The practice of paying bonus in India appears to have originated during First World War when certain textile mills granted 10% of wages as war bonus to their workers in 1917. In certain cases of industrial disputes demand for payment of bonus was also included. In 1950, the Full Bench of the Labour Appellate evolved a formula for determination of bonus. A plea was made to raise that formula in 1959. At the second and third meetings of the Eighteenth Session of Standing Labour Committee (G. O.I.) held in New Delhi in March/April 1960, it was agreed that a Commission be appointed to go into the question of bonus and evolve suitable norms. A Tripartite Commission was set up by the Government of India to consider in a comprehensive manner, the question of payment of bonus based on profits to employees employed in establishments and Continue reading
Legal Framework
Financial Market Regulation: Meaning and Objectives
Financial Market Regulation The nature of securities markets is such that they are inherently susceptible to failures due to the existence of information asymmetries and existence of high transaction costs. It needs to be emphasized that when securities markets come into existence, the interest of the member brokers are taken care of through margin requirements, barriers to entry of membership, listing agreements. However the investors/clients who buy and sell via their brokers are not able to form an organization to safeguard their interests due to the cost of creation of such organizations and free rider problems. The distinctive nature of the market can be observed with reference to the commodity, its quality, the system of transactions and the participants in the market, as follows: (a) the commodity(the security)has a life to perpetuity. (b) while the outcome of the contract say the redemption of debt is certain, in the case of Continue reading
The Minimum Wages Act, 1948
Introduction: Wages means all remuneration capable of being expressed in terms of money, which Would, if the terms of contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such. Employment it includes house rent allowance but does not include the value of any house accommodation, supply or light, water, medical attendance or other amenity or service excluded by general or special order of appropriate Government; contribution paid by the employer to Pension/ Provident Fund or under scheme of social insurance; traveling allowance or value of traveling concession; sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or any gratuity payable on discharge. As of now there is no uniform and comprehensive wage policy for all sectors of the economy in India. Wages in the organized Continue reading
Legal and Regulatory Framework for Mutual Funds in India
Securities and Exchange Board of India (SEBI) is the apex regulator of Indian capital markets. Issuance and trading of capital market instruments and regulation of capital market the intermediaries is under the purview of SEBI. SEBI is the primary regulator of mutual funds in India. SEBI has enacted the SEBI (Mutual Funds) Regulations, 1996, which provides the scope of the regulation of mutual funds in India. It is mandatory that mutual funds should be registered with SEBI. The structure and the formation of mutual funds, appointment of key functionaries and investors, investment restrictions, compliance and penalties are all defined under SEBI Regulations, Mutual funds have to send a seven-year compliance reports to SEBI. SEBI is also empowered to periodically inspect mutual fund organizations to ensure compliance with SEBI regulations. SEBI also regulates other fund constituents such as AMCs, Trustees, Custodians, etc. Reserve Bank of India capital adequacy(RBI) is the monetary Continue reading
SEBI(Prohibition of Insider Trading) Regulations, 1992
Insider trading is prohibited and is considered an offence vide SEBI (Insider Trading) Regulations, 1992. The definitions of some of the important terms are given below : ‘Dealing in securities’ means an act of subscribing, buying, selling or agreeing to subscribe, buy, sell or deal in any securities by any person either as principal or agent. ‘Insider’ means any person who, is or was connected with the company or is deemed to have been connected with the company, and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company, or who has received or has had access to such unpublished price sensitive information. A “connected person” means any person who- (i) is a director, as defined in clause (13) of section 2 of the Companies Act, 1956 of a company, or is deemed to be a director of that company by Continue reading
Securites and Exchange Board of India Act, 1992
Major part of the liberalisation process was the repeal of the Capital Issues (Control) Act, 1947, in May 1992. With this, Government’s control over issues of capital, pricing of the issues, fixing of premia and rates of interest on debentures etc. ceased, and the office which administered the Act was abolished: the market was allowed to allocate resources to competing uses. However, to ensure effective regulation of the market, Securites and Exchange Board of India Act, 1992 was enacted to establish SEBI with statutory powers for: (a) protecting the interests of investors in securities, (b) promoting the development of the securities market, and (c) regulating the securities market. Its regulatory jurisdiction extends over companies listed on Stock Exchanges and companies intending to get their securities listed on any recognized stock exchange in the issuance of securities and transfer of securities, in addition to all intermediaries and persons associated with securities Continue reading