held
directly by the lenders, ECB should use
for the purpose permitted under ECB
guidelines and minimum lock in period
is 7 years) under the approval route.

B. INTERNATIONAL SOURCES FOR ECB;
International Banks, International capital
markets, Multilateral
financial
institutions/regional
financial institutions and
Government owned
development financial
institutions, Export
credit agencies,
Suppliers of Equipment, Foreign collaborators
and Foreign Equity Holders are the international
sources for ECB.
C. MAXIMUM LIMIT TO BORROW FUNDS
AND MATURITY PERIOD;

Maximum of USD 750 million or its
equivalent can be raised by corporate.
Maximum of USD 200 million or its
equivalent can be raised in the corporate
service sector.
Maximum of USD 10 Million or its
equivalent can be raised
by NGOs engaged in
micro finance activity.
50 per cent of
owned funds can be
avail by the SIDBI
subject to ceiling of 500
million.
The ECB proceeds
should be kept in a
separate escrow
account.

Maturity Period:
Amount Maturity Period
Up to USD 20 million or its equivalent Minimum average maturity of 3 years.
Above USD 20 million and up to USD 750 million Minimum average maturity of five years.

D. ALL IN-COST CEILINGS :

It includes rate of interest, other fees and expenses in foreign currency except commitment fee, pre-
payment fee, and fees payable in Indian Rupees. These are:

Average Maturity Period All-in-cost Ceilings over 6 month LIBOR
3 years and up to 5 years 350 basis points
More than five years 500 basis points

E. END- USE:

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ECB CAN BE RAISED UNDER AUTOMATIC
ROUTE FOR:
Import of capital goods as classified by DGFT in
the Foreign Trade Policy;
Overseas Direct Investment in Joint Ventures/
Wholly Owned Subsidiaries;
New projects, modernization expansion of
existing production units;
Investment in industrial sector, investment in
infrastructure sector and specified service
sectors,
Acquisition of shares in the disinvestment
process;
Micro finance activity including capacity
building by NGOs engaged micro finance
activities;
Infrastructure Finance Companies(IFCs);
SIDBI can on lend to the borrowers in the MSME
sector for permissible end uses, refinancing of
Bridge Finance (including buyers / suppliers
credit) availed of for import of capital goods by
companies in Infrastructure Sector and ECB is
allowed for Import of services, technical know-
how and payment of
license fees.
ECB CAN BE RAISED
UNDER APPROVAL
ROUTE FOR:
Avail exchange in the
real sector,
infrastructure sector,
telecom sector as per
the RBI Guidelines;
Working capital for civil aviation sector;
General corporate purposes from foreign equity
holders;
Low Cost Affordable Housing are allowed to
access ECB.
ECB NOT PERMITTED:
ECB for real estate and on-lending or
investment in capital market or acquiring a
company (or a part thereof) in India by a
corporate is not permitted.
PROCEDURE OF INFUSION OF FUNDS:
The borrowers under the automatic route
as well as the approval route, have to
submit Form 83 to the Authorized Dealer
(AD), in duplicate, for allotment of Loan
Registration Number (LRN).
A copy of the same is to be forwarded by
the designated AD to the Director, Balance
of Payments Statistics Division,
Department of Statistics and Information
Systems (DSIM) and RBI.
The borrower can draw-down the loan
only after LRN is allotted by DSIM.
For the purpose of accessing ECBs
under the
approval route,
applicants are
required to
submit an
application in
Form ECB,
throu0067h the
designated AD, to
the Chief General
Manager-in-
Charge, Foreign
Exchange

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Department (ECB Division), RBI, along
with the following documents:
Copy of offer letter from the overseas lender
/supplier furnishing complete terms and
conditions of proposed loan / credit
arrangement.
Copy of import contract, proforma /
commercial invoice / Bill of Lading.
REPORTING TO THE RBI:
The borrowers are required to submit a
monthly Return in Form ECB-2, in respect of
actual ECB transactions that have taken
place during the previous month.
In case there have not been any transactions
during the previous month a NIL return has
to be submitted.
The aforesaid Form has to be certified and
forwarded by the designated AD bank so as
to reach DSIM, RBI within seven working
days from the close of the month.
CONVERSION OF ECB INTO EQUITY:
As per RBI Master Circular dated July 01,
2010, an Indian company is eligible to
convert its ECB into Equity through
compliance of the following conditions:
Foreign Investment promotion
Board (FIPB) or Government
approval is required where the
company carries business under
the automatic route.
Company should not exceed the
foreign equity holding sectoral
cap.
FEMA, 1999 pricing guidelines
will applicable for pricing of
shares.
Permission with the RBI.
REPORTING TO THE RBI ABOUT CONVERSION
OF ECB:
Borrowers are required to report full conversion
of outstanding ECB into equity in the form FC-
GPR to the Regional Office concerned of the RBI
as well as in form ECB-2 submitted to the DSIM,
RBI within seven working days from the close of
month to which it relates. Contravention of the
ECB Guidelines will attract the FEMA 1999 penal
provisions.
CONCLUSION:
ECB is boon to the Indian financial market. It
provides huge funds for large projects and
borrowings at low rate of interest. But it
involves huge risk and lot of procedures in
infusion and repatriation process. ECBs are very
worthwhile for the company to achieve its
vision and mission.


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LISTING AND ISSUE OF CAPITAL BY SMEs








NITISH SHETTY
CS PROF. PROGRAMME;
CS SRIKANT.R.GUDI; HUBLI.

SEBI (LISTING OF SPECIFIED SECURITIES ON
ITP):
The provisions of this Chapter shall apply to
small and medium enterprises which do not
have their securities listed on any recognized
stock exchange and which seek listing of their
specified securities exclusively on the ITP.
ITP (ITP)- It is a platform created in SME
Exchange for listing and trading of specified
securities of small and medium enterprise.
SMALL AND MEDIUM ENTERPRISE (SME)-
SMEs are public companies including start-up
companies which shall fulfill the following
eligibility conditions to get listed in the ITP.
ELIGIBILTY (REGULATION 106Y):
A small and medium enterprise shall be eligible
for listing of its securities on the ITP, if it
satisfies the following:
The company, its promoter, group
company or director should not appear in
the willful defaulters list of Reserve Bank
of India as maintained by Credit
Information Bureau (India) Limited;
There shouldnt be winding up petition
against the company that has been
admitted by a competent court;
The company, group companies or
subsidiaries has not been referred to the
Board for Industrial and Financial
Reconstruction within a period of five
years prior to the date of application for
listing;
No regulatory action has been taken
against the company, its promoter or
director, by the Board, Reserve Bank of
India, Insurance Regulatory and
Development Authority or Ministry of
Corporate Affairs within a period of five
years prior to the date of application for
listing;
The company must not have completed a
period of more than ten years after
incorporation and its revenues should not
exceeded one hundred crore rupees in any
of the previous financial years;
The paid up capital of the company has not
exceeded twenty five crore rupees in any
of the previous financial years;
The company has at least one full years
audited financial statements, for the
immediately preceding financial year at
the time of making listing application; and
Any one of the following criteria should be
fulfilled:

INDIA IS A COUNTRY WHERE THERE ARE THOUSANDS OF
SMES AND ALSO IS GIVING RISE TO MANY START-UPS. THE
NEW SEBI GUIDELINES PROVIDE A NEW SOURCE OF CAPITAL
FOR THE SMES/ START-UPS. THE AMENDMENT WAS MADE
TO THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009 WHERE IN A NEW
CHAPTER XC WAS INSERTED TO THESE REGULATIONS
WHICH PROVIDE PROVISIONS FOR THE LISTING AND ISSUE
OF CAPITAL BY SMALL & MEDIUM ENTERPRISES. THESE
REGULATIONS ARE CALLED SECURITIES EXCHANGE BOARD
OF INDIA (LISTING OF SPECIFIED SECURITIES ON ITP).


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INVESTORS MINIMUM INVESTMENT













LISTING OF SPECIFIED SECURITIES
























CONDITIONS ON ISSUE OF SECURITIES & RAISING OF CAPITAL:
The company shall not make initial public
offering while its specified securities are
listed on ITP.
The company listed on ITP may raise capital
through private placement or rights issue
without an option for renunciation of rights.
The private placement of securities by a
company whose securities are listed on ITP
shall be subject to the following:

Alternative Investment Fund or
Venture Capital fund or
Angel Investor (At least One) or
Registered Merchant Banker or
Qualified Institutional Buyer or
Scheduled Bank (no minimum investment specified) or
specialized international multilateral agency or
domestic agency or a public financial institution
(No minimum investment specified).

Rs.50 Lakhs in
Equity Shares
FULFILL ELIGIBITY CRITERIA
APPLY TO RECOGNISED STOCK
EXCHANGE ON ITP
Enclose Information
Document As Specified
In Schedules
INFORMATION DOCUMENT
SHALL BE MADE PUBLIC
Hosted On Website of
Recognized Stock
Exchange
RECOGNISED STOCK EXCHANGE
GRANTS IN-PRINCIPAL
APPROVAL
RECOGNISED STOCK EXCHANGE LISTS THE
SECURITIES OF THE COMPANY ON THE
ITP.
The company which has
received in-principle approval
from the recognized stock
exchange shall be deemed to
have been waived by the Board
under sub-rule (7) of rule 19
from clause (b) of sub-rule (2)
of rule 19 of Securities
Contracts (Regulation) Rules,
1957 for the limited purpose of
listing on ITP.


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The securities so issued through private
placement shall be made at a price not less
than higher of the following:
the book value of the
equity shares as per its last
audited financial statement
not older than six months;
Value of shares as
determined in an
independent auditors or
registered merchant
banker's report.
(5) A company listed on ITP making a rights
issue shall comply with the following:
1. there shall not be an option for
renunciation of rights;
2. the company shall obtain in-principle
approval from the recognized stock
exchange where its securities are listed
prior to a rights issue;
3. The company making a rights issue shall
send a letter of offer to its shareholders
through registered post or speed post
or electronic mode and the same shall
be made available on the website of the
company and the recognized stock
exchange.


OTHER SPECIFICATIONS:











PROMOTERS SHARE
Not Less Than 20 Percent of Post
Issue Capital Locked For a Period Of 3
Y
DEMATERIALIZE
All specified securities of the company shall be in
dematerialized form upon listing on ITP.
TRADING LOT
The minimum trading lot on ITP
shall be ten lakh rupees.

OBTAIN IN-PRINCIPAL APPROVAL
APPROVAL OF SHAREHOLDERS
THROUGH SPECIAL RESOULTION
ALLOTMENT OF SECURITIES
(WITHIN 2 MONTHS)
RECOGNISED STOCK EXCHANGE
GRANTS IN-PRINCIPAL
APPROVAL
The explanatory statement to the notice to
shareholders shall include:
(i) the purpose for private placement;
(ii) identity of allottees;
(iii) whether allottee is a promoter or belongs
to the promoter group and if not the
relationship between promoter and
allottee;
(iv) nature of securities being issued;
(v) price at which the security is being issued.

DISCLOSURE OF DOCUMENTS TO
RECOGNISED STOCK EXHANGE
(15 DAYS PRIOR GENERAL BODY MEETING)

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EXIT FROM ITP:
A company whose specified securities
are listed on ITP may exit from that
platform, if:
a) Its shareholders approve such exit by passing
a special resolution through postal ballot where
ninety per cent of total votes and the majority
of non-promoter votes have been cast in favor
of such proposal;

b) The recognized stock exchange where its
shares are listed approve such exit.

A company whose securities are listed on
ITP shall exit the platform in the event if
fulfils following conditions:






A company listed on ITP shall be
delisted and permanently removed
from the ITP under the following
circumstances:

a) The company has failed to file its periodic
filings with the recognized stock exchange for
more than one year; or
b) The company has failed to comply with
corporate governance norm(s) for more than
one year; or
c) Notwithstanding anything contained in
clauses (a) and (b), the recognized stock
exchange may delist the company on non-
compliance of the condition of listing as may be
specified by the recognized stock exchange.

In case of a company delisted under sub-
regulation (3), no company promoted by
promoters and directors of such delisted
company shall be permitted to be listed on ITP
for a period of five years from the date of such
delisting.

LISTED MORE THAN 10 YEARS
PAID-UP CAPITAL MORE THAN 25 CRORE
REVENUE MORE THAN 100 CRORE
MARKET CAPITALIZATION MORE THAN 500 CRORE

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EMPLOYEE PROVIDENT FUND






RADHESH. R. BHAT,
CS PROFESSIONAL PROGRAMME;
TRAINEE - M/S. GANAPATHI & MOHAN,
COMPANY SECRETARIES,



Provident fund is created with the purpose of
providing financial security and stability to
employees. A person starts his contribution in
the PF fund once he joins a company as an
employee. The contributions are made on a
regular basis. The primary purpose of Provident
Fund is to help employees save a fraction of
their salary every month so that he can use the
same in an event that the employee is
temporarily or no longer fit to work or at
retirement.
The Employees' Provident Funds and
Miscellaneous Provisions Act, 1952 came
into effect on 4
th
March, 1952 as part of a
series of legislative interventions made in
this direction. The Organization is
administered by a Central Board of
Trustees, composed of representatives of
the Government of India, Provincial
Governments, employers and employees.
The Board is chaired by the Union Labour
Minister of India. The Chief Executive of
the EPFO, the Central Provident Fund
Commissioner, reports to the Union Labour
Minister through the Permanent Secretary in
the ministry.
EMPLOYEES PROVIDENT FUND
ORGANIZATION (EPFO):
The Employees' Provident Fund Organization
(EPFO) is a statutory body of the Government of
India, under the Ministry of Labour and
Employment. It administers a compulsory
contributory Provident Fund Scheme, Pension
Scheme and an Insurance Scheme. It is one of
the largest social security organizations in
the India in terms of the number of covered
THE EMPLOYEE PROVIDENT FUND
(EPF) IS A SOCIAL WELFARE MEASURE
AND ONE OF THE MOST BENEFICIAL
AND POPULAR INVESTMENT SCHEMES
FOR THE SALARIED PERSONS IN INDIA.
PROVIDENT FUND IS CREATED WITH
THE PURPOSE OF PROVIDING
FINANCIAL SECURITY AND STABILITY
TO EMPLOYEES. A PERSON STARTS HIS
CONTRIBUTION IN THE PF FUND ONCE
HE JOINS A COMPANY AS AN
EMPLOYEE. THE CONTRIBUTIONS ARE
MADE ON A REGULAR BASIS. THE
PRIMARY PURPOSE OF PROVIDENT
FUND IS TO HELP EMPLOYEES SAVE A
FRACTION OF THEIR SALARY EVERY
MONTH SO THAT HE CAN USE THE
SAME IN AN EVENT THAT THE
EMPLOYEE IS TEMPORARILY OR NO
LONGER FIT TO WORK OR AT
RETIREMENT.


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beneficiaries and the volume of financial
transactions undertaken. The EPFO's apex
decision making body is the Central Board of
Trustee (CBT).
APPLICABILITY OF EPF:
The Employees' Provident Fund and
Miscellaneous Provisions Act, 1952 applies to
the whole India except Jammu & Kashmir and it
is applicable to every establishment which is
engaged in any one or more of the industries
specified in Schedule I of the Act or any activity
notified by Central Government in the Official
Gazette and any establishment employing 20 or
more persons or in case
of Cinema theater
employing five or more
person. If any of the
establishment is not
satisfying the above
conditions for coverage
and if the employer and
majority of the
employees are willing,
the Act may be
applicable to such
establishment.

The establishment to
which this Act applies shall continue to be
governed by this Act, even if the number of
employees falls below 20 at a later date. As on
date, the EPF & MP Act extends to 187 classes
of establishments. Any establishment falling in
any of the 187 categories mentioned above and
employing more than 20 persons automatically
comes under the purview of the EPF & MP Act
1952.

The contribution which shall be paid by the
employer to the fund shall be 10% on the basic
pay, dearness allowance and retaining
allowance for the time being payable to each of
the employees whether employed by him or
through a contractor.
ONLINE PROVIDENT FUND TRANSFER AND
WITHDRAWAL:
The EPFO offers many online services through
its portal to members. The EPFO announced an
online withdrawal and transfer provision for
employee's provident fund (EPF) from 1
st
July,
2013 with the aim to settle claims faster and
provide services are efficiently and comfortably
to everyone. EPFO set up a Central Clearance
House, which was
operational from July 1.
Now if an employee
changes his job he can
easily apply to transfer
his PF account through
an easy online process,
if the Employee
Provident Fund
& Miscellaneous
Provisional Act, 1952
applies on both the
establishments. The
earlier procedure for
transfer or withdrawal
of EPF involved the submission of a physical
application while changing a job. This would be
lost in the system and could not be tracked to
know the status. Online withdrawal and
transfer of EPF aims to make the process
smoother and efficient. A central clearance
facility ensures speedy execution of transfers
and withdrawals and subscribers can now track
the status of their application online.
Verification of the details of the PF account
from the previous employers will be on the
EPFO henceforth, unlike the previous scenario

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Milaap - 2014
where employees needed to get their
applications verified from the employer for
claim settlement. Subscribers are now assigned
a permanent EPF account number, which will be
used to track their application and process their
transfer, withdrawal and claim request.
Many essential Provident Fund services are
already made available online to members by
the EPFO and new initiatives are being taken to
make the process easier for a large number of
employees working in both the public as well as
private sectors.
BENEFITS OF EPF SCHEME:
Employee Provident Fund is a very important
investment for taking in to account of
employees future. The tax free interest and the
maturity award ensure a very good growth to
the money. If the PF money continued for a
very long period of time, it can help in meeting
employee's requirements including his
retirement goals.

In case of short fall of funds
during emergencies and at
when borrowing are the only
options remaining, the EPF can
comes handy because of the
benefits it provides. The PF can be used for
multiple purposes at different times, as it
guarantees benefits such as Accumulation plus
interest upon retirement, resignation and death
and also partial withdrawals allowed for specific
expenses such as house construction, higher
education, marriage, illness etc.

Any person joining an establishment to which
the EPF & MP Act applies, shall compulsorily
submit a declaration to his/her employer
whether he/she is already a member of
Provident Fund.This will ensure continuity of
service and consequential benefits.

CONCLUSION:

Employees Provident Fund Schemes provide
social security measures to the Employees and
also it provides monetary facility to the
employees when they working on the
establishment by withdrawal of partial benefit
or when they leave the establishment by final
withdrawal.










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Milaap - 2014

YES BANK BOARD CONFLICT






The saga of appointment of Directors at Annual
General Meeting of YES Bank and the
questioning of its legality by another promoter
group has caught on the attention of the
Compliance professionals. This article is a brief
chronicle of the events and final judgment by
Mumbai High Court.
On June 08, 2013, the Annual General Meeting
(AGM) of Yes Bank was to approve appointment
of Mr. Diwan Arun Nanada, Mr. Ravish Chopra
and Mr. M.R. Srinivasan as whole-time directors
by voice vote. The three directors were
nominated by the Bank MD & CEO, Mr. Rana
Kapoor -- who holds 13.72 per cent stake in the
bank -- but were opposed by Ms. Madhu Kapur,
wife of late Ashok Kapur and co-founder of Yes
Bank, who holds 12 per cent stake in the bank.
Ms. Madhu Kapur has claimed that according to
item numbers 6, 7 and 8 in the Notice for the
AGM, under the heading of special business,
resolutions were proposed for appointment of
three directors on the board, one of whom is to
be an independent director and the other two
are being nominated by the Indian
promoter Mr. Rana Kapoor. This,
she alleges, seeks to deny the rights
of the Ashok Kapur group. Following this,
members were asked to cast paper ballots and
results of the same would be known in 48
hours.
Ms. Madhu Kapur moved the High Court
objecting to the holding of AGM saying that
they had not been consulted before
appointment of directors citing the Articles of
Association of the bank that require a
recommendation by the promoters for the
appointment of whole time directors. That is to
say, the successors & the legal representatives
of late Ashok Kapur, Madhu Kapur Familys
recommendation was not sought.
The High Court directed the Bank to consider
the appointment of Ms. Shagun Gogia, daughter
of its late founder, Mr. Ashok Kapur. The board
of directors at its meeting, unanimously
disagreed the recommendation of appointment
of Ms. Shagun Gogia on the ground of not
meeting the criteria of experience.
On the other hand, the board has given its
approval to submit applications to the Reserve
Bank of India for the
appointment of top
management executives, Mr.
K. ARUNA;
CS PROF. PROGRAMME;
BANGALORE.

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Milaap - 2014
Rajat Monga, Mr. Sanjay Palve and Mr. Pralay
Mondal of the bank as whole-time directors,
subject to RBI and shareholders approval.
On this, Ms. Madhu Kapur amended the
petition saying the appointment of all the six
directors is illegal and to seek the right to
appoint Ms. Shagun Gogia on the Board citing
Articles of the Company. Yes Bank took stand
that as per the Articles of the Company the
right to appoint directors solely rests with
the Indian Partners- the banks CEO & MD Mr.
Rana Kapoor & late co- founder Mr. Ashok
Kapur. After the demise of Mr. Ashok Kapur, the
privilege now rests with Mr. Rana Kapoor only.
Further, Yes Bank argued that appointment of
directors by the banks board cannot be
questioned in a court of law.
FINAL DAY OF JUDGMENT: Mumbai High Court
dismissed the contention and said the court has
power to decide.
The Court held that the three directors
appointed in the AGM on June 8, 2013 were
duly elected. It decided that the suit is not
maintainable. The Court said that, as Ms.
Madhu Kapur demanded poll and 80% agreed
for the appointment, hence, it could be said
that the directors were duly elected.
Ms. Madhu Kapur also challenged the decision
of the Bank's Board to appoint three whole-
time directors, Mr. Rajat Monga, Mr. Sanjay
Palve and Mr. Pralay Mondal. On this, the Court
decided that their appointment, made in a
meeting on June 24, 2013 is valid, however,
subject to the approval of Reserve Bank of India
and the Annual General Meeting.
The High Court further held that rejection of
nomination of Ms. Shagun Gogia on the
Board was on grounds of qualification, and
so, is valid.
Conclusion: Before arriving at any conclusion,
a question stands out- Are all shareholders
equal? Probably not. Our law gives power to
the majority shareholders over the minority
group. So the decision making power,
especially to appoint anyone on Board, lies
with the majority group.
Then again a question arises- Whether the
promoters kids always get advantage of their
surname? The answer is not as simple, as the
question. Be it is the case of Yes Bank, for
appointment of Ms. Shagun Gogia or in the case
of Infosys, for the appointment of Mr. Rohan as
Executive Assistant to his father , Mr. Narayana
Murthy, on his recommendation- Is it because
of their qualification or their last name?
In the Yes Bank case, Ms. Shagun Gogias
appointment might have gotten disapproved
because of the reason, that she is too young for
her age to be on the Board and would not be
able to safeguard the interest of the
stakeholders. But, there lies a stand that Ms.
Shagun Gogia, because of her family and
educational background, could make it possible.
However, in the respective case, both sides
have valid arguments, so the case could go
either way.
MAJOR CONTENTIONS:
1. Does High Court have power to decide such a case?
2. Is the appointment of three directors, Mr. Diwan
Arun Nanada, Mr. Ravish Chopra and Mr. M.R.
Srinivasan valid?
3. Is the appointment of directors, Mr. Rajat Monga,
Mr. Sanjay Palve and Mr. Pralay Mondal legal?
4. Is the rejection of nomination of Ms. Shagun Gogia
on the Board on valid grounds?



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Milaap - 2014
DRAFTING OF LEASE AGREEMENTS

NANCY V DHAWALE
CS PROF. PROGRAMME;
K. SANDHYALAKSHMI, PCS

A well planned agreement, put in proper terms
and form will free the parties to Contract, or
even reduce, to a large extent; legal hassles that
may crop up during the term of such lease/rent
and at times, even after the expiry of the term.
It is very important to bear in mind every
minute detail in legal terms or otherwise, by
which, both, or either party may or will be
affected, or such details are in the area of their
interest. Hence, to start with, a skeleton draft
may be prepared with all the clauses that are to
be fitted in the final copy of the agreement,
which will be binding on the parties to the
agreement.
CLAUSES TO BE INCLUDED IN A LEASE
AGREEMENT IN GENERAL ARE LISTED BELOW:
PARTIES TO THE AGREEMENT:

This clause should contain basic details of all the
parties to the Contract starting with their name,
fathers name, age, address, and designation
and also the title they hold in the said property.
Brief description of the Property to be leased
with the intention of the parties towards the
property.Term of the Agreement and the
handover date including renewal period

RENT AND MAINTENANCE CHARGES:

Details regarding the time within which such
rent needs to be deposited, the Percentage of
rent to be enhanced on a timely basis and
applicable taxes.

SECURITY DEPOSIT:
Amount of deposit to be paid as Security
Deposit at the time of entering into an
agreement, mode of payment, Installments (if
any), Rate of interest on failing to refund such
deposit on termination of agreement, within
the said period
ELECTRICITY CHARGES AND PROPERTY
TAXES:
A mention regarding the party responsible for
bearing the Electricity Charges and Property
Taxes and to make payments on dues has to be
made clear to avoid confusions in future.

SIGNAGE:
If the said property is being let out for
commercial purposes, then the lessor needs to
mention the permission granted to display the
name board, logo, symbol and any additional
consideration if any, that needs to be paid to
the lessor.
PARKING:
This includes Slots allowed for parking and
additional consideration (if any) that needs to
be paid.
COVENANTS OF LESSEE:
This shall include all the duties to be carried on
by the lessee towards the said premises and
also towards the lessor. Some of which may
include maintenance of premises in good
Drafting lease agreements to let out property on
lease is a specialized area that relies on training,
experience and continual update of current law.
Each leasing situation is different and will require
an agreement drafted to fit the situation and the
intension of the parties.

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Milaap - 2014
condition, timely payment of rent and other
dues, details regarding sub- letting, and so on.
COVENANTS OF LESSOR:
This shall include all the duties and rights of the
lessor towards the lessee and the property
mentioned respectively.
FORCE MAJEURE:
Upon the occurrence of any event beyond the
control of the parties including fire, accidents,
any natural calamities, war, terrorist activities,
governmental or municipal action, prohibition,
restriction which in any way adversely affect the
right of the lessee to peacefully enjoy the
property can be described as force Majeure.
The terms of payment of rent, on force
majeure shall be mentioned and time till which
such period can extend beyond which,
continuation or termination of lease would take
place needs to be specified and any deductions
that need to be made from the rent during this
time, also shall be mentioned.
TERMINATION :
The Lock in period after which the lease or rent
can be terminated shall be mentioned including
the minimum notice period to be given to the
lessor. Any other condition on which the lease
may be terminated by either of the parties has
to be included.
GOVERNING LAW & JURISDICTION:
The law of the land and the jurisdiction to
resolve the disputes, if any arise, shall be
mentioned correctly.
STAMP DUTY AND REGISTRATION
CHARGES:

Cost of stamp duty, registration charges and
other incidental expenses which need to be
borne are to be clearly specified as to the
person responsible for bearing of such costs.
NOTICES:
Mode of delivering of notices to the concerned
parties need to be specified, including the
address and contact details at which such
notices shall be delivered.
DISPUTE RESOLUTION
In case if any dispute arises, the mode for
resolving such dispute needs to be mentioned ,
including settling of disputes according to the
provisions of the Arbitration and Conciliation
Act, 1996.
SEVERABILITY:
If any of the clause or clauses of the agreement
is found to be illegal, invalid or unenforceable,
such clauses may be taken not to form part of
the agreement only if they can be severed
without affecting the rest of the agreement.
WAIVER:
Conditions of waiver, if any, should be
mentioned.
INDEMNITY:
The lessor needs to make an undertaking to
indemnify the lessee against all losses, claims,
damages, costs, etc. that the lessee may have to
suffer on account of any defect in the lessors
title and rights to the demised premises and its
ability to perform its obligations , including , but
not limited to third party claims. Any terms of
alteration of deed needs to be mentioned.
ANNEXURES: The description of the Building
and the premises and the immediate
surroundings need to be mentioned clearly,
including the list of furniture, fittings that the
property already possesses, which will be
handed over to the lessee along with the said
property details.

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Milaap - 2014
POORNIMA V HEGDE
CS PROF. PROGRAMME
VIVEK HEGDE & CO



ANALYSIS OF SECTION 185 OF THE COMPANIES ACT, 2013















The Companies Act, 2013 (CA 2013) which is
enacted in the mid of 2013, is a landmark
legislation and is likely to have far-reaching
impact on all companies operating in India.
While a part of CA 2013 has already become
effective from 12
th
September, 2013, the Draft
Rules are in the notification stage after
gathering public comments/opinion.

One of the important Sections of CA, 2013
which has come into force on12
th
of September,
2013,is Section 185 which corresponds to
Section 295 of Companies Act, 1956 (CA 1956)
which contains provisions regarding giving loans
to directors and other entities in which
directors are interested.

In this Article, an
attempt is made to
analyze the provisions of
Section 185 of CA 2013
in comparison with CA
1956.

WHAT SECTION 185
SAYS?

No company shall,
directly or indirectly,
advance any loan,
including any loan
represented by a book debt, to any of its
directors or to any other person in whom the
director is interested or give any guarantee or
provide any security in connection with any
loan taken by him or such other person.

What the expressionto any other person in
whom director is interested means?

The expression means:

(a) any director of the lending company, or of a
company which is its holding company or
any partner or relative of any such director;

(b) any firm in which any such director or
relative is a partner;

(c) any private
company of which any
such director is a
director or member;

(d) any body
corporate at a general
meeting of which not
less than twenty five
per cent. of the total
voting power may be
exercised or controlled
VINAYAK S BHAT
CS PROF. PROGRAMME
VIVEK HEGDE & CO



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Milaap - 2014
by any such director, or by two or more
such directors, together; or

(e) any body corporate, the Board of directors,
managing director or manager, whereof is
accustomed to act in accordance with the
directions or instructions of the Board, or of
any director or directors, of the lending
company.

WHAT IS EXEMPTED?

Following transactions are exempted from the
applicability of the Section 185:

a) the giving of any loan to a managing or
whole-time director

(i) as a part of the conditions of service
extended by the company to all its
employees; or

(ii) pursuant to any scheme approved by the
members by a special resolution; or

b) a company which in the ordinary course of
its business provides loans or gives
guarantees or securities for the due
repayment of any loan and in respect of such
loans is charged at a rate not less than Bank
rate declared by RBI.


WHAT IF THE PROVISIONS ARE
CONTRAVENED?

If the provisions of Section 185 are contravened
-

a) the company shall be punishable with
fine which shall not be less than five
lakh rupees but which may extend to
twenty-five lakh rupees

b) the director or the other person to
whom any loan is advanced or
guarantee or security is given or
provided in connection with any loan
taken by him or the other person, shall
be punishable with imprisonment which
may extend to six months or with fine
which shall not be less than five lakh
rupees but which may extend to
twenty-five lakh rupees, or with both.

ANALYSIS AND COMPARISON WITH SECTION
295 OF CA, 1956:

1. Erstwhile Section 295 was not applicable to
a private limited Company unless it is a
subsidiary of a public limited. Whereas,
Section 185 gives no exemption to a private
limited Company.

2. Any loan made by a holding company to its
subsidiary company or any guarantee
given or security provided by a holding
company in respect of any loan made to its
subsidiary were exempted from the
applicability of Section 295 of CA, 1956.
However, Section 185 gives no exemptions
to those transactions.

3. Under Section 295 of CA, 1956, advancing
loan to Directors, etc., was possible with the
previous approval of the Central
Government. Whereas Section 185 of CA,
2013 prohibits such a transaction.

4. Under section 295 of CA, 1956
imprisonments could be fully avoided
by repayment of loan, where the loan
has been repaid in part, imprisonment
could be reduced proportionately.
There are no such provisions in section
185 of CA, 2013.

CLARIFICATION BY THE MINISTRY OF
CORPORATE AFFAIRS:

The Ministry has issued a Circular dated
19
th
November, 2013, clarifying that section
372A of CA, 1956 dealing with inter-corporate
loans and advances is still operative. While
section 186 of CA, 2013 which was the

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Milaap - 2014
corresponding section to Section 372A of the
Act was still not notified, it was more of less
clear that the section was operative.


QUESTIONS TO BE ANSWERED:
1. The Section 372A of CA, 1956 which still
operative as per MCA clarification, gives
exemptions to any loan made by a holding
company to its wholly-owned subsidiary or
to any guarantee given or any security
provided by a holding company in respect of
loan made to its wholly-owned subsidiary
and hence such transactions are allowed.
However Section 185 of CA, 2013 prohibits
such transaction. Is the intent of the circular
issued by MCA to exempt the transactions of
the company with its wholly owned
subsidiaries in which the director is otherwise
interested?

2. Transactions relating to providing of
loans, guarantees and securities in
ordinary course of business are not
prohibited under the provisions of
Section 185 of CA,
2013 subject to some
conditions. But the
expression 'ordinary
course of business' is
not clarified. Some of the experts are of
the opinion that this relaxation can be
availed only by financial institutions
such as Banks as lending is ordinary
course of businesses for them. It is also
being interpreted that lending to a
subsidiary company is also a ordinary
course of business since it is a day to
day transaction. How to interpret this
expression?

CONCLUSION:
The Section 185 of CA, 2013 has attained much
importance because of its applicability to
private limited Companies and transactions
with wholly owned subsidiaries. As clarified by
MCA, it has received number of representations
from the stakeholders consequent to the
implementation of the Section, it is evident that
there are lot of confusions in the professional
community which as has to be addressed by
MCA.










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MILAAP 2014:
A SNEEK PEEK INTO THE
TWO DAYS EVENTS.




DAY 1;
SATURDAY, 22
ND
FEBRUARY 2014.

INAUGURAL SESSION:
Milaap 2014 was inaugurated by invoking the
blessing of the divine, followed by lighting of
the lamp and an inaugural dance, performed by
the students.

Further, celebrating its 10
th
anniversary the
inaugural ceremony was followed by a Cake
Cutting celebration, signifying the same.

SESSION1-TASTING SUCCESS:

Mr. Tony Francis, Station Director at RED FM,
was the guest faculty for the session. He
enlightened the audience with his talk, on how
bearing in mind the situations around us in our
lives- our responsiveness & reactions to the
same, can allow us to face the circumstances ,
either with strength or in weakness.

That our adaptability in facing the same , plays a
pivotal role, in the shaping of our lives. The
speaker drew examples from his life to
enumerate the same.

FLOURISHING CAREER AS A CS - BEYOND
COMPANY LAW:

It was an extremely educative & informative
session, delivered by CS Vittal, CS Raghu
Kumar.K.N & with Mr.Vivekanada, chairing the
session as the Moderator. It provided the
students with valuable insights on the scope &
availability of opportunities that lay before
students - than only restricting themselves, to
being merely Company Law experts. Inputs
were suggested, in assisting students, to being
more competent professionals.

During the course of the session, the faculties
discussed at length, the need for Company
Secretaries to be involved in matters of
Taxation, Labour Laws, and other such statutes.

Much emphasis was laid on the tremendous
responsibilities, that rests with Company
Secretaries-which extends beyond the paradigm
of only filing of requisite forms & returns &
issuance of compliance certificates, but also the
importance of Company Secretaries, in the
areas of economic, political and administrative
dimensions, in ensuring the companys
responsibility to the stake holders, the country,
and to the society, in being a good Corporate
Citizen, are being honored.

SHOWCASE EVENT:

The most awaited event with eagerness &
anticipation both by students and other
members alike, this years Showcase event

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Milaap - 2014
revolved around the subject theme of -The
attitude, mind-set, & perceptions of the
students, on the threshold of entering into the
profession & the outlook, changed awareness &
attitude of students, already present in the
profession.

With the added element of fun, it was
entertainment coupled with learning for all. The
team was guided by CS. Vasant More, Prof.
Salimath & reviewed by CS. Padmavathi. Also
presented, was a skit by the Dharwad students.

WINNING STRATEGY FOR SUCCESSFUL CAREER:
I believe in reinventing myself & learning new
things every day. The only disability in someone
can be an inferiority complex-Malathi.K.Holla.
A woman of great strength, grit &
determination, she is a fighter through and
through. It was a session delivered, by one of
Indias remarkable sport persons recipient of
the Arjuna award in 1995 and the Padmashri in
2001(The first disabled person to receive the
award) - Ms. Malathi.K.Holla, the International
Para athlete, who has won over 300 medals at
National & International events & has
represented India at the Paralympic games,
Asian games etc.

Her inspirational story left behind an indelible
impression, on all present & was indeed a
learning experience, on how the traits of hard
work, sheer willingness coupled with a never-
say die approach, can without doubt & will
always, make possible for you, to achieve the
targets you set in sight for yourself.

CULTURAL EVENTS:
The evening culminated with a resplendent
display of performances in the categories of
dance, Song and an Ethnic parade, by the
students. The stage gave way, for the students
to display their talents, in the capacity as
performers & the performances were well
received & cheered for, by one and all. It was
fun time!

DAY 2
SUNDAY, 23
ND
FEBRUARY 2014
COMPANIES ACT 2013 - TECHNICAL SESSION:
With the Companies Act, 2013 being finally
notified, a new era in corporate governance,
will arise. All the sections have not been
notified yet and being in the midst of a
transition, there are a number of questions
already being asked and waiting to be
answered.

This technical Session given by CS. Kannan & CS
Kailasam, gave the students & members alike,
an opportunity to hear to the experts opinion
& their sharing of knowledge on the key
provisions of the Act and a Comparative
analysis of the same, with the Companies Act
1956.
With its applicability to the upcoming CS exams,
to be held this academic year onwards, it was of
immense help to the students to comprehend
better, in relation to the new Act.

COMPANIES ACT 2013: PRESENTATION &QUIZ:

The Company Law PPT presentation event saw
participation from 3 teams, on the final day of
the event. . Subject matter of the presentations
were Key Managerial Personnel, Minority
Interest & Related Party Transactions, from the
students. The event was judged by CS Harish
B.N & CS.Parmeshwar Bhat.
Also, a quiz competition on the topic of
Companies Act, 2013 was conducted. It gave
the students an overview of their standing, in
matters of their knowledge & awareness on the
area under discussion.

THE EVERGREEN QUESTIONS:
The session is aptly named so, as this interactive
session addressed questions, clarifications &
various other doubts, arising in the minds of
students. From questions ranging from
achieving excellence in academics to what next
after completion of CS? , questions were
responded to by CS.Jyotika Kamat, CS. Ashok
Tandon & CS.Dattatri.H.M -being the
Moderator of the session. It was a platform, to
respond to the Ever Green Questions in the

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Milaap - 2014
minds of students, at this years Milaap & the session rightly justified the same.
VALEDICTORY:

Commencement of the valedictory ceremony
began with the official release of the E-souvenir
of Milaap-2014.

It was followed by the prize distribution
ceremony & winners of various events
conducted were awarded. The winners of the
Top 3 Best articles of Milaap- 2014, were also
announced.

The efforts of all the organizing teams of
Milaap-14, was also rewarded & acknowledged.
In conclusion, as a note of our thankfulness,
mementos were presented to the Chief guests,
after their address to the audience.

With a successful participation from over 450
students ,Milaap 2014 saw the day drawing to a
close, with the endeavor envisioned by the
members, students & the participating faculties,
coming to a reality on the 22
nd
& 23
rd
of
February14 .

Two months of effort, hard work, many a
number of discussions & deliberations came to a
cheerful & fantastic close, with the witnessing of
the successful 2 day event, for all till the next
year brings us together again, with newer
additions to our student & member community,
newer challenges & newer heights to scale.




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Milaap - 2014

THE STRENGTH OF THE TEAM IS EACH INDIVIDUAL MEMBER. THE STRENGTH OF EACH
MEMBER IS THE TEAM- PHIL JACKSON

THE ORGANIZING TEAMS OF MILAAP 2014

SL.NO THE EVENTS TEAM
1 Suhas
2 Vikram
3 Nisha Hadimani
4 Shubhada
5 Kumudini.E
6 Smitha.P
7 Anup.M
8 Esha Sharma
9 Neha
10 Nandan.S
11 Akshata Rao
12 Ankit Porwal
13 Akash Gowda
14 Nanjundaiah
15 Praveen
16 Akshata.N
17 Lavanya.L
18 Shashikanth
19 Ankush
20 Manasa
21 Padmavathi
22 Naresh
23 Rajesh
24 Promodh
25 Satyajit
26 Keerthi
27 Vahini
28 Manasa.B.M
29 Aishwarya.B
30 Akshata Bogur











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Milaap - 2014
2. THE HOSPITALITY TEAM 3. THE PUBLICITY TEAM

SL. NO THE HOSPITALITY TEAM
1 Sriram
2 Arjun
3 Chetan Kumar
4 Vijayesh
5 Naveen Kumar
6 Manasa
7 Ravi.S.K
8 Rahul
9 Chandrashekhar
10 Vishnu
11 Rakshita


4. THE E-SOUVENIR TEAM

SL. NO THE E-SOUVENIR TEAM
1 DHIKSHIT.U (MENTOR)
2 KUSUMA.G
3 SOWMYA SUNNY
4 SHILPA.R



SL. NO THE PUBLICITY TEAM
1 Punitha
2 Gayathri
3 Shashikanth
4 Dimple
5 Parvathy
6 Madhavi
7 Deepak
8 Abhishek
9 Shivram
10 Aparna
11 Ashwini

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Milaap - 2014
We acknowledge our heartfelt gratitude to:


The Guests of Honor & other dignitaries.
Speakers of Technical Sessions & special sessions.
Out station students & their respective educational
institutions/Employers/Chapters for their active participation.
The Entertainment programme team.
Service providers.
The Managing Committee members.
Staff at the Bangalore chapter of ICSI
Organising students

We welcome any and all feedback. Send us your comments and
suggestions to -

feedbackmilaap2014@gmail.com














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