In terms of regulation 2(g), ‘small investor’ means any investor buying or selling securities on a cash transaction for a market value not exceeding rupees fifty thousand in aggregate on any day as shown in a contract note issued by the stock-broker. Registration of Stock Broker A stock broker applies in the prescribed format for grant of a certificate through the stock exchange or stock exchanges, as the case may be, of which he is admitted as a member (Regulation 3). The stock exchange forwards the application form to SEBI as early as possible as but not later than thirty days from the date of its receipt. SEBI takes into account for considering the grant of a certificate all matters relating to buying, selling, or dealing in securities and in particular the following, namely, whether the stock broker: (a) is eligible to be admitted as a member of a stock Continue reading
Legal Framework
Laws governing merger in India
Various Laws governing merger in India are as follows: 1. Indian Companies Act, 1956 This has provisions specifically dealing with the amalgamation of a company or certain other entities with similar status. The most common form of merger involves as elaborate but time-bound procedure under sections 391 to 396 of the Act. Powers in respect of these matters were with High Court (usually called Company Court). These powers are being transferred to National Company Law Tribunal (NCLT) by companies (second Amendment) Act, 2002. The Compromise, arrangement and Amalgamation/reconstruction require approval of NCLT while the sale of shares to Transferee Company does not require approval of NCLT. Sec 390 This section provides that “The expression ‘arrangement’ includes a reorganization of the share capital of the company by the consolidation of shares of different classes, or by the division of shares into shares of different classes, or by both these methods” Sec Continue reading
Workers Compensation Act, 1923
The Workers Compensation Act, aims to provide workmen and/or their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen. It provides for payment by certain classes of employers to their workmen compensation for injury by accident. The latest amendment to the Act was made in 1984. Object and scope of the Act: The passing of the Act in 1923 was the first step towards social security of workmen. The main objective of the Act is to provide for the payment of compensation by certain classes of employers to their workers for injury by accident. The theory of Act is that “The cost of the product should bear the blood of the workmen”. The Act came into force on the first day of July, 1924. The growing complexity of industry with increasing use of machinery and Continue reading
Financial Market Regulation in India (Guidelines Issued by RBI and SEBI)
Guidelines Issued by Reserve Bank of India for the Regulation of Financial Markets 1) Management oversight, policy/operational guidelines – The management of a Primary Dealer should bear primary responsibility for ensuring maintenance of appropriate standards of conduct and adherence to proper procedures by the entity. Primary Dealers (PD) should frame and implement suitable policy guidelines on securities transactions. Operational procedures and controls in relation to the day-to-day business operations should also be worked out and put in place to ensure that operations in securities are conducted in accordance with sound and acceptable business practices. With the approval of respective Boards, the PDs should clearly lay down the broad objectives to be followed while undertaking transactions in securities on their own account and on behalf of clients, clearly define the authority to put through deals, procedure to be followed while putting through deals, and adhere to prudential exposure limits, policy regarding Continue reading
Steps implemented by Companies Act with regard to Corporate Governance
The Ministry of Company Affairs appointed various committees on the subject of corporate governance which lead to the amendment of the companies Act in 2000. These amendments aimed at increasing transparency and accountabilities of the Board of Directors in the management of the company, thereby ensuring good corporate governance. The dealt with the following: 1. COMPLIANCE WITH ACCOUNTING STANDARDS — SECTION 210A As per this subsection inserted by the Companies Act, every profit and loss account and balance sheet of the company shall comply with the accounting standards. The compliance of Indian Accounting standards was made mandatory and the provisions for setting up of National Committee on accounting standards were incorporated in the Act. 2. INVESTORS EDUCATION AND PROTECTION FUND — SECTION 205C This section was inserted by the Companies Act 1999which provides that the central government shall establish a fund called the Investor Education and protection Continue reading
Regulatory Provisions in FEMA with Respect to Current Account & Capital Account
Current Account Transactions Current Account Transactions as defined in Section 2 (j) of FEMA, means a transaction other than a capital account transaction and without prejudice to the generality of the other provisions shall include: payments due in connection with foreign trade, other account current business, services and short term banking and credit facilities in tire ordinary course of business; payments due as interest on loans and as net income from the investments; remittances for living expenses of parents, spouse and children resid ing abroad; expenses in connection with foreign travel, education and medical care of parents, spouse and children. Provisions to Section 5 of FEMA empowers the Central Government in public interest and in consultation with the Reserve Bank to impose such reasonable restrictions for current account transactions in exercise of the powers conferred and in consultation with the Reserve Bank the Central Government issued Foreign Exchange Management (Current Continue reading