💛~Insider Trading~💛

MEANING

illegal trading in stock exchange for the benefits by the means of confidential information from the company by the key managerial person of the company which would be a chairperson, boards of directors, company secretary, president,  vice-president, treasurer, the comptroller, the general council, general manager, managing director and other who work in the entity more then normally performer who passes unpublished price sensitive information in respect of shares.

A person shall not deemed to be connected directly or indirectly to an insider or connected person.Insider can be any person who is connected to a company or has access to secret information which is not been publicly published.

INSIDER TRADING LEGALLY PERMITTED 

Insider trading are legally permitted to buy and sell shares of the company and to any subsidiaries that employ them. The transaction must be properly registered with the securities and exchange commission (SEC) and it should be done in advance filing.This type of legal insider trading happens often.The details about it is available on securities and exchange commission (SEC).

PUNISHABLE

An insider trader directly or indirectly is guilty of offence is punishable with fine not exceeding the greater of one million dollars and three times the profit made or to the imprisonment for the term not exceeding six months or to both.

Insider trading  is prohibited by security board exchanges of India (SEBI) for the benefits of the common investors and to promote healthy and fair trading in stock exchange.

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~All About Partnership In Business~💛

THE INDIAN PARTNERSHIP ACT,1932. DEFINES PARTNERSHIP AS AN ASSOCIATION WHERE PERSONS AGREE TO COMBINE THEIR FINANCIAL RESOURCES TO SHARE PROFIT AND LOSS EQUALLY IN AGREED RATIO AND RUN A BUSINESS BY THEIR MANAGERIAL SKILLS AND ABILITIES. PARTNERSHIP HELPS IN EXPANSION OF BUSINESS WITH MORE CAPITAL, SUPERVISION,CONTROL AND DIVISION OF WORK. THE BUSINESS IS CARRIED BY ALL OF THE PARTNER'S OR WITH ONE OF THEM ON BEHALF OF EVERYONE.

A partnership can be formed by minimum 2 partners and maximum 20 partners.

FEATURES OF PARTNERSHIP 

1)The term and condition of partnership are laid down in a document known as partnership deed.

2)A partnership can be formed only on the basis of business. Business may include any trade, industry or profession. Thus a Partnership can engage in any occupation, production and distribution of goods and services.

3)The liability of partners are unlimited. If some obligation arises then not only the Partnership assets but also the private property of the partners can be taken for the payment of the liabilities of the firm.

4)Every partner is entitled to participate in the business but it is not necessary for all the partners to participate in day to day activities of the business. Even if the business is runed by some partners on behalf of all the partners, the consent of all the partners is necessary for taking any decisions.

5)In Partnership firm no partner is allowed to transfer their shares to other person and if doing the consent of other partners is required.

6)The partnership firms continues till the pleasure of partners. Legally partnership comes to an end if any partner dies, retire or become insolvent but if the remaining partners agree to continue the business under the original firm's name, the firm will not be dissolved and will continue its business after settling the claim of the outgoing partner.

TYPES OF PARTNERSHIP

1) PARTNERSHIP AT WILL:- This partnership will come to an end whenever any partner gives notice of his intension to do so. Such partnership exists on the will of the partners.

2) PARTICULAR PARTNERSHIP:- This partnership is formed for undertaking a particular venture. It comes to an end automatically with the completion of the venture.

3) PARTNERSHIP FOR FIXED DURATION:- This partnership is fixed for 2 to 5 years or any other duration as decided by the partner.

TYPES  OF  PARTNERS

Active partners:- Are active in day to day activities of the business.

Sleeping or dormant partner:- Such partner only contribute the capital and does not take part in day to day activities.

Nominal partner:- They just lend their names to the business, they do not participate in day to day activities neither contribute any capital.

Partnership holding out:- if a person by his own or conduct to hold out to another that he is a partner, he  be prevented from denying that he is not a partner, the person who thus become liable to third parties to pay the debts of the firm's is known as a partner by holding out.

PARTNERSHIP  DEED 

1) Normally Carries the name of the business, address of its principal place and short summary of the nature of business.

2) The deed give important financial details of the partnership such as amount of capital to be invested by each partner, the profit and loss sharing of each partner, the method of distributing the business income.

3) The deed provides a accepted method for accounting of the cash flow, profit and loss, and assets and liabilities of the business. There should be a ficsal year mentioned for accounting statements and how these statements will be distributed amongst the partners.

4) The duties, power and obligations of each partner shall be spelt out in the deed.

5) The deed shall be mentioned that if a partner is to be hindrance or detriment to the business or loses legal rights in a bankruptcy or other court action, the other partner must have a method of modifying the partnership rights of or expelling him.

6) The deed shall have mentioned the method of dissolving a business if desired and how the accounts will be settled within the partner at the termination of the business.

7) As the business partnership deed must provide the mean of arbitration of disputes. The main aim of the deed is to avoid expensive litigation over details that have not been fully worked out in signed agreement.

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~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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