Section 182 of the contract act defines, “An agent is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is represented, is called the principal”. The function of an agent is essentially to bring about contractual relations between the principal and third parties. An agent has certain rights, duties and liabilities towards the principal and third parties depending upon the nature of business. These rights, duties and liabilities can be generated as:- Rights of an Agent i) Right to Receive Remuneration — The agent is entitled to receive an agreed remuneration or reasonable remuneration unless otherwise agreed upon. An agent has a right to claim his remuneration on completion of his work, even if the contract never materializes on account of breach. But, if an agent is found guilty of misconduct Continue reading
Business Law
The Corporate Personality and Piercing the Corporate Veil
Concept of Corporate Personality A company is a legal person, since in the eyes of law it is capable of having legal rights and obligations just like a natural person. Like any other person it can acquire and own property, transfer property, enter into contracts and sue and be sued in its own name. Being a legal person, a company has a separate legal entity, a personality distinct from its members or shareholders. The concept of separate entity of a company was established in the celebrated case of Salomon Vs Salomon & Co. Ltd. The facts of the case are that one Salomon, a boot manufacturer, formed a company with himself, his wife, and daughter and four sons as the sole shareholders. Salomon took 20,000 shares of £1 each, debentures worth £10,000 secured by the assets of the company and the balance in cash. His wife, daughter and four sons 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with the company or is deemed to have been connected with the company, and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company, or who has received or has had access to such unpublished price sensitive information.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
Dishonour of Cheques – Section 138 of Negotiable Instruments Act
A paying banker is under a legal obligation to honour his customer’s mandate. He is bound to do so under his contractual relationship with his customer. A wrongful dishonour will have the worse effect on the banker. However, under the following circumstances, the payment of a cheque may be refused: Countermanding: Countermanding is the instruction given by the customer of a bank requesting the bank not to honour a particular cheque issued by him. When such an order is received, the banker must refuse to pay the cheque. Upon receipt of notice of death of a customer: When a banker receives written information from an authoritative source, regarding the death of a particular customer, he should not honour any cheque drawn by that deceased customer. Upon the receipt of notice of insolvency: Once a banker has knowledge of the insolvency of a customer he must refuse to pay cheques drawn Continue reading
About Sarbanes-Oxley Act of 2002
Public Company Accounting Reform and Investor Protection Act of 2002 commonly known as Sarbanes-Oxley Act or SOX Act was enacted by US Congress to handle concerned issues surrounding business management and financial reporting as a way to restore and maintain investor confidence in the US capital market grappling with corporate scandals and accounting irregularities. With the integrity of the market further compromised by the failures of Enron’s bankruptcy and WorldCom, the act considered as the most significant corporate regulatory reform since the Securities and Exchange Act of 1934, sought to curb the ongoing-spectacular corporate failures and scandals occurring in North America. The WorldCom’s failure was the last straw, prompting the speed passage of most drastic legislation to affect the accounting profession since 1933. The major purpose of this act is to provide reliable and accurate information to the investors. The formation of this act had to undergo a detailed process 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