The preamble to our Indian Constitution promises justice – social, economic and political. It also stresses Equality of status and of opportunity. Article 23 of the Constitution prohibits traffic in human beings and forced labour. Article 24 prohibits employment of children in factories. The article 38 and 39 spelt under Directive Principles of State Policy are now enforceable as per the dictums laid by our Supreme Court. Constitution of India, Article 38: State to secure a social order for the promotion of welfare of the people: The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life. The State shall, in particular, strive to minimize the inequalities in income, and endeavor to eliminate inequalities in status, facilities and opportunities, not only amongst Continue reading
Legal Framework
Corporate Governance and Clause 49 of the Listing Agreement
SEBI revise Clause 49 of the Listing Agreement pertaining to corporate governance vide circular date October 29th, 2004, which superseded all other earlier circulars issued by SEBI on this subject. All existing listed companies were required to comply with the provisions of the new clause by 31st December 2005. The major provisions included in the new Clause 49 are: The board will lay down a code of conduct for all board members and senior management of the company to compulsorily follow. The CEO an CFO will certify the financial statements and cash flow statements of the company. If while preparing financial statements, the company follows a treatment that is different from that prescribed in the accounting standards, it must disclose this in the financial statements, and the management should also provide an explanation for doing so in the corporate governance report of the annual report. The company will have Continue reading
The Money Laundering Act, 2002
The Money Laundering Act, 2002 was enacted to prevent money laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. The terms used in the Act are defined as under: (1) “intermediary” means a stock-broker, sub-broker, share transfer agent, banker to an issue, trustee to a trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and any other intermediary associated with securities market and registered under section 12 of the Securities and Exchange Board of India Act, 1992. (2) “proceeds of crime” means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located; The term Money Laundering has been defined in Section 3 of the Act as Whosoever directly or Continue reading
Laws statutes applicable to Takeover
Laws applicable to Takeover Clauses 40A and 40B of the listing Agreement the company has entered into with stock exchange. SEBI’s (Substantial Acquisition of shares and Takeover’s) Regulations, 1997. 1. Takeover and Listing agreement exemption Clauses 40A and 40B of Listing Agreement Clause 40A deals with substantial acquisition of shares and requires the offeror and the offeree to inform the stock exchange when such acquisition results in an increase in the shareholding of the acquirer to more than 10%. Clause 40B deals with takeover efforts. A takeover offer refers to change in management where there is no change in management, Clause 40B of listing agreement will not apply. However, sub clause 13 of amendment of Clause 40B also provides an exemption to the scheme approved by BIFR. There is no provision under clause 40B for exemption of non BIFR companies. 2. SEBI (Substantial Acquisition of shares Continue reading
Securitization in India – SARFAESI Act, 2002
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or SARFAESI Act, 2002 allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans. The Act aims at speedy recovery of defaulting loans and to reduce the mounting levels of Non-performing Assets of banks and financial institutions. As stated in the Act, it has “enabled banks and FIs to realise long-term assets, manage problems of liquidity, asset-liability mismatches and improve recovery by taking possession of securities, sell them and reduce non performing assets (NPAs) by adopting measures for recovery or reconstruction.” The SARFAESI Act, 2002 has been largely perceived as facilitating asset recovery and reconstruction. The Act has been passed based on the recommendations of Narasimham Committee I and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining banking sector reforms and to Continue reading
The Consumer Protection Act, 1986
The consumer protection Act, 1986 is a milestone in the history of socio-economic legislation in the country. It is one of the most progressive and comprehensive pieces of legislations enacted for the protection of consumers. It was enacted after in-depth study of consumer protection laws in a number of countries and in consultation with representatives of consumers, trade and industry and extensive discussions within the Government. The main objective of the act is to provide for the better protection of consumers. Unlike existing laws, which are punitive or preventive in nature, the provisions of this Act are compensatory in nature. The act is intended to provide simple, speedy and inexpensive redressal to the consumers’ grievances, and relief’s of a specific nature and award of compensation wherever appropriate to the consumer. The act has been amended in 1993 both to extend its coverage and scope and to enhance the powers of Continue reading