~All about the directors of the company~💛

DIRECTOR OF COMPANY 

Director of a company are individual who are elected for the management of the corporation related to policy and to make decisions for the major issue of the companies.The success of the company depends upon the competence and integrity of the directors of the company

TYPES OF DIRECTORS

* First director (firstly appointed director of the company within incorporation).

* Residential director ( who is resident to India).

* women director (there shall be  atleast one women director after the completion of number of paid up shares and turnover  exceed as per companies act, 2013).

* Independent director (who has no relation with the company shares).

* Alternate director (alternate director is an individual who is appointed to attend a board meeting on behalf of the director of a company where the principal director would be otherwise unable to attend).

* Additional director (who is appointed by boards of directors and can hold the company till next annual general meeting).

* Small shareholder director (if company is carrying any shareholder with small paid up share there should be atleast one small shareholder director to work for their benefits).

* Nominee director (it should be an individual who is appointed by the financial institutions, banks where such institutions have some interest in the company the interest can be in form of financial assistance, loan or investment).

APPOINTMENT

public company shall have atleast 3 directors

Maximum 15 directors

Private company shall have atleast 2 directors

Maximum 15 directors

One person company shall have atleast one directors

Maximum number can be increased by passing special resolution.

DIRECTOR IDENTIFICATION NUMBER

Every individual who tends to be appointed as a director of a company needs to file a form as prescribed under sec 153 of companies act, 2013 for the allotment of DIN (director identification number).

A director shall exercise independent judgement.

RIGHTS AND DUTIES OF DIRECTORS

To act in good faith

(Promote the object of the company for the benefit of the members)

To act as per articles of the company

(The directors shall comply in accordance with the articles of the company)

To avoid conflict of interest

( Director may not directly or Indirectly have interest to the conflicts or involve in interest of the company)

Exercise due care 

(Director shall exercise his duties with reasonable care, skill and diligence)

Duty not to make undue gain 

(A director shall not achieve, gain or take any advantage either himself or to his relatives, partners, or association. If the director found guilty under undue gain shall be liable to pay the fine amount equal to that gain to the company).

Not to assign his office

( Shall not assign his office or any assignment to any other person, if made shall be considered void).

A DIRECTOR MAY BE REMOVED FROM THE OFFICE BY GIVING SPECIAL NOTICE.

A DIRECTOR MAY RESIGN HIS OFFICE IN THE MANNER PROVIDED BY THE ARTICLES.

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~Money Laundering~💛

MONEY LAUNDERING is a process of criminal disguise it's illegal origin. When a person or a criminal activities generates a substantial profit either individual or group involved in such activities give a route to the funds to safe heavens by disguising the sources , changing form or moving the funds to a place where they will be less likely to attract attention.

There Are Several Varieties Of Money laundering  :-

Terrorism

Illegal arms

Sales

Financial crimes

Smuggling

Organized crimes 

Drug trafficking

Prostitution rings

Embezzlement

Insider trading

Bribery

Computer fraud

Also produce large profit to create an incentive to legitimise the illegal gains through money laundering.

STAGES OF MONEY LAUNDERING

1) PLACEMENT

2) LAYERING

3) INTEGRATION

PROCESS OF MONEY LAUNDERING

PLACEMENT :- The launderer brings his legal profit into the financial system by breaking the large amount of cash into small conspicuous that are then directly deposited into the bank accounts or by purchasing a series of monetory instruments which are later collected and deposited into accounts at another location.

LAYERING :- In this stage, the launderer engages in a series of conversion or movement of the funds to distance them from their source so the funds simply wire throught a series of accounts at various banks across the globe.

INTEGRATION :- After successful processing a criminal profit throught the first two stage, the launderer moves them to integration in this the funds re-entre the legitimate economy . 

THE LAUNDERE MIGHT CHOOSE TO INVEST THE FUNDS INTO REAL ESTATE ,LUXURY ASSETS OR BUSINESS VENTURES.

PUNISHMENT FOR MONEY LAUNDERING :-

Section 3 of the act states that whosoever directly or indirectly is indulge in the activity connected with crime including its concealment , possession, acquisition, projecting or claiming it's untained property shall be guilty of offence of money laundering.

Section 4 provides that any person who commits the offence of money laundering is punishable with rigorous imprisonment for the term which shall not be less than three(3) years but which may extend upto seven(7) years and also liable to the fine. The proceeds of crime involved in money laundering relates to any offence specified Under the narcotic drugs bad psychotropic substance Act ,the punishment may extend to rigorous imprisonment for ten years.

~Buy-Back~💛

BUY-BACK IS THE PROCESS WHERE BY A COMPANY PURCHASES ITS OWN SHARES OR OTHER SPECIFIED SECURITIES(SHARES) FROM THE HOLDERS FOR :-

*)To improve earnings per share.

*)To improve return on capital, return on net worth and to enhance the long-term shareholder value.

*)To prevent hostile(unwelcome) takeover bids.

*)To return surplus cash to shareholders.

*)To service the equity more effecient.

*)To achieve optimum capital structure.

BUY-BACK of securities are governed by section 68 of companies Act,2013 and rule 17 of companies (share capital and debentures)Rules,2014.

Listed companies have to comply with the requlations laid down by SEBI also in this behalf. Condition for buy back pursuant to section 68(2) of companies Act,2013.

1) Buy back must be authorized by the AOA( Articles Of Association of the company.

2) A company can buy-back upto 25% of the aggregate of paid-up capital and free reserve of the company. In case of equity shares the limit of 25% of paid up capital shall be constructed as25% of equity paid up capital.

3)shares offered for buy back must be fully paid-up.

4) Buy back must be authorized by a special resolution .

AUTHORISATION IN THE ARTICLES

The articles of association of the company should authorise the buy back of shares.in case the provision is not available,it would be necessary to alter the articles of association to authorise buy back. Buy back can be done with the approval of BOD ( boards of directors) at the meeting and/or by special  resolution passed by the shareholders in the GM(general meeting), depending on the quantum of buy back. in case of listed company, approval of shareholders shall be obtained only by pastol ballot [Postal voting is voting in an election where ballot papers are distributed to electors (and typically returned) by post].

METHOD OF BUY-BACK

The buy-back may be :-

*) The existing security holders on a proportionate basis.

*) The open market through

Book-building process (is a process of price discovering. It is a period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to lower price. The offer price is determined after the bid closing date)

*) Stock exchange (place where trading of securities/shares are conducted on an organized manner).

*) Odd lot holders (it refers to an order amount for a security that is less than the normal unit or small unit, which is typically 100 shares for stocks.

BUY-BACK PROCESS

1) Appointment of MERCHANT BANKERS/REGISTRAR.

2) Filing the resolution with SEBI/STOCK EXCHANGES.

3) Public announcement to be released in newspapers and stimultaneous filing with SEBI/STOCK EXCHANGE.

4) File the return with ROC and SEBI.

5) Merchant bankers to FILE A REPORT TO SEBI.

6) ISSUE OF PUBLIC ADVERTISEMENT in national daily on completion of buy-back process 9 determination of offer price, Opening and Closure of buy back offer .

7) ACCEPTANCE AND PAYMENT to security holders

8) Extinguishment of Certificate and intimation to stock exchange.

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~Bonds~💛

Bonds are the debt security where an issuer is bound to pay a specific rate of interest as per the agreed term of payment and the principal amount to be paid later as maturity of bond. A bond either issued by government or corporation has a specific maturity period which can range upto few days to 10-30 years or even more.The bond period generally would be of 5 to 10 years.The bond holder generally are like a creditor to the companies. Bonds are referred as short and long-term bonds. Bonds have fixed face value, which the amount has to be returned to the investor/creditor upon a maturity of bond. During this period investor/creditor receive a regular payment of interest, semi annually or annually, which is calculated as certain percentage of the face value and it is known as ‹coupon payment›.

THERE ARE SOME TYPES OF BONDS

GOVERNMENT BONDS -  These bonds are issued by government of India or by public sector units (PSU's) in india. These bonds are generally issued with the low rate of interest as compare to other types of bonds. These bonds are secured as they are backed up with security from government of India.

CORPORATE BONDS -   These bonds are issued by the private Corporate companies. Indian corporate issue secured or non secured bonds.The private Corporate has to take care of the credit rating given by the credit rating agencies before investing in these bonds.

TAX SAVING BONDS - In India, the tax saving bonds are issued by the government of India for providing benefits to the investors in form of tax saving. The bond creditors/investors along with getting the normal interest they would also get tax benefits. In India these bonds are listed by National stock exchange and bombay stock exchange. Hence they can easily be liquidated and sold in the open market.

BANKS AND OTHER FINANCIAL INSTITUTIONS  BONDS - They are issued by banks or any financial institutions. The financial market is well requlated and the majority of bond markets are from this segment.

FOREIGN CURRENCY EXCHANGEABLE BONDS (FCEBs) -  These bonds are used to raise funds from international markets against the security and exchangeability of shares of another companies.

It means:-

1) The principal and interest is payable in foreign currency.

2) Bonds are expressed in foreign currency.

3) Issued by an issuing company, being an indian company.

4) exchangeable into equity shares of another company.

5) wholly or partly or on the basis of any quity related warrants attached to debt instruments.

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~Employee Stock Option Scheme(ESOP)~💛

THE TERM ‘EMPLOYEE STOCK OPTION SCHEME' [ESOP] HAS BEEN DEFINED UNDER SECTION 2(37) OF COMPANIES ACT 2013.

Employess stock option scheme (ESOP) means the option given to the directors, officer, employees of the company or its holding company or subsidiary company or companies, if any, which gives such directors ,officers or employees ,the benefits or right to purchase , or the subscriber for the shares of the company at the further date at a pre-determined price.

HOW IS ESOP GOOD FOR EMPLOYEES

Employess participants to the plan can receive significant retirement benefits at no monetary cost to them. 

Being part of an ESOP company can provide unique rewards for employees. 

An ESOP is a great way to enhance the companies ability to retain and recruit at top.

WHAT HAPPENS TO ESOP, IF YOU QUIT ?

If you quit, the ESOP distributions are deferred for six years under IRS regulations.

Once those six years passes, you may receive the value of your ESOP shares in either total sum of amount or in equal payments made over five years.

AT WHAT AGE CAN YOU WITHDRAW ESOP?

The distribution automatically begins on April 1 of the first year after you reach 70 1/2 years of age.

If you retire early, distribution must begin within six years of your retirement date, with payouts being paid over a span of five years.

CONDITION FOR COMPANIES FOR ISSUING EMPLOYEE STOCK OPTION SCHEME [u/s 62(1) (b)].

* ESOP must be authorized in the articles of association.

* Approval of members are required by passing special resolution at the general meeting.

* There should be gap of atleast 1 year between grant of option ( is an opportunity to buy the shares of the company in which he or she works) and vesting of option (Vesting is known as the time period during which you unconditionally own the stock options that are issued to you by your company, Until you vest the stock options, you forfeit them if you were to leave the company. Typically, that time period is four years).

* Company is free to set the lock-in period (Lock-in period in which the investor is prohibited from redeeming the units of the fund, either partially or wholly).

* The company shall maintain the register in form SH-6

* The offer given to the employees is not transferable, nor it can be pledge or hypothecated (money by law for a specific purpose).

* No voting rights & dividend will be given unless the option is exercised.

* Disclosure to be made in board report.

* Listed companies to be comply with SEBI guidelines.

* Disclosure to be made in explanatory statement.

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~All About Mortgage~💛

HELLO EVERYONE! I AM HERE TODAY TO HELP YOU IN KNOWING ABOUT MORTGAGE AND MORTGAGOR (LOANS).

MEANING:- when any person acquire any loan from bank or any other person against any security then this transaction is known as mortgage.A person acquire loan is known as mortgagor and a person who provides loan is mortgage.

TYPES OF MORTGAGE (LOAN PROVIDER) :-

SIMPLE MORTGAGE :- In this method right is created in favour of mortgage(loan provider) but the possession on property remains with mortgagor(loan taker) itself but if he/she fails to pay the loan then the mortgage has a right to sell the property and recover the amount.

USUFRUCTUARY MORTGAGE :-

Under this method position of property  is tranfered to mortgage(loan provider) and the mortgage can recover the money by using the Property in different manner. For e.g:- (Rent).

ENGLISH MORTGAGE :-

In this method property is Tranfered to bank against loan amount. Mortgagor creates right in favour of mortgagee. If loan is repayed within specified time then property will be reverted back and if it is not paid within specified time then transfer will be declared as sale.

MORTGAGE BY CONDITIONAL SALE :-

In this method property is tranfered by mortgagor as a sale and if loan is repayed then sale will be declared as invalid.

(If loan is not payed then the sale will be declared valid)

MORTGAGE BY DEPOSIT OF TITLE DEEDS :-

In this method all the originals document of ownership are deposited with bank and they will hold all the documents till the recovery off loan amount.

ANOMALOUS MORTGAGE :-

The mortgage which does not belong to any of the above mortgage is called an anomalous mortgage. For e.g:-(two combination of mortgage,(usufructuary and simple) both together are anomalous mortgage).

SUB MORTGAGE :-

In this method when any mortgage is created on existed mortgage then subsequent mortgage is known as sub mortgage.

PUISNE MORTGAGE :-

In this method when any person creates multiple mortgage on single property then subsequent mortgage and so on is known puisne mortgage.

RIGHTS OF MORTGAGOR (LOAN TAKER)

1)Right of redemption ( paid full loan and asked for the Property)

2)Right against clog (anything beyond the period of loan is clog always treated as invalid for e.g- taken the Property for some more time after completion of loan).

3)Right to partial redemption (if you have given more then one number of Properties and have been paid half of the loan so can ask for the property of such amount which has been paid).

RIGHTS OF MORTGAGE (LOAN PROVIDER).

1)Right to sale (if loan amount is not recovered can sell the property to recover the loan).

2)Right to sue for mortgage money (Even after Selling the property the money is not recover so the loan provider can sue the mortgagor).

3)Right to appoint receiver (appointing legal reciever to pay attention on mortgagor transaction).

A MORTGAGE IS TRANSFER OF AN INTEREST IN THE PROPERTY MADE BY THE MORTGAGOR AS A SECURITY FOR THE LOAN. A MORTGAGE CAN ONLY BE CREATED BY ACT OF PARTIES. MORTGAGE DEED MUST BE REGISTERED AND ATTESTED BY TWO WITNESSES. IN A MORTGAGE THERE CAN BE SECURITY AS WELL AS PERSONAL LIABILITY.

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~Memorandum Of Association~💛

HELLO EVERYONE I AM HERE TO HELP YOU IN KNOWING ABOUT WHAT IS MEMORANDUM OF ASSOCIATION (MOA) MEANS.

The term memorandum of association (MOA) is defined under section 2(56) of companies act 2013.it is an important Corporate document with certain jurisdiction.which contains fundamental Provisions of company's constitution.it contains every essential condition upon which alone the company can be incorporated.it not only shows the object of formation of the company but also defines the power of the company and the utmost possible scopes beyond which it's action cannot move.

It enables shareholders,creditors and all those who deal with the company to know their powers and range of activities it carries.

FOLLOWING ARE THE STATUTORY REQUIREMENTS REGARDING SUBSCRIPTION OF MEMORANDUM :-

The memorandum of association must be printed ,divided into paragraphs,numbered consecutively and signed by each subscriber (7 in public company, 2 in private company, 1 in one person company(OPC).Both artificial and natural person can subscribe to memorandum.

In OPC the memorandum shall indicate the name of other person which would be the nominee with the prior written consent ,who shall became the member of the company in the event of the subscriber death or in his/her incapacity to contract.

1)The memorandum must be signed by each subscriber in the presence of atleast one witness (who must attest the signature).

2)Each subscribe must write his/her occupation,address and the number of shares opposite his/her name .

3)Each subscribe must take atleast one share.

FORMS OF MEMORANDUM [SECTION 4] :-

section 4 of the companies act provides that the memorandum of association should be in respective forms specified in tables (A,B,C,D, and E) of schedule I to the act ,as may be Applicable to such company.

Form A is Applicable to the companies limited by shares.

Form B is applicable to the companies limited by guarantee and not having share capital.

Form C is Applicable to the companies limited by guarantee and having share capital.

Form D is applicable to unlimited companies and not having a share capital.

Form E is applicable to unlimited companies and having share capitals.

CLAUSES:-

A)Name clause :- The first clause in the memorandum must state the name by which a company is known.it may be noted that the name of the company shall not be identical too nearly with existing company.the name should not be such that it's use by the company will constitute an offence under law.the company shall not have name which is undesirable in the opinion of central government.

B) Registered office clause or situation clause :- The name if the state in which registered office is situated must be given in the memorandum.as per section 12, a small company shall from the 15th day of its Incorporation shall have the registered office.the company shall furnish to the registrar office verification of its Registered office with a period of 30 days of its Incorporation.

C)Objects clause :- It has a great importance as it determines the purpose and the capital of company.

D)Liability clause :- The fourth of memorandum of every Company must be stated that the liablities of its members is limited by shares or limited by guarantee or is unlimited.

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