Sunday 29 March 2015

Foreign projects and equity crowd funding in India

The Crowd funding scene in India seems to be a highly lucrative one at present. Based on three different aspects, crowd funding can be a great support for foreign projects too. Reward based programs tend to offer a cohesive platform for accepting banker's donations for projects while those based on lending tend to be more people oriented and those that facilitate loans to the needy. And then there is the equity based crowd funding where donors are allowed a share of equity in the project or start up in which they are investing. However, the equity based trend is not legal in India as of now. The Companies Act 2013 in India makes it mandatory for all listed companies to spend 2% of their profits on CSR. India can be seen as one of those countries that have a strong presence of NGOs. This is a significant aspect as it implies that crowd funding does stand a very good chance of success. There can be challenges associated with various crowd funding platforms but that is only natural and it tends to go hand in hand with the available number of opportunities that can be present for foreign projects or multi national companies willing to open up branches in India.

Thursday 26 March 2015

Are you authorized to register your company in India?

If you are a multi national company or a company based in some other country who wants to establish business in India, then you should be aware of the governing laws, rules and regulations of the country. It is important to ascertain that your company is authorised to register in India and in order to do so, you should know about the type of companies that can register themselves in the country. The different kinds of companies that are authorised to be registered in India have been discussed below.  OPC: An OPC is a one person company and as the name suggests, it is run only by one member. The process of starting the same is more of a hybrid structure that is based on an infusion of sole proprietorship and company forms of business. Private Limited: This is a separate legal entity with a minimum required capital of Rs. 1 lakh.  Public Limited: The minimum requirement for registering a Public Limited company is to have a capital of Rs. 5,00,000 and at least three directors.Company Limited by Guarantee: This one is run without any shareholders.Non-profit Organizations:  This category includes trusts, societies and section 8 companies as per the rules and set guidelines.

Monday 23 March 2015

Corporate frauds: Reporting, investigation and action

The Companies Act 2013 deals the issue of fraud much extensively and defines it as an act of concealment, deceit or abuse of position by any member of a company that can either injure the interests of the company or can allow that member to take undue advantage of the same. The reporting of corporate frauds at any level needs to be handled well by the company to ensure proper investigation and action that can prevent such cases in the future. The various possibilities of corporate fraud that need to be reported can include furnishing false or incorrect information or even suppressing any significant information for personal gains. Tricking people into investing money for fraudulent gains, illegal transfer of shares, failure to pay pending deposits or deliberately providing incorrect particulars in case of filling up forms and other related acts all account for corporate fraud. Reporting for the same can call for serious legal penalties. In order to handle the reporting and investigation of corporate frauds, the SFIO or Serious Fraud Investigation Office has been set up by the Central Government under the Companies Act 2013. Once the report of any possible fraud reached the inspector or the registrar, the SFIO will proceed with the investigation and all fraud related offences will be subject to stringent penalties that have been prescribed in advance.

Thursday 19 March 2015

Corporate frauds: Reporting, investigation and action

The Companies Act 2013 deals the issue of fraud much extensively and defines it as an act of concealment, deceit or abuse of position by any member of a company that can either injure the interests of the company or can allow that member to take undue advantage of the same. The reporting of corporate frauds at any level needs to be handled well by the company to ensure proper investigation and action that can prevent such cases in the future.

The various possibilities of corporate fraud that need to be reported can include furnishing false or incorrect information or even suppressing any significant information for personal gains. Tricking people into investing money for fraudulent gains, illegal transfer of shares, failure to pay pending deposits or deliberately providing incorrect particulars in case of filling up forms and other related acts all account for corporate fraud. Reporting for the same can call for serious legal penalties.

In order to handle the reporting and investigation of corporate frauds, the SFIO or Serious Fraud Investigation Office has been set up by the Central Government under the Companies Act 2013. Once the report of any possible fraud reached the inspector or the registrar, the SFIO will proceed with the investigation and all fraud related offences will be subject to stringent penalties that have been prescribed in advance.


Monday 16 March 2015

Rotation of Auditors

The final changes in the rules of the Indian Companies Act 2013 accounts for a threshold that is more practical for identifying the required class of companies on a broader scale. According to those rules, the unlisted public companies that have a paid up share capital of more than or equivalent to Rs.10 crores or more, will be liable to abide by an auditor rotation feature. The condition differs in case of private sector companies and those with public borrowings from financial institutions as the required paid up share capital limit for them is Rs.20 crores and Rs.50 crores respectively. Audit rotation appears to be quite a welcome change due to the fact that it increases the possibility of providing significant relief for smaller companies as well as their auditors. Another significant matter related to the audit rotation requirement is to evaluate the maximum term for the existing auditors according to their terms that they have been serving in the past. This particular requirement is a great medium that positively reinforces the intent of making the auditor rotation even more effective. The appointment of an auditor on a rotational basis can be decided through an ordinary resolution at an Annual General Meeting. In other words, unlike the previous fixed term appointments of the auditors, annual appointments will start to take place.

Thursday 12 March 2015

The Policy of Corporate Social Responsibility

In order to ensure ethical business practices and functioning by a company, several legal mandates have been created in India. These mandates are an effort for introducing a healthy culture of social responsibility among Indian corporates. It also requires a certain class of companies to formulate exclusive policies for incurring a certain minimum expenditure on social activities. The Indian Companies Act 2013 stipulates the companies to come up with their own policy for Corporate Social Responsibility under which they can contribute towards initiatives and activities for the benefit of the society. The companies which need to formulate the CSR policy are the ones that have an annual turnover of Rs.1000 crore or more. In addition to that, every company which has a net worth of Rs. 500 crore or more or a net profit of Rs. 5 crore or more during a particular financial year would be legally liable to establish an internal CSR Committee with a minimum of three directors on board. Also, out of the three directors, one should be independent. The aforementioned requirement of the Board of Directors would also be expected to generate a report based on which the composition of the CSR Committee would be disclosed. Though some companies may find it difficult to implement a policy for reflecting their Corporate Social Responsibility during the initial years, this measure has been taken to ensure the improvement of the under privileged sections of the society. Moreover, at another level, corporates can use this opportunity to enhance their image and reputation for contributing towards these causes.