Important Topics For CS Final Examination June, 2013 (With Answers)

CS Professional Examinations
June, 2013
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1. Write short note on MCA 21. Keeping in tune with the e-Governance initiatives the world over, the Ministry of Corporate Affairs (MCA), Government of India, has initiated the MCA21 project, to enable an easy and secure access to MCA services in a manner that best suits the corporate entities and professionals besides the public. The MCA21 project is designed to fully automate all processes related to the proactive enforcement and compliance of the legal requirements under the Companies Act, 1956. The key benefits of MCA21 project are as follows: (a) On-line incorporation of companies (b) Simplified and easy mode of filing of Forms / Returns (c) Registration as well as verification of charges anytime and from anywhere (d) Inspection of public documents of companies anytime from anywhere (e) Corporate-centric approach (f) Building up a centralized database repository of corporate operating in India (g) Enhanced service level fulfillment and customer relationship building The following services are available under the MCA21 Project: Registration and incorporation of new companies Filing of Annual Returns and Balance Sheets Filing of forms for change of names/address/Directors details Registration and verification of charges Inspection of documents Applications for various statutory services from MCA Investor grievance redressal. Explain the procedure for incorporation of a Section 25 company. Select, in order of preference, a few suitable names, maximum 6, indicative of the main objects of the company. Ensure that the name does not resemble the name of any other company already registered and also does not violate the provisions of Emblems and Names (Prevention of Improper Use) Act, 1950. Apply to the Registrar of Companies (ROC) in e-Form-1A to ascertain which of the names selected are available along with the prescribed fees of Rs. 500/-. Arrange for the drafting of the Memorandum and Articles of Association of the company. Get the Memorandum and Articles signed by at least two subscribers filling in the relevant details like their fathers name, occupation, address and the number of shares subscribed for. The Memorandum and Articles shall also be witnessed by at least one person. Make an application to the Regional Director for grant of license u/s 25 of the Companies Act, 1956 in eform 24A alongwith MOA, AOA, future annual income and expenditure estimates, details of the proposed promoters and directors of the company, declaration by advocate of Supreme Court / High Court / a company secretary or chartered accountant in whole-time practice that the MOA and AOA have been drawn in conformity with the Companies Act, 1956 etc. According to Section 25, the applicants have to prove to the satisfaction of the Regional Director that an association is to be formed as a limited company for promoting art, science, religion, literature, charity or any other useful object and that the association intends to apply its profits for promoting its objects and it prohibits distribution of dividend to its members. Simultaneously with the making of application, the applicants shall also furnish a copy of the application to the RoC.
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Within a week of submitting the application, the applicants shall publish in two newspapers (one regional and the other in English), a notice of the application made to the Regional Director. The Regional Director being satisfied on all accounts, may by a license direct that the association may be registered as a company with limited liability. After obtaining the license from the Regional Director file the following Forms with the RoC: (a) E-form 1 application for declaration and incorporation of the company (b) E-form 18 notice of situation of registered office of the company (c) E-form 32 particulars of directors, manager, secretary etc. The RoC on being satisfied will register the company and issue the Certificate of Incorporation alongwith CIN. Short note on holding and subsidiary companies and companies limited by guarantee. Holding and Subsidiary companies In terms of Section 4 of the Companies Act, 1956, a company (Company A) shall be deemed to a subsidiary of another company (Company B): if that other Company B controls the composition of Board of directors of Company A if Company B holds majority shares (> 50% of the equity share capital) of Company A if Company B is a subsidiary of Company C, Company A shall be deemed to be a subsidiary of Company C (chain subsidiaries) Both holding and subsidiary companies enjoy separate legal entities Turner Morison & Co. Ltd vs. Hungerford Investment Trust Ltd. A subsidiary company cannot be a member of the holding company Section 42 of the Act Companies limited by guarantee A company limited by guarantee is a company having the liability of its members limited to the amount undertaken under the Memorandum to contribute to the assets of the company in the event the company is being wound up. The Memorandum of such companies contains an undertaking by its members to contribute a specified amount towards the payment of its debts and other expenses of winding it up in case the company is wound up while he is a member or within one year after he ceases to be a member. Types of companies limited by guarantee include charitable, social or other non-commerical objects. A company limited by guarantee may or may not have a share capital. In case of a guarantee company with share capital, its members are under double liability of having to pay the issue price of their shares and also honor the guarantee in case the company is wound up. Explain the procedure for commencement of business by a public company which has issued prospectus. Issue the prospectus The minimum subscription amount, as stated in the prospectus, should have been received by the company in cash In case the directors of the company have applied, they should pay the same amount per share as is payable by the other shareholders Shares issued for cash to the public must have been allotted Company will need to file Form 19 alongwith the following: a) Declaration that shares payable in cash have been allotted upto the amount of minimum subscription b) Declaration that directors have paid, in respect of the shares taken by them, an amount which is equal to what has been paid by the public c) Statutory declaration verified by 1 director or secretary (if no CS then PCS) that all the above has been complied with.
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5. What are the various clauses of Memorandum of Association? (a) Name Clause - A company being a distinct entity must have a name of its own to establish its separate entity. Last words of the name of the company shall be limited or private limited as the case may be. The name should not be undesirable in the opinion of the Government. It should not be prohibited under The Emblems and Names (Prevention of Improper Use) Act, 1950. Also the name should not be identical with or too resemble the name with which another company is registered or a registered trademark - Section 20 of the Act. (b) Registered office Clause - Every company must have a registered office to which all communications and notices will be addressed. This Clause states the name of the State in which the registered office of the company is situated the exact address need not be stated. (c) Objects Clause - This clause defines the sphere of the companys activities and the specific objectives for the formation of the company. All companies registered after 1965 must divide its objects into Main Objects and Other Objects (ancillary or incidental to the attainment of the main objects). Anything done beyond the objects is ultra vires and void and cannot be ratified even by assent of the whole body of shareholders. (d) Capital Clause - This states the amount of capital with which the company is to be registered. It also states the number and value of shares into which the capital of the company is divided. (e) Liability Clause - This clause states the liability of the members of the company. In case of a company limited by shares or by guarantee this clause shall state that the liability of the members is limited. (f) Association Clause - In this clause the subscribers declare that they desire to be formed into a company & agree to take the shares stated against their names. The names, addresses and occupations of the subscribers must be given. Each subscriber must sign in the presence of atleast one witness who shall attest his signature. Explain the steps for change of name of a company. Hold a Board meeting to propose 6 names in order of preference. Make an application to RoC in e-form 1A for checking availability of name alongwith a letter explaining the reason and justification of change. RoC shall intimate availability of name within 3 days of receipt of application. On receipt of approval hold another Board meeting for calling a general meeting. Hold a general meeting and pass 1. Special resolution for change of name 2. Special resolution for alteration of MOA. File e-form 23 with copies of various special resolutions within 30 days of passing the resolutions. Make an application to CG in e-form 1B. Issue of fresh Certificate of Incorporation from RoC. Inform various authorities. Arrange for a new common seal.
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Correct all the records of the company.

7. Explain the procedure for shifting of registered office within one State from one RoC to another. Hold a Board meeting to pass a board resolution for shifting of registered office and for calling a general meeting. Hold the general meeting and pass a Special resolution for shifting of registered office. In case the company is listed, the aforesaid special resolution shall be passed through postal ballot. File a copy of the special resolution passed with the RoC in e-form 23 within 30 days of passing the resolution. Make an application to the Regional Director in Form 1AD alongwith a copy of the special resolution and a copy of newspaper advertisement. The Regional Director shall pass an order in writing confirming the change within 4 weeks from the date of receipt of application. The company shall file a copy of the order received from the Regional Director with the RoC in Form 21.

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The RoC shall thereafter issue a certificate of registration confirming the aforesaid shifting within 1 month from the date of filing Form 21.
Such certificate shall be conclusive evidence that the company has complied with all the statutory provisions.
8. Explain the procedure for changing the financial year of a company. In terms of Section 2(17) of the Companies Act, 1956, financial year means the period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up, whether that period is a year or not. In order to change the financial year of a company, it is required to follow the following procedure: Convene a Board meeting. Hold the Board meeting and pass the necessary resolution for change of financial year of the company. If the financial year is extended beyond a period of 12 calendar months and the company requires more time to finalise its accounts, the company should apply to the RoC for obtaining extension of time for holding AGM. The application should be made in e-form 61 alongwith the board resolution, reasons for extension of financial year, period for which the extension is required and the detailed application. The consent of the Assessing Officer of the IT Department is also required. What are the eligibility norms for making IPO / FPO under the SEBI ICDR Regulations? Eligibility Norms for IPOs (a) The company has net tangible assets of atleast Rs. 3 crores in each of the preceding 3 full years (of 12 months each), of which not more than 50% is held in monetary assets. If more than 50% of the net tangible assets are held in monetary assets, the company should make firm commitments to deploy such excess monetary assets in its business/project. (b) The company has a minimum average pre-tax operating profit of Rs. 15 crores, calculated on a restated and consolidated basis, during the 3 most profitable years out of the immediately preceding 5years. (c) The company has a net worth of at least Rs. 1 crore in each of the preceding 3 full years (of 12 months each) (d) In case the company has changed its name within the last one year, atleast 50% of the revenue for the preceding 1 full year is earned by the company from the activity suggested by the new name (e) The aggregate of the proposed issue and all previous issues made in the same financial year in terms of size does not exceed 5 times its pre-issue net worth as per the audited balance sheet of the last financial year. Eligibility Norms for FPOs The aggregate of the proposed issue and all previous issues made in the same financial year in terms of size does not exceed 5 times its pre-issue networth as per the audited balance sheet of the last financial year. In case the company has changed its name within the last one year, atleast 50% of the revenue for the preceding 1 full year is earned by the company from the activity suggested by the new name Companies not complying with the above The company may make an IPO if the issue is made through the book-building process and the company undertakes: (a) to allot, at least 75% of the net offer to public, to QIBs and (b) to refund full subscription money if it fails to make the said minimum allotment to QIBs The number of prospective allottees should be more than 1000
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10. Explain the procedure for making bonus issue by a listed company. A listed company has to comply with the following procedure for issue of bonus shares in terms of SEBI (ICDR) Regulations, 2009: Ensure that bonus is made out of free reserves built out of genuine profits. Ensure that the company has not defaulted in the payment of interest / principal of fixed deposits, debentures, statutory dues to employees etc. There should be a provision in the AOA permitting issue of bonus shares. Share capital after bonus must be within the authorised capital otherwise the authorised share capital will be required to be increased. Hold a board meeting for passing a resolution for bonus issue and for calling a general meeting. Ensure all partly paid up shares are made fully paid up before bonus issue. Intimate the results of the Board meeting within 15 minutes to the stock exchange. Forward copies of notice of general meeting to the stock exchange. Hold general meeting and pass the resolution for issue of bonus shares. File a copy of the proceedings of the general meeting with the stock exchange. File e-form 23 and e-form 5 with the RoC within 30 days of passing the resolution. Fix record date / book closure. Give 30 days notice to the stock exchange before record date. File return of allotment Form 2 with the RoC within 30 days of allotment. Ensure that the bonus issue is completed within 2 months from the date of approval in case it requires shareholders approval for bonus issue as per its AOA and within 15 days in case it requires no such approval. Get share certificates printed and issue the same to the members.
Submit an application to stock exchange for listing of bonus shares.

11. Distinguish between ESOP and ESPS. Employee Stock Option Plan (ESOP) is an option given to the whole-time directors, officers or employees of the company which gives such directors, officers or employees the benefit or right to purchase or subscribe at a future date, the securities offered by the company at a pre-determine price. Employee Stock Purchase Plan (ESPS) is a plan under which the company offers directly shares to employees as part of public issue or otherwise. Shares under ESOP scheme are allotted only after exercise of the option. Whereas in an ESPS plan, shares are allotted outrightly. The requirements for issuing both ESOP and ESPS are same under the SEBI (ESOP and ESPS) Guidelines, 1999. Explain the procedure for issuing sweat equity shares. Sweat equity shares means shares issued by a company to its employees / directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of IPRs or value additions. In terms of Section 79A of the Companies Act, 1956 read with the SEBI (Issue of Sweat Equity) Regulations, 2000, the following procedure needs to be followed by a listed company for issue of sweat equity shares:
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Atleast 1 year must have elapsed from the date on which company is entitled to commence business. Convene a Board Meeting for passing a resolution to issue sweat equity shares and calling a general meeting. market price, consideration and the class of employees / directors to whom such shares shall be issued.
Pass a special resolution at General meeting. The special resolution shall specify the number of shares, current File a copy of the special resolution passed with the RoC in e-form 23 within 30 days of passing the resolution.

June, 2013
CS Solutions Hazra & Girish Park, Kolkata Study CS from the Experts Forward a copy of the proceedings of general meeting to stock exchanges where the company is listed.
13. What are the steps for redemption of preference shares? No authorization is required to redeem preference shares. Fully paid-up shares may be redeemed - out of profits - out of fresh issue of shares The premium payable on redemption, if any, may be taken out from profits of the company or securities premium account Creation of Capital Redemption Reserve (CRR) is mandatory if preference shares are redeemed out of profits Nominal amount of preference shares is required to be transferred to CRR CRR may be utilized for issuing fully paid up bonus shares or for any other purpose (subject to compliance of requirements applicable to reduction of share capital) The company is required to give notice to the RoC in e-form 5 within 30 days from redemption. The company will also be required to inform the preference shareholders individually and also through a public notice. Explain the procedure for issue of share certificates. Share Certificate is a document of title to the shares in a company. It is issued by a company to its members in whose names shares are registered in the register of members of the company. following is the procedure for issue of share certificates: Pass a resolution at the board meeting for issue and allotment of share certificates. The Board will approve the numbers and authorise by resolution for their printing. In case of listed companies, forms of share certificates shall also be approved by the stock exchanges. All blank form of share certificates will be in the custody of the company secretary. The depository shall be immediately informed after the shares are issued. Necessary entries will be made in the register of members. They shall be issued within the specified time limit Share certificates are issued under the signatures of at least 2 directors, one of whom shall be MD, and the CS / Authorised signatory
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Share certificates is issued under the common seal of the company.

15. Short note on Debenture Redemption Reserve. In terms of Section 117C of the Companies Act, 1956: Creation of Debenture Redemption Reserve is mandatory for every company which issues debentures Adequate amounts shall be created to Debenture Redemption Reserve out of the profits of the company every year till debentures are redeemed Debenture Redemption Reserve shall be utilized for redemption of debentures What are the requirements relating to redemption and roll over of convertible debentures? The non-convertible portion of partly convertible debt instruments issued, the value of which > Rs.50 lakhs may be rolled over without change in the interest rate, subject to compliance with the following conditions: 75% of the holders of the convertible debt instruments of the issuer have approved the rollover through postal ballot The company has, along with the notice for passing the resolution, sent to all holders of the convertible debt instruments, an auditors certificate on the cash flow of the issuer and with comments on the liquidity position of the issuer The company has undertaken to redeem the non-convertible portion of the partly convertible debt instruments of all
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the holders of the convertible debt instruments who have not agreed to the resolution Credit rating has been obtained from at least one credit rating agency registered with SEBI within a period of six months prior to the due date of redemption and has been communicated to the holders of the convertible debt instruments, before the roll over The creation of fresh security and execution of fresh trust deed shall not be mandatory if the existing trust deed or the security documents provide for continuance of the security till redemption of secured convertible debt instruments. What are the various modes of acquiring membership in a company? By subscribing to the MOA By agreement and registration By agreeing to purchase qualification shares By application and allotment By transfer / transmission of shares By estoppel Short note on nomination of shares and transmission of shares. Nomination of shares Section 109A and 109B Every member who is an individual can make a nomination at anytime The nominee shall be an individual; a minor may be named as a nominee provided the name of a guardian is mentioned in the nomination form After the death of the holder, an application signed by the nominee alongwith a death certificate of the member shall be submitted to the company. The application shall state that the nominee has elected to become a member of the company. The nominee is also entitled to transfer such shares. Transmission of shares Section 109 Transmission means passing of the title to a person to another by operation of law In case of joint holding, transmission shall only take place when all the joint holders die A person entitled to shares as a consequence of death or insolvency of a member needs to make an application in writing to the company requesting the company to admit him as a member Such person may also chose to transfer such shares without becoming a member by executing a transfer deed. What are the rights of joint members? Joint holders of shares in a public company are not a single member. Each of such joint holders is a member of the company Narandas vs. India Manufacturing Co. Notices and other documents required to be served by the company will be deemed to be properly served if the same is effected on the first named joint holder. Unless instructions have been received to the contrary, the company can pay dividend to the first named shareholder. Any joint holder is entitled to be present in the general meeting and take part in the proceedings and vote. In the event of poll, voting right can only be exercised by one of the joint holders. Joint holders are jointly and severally liable to pay the calls. Proxy form to be valid should be signed by all the joint shareholders.
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20. Short note on Refusal of registration of transfer by a public company and a private company. Private company may by its Articles or otherwise refuse to register transfer or transmission of shares. However in the case of a public company, shares are freely transferable and it cannot refuse to register transfer of shares. In case of refusal by a public company, the Company Law Board is empowered to direct rectification of register of members to give effect to the transfer. Section 111A of the Companies Act, 1956 provides that the CLB may, on an application made by a depository, company, participant, investor or SEBI, if the transfer of shares is in contravention of any provisions of the SEBI Act, SICA, or any other law, within 2 months from the date of transfer, direct the depository or the company to rectify its records. Explain the procedure for appointment of additional directors and directors to fill casual vacancy. Procedure for appointment of Additional Directors Section 260 of the Companies Act, 1956 Ensure that the AOA authorise the Board to appoint additional directors. Ensure that the person proposed to be appointed as additional director does not suffer from any disqualifications. Ensure that such appointment of additional director is within the maximum limit mentioned in AOA. BOD shall appoint the director either at a board meeting or through circulation. Ensure that the director has given his DIN and his consent to the company. Company has to file e-form 32 within 30 days of appointment. Particulars of the director shall be entered in all the registers. In case the company is listed, it shall also inform the Stock Exchanges. Procedure for appointment of filling casual vacancy Section 262 of the Companies Act, 1956 Casual vacancy vacancy caused due to death, insolvency, resignation or disqualification. A causal vacancy occurring in the position of a director appointed in general meeting may be filled up by the Board at a Board meeting. Ensure that the person proposed to be appointed as additional director does not suffer from any disqualifications. Ensure that the director has given his DIN and his consent to the company. Such person shall hold office till the time the person in whose place he is appointed would have held the office. The Section ONLY applies to public companies. Company has to file e-form 32 within 30 days of appointment. Particulars of the director shall be entered in all the registers. In case the company is listed, it shall also inform the Stock Exchanges. Short note on small shareholder directors. In terms of Section 252 of the Companies Act, 1956 read with Companies (Appointment of the Small Shareholders Director) Rules, 2001: A public company having paid-up share capital of Rs.5 crores or more AND 1000 or more shareholders may have a small shareholder director. Small shareholder means a shareholder holding shares of nominal value of Rs. 20,000/- or less. A small shareholder director may be appointed by : (a) the company on its own motion (b) the small shareholders through a notice by 1/10 th or more small shareholders atleast 14 days before the meeting in which case the company shall be bound to act on such notice (c) in case of listed companies, such appointments shall be made by postal ballot The small shareholder director has to be a small shareholder and he cannot become a small shareholder director in
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more than 2 companies. The maximum tenure of appointment is 3 years after which he can be re-appointed. He is not liable to retire by rotation and Section 274 of the Act dealing with disqualifications of directors [except Section 274(1)(g)] applies to him. Explain the procedure for removal of director by shareholders. The company is required to comply with the following procedure for removal of director by shareholders u/s 284 of the Companies Act, 1956: Special notice should be received from a member of the company atleast 14 days before the general meeting for removal of a director. A copy of the notice shall also be given to the concerned director he has a right of being heard in the general meeting before he is removed. Representation if any given by the director shall be sent by the company atleast 7 days before the general meeting to all the members of the company. If the same is not sent, then the company at the instance of the director shall read out the same at the meeting. Call a general meeting by issuing 21 days notice before the general meeting.
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The director shall be removed if an ordinary resolution for his removal is passed by the shareholders of the
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In case the company is listed, a copy of the proceedings of the general meeting shall be sent to the stock exchange.
Company has to file e-form 32 within 30 days of appointment. Particulars of changes in directors shall be entered in all the registers.
In case the company is listed, it shall also inform the Stock Exchanges.
24. Explain the kinds and limits on remuneration payable to executive and non-executive directors. Remuneration of a director who is not a MD / WTD i.e. non-executive directors Section 309 of the Act: He can be paid : (a) Monthly, quarterly or annual payment with approval of the CG (b) Commission with approval of members through special resolution ( this SR is valid for 5 years) Quantum of payment In case the company has a managing or whole-time director In any other case 1% of the net profits of the company 3% of the net profits of the company
The NEDs can also be paid sitting fees (no sitting fees can be paid to MD / WTD) subject to the following ceilings: Companies with a paid-up share capital and Sitting fees not to exceed ` 20,000/free reserves of ` 10 crores or more or turnover of ` 50 crores or more Other companies Sitting fees not to exceed ` 10,000/ Where Board meeting is adjourned and again held, sitting fees shall be paid only once, since adjourned meeting is a mere continuation of the original meeting. Remuneration of a MD / WTD / Manager - Section 309 of the Act Determination of managerial remuneration (a) By Articles of Association (b) By ordinary resolution

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(c) By special resolution, if the Articles so provide Mode of payment (a) Monthly payment and / or (b) Specified % of net profits Quantum of payment Particulars Single Managing Director or Manager or Whole time Director More than One Managing Director or Manager or Whole time Director
% of Net Profit 5% 10%
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In case of payment of remuneration to a director for services rendered in any capacity other than that of a director, his total remuneration cannot go above the ceiling fixed by Section 198. But if the services rendered are of a professional nature, the remuneration payable to a director for that will not come within the provisions of Section 309 of the Act. Short note on disclosure of interest by directors. In terms of Section 299 of the Companies Act, 1956, every director who is interested in any contract or arrangement or any proposed contract or arrangement shall disclose his interest. Such disclosure is required to be made as follows: (a) In case of a proposed contract at the Board meeting when the contract is first considered by the Board (if then the director is interested) or at the meeting held first after he became interested (if he later on becomes interested) (b) In case of an existing contract at the Board meeting held first after the director becomes interested (c) Alternatively the director can given a general notice of disclosure which shall remain till the expiry of one financial year after which the same can be renewed. Disclosure is not required if interest of one or more directors is less than 2% of the paid-up capital of the other company If the cumulative holding of all the directors together with their relatives does not exceed 2% of the paid-up capital of the other company. Define the term Company Secretary in Practice as defined under the CS Regulations. Section 2(2) of the Company Secretaries Act, 1980, provides that a member of ICSI shall be deemed to be in practice, when individually or in partnership with one or more members of the Institute, engages himself in the practice of the profession of Company Secretaries to, or in relation to, any company; or offers to perform or performs services in relation to the promotion, forming, incorporation, amalgamation, reconstruction, reorganization or winding up of companies; or offers to perform or performs such services as may be performed by (a) an authorized representative of a company with respect to filing, registering, presenting, attesting or verifying any documents (including forms, applications and returns) by or on behalf of the company, (b) a share transfer agent, (c) an issue house (d) a secretarial auditor or consultant, (e) an adviser to a company on management, including any legal or procedural matter, (f) issuing certificates on behalf of, or for the purposes of, a company; holds himself out to the public as a Company Secretary in practice; or renders professional services or assistance with respect to matters of principle or detail relating to the practice of the profession of Company Secretaries; or renders such other services as, in the opinion of the Council, are or may be rendered by a Company Secretary in
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27. practice. What are the various kinds of services which a PCS can render under the CS Regulations? Regulation 168 prohibits a company secretary in practice from engaging in any business or occupation other than the profession of company secretary unless it is permitted by a general or specific resolution of the Council. Following services are permitted generally Private tutorship. Authorship of books and articles. Holding of Life Insurance Agency Licence for the limited purpose of getting renewal commission. Holding of public elective offices such as M.P, M.L.A., M.LC. Honorary office-bearership of charitable, educational or other non-commercial organisations. Acting as Justice of Peace, Special Executive Magistrate and the like. Teaching assignment under the Coaching Organisation of the Institute or any other organisation, so long as the hours during which a member in practice is so engaged in teaching do not exceed average four hours in a day Valuation of papers, acting as a paper-setter, head examiner or a moderator, for any examination. Editorship of professional journals. Acting as ISO lead auditor. Providing Risk Management Services for non-life insurance policies except marketing or procuring of policies. Acting as Recovery Consultant in the Banking Sector. Becoming non-executive director / promoter / promoter director / subscriber to the Memorandum and Articles of Association of a company the objects of which include areas, which fall within the scope of the profession of Company Secretaries irrespective of whether or not the practising member holds substantial interest in that company. Becoming non-executive director / promoter / promoter director / subscriber to the Memorandum and Articles of Association of a company which is engaged in any other business or occupation provided that the practising member does not hold substantial interest in the company. Permission to be granted specifically Interest or association in family business concerns provided that the member does not hold substantial interest in such concerns. Interest in agricultural and allied activities carried on with the help, if required, of hired labour.
Editorship of journals other than professional journals.

28. Explain the procedure for appointment of auditors other than retiring auditors. In terms of Section 225 of the Companies Act, 1956, the company shall comply with the following procedure for appointment of auditor other than retiring auditors: Special notice u/s 190 is required for this purpose atleast 14 days before the meeting. Company shall give atleast 7 days notice to the members. A copy of the special notice shall also be furnished to the retiring auditor. The retiring auditor can make a representation. Company shall state the fact of such representation in the notice to the members. It shall also send a copy of the representation to the members. Pass the resolution at the AGM for appointment of other than retiring auditor. Inform the new auditor within 7 days of his appointment.
Auditor shall file Form 23B with the RoC within 30 days.

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29. Short note on branch auditor. In terms of Section 228 of the Companies Act, 1956: Where a company has a branch office in India the accounts of that office shall be audited by the companys auditors or by any other CA In case the company has a branch outside India audit may also be conducted by an accountant duly qualified to act as an auditor in accordance with the laws of the country in which the branch office is situated In case branch audit is to be conducted by a person other than the companys auditors the company in general meeting shall appoint a qualified person as branch auditor or may authorize the BOD He has got the same rights and duties as a statutory auditor He shall forward his report to the companys auditor. Explain the steps and requirements for maintenance of cost accounting records and appointment of cost auditor. In terms of Companies (Cost Accounting Record) Rules 2011 dated 3rd June, 2011, the CG has mandated companies engaged in production, processing, manufacturing, or mining activities and wherein, the aggregate value of net worth as on the last date of the immediately preceding financial year > Rs. 5 crores or the aggregate value of the turnover made by the company from sale or supply of all products or activities during the immediately preceding financial year > Rs. 20 crores or the companys equity or debt securities are listed Cost accounting records are required to be maintained in respect of financial years commencing on or after 1 st April, 2011. Exemptions wholesale or retail trading activities, banks, investment and insurance companies, IT services, postal / courier services etc. In terms of CAB (Cost Accounting Board) Orders, Cost Audit has been mandated for the following industries Paper Cement Tyres and Tubes Steel Insecticides Glass Paints & Varnishes Aluminium Jute, cotton, silk and woolen textiles Edible oilseeds Packaged food products Plantation products Coal & lignite Such audit shall be conducted by a cost accountant within the meaning of the Cost and Works Accountants Act, 1949. Such cost shall be appointed by the Board of Directors with the previous approval of the CG. The Audit committee of the company shall be the first point of reference for such appointment. Auditor of the company cannot be appointed as cost auditor. A person disqualified to be an auditor cannot be appointed as cost auditor. The company shall disclose full particulars of its cost auditor in its annual report.
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31. Explain the procedure for passing of resolutions through postal ballot. In terms of Section 192A read with Companies (passing of the resolution by postal ballot) Rules, 2011: Notice to all shareholders alongwith a draft resolution and requesting them to send their assent / dissent within 30 days of posting the letter. It shall be sent by registered post acknowledgement due or through e-mail provided the company obtains the e-mail addresses of its shareholders. Company shall issue advertisement in one English and vernacular newspaper after despatch of the postal ballot forms. If it is assented by the majority it shall be deemed to be passed at a meeting. Voting by electronic mode is also permitted. Further in terms of Clause 35A of the Listing Agreement, every listed company conducting postal ballot, shall give the facility of e-voting to its shareholders. Matters which compulsorily need to be passed through postal ballot Alteration of objects clause of MOA Alteration of AOA for insertion of provisions re. Private co. Buy back of shares Issue of shares with differential voting rights Change in registered office outside the local limits of the city, town or village Sale of whole of the undertaking of the co. Give loans, guarantees, or security in excess of the limits u/s 372A Election of a small shareholder director
Variation of rights attached to a class of shares / debentures

32. Explain the powers of the Board of Directors which are exercisable only with the approval of shareholders. In terms of Section 293 of the Companies Act, 1956, the following powers of the Board can only be exercised with the approval of the shareholders: Sell, lease or otherwise dispose of whole, or substantially the whole, of the undertaking of the company Remit, or give time for repayment of any debt due by a director Invest, otherwise than in trust securities, the amount of compensation received by the company in respect of the compulsory acquisition of any such undertaking as referred above Borrow moneys, where the moneys to be borrowed, together with the moneys already borrowed by the company (apart from temporary loans obtained from the company's bankers in the ordinary course of business), will exceed the aggregate of the paid-up capital of the company and its free reserves Contribute to charitable and other funds not directly relating to the business of the company or the welfare of its employees, any amounts in excess of Rs. 50,000/- or 5% of its average net profits during the 3 financial years immediately preceding, whichever is greater. Short notes on explanatory statement and poll in general meetings. Explanatory Statement Section 173 of the Companies Act, 1956 In terms of Section 173 of the Companies Act, 1956, every notice proposing to transact special business in a general meeting, shall be accompanied by an explanatory statement, setting out all material facts concerning that special business, including the concern / interest of every director / manager. The object of providing explanatory statement u/s 173 is to secure that all facts which have a material bearing on the question on which the shareholders have to form their judgment are brought to the notice of them so that the shareholders can exercise an intelligent judgment Balasundaram vs. New Theatres Carnatic Talkies Private Limited The provision of Section 173 is mandatory in nature and disobedience to its requirements will lead to
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nullification of the action taken Firestone Tyre and Rubber Co. Ltd. Vs. Synthetics and Chemicals Ltd. The principle to be applied in case of explanatory statement is that could a reasonable shareholder knowing the true facts have taken a different course from that which he took on the basis of the explanatory statement which did not disclose the true facts Jessel Trust Limited Poll Section 179 of the Companies Act, 1956 It is a method of voting in which votes are cast by members (in person or by proxy) in accordance with the number of shares held, by registering their votes on sheets of paper called Poll paper or Ballot paper distributed to the voters. The object of a poll is to ascertain the true sense of a meeting and is not to give absent members a further opportunity of voting unless a contrary intention is expressly or impliedly to be gathered from the Articles Liladhar Shamji vs. Rehmubhoy Allana A poll may be ordered by the Chairman on his own motion or shall be ordered on a demand made by the persons as follows: (a) Public company with share capital members holding not less than 1/10th of the voting power or on which an aggregate sum of Rs. 50,000/- or more has been paid (b) Private company with share capital 1 member, if 7 members are present or 2 members if > 7 members are present (c) Any other company - members holding not less than 1/10th of the voting power Proxies may also demand a poll Berar Trading Company Limited vs. Gajana G Dixit In case of poll on election of chairman or on adjournment of the meeting, it has to be taken forthwith In case of poll on any other question, it must be taken within 48 hours of the time of demand Chairman should appoint 2 scrutineers (atleast 1 scrutineer should be a member of the company and not an officer / employee) to scrutinize the votes cast on a poll The results of the poll shall be displayed at the registered office of the company. Explain the steps for holding an EGM. In terms of Section 169 of the Companies Act, 1956, any general meeting between two annual general meetings shall be called an extra-ordinary general meeting. An EGM may be called by the following parties: 1. By the Directors The Board of Directors may call a general meeting of the members at any time by giving not less than 21 days' clear notice. By the Directors on Requisition The Board of Directors must convene a general meeting upon request or requisition under the following conditions : The requisition must be signed by a member(s) holding at least 1/10th of the paid-up share capital of the company, in the case of companies having a share capital; and by members holding at least 1/10th of the total voting power in other cases The requisition must state the objects of the meeting The requisition must be deposited at the registered office of the company . The directors must, within 21 days of the receipt of a valid requisition, issue a 21 clear days' notice for the holding of the meeting on a date fixed within 45 days of the receipt of the valid requisition. By the Requisitionists Themselves If the directors fail to hold the meeting as aforesaid, the requisitionists may call a meeting within 3 months from the date of requisition. All reasonable expenses of such a meeting can be recovered from the company which in turn shall recover the same from the remuneration of the directors at fault. By the Company Law Board Section 186
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If, for any reason, it is impracticable to call a meeting of the company, other than AGM, the CLB may either of its own motion or on the application of any director or any member of the company who would be entitled to vote at the meeting order a meeting of the company to be called, held and conducted in such a manner as the Board thinks fit. The CLB may also give such ancillary or consequential directions as it thinks expedient including a direction that one member present in person or proxy shall be deemed to constitute a meeting. Distinguish between motion and resolution. A motion is a definite proposal put before a meeting for its consideration and adoption. Notice of a motion is necessary before it is put before the meeting It must be proposed and seconded A resolution is the formal expression of the decision of a meeting When a motion has been voted upon and passed by the requisite majority it is called a resolution. Short notes on Holding of Board and General meetings through video-conferencing. The MCA, vide Circular No. 28/2011 dated 20 th May, 2011, has permitted directors to participate in Board / Committee meetings through the video conferencing facility subject to compliance with the following Every director must personally attend atleast one meeting of the Board / Committee in a financial year It shall not be mandatory for companies to provide its directors with the facility to attend meetings through video conferencing; the notice of meetings shall contain the necessary information regarding availability of this facility, in cases where such facility is provided The Chairman / CS shall be responsible to safeguard the integrity of the meeting conducted via video conferencing At the commencement of such meetings, the Chairman / CS shall make a roll call where the director attending the meeting through electronic mode shall state his name, location and that he can completely and clearly see and communicate with the other participants; The directors participating through electronic mode shall be counted for the purpose of quorum. At the end of such meeting, the Chairman shall announce the summary of the decisions taken in that meeting and the names of directors who have consented or dissented to those decisions. Similarly, the MCA has also permitted shareholders to participate in general meetings through the video conferencing facility subject to compliance with following conditions It shall not be mandatory for companies to provide the facility of video conferencing to its shareholders for the general meetings In such cases also, the notice of general meetings shall contain the necessary information regarding the availability of this facility and the Chairman / CS shall be responsible to safeguard the integrity of the meeting conducted via video conferencing; The meeting shall be deemed to be held at the place where the Chairman is physically present. Short note on Corporate Governance Report under Clause 49 of the Listing Agreement. In terms of Clause 49 of the Listing Agreement : Annual Report of the Company should comprise a separate section on Corporate Governance wherein specified compliance with Clause 49 is required to be disclosed. Quarterly Compliance Report to be submitted to Stock Exchanges within 15 days from the close of the quarter in the prescribed format. What do you mean by Directors Responsibility Statement? In terms of Section 217 of the Companies Act, 1956, the Directors Report of a company shall contain a Directors Responsibility Statement certifying that that in preparation of annual accounts, the applicable accounting standards are being followed together with proper explanations relating to material departures that the directors have selected such accounting policies and applied them consistently and made judgements
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and estimates that they are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the year and profit and loss for the period that the directors have taken proper and sufficient care for the maintenance of adequate accounting records for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities that the directors have prepared the accounts on a going concern basis Explain the procedure for exemption from attaching the accounts of subsidiary company with the holding company. General exemption has been granted to holding companies vide General Circular No. 2/2011 dated 8 th February, 2011, from attaching accounts of subsidiaries, subject to compliance with the following conditions: The Board of Directors of the company gives consent for not attaching the accounts of subsidiaries. The company prepares consolidated financial statements in compliance with Accounting Standards and Listing Agreement. The holding company shall furnish hard copies of the accounts of subsidiaries to shareholders on demand. The company shall disclose in the consolidated balance sheet the following information in aggregate for each subsidiary including subsidiaries of subsidiaries:- (a) capital (b) reserves (c) total assets (d) total liabilities (e) details of investment (except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation (j) proposed dividend. Explain the power of RoC to strike off names of companies. Section 560 of the Companies Act, 1956 empowers RoC to strike off the names of those companies which do not carry on any business or operation in the following circumstances: (a) where a company is being wound up and the RoC has reasonable cause to believe that no liquidator is acting; (b) if the affairs of the company have been completely wound up and the required returns are not forthcoming from the liquidator appointed for a period of 6 consecutive months.
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Any aggrieved member / creditor may apply for restoration of name within 20 years from publication of striking off
41. notice in official gazette. Short notes on SS7, SS8, SS9 and SS10. Secretarial Standard 7 - Passing of Resolutions by Circulation Chairman of the Board or the managing director should decide whether the approval of the Board for a particular business should be obtained by means of a resolution by circulation. A resolution proposed to be passed by circulation should be sent in draft form, together with the necessary papers, individually to all the directors or, in the case of a Committee to all the members of the Committee, at the same time. Each business proposed to be passed by way of resolution by circulation should be explained by a note setting out the details of the proposal and the draft of the resolution proposed The resolution is passed, when it is approved by a majority of directors entitled to vote on the resolution other than interested directors. The resolution is deemed to have been passed on the date on which it is approved by the majority of the Directors. Resolutions passed by circulation should be noted at the next meeting of the Board or Committee, as the case may be, and the decision recorded in the minutes of such meeting. Passing of resolution by circulation should be considered valid as if it had been passed at a duly convened meeting of the Board or of the Committee. Secretarial Standard 8 - Affixing of Common Seal The common seal should be adopted by a resolution of the Board. The impression of the common seal should be made part of the minutes of the meeting in which it is adopted.

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The common seal should be made of metal and capable of being manually operated. The common seal should have the name of the company and state in which the registered office is situated engraved in legible characters. The common seal should be affixed to any instrument only by authority of a resolution of the Board or a committee authorized by the Board. The common seal should be affixed in the presence of managing director or any two directors, and the company secretary or any other person as the Board may authorize for the purpose. The persons in whose presence the seal is affixed should sign every instrument to which the seal of the company is so affixed. Every company should maintain a register, at its registered office, containing particulars of documents on which the common seal of the company has been affixed. The common seal should be kept in the custody of a director of the company or the company secretary or any other official, as authorized by the Board. Secretarial Standard 9 - Forfeiture of shares The Articles should contain a provision for forfeiture of shares. Forfeiture of shares requires approval of the Board in a duly convened meeting. A forfeiture of shares held by a member should be made under the authority of the Board, if a call on the shares, together with interest accrued thereon, in accordance with the terms of issue of the shares, remains unpaid after the day appointed for payment thereof. If a member fails to pay any call, on or before the day for payment thereof, the company should during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of the call remaining unpaid, together with interest which may have accrued. The notice should state the amount of the call due and the interest accrued thereon. The Board at a duly convened meeting should approve the forfeiture and authorize any director or manager or the secretary to make a declaration of such forfeiture. The Notice should also specify a day not being earlier than the expiry of twenty-one days from the date of posting of the notice on or before which the payment required by the notice is to be made; and state that in the event of nonpayment on or before the day so specified, the shares in respect of which the call was made including the amount already paid thereon will be forfeited. Upon forfeiture, any director or manager or the secretary, authorized by the Board of the company shall make a declaration specifying the particulars of shares forfeited. The declaration shall be conclusive evidence of forfeiture as against all persons claiming to be entitled to the shares of the company which have been forfeited. The Board should issue individual notices to the defaulting members whose shares have been forfeited. Entries in the register of members should be made with regard to forfeited shares and share certificates in relation to forfeited shares shall stand cancelled upon forfeiture. There should be a reference to the forfeiture of shares in the report of the directors to the shareholders.
A person whose shares have been forfeited would cease to be a member of the company, in respect of those shares.
Upon forfeiture, any director or manager or the secretary, authorized by the Board of the company shall make a declaration specifying the particulars of shares forfeited. The declaration shall be conclusive evidence of forfeiture as against all persons claiming to be entitled to the shares of the company which have been forfeited. The Board should issue individual notices to the defaulting members whose shares have been forfeited. Entries in the register of members should be made with regard to forfeited shares and share certificates in relation to forfeited shares shall stand cancelled upon forfeiture. There should be a reference to the forfeiture of shares in the report of the directors to the shareholders.

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A person whose shares have been forfeited would cease to be a member of the company, in respect of those shares. Secretarial Standard 10 - Boards Report The Boards Report should include a statement by the Board that the company has devised proper systems to ensure compliance of all laws applicable to the company. In the event of sickness of the company, the Report should provide the factors leading to such sickness and the steps proposed to be taken. The Report should disclose specified details of issue of sweat equity shares. The Report should specify the reasons for the failure to implement any proposal relating to preferential allotment. The Report should specify the reasons for the failure to pay interest or redeem debentures or preference shares on due date(s) and remedial measures taken. The Report should specify changes in the composition of Board. The Report should disclose if any director has incurred any disqualification or vacated office pursuant to the provisions of the Act or any other law for the time being in force. The Report should disclose the amounts, if any, transferred during the year to the Investor Education and Protection Fund. The Report should, in case of payment of managerial remuneration in excess of prescribed limits, disclose the particulars specified under the Act The Report should disclose composition of audit committee. The Report should specify the reasons for not accepting the recommendations of the Audit Committee. The Report should disclose the amounts to be paid as limited return on share capital. The Report should disclose the amounts, if any, proposed to be disbursed as patronage bonus. The Report should state that the consolidated financial statements are also presented in addition to the individual financial statement of the company.
The Report should specify projections made in the previous year and the current status related to the companys
performance. The Report shall be the collective responsibility of all the directors though the report may have been approved only by a majority of the directors. The Board should ensure consistency of information given in the Report, the Report on Corporate Governance and the explanatory statements to resolutions. Short note on Investor Education and Protection Fund. In terms of Section 205C of the Companies Act, 1956: Investor Education and Protection Fund shall be established by CG Such fund shall be credited with - amounts in the unpaid dividend accounts of companies - application moneys received by companies for allotment of any securities and due for refund - accrued interest on the aforesaid amounts - grants and donations given to the Fund - interest or other income received out of the investments made from the Fund The aforesaid amounts shall be transferred to IEPF only if the same remains unclaimed for 7 years
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43. Explain the procedure for declaration and payment of interim dividend. Give notices for board meeting. Inform the stock exchanges atleast 2 working days in advance. Hold the Board meeting and declare the interim dividend. Before declaring interim dividend the directors must satisfy themselves about the financial position of the company. Inform the stock exchanges about the interim dividend declared within 15 minutes of Board meeting. Publish notice of book closure in newspapers atleast 7 days before the commencement of book closure and inform the stock exchanges. Close the register of members of the company. Open bank account and transfer the amount of dividend within 5 days of declaration. Ensure payment of dividend distribution tax. Print dividend warrants and despatch them within 30 days of declaration. Arrange for transfer of unpaid dividend to the unpaid dividend account within 7 days from completion of 30 days period. Transfer dividend lying in the unpaid dividend account after expiry of 7 years from the date of transfer.
File Form 1 of IEPF Rules with the RoC.

44. What are the consequences of non-registration of charge? The charge will be void against the creditor and liquidator of the company The company shall be liable for repayment of the money secured by the charge immediately The company may create a second charge having priority of the unregistered charge Explain the procedure for satisfaction of a registered charge. In terms of Section 138 of the Companies Act, 1956, a company is required to comply with the following procedure for satisfaction of charge: File Form 17 with the RoC within 30 days of satisfaction of charge. Attach with Form 17 a certified copy of the document satisfying the charge. Short note on the Model Code of conduct for prevention of insider trading. In terms of the SEBI (Prohibition of Insider Trading) Regulations, 1992 every listed company is required to frame a code of internal procedures and conduct as near thereto the Model Code specified in the Regulations without diluting it in any manner and ensure compliance of the same. The Model Code of Conduct contains the following terms: Company shall appoint a Compliance Officer (senior level employee) who shall report to the MD / CEO. The Compliance Officer shall be responsible for setting forth policies, procedures, monitoring adherence to the rules for the preservation of Price Sensitive Information, pre-clearing of designated employees and their dependents trades (directly or through respective department heads as decided by the company), monitoring of trades and the implementation of the code of conduct under the overall supervision of the Board of the listed company. The Compliance Officer shall maintain a record of the designated employees and any changes made in the list of designated employees. Employees / directors shall maintain confidentiality of price sensitive information. Price sensitive information shall be dealt on a need to know basis. Company shall specify a period called trading window for trading in the companys securities. The window shall be closed during which the price sensitive information shall be unpublished. It shall open 24 hours after information is made public. All directors /officers / designated employees of the company and their dependants who intend to deal in the
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securities of the company (above a minimum threshold limit to be decided by the company) should pre-clear the transactions. All directors / officers / designated employees who buy or sell any number of shares of the company shall not enter into an opposite transaction i.e. sell or buy any number of shares during the next six months following the prior transaction. All directors/ officers/ designated employees shall also not take positions in derivative transactions in the shares of the company at any time. All directors / officers / designated employees shall hold their investments for minimum period of 30 days. All directors / officers / designated employees shall disclose their holdings at the time of joining and on an annual basis. Any employee/ officer / director who trades in securities or communicates any information for trading in securities in contravention of the code of conduct may be penalised and appropriate action may be taken by the company. What do you mean by the term insider? In terms of Regulation 2(e) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 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
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has received or has had access to such unpublished price sensitive information.
48. What are the exceptions to Section 372A of the Companies Act, 1956. Banking company, insurance company or housing finance company in the ordinary course of its business A company established with the sole object of financing industrial enterprises or of providing infrastructural facilities A company whose principal business is acquisition of shares / securities A private company Investments made in rights issue
Loan / investment / guarantee by a holding company to its wholly owned subsidiary company

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49. Salient features of UK Companies Act 2006 and Australian Corporations Act. UK Companies Act 2006 One person can form a company Minimum authorised capital 50,000 Minimum members 2 members Minimum 2 directors Directors duty to act in accordance with the companys constitution and exercise powers for the purpose of which they are given Company to prepare a directors remuneration report Public company must have a secretary Companies to lay and file accounts Private company within 9 months Public company within 6 months Small companies exempt from audit Shareholders holding atleast 10% shares may requires companies to do audit. Australian Corporations Act Proprietary company having not more than 50 non-employee shareholders Minimum 1 director ordinarily residing in Australia Public company atleast 3 directors minimum 2 should reside in Australia Directors minimum age 18 years Company other than proprietary company must have a CS ordinarily residing in Australia CS has the responsibility to notify ASIC Changes in directors and CS Changes to register of members
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Changes of holding company.
Short notes on Companies Bill 2012. Companies Bill, 2012 was passed by the Lok Sabha on 18th December, 2012. Highlights are given below: Concept of One Person Company and Small companies introduced. These companies have been subjected to less stringent regulatory framework. Small companies mean companies with paid-up share capital upto Rs. 50 Lakhs or turnover upto Rs. 2 Crores. Maximum number of members in case of private companies enhanced to 200 (from 50). Private companies to also require a certificate of commencement of business by the RoC. Maximum number of directors in a company restricted to 15. Companies permitted to appoint more than 15 directors after taking approval of the shareholders by way of special resolution. Prescribed class of companies to have atleast one woman director. All listed companies are required to appoint atleast 1/3rd of the total number of directors as independent directors. Prescribed class of companies are required to have the following whole-time key managerial personnel, (i) Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director; and (ii) Chief Financial Officer and (iii) Company Secretary. Independent Directors have been prohibited from getting Stock options but may get sitting fees and profit

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linked commission subject to limits specified in the Bill / Rules. Secretarial Standards on Board and General Meetings (issued by ICSI and approved by Central Govt.) to be made mandatory. Companies having minimum net worth of Rs. 500 crores or turnover of Rs.1000 crores or net profit of Rs. 5 crores to mandatorily constitute a CSR Committee (comprising of 3 or more directors with atleast one independent director). Such companies to endeavour to spend at least 2% of average net profits of the 3 immediately preceding financial years on CSR activities. Companies to specify in their Directo rs Report reasons for not spending the said amount. Financial statements to include Balance Sheet, P/L Account, Cash Flow Statement and Statement of changes in equity. Companies permitted to make investment only through maximum two layers of investment companies. Central Govt. empowered to prescribe maximum permissible layers of subsidiaries for prescribed class of companies.
DRAFTING, APPEARANCES AND PLEADINGS

1. Short notes on Testimonium clause, Indenture, Deed Escrow and Habendum. Testimonium Clause This clause signifies that the parties to the document have signed the deed. It marks the close of the deed and is an essential part of the deed. In usual form, it states In witness whereof, parties hereto have hereunto set their respective hands and s eals the date and year first above written. Indentures They are those deeds in which there are two or more parties. It is an old concept where they were written in duplicate upon one piece of parchment and two parts were served so as to leave an indented edge. Indentures are so called as at one time they were indented or cut with uneven edge at the top. Deed escrow A deed signed by one party is delivered to another as an escrow for it is not a perfect deed. It is only a mere writing unless signed by all parties and dated when the last party signs it. Habendum Habendum states the interest the purchaser is to take in the property if the property conveyed is unencumbered reference thereto should be made in the habendum. It starts with the words The have and to hold. It limits the estate mentioned in the parcels. The transferee is mentioned again in the habendum for whose use the estate has been conveyed. Distinguish between drafting and conveyancing. Both the terms drafting and conveyancing convey the same meaning, although these terms are not interchangeable. Conveyancing gives more stress on documentation much concerned with transfer of property from one person to another whereas drafting gives a general meaning relating to preparation of documents. Documents may include loan agreement, deed of mortgage, bill of lading, summons, notices etc. Different statutes provide different definition for documents.
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3. Short notes on the recital clause. Recitals - short story of the property upto its vesting into the last transferor Recitals are of two types 1. Narrative recitals relating to past history of the property transferred 2. Introductory recitals explaining the motive and intention behind execution of a deed Recitals should be inserted with great caution because they precede the operative part and as a matter of fact contain the explanation to the operative part of the deed. Recitals carry evidentiary importance in the deed it is an evidence against the parties to the instrument and those claiming under and it may operate as estoppel Ram Charan vs. Girija Nandini What do you mean by endorsements and supplemental deeds? Endorsement means to write on the back / face of a document wherein it is necessary in relation to the contents of that document. The term endorsement is used with reference to negotiable instruments like cheques, bill of exchange etc. It is used to give legal significance to a particular document with reference to new facts to be added to it. Supplemental Deed is a document which is entered between the parties on the same subject on which there is a prior document existing and operative for adding new facts to the existing document. Thus supplemental deed is executed to give effect to the new facts in the deed. When a deed or document is required to be supplemented by new facts in pursuance of or in relation to a prior deed this can be affected by either endorsement on the prior deed when short writing would be sufficient, or by executing a separate deed know as supplemental deed. Distinguish between deed poll and deed pool. Deed Pool a deed made between two or more parties where as many copies are made as there are parties, so that each party is in possession of a copy. Deed Poll a deed made and executed by a single party for example POA. Draft an agreement for sale of house property. THIS AGREEMENT OF SALE executed on the 10th day of April, 2012, between Mr. Ram Kapoor son of Mr. Atmaram Kapoor, residing at 41 Chowringhee Road, Kolkata 700 071, hereinafter called the vendor of the one part and Ms. Priya Sharma, daughter of Mr. Shivraj Sharma, residing at 4 Lovelock Place, Kolkata 700 019, hereinafter called the purchaser of the other part, (The expressions "vendor" and "purchaser" wherever they occur in these presents, shall unless the context otherwise admits, also mean and include their respective heirs, executors, administrators, legal representatives and assigns). WHEREAS the vendor is the sole and absolute owner of the property more fully set out in the Schedule hereunder: AND WHEREAS it is agreed that the vendor shall sell and the purchaser shall purchase the said property for a sum of Rs. 50,00,000/- (Rupees fifty lakhs only) free of all encumbrances. NOW THIS AGREEMENT OF SALE WITNESSETH AS UNDER: (a) The price of the property more fully set out in the Schedule hereunder is fixed at Rs. 50,00,000/- (Rupees fifty lakhs only) free of all encumbrances. (b) The purchaser has paid to the vendor this day, a sum of Rs. 10,00,000/- (Rupees ten lakhs only) by way of earnest money for the due performance of the agreement, the receipt whereof the vendor doth hereby admit and acknowledge.
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(c) (d) (e) The time for performance of the agreement shall be three months from the date hereof and it is agreed that the time fixed herein for performance shall be of the essence of this agreement. The purchaser shall pay to the vendor the balance sale price of Rs. 40,00,000/- (Rupees forty lakhs only) before registration of the conveyance deed. The vendor agrees that he will deliver vacant possession of the property to the purchaser before registration of the conveyance deed. Or alternatively, the vendor agrees that he will put the purchaser in constructive possession of the property by causing the tenants in occupation of the property to attorn their tenancy to the purchaser. The vendor shall execute the conveyance deed in favour of the purchaser or his nominee as the purchaser may require. The vendor shall hand over all the title deeds of the property to the purchaser or an advocate nominated by him within ten days from the date of this agreement for scrutiny of title and the opinion of the vendor's advocate regarding title to the property shall be final and conclusive. The purchaser shall duly intimate the vendor about the approval of title within thirty days after delivering the title deeds to him or to his advocate. If the vendor's title to the property is not approved by the purchaser, the vendor shall refund the purchaser the earnest money received by him under the agreement and on failure of the vendor to refund the same within thirty days, he shall be liable to repay the same with interest thereon at the rate of 15% per annum. If the purchaser commits a breach of the agreement, he shall forfeit the earnest amount of Rs. 10,00,000/(Rupees ten lakhs only) paid by him to the vendor. If the vendor commits a breach of the agreement, the vendor shall not only refund to the purchaser the sum of Rs. 10,00,000/- (Rupees ten lakhs only) received by him as earnest money, but shall also pay to the purchaser an equal sum by way of liquidated damages. Nothing contained in paras (i) and (j) above shall prejudice the rights of the parties hereto specific performance of this agreement of sale/purchase.
(f) (g)
(h)
(i) (j)
(k)
IN WITNESS WHEREOF the vendor and the purchaser have set their respective hands to the agreement of sale/purchase on the day, month and the year above written, in the presence of the following witnesses: Witnesses: (1) Name: Father's Name: Address: Signature: (2) Name: Father's Name: Address: Signature: Schedule of Property All that one Flat being No. 5/B, containing an area of 1258 square feet more or less on the fifth floor of the building commonly known as Poonam being premises No. 5/2, Russel Street, P.S. - Park Street, in the town of Kolkata. Ms. Priya Sharma Purchaser Mr. Ram Kapoor Vendor

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7. What do you mean by del credere agent ? Del Credere Agency is a special type of agency which combines agency with guarantee. A Del Credere Agent is one who for an extra remuneration undertakes the liability to guarantee the due performance of the contract by the buyer. He therefore gives additional security to the seller, but he does not shift the responsibility of payment from the buyer to the seller. Draft an agreement for entering into a collaboration. Agreement executed this 20th day of June, 2012 between M/s. Incos. Limited a Foreign Company incorporated in the United Kingdom and having its registered office at 43, Birmingham Place, UK, hereinafter called the U.K. Company of the ONE PART. AND M/s. Prem Works Limited, a company incorporated in India and having its registered office at 43, V.I.P Road, Kolkata 700 056, hereinafter called the Indian company of the OTHER PART. WHEREAS the Indian company has been incorporated having for its object the manufacture and production of steel rolls; WHEREAS the Indian company has already constructed factory buildings, installed plant and machinery and commenced manufacture and production of steel rolls; WHEREAS the Indian company with a view to improve still further the quality of the commodities manufactured and to increase production are desirous of procuring the latest technique and know-how relates to the manufacture of the above said commodities; WHEREAS the Indian company therefore approached the U.K. company who have considerable experience in the line of manufacture engaged in by the Indian company, and requested them to extend to them necessary technical assistance in that behalf; AND WHEREAS the U.K. company has agreed to extend technical assistance and to furnish to the Indian company for improvement of their business the requisite know-how in the form of designs, plans, engineering drawings, technical advice and also to supply technicians to advice for improvement of the existing factories, machineries and plant and also to provide to the Indian personnel necessary technical training to enable them to successfully handle and exploit the technical know-how to be imparted to the Indian company subject to the terms and conditions set out hereunder: NOW THIS AGREEMENT WITNESSES AS FOLLOWS: (a) In consideration of the remuneration paid by the Indian company to the U.K. company as described hereinafter the U.K. company shall supply to the Indian company: technical advice and know-how for the purpose of improving or adding to the existing factories and installing additional plant and machineries if necessary for the manufacture of steel rolls; further the necessary plans, factory-design and layouts, charts and drawings, documentation and other forms of technical know-how for the said purpose; render advice in the matter of purchase of the further plant and machinery suitable and necessary for the factory; lend the services of their technicians to assist the Indian company in carrying out the improvement to the factories and for installing additional plants and machinery; provide technicians from their own staff to attend at the Indian company's factory in India whenever necessary; impart technical training to selected Indian personnel at their works in England or in their associated companies, to enable them to operate the machinery and plant to be installed and to exploit the imported technical know-how to the best advantage; advise the Indian company, promptly and to the best of their ability, in connection with any technical or manufacturing problems or difficulties which may be referred to it by the Indian company during the continuance of this agreement.
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(b) For technical know-how and data supplied by the U.K. company to the Indian company as above, the Indian company shall make a lump sum payment of Rs. 50 lakhs to the U.K. company phased as follows: one-third on approval of the agreement by the Central Government; one-third, on the U.K. company supplying the Indian company necessary charts, plans, engineering drawings, documentation and other technical data and know-how, which shall be done within 15 days from the date of approval, of this agreement by the Central Government; the balance one-third in three equal annual instalments thereafter after commencement of production.
(c) This Agreement shall be in force for a period of 5 years at the first instance, subject to extension for a further period of 5 years by mutual agreement and subject to approval by the Central Government. (d) The Indian company may but not bound to use foreign brand names on their products for internal sale or on products to be exported. (e) There shall be no restriction on the Indian company exporting their products to foreign countries. (f) The Indian company shall not have the right to pledge, mortgage or assign or to sub-licence the technical knowhow, data, engineering designs, layouts etc. to other parties, without the consent in writing of the U.K. company. (g) There shall be no restraint on the Indian company having their own arrangements for procurement of raw materials, purchase of spares and components and for pricing their products and the sale thereof. (h) Technicians who may be deputed by the U.K. company to the Indian company to advise and assist the Indian company under this agreement shall be paid their salary, travelling expenses and boarding and lodging by the Indian company. (i) The Indian company shall likewise bear all the expenses of the persons sent by them to the U.K. company for training in their works under clause (a) supra. (j) The parties hereto mutually agree that they will each inform the other of any new development in design or methods of manufacture which they respectively may discover during the continuance of this Agreement in so far as such new developments are applicable to the products manufactured by the Indian company. (k) The Indian company shall maintain the utmost secrecy in connection with any technical data supplied by the U.K. company under this Agreement, and in particular shall keep all data concerned with the manufacturing processes under lock and key. (l) It is agreed that the payment made to the U.K. company shall include the compensation for use of the patent rights for the period of its duration and that the Indian company shall have the right for the period of its duration and that the Indian company shall have the right to manufacture their products even after the expiry of this Agreement. (m) The Indian company shall not during the continuance of the Agreement refer any technical or manufacturing problems or difficulties to any one other than the U.K. company but shall regard and use the U.K. company as its sole technical consultant. (n) On the expiry of the period prescribed herein or of extended period provided in clause (c) (supra) or upon the termination of this agreement for any reason the Indian company shall return to the U.K. company all copies of information data or material sent to it by the U.K. company under this Agreement and then in its possession and shall expressly refrain from communicating any such information, technical data or material received by it hereunder to any person, firm or company whatsoever. IN WITNESS WHEREOF the parties hereto have signed this Agreement this 20th day of June, 2012 in the presence of the following:

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Witnesses: (1) Name: Father's Name: Address: Signature: (2) Name: Father's Name: Address: 9. Signature: Draft an arbitration agreement to refer dispute to two arbitrators. On behalf of Prem Works Limited On behalf of Incos. Limited
This agreement made and entered into between Mr. Amit Agarwal and Mr. Shiv Seksaria on this 23rd day of February, 2012 witnesseth as follows: WHEREAS differences and disputes have arisen between the parties above-mentioned regarding the matter of export of machines and the parties could not mutually settle the matter. Now the parties agree that the matter as under be referred to arbitration to obtain an award: For the purpose of final determination of the dispute, the matter will be referred to Mr. A K Guha nominated by one party and Mr. Shyam Sundar Pansari nominated by the other party as arbitrators and their award shall be final and binding on both the parties. If differences should arise between the said two arbitrators on the questions referred to them, the said arbitrators shall select an umpire and the award to be given by the umpire shall be final and both the parties hereby agree that the award so given by the umpire or arbitrators shall be binding on both the parties. A reasonable time-limit may be fixed after consulting the arbitrators for the grant of the award by them and umpire if appointed and the said time may be extended in consultation with the arbitrators or umpire if need be. The provisions of the Arbitration and Conciliation Act, 1996 so far as applicable and as are not inconsistent or repugnant to the purposes of this reference shall apply to this reference to arbitration. Both the parties agree that they would co-operate and lead evidence etc. with the arbitrators so appointed as expeditiously as possible and it is an express condition of this agreement, that if any of the parties non-co-operates or is absent at the reference, the arbitrators would be at liberty to proceed with the reference ex parte. The parties hereto agree that this reference to arbitration would not be revoked either by death of either party or any other cause. If the arbitrators or anyone of them as chosen under this agreement become incapacitated either by death or sickness or other disability, the parties retain the right of nominating substitutes and no fresh agreement therefor would be necessary. It is an express stipulation that any award passed by the said arbitrators shall be binding on the parties, their heirs, executors and legal representatives. Having agreed to the above by both the parties, the said parties affix their signatures to this agreement this 23rd day of February, 2012 at Kolkata.

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10. Signature I Draft a Deed of Guarantee for the Performance of a Contract. Signature II
THIS DEED OF GUARANTEE made this 29th day of September, 2011 between Shri Avinash Aggarwal, son of Shri Mahesh Aggarwal, resident of 36 Rafi Ahmad Kidwai Road, Kolkata 700 001, (hereinafter called "the Guarantor"), which expression shall, unless repugnant to the context, include his heirs, legal representatives, assigns etc. of the one part and Shri Sandeep Gattani, son of Gopal Gattani, resident of 41, Lake Town, Block B, Kolkata 700 056, (hereinafter called "the Principal), which expression shall, unless repugnant to the context, include his heirs, legal representatives, assigns etc., of the other part. WHEREAS BY AN AGREEMENT DATED 13th day of August, 2011, made between Shri Ravi Varma, son of Shri Vikash Varma, resident of 12, Belgachia Main Road, Kolkata 700 058, therein referred to as "the Contractor", of the one part and the Shri Sandeep Gattani herein referred to as "the Principal", of the other part, it was inter alia agreed by and between the parties as follows: (a) The Contractor will construct a Building on the main V.I.P. Road, on the land selected by the Principal; (b) The Contractor will be paid a sum of Rs. 5,00,000/- plus taxes. AND WHEREAS the said work was entrusted to the Contractor upon the Guarantor having agreed with the Principal as to its guarantee of performance by the Contractor and to indemnify and keep indemnified the Principal against all losses, damages, costs, charges and expenses arising out of performance or non-performance thereof. Now it is agreed and declared by and between the parties as follows: The Guarantor will see that the Contractor (unless relieved from the performance by operation of any clause of the contract or by statute or by virtue of the decision of any tribunal or court of competent jurisdiction, shall carry out, execute and perform the contract without any exception or reservation and in case he commits any breach thereof, the Guarantor will indemnify and keep indemnified the Principal and his estate against all losses, damages, costs, expenses or otherwise which he may suffer or otherwise incur by reason of any act, negligence, default or error in judgement on the part of the Contractor in performing or non-performing the contract. In case of any dispute or difference as regards the quantum of such losses, damages, costs, charges or expenses, the same shall be decided by reference to arbitration of one architect or engineer if the parties so agree or otherwise to two architects or engineers, one to be appointed by each, whose decision shall be final and binding on all parties. IN WITNESS WHEREOF, the parties hereto have hereunto set and subscribed their respective hands and seals the day, month and the year first above-written. Signed, sealed and delivered in the presence of : 1. 2. Guarantor Principal

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11. Distinguish between lease and licence. In a lease there is a transfer of interest in the premises whereas in case of licence there is no transfer of interest In Khalil Ahmed Bashir Ahmed vs. Tufelhussein Samasbhai Sarangpurwala the SC held that in order to determine whether a document created a licence or a lease the real test is to ascertain the interest of the parties. If the document creates an interest in the property entitling the transferee to enjoyment, then it is a lease. But if it permits another to make use of the property without exclusive possession then it is a licence. Licence It is a personal non-heritable right Creates no interest in the licensee Non-assignable Always permissible and normally revocable Not Exclusive user Denial of grantors title does not result in forfeiture. Remedy of breach is damages No notice necessary for termination Instrument granting right does not require registration Does not entitle licencee to sue strangers in his own name Licencee not liable for rents Licencee not liable for public nuisance Explain the components of a leave and licence agreement. Lease It is a heritable right in rem. Interest is created in the lessee Usually assignable Permissive but not normally revocable Exclusive user Denial of lessors title results in forfeiture Specifically enforceable Notice necessary for termination Instrument granting right requires registration Lessee can sue in his own name Liable Liable
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Leave and License Agreement are alternatives to lease deeds or tenancy agreements. In a Leave and License Agreement the juridical possession of the premises is deemed to remain with the licensor and the licensee is said to be in constructive possession of the said premises. Draft an agreement for sale of immoveable property. THIS AGREEMENT OF SALE executed on the 15th day of December, 2010 between Greenacre Holdings Limited, a company incorporated within the meaning of the Companies Act, 1956 and having its registered office at 7/1 Ballygunge Park, Kolkata 700 019, (hereinafter called Vendor of the one part) and Divya Management Limited, a company incorporated within the meaning of the Companies Act, 1956 and having its registered office at 21 Prafulla Sarkar Street, Kolkata 700 027 (hereinafter called the Purchaser of the other part) (The expression "Vendor" and "Purchaser" wherever they occur in these presents, shall also mean and include their respective heirs, executors, administrator, legal representatives and assigns). WHEREAS the vendor is the sole and absolute owner of the property more fully set out in the Schedule hereunder. AND WHEREAS it is agreed that the vendor shall sell and the purchaser shall purchase the said property for the sum of Rs. 10,00,00,000 (Rupees Ten Crores only) free of all encumbrances. NOW THIS AGREEMENT OF SALE WITNESSES AS FOLLOWS: 1. The price of the property more fully set out in the Schedule is fixed at Rs. 10,00,00,000 (Rupees Ten Crores only) free of all encumbrances.

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2. The purchaser has paid to the vendor this day the sum of Rs. 2,00,00,000 (Rupees Two Crores only) by way of earnest money for the due performance of the agreement, the receipt of which the vendor doth hereby admit and acknowledge. 3. The time for performance of the agreement shall be three months from this date, and it is agreed that time fixed herein for performance shall be the essence of this contract. 4. The purchaser shall pay to the vendor the balance sale price of Rs. 8,00,00,000 (Rupees Eight Crores only) before registration of the sale deed. 5. The vendor agrees that he will deliver vacant possession of the property to the purchaser before registration of the sale deed. 6. The vendor shall execute the sale deed in favour of the purchaser or his nominee or nominees as purchaser may require. 7. The vendor shall hand over all the title deeds of the property to the purchaser or his advocate nominated by him within 15 days from the date of this Agreement for scrutiny of title and the opinion of the vendor's Advocate regarding title of the property shall be final and conclusive. The purchaser shall duly intimate the vendor about the approval of the title within 10 days after delivering the title deeds to him or his Advocate. 8. If the vendor's title to the property is not approved by the purchaser, the vendor shall refund to the purchaser the earnest money received by him under this Agreement and on failure of the vendor to refund the earnest money within 15 days he shall be liable to repay the same with interest thereon at 15% per annum. 9. If the purchaser commits a breach of the Agreement, he shall forfeit the earnest amount of Rs. 2,00,00,000 (Rupees Two Crores only) paid by him to the vendor. 10. If the vendor commits a breach of the Agreement, the vendor shall not only refund to the purchaser the sum of Rs. 2,00,00,000 (Rupees Two Crores only) received by him as earnest money, but shall also pay to the purchaser an equal sum by way of liquidated damages. 11. Nothing contained in paras 9 and 10 supra shall prejudice the rights of the parties hereto, to specific performance of this Agreement of sale. IN WITNESS WHEREOF the vendor and the purchaser have set their hands to the Agreement of sale the 15th day of December, 2010 in the presence of the witnesses: Witness Witness Vendor Purchaser
Schedule of Property ALL THAT piece of parcel of freehold land or ground containing by admeasuring 3916.67 square meters or thereabouts (being a portion of the Sauparibaug Estate Scheme No. XXXI formerly of the Trustees for the Improvement of the City of Bombay and subsequently of the Municipal Corporation of Greater Bombay) TOGETHER WITH the buildings erections and structures erected and standing thereon situate at Dr. Earnest Bourges Road at its junction with Parmar Guruji Marg in the City and Island and Registration Sub-Dristict of Bombay forming part of Cadastral Survey No 2158/74 of Parel - Sewri Division and assessed by the Assessor and Collector of Municipal Rates and Taxes under F Ward No. 619 (1-4) Street Nos. 33B, 33C and 33 Chamerbagwalla Road and bounded as follows, that is to say: On or towards the North by Parmer Guruji Marg aforesaid, On or towards the East by a portion of the property bearing C.S. No. 2158/74 of the Vendors, On or towards the South by portion of the property of Prakash Chandra Mangaldas Verma bearing C.S. No.215/74 of Parel - Sewri Division and On or towards the West by Dr. Earnest Bourges Road aforesaid.

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14. Draft an agreement for sale of business and assignment of goodwill. THIS INDENTURE made the 15th day of December, 2010 between Greenacre Holdings Limited, a company incorporated within the meaning of the Companies Act, 1956 and having its registered office at 7/1 Ballygunge Park, Kolkata 700 019, (hereinafter called Vendor of the one part) and Divya Management Limited, a company incorporated within the meaning of the Companies Act, 1956 and having its registered office at 21 Prafulla Sarkar Street, Kolkata 700 027 (hereinafter called the Purchaser of the other part) (The expression "Vendor" and "Purchaser" wherever they occur in these presents, shall also mean and include their respective heirs, executors, administrator, legal representatives and assigns). WHEREAS the said Vendor has been carrying on the trade and business of selling garments and other textile articles, at premises 7/1 Ballygunge Park, Kolkata 700 019 under the name and style of Shyam Garments. AND WHEREAS the said Vendor has contracted with the said Purchaser for the sale to him of all his stock-in-trade and other assets and goodwill of the said trade of and the business in entirety as a going concern together with all book debts and other debts and all rights and benefits of all pending contracts, orders, securities, etc., full particulars whereof are contained in the books of the said business and all money due and payable to the said Vendor on account therefor whether adjusted or unadjusted subject however to all contracts, orders and engagements which are still to be executed or for which the said Vendor is otherwise liable; at and for the sum of Rs. 50,00,000 (Rupees Fifty lakhs only) upon the terms hereinafter mentioned; AND WHEREAS the said Vendor has delivered to the said Purchaser the books of account and other books relating to the said business containing full particulars of the debts, respectively due and owing to and from the said Vendor and also the particulars of the contracts and engagements to which he is liable in respect of the said business. NOW THIS DEED OF SALE WITNESSES that in pursuance of the said agreement and in consideration of the sum of Rs. 50,00,000 (Rupees Fifty lakhs only) paid by the said Purchaser to the said Vendor (the receipt whereof the said Vendor hereby admits and acknowleges), and also in consideration of the covenants and conditions thereunder contained to be observed and performed on the part of the said Purchaser the said Vendor do hereby and hereunder grant, convey, sell, transfer, assign and assure unto and to the use of the said Purchaser all that the trade or business carried under the name and style of Shyam Garments at premises 7/1 Ballygunge Park, Kolkata 700 019 with ALL beneficial interest and goodwill of the said Vendor, in the said trade and business of, etc., so carried on by him as aforesaid, and also all the books and other debts now due and owing to him on account of the said trade and the business and all securities for the same, and also all contracts and engagements and benefits and advantages thereof which have been entered into with the said Vendor and also all the stock-in-trade goods, fixtures, articles and things which, at the date of this deed, belong to the said Vendor on account of the said trade and business, and all the rights, title and interest of the said Vendor to and in the said premises; TO HAVE AND TO HOLD the same to the said Purchaser absolutely. AND THAT THE SAID Vendor does hereby covenant with the said Purchaser that he, the said Vendor, will not at any time hereafter, either by himself or in collaboration with any other person or persons, or as a partner or as a director of any limited company carry on the said trade and business of selling garments and other textile articles, within a radius of 100 miles of the said premises. AND that the amount and particulars of the debts respectively due and owing to and from the said Vendor on account of the said trade and business and the particulars of the contracts and engagements to which he is liable with respect to the said trade and business, are correctly stated in the books of account and other books delivered by the said Vendor to the said Purchaser. AND further that the said Vendor will pay or cause to be paid all and every sum to the said trade and business in excess of the amount or amounts which by the said books appear to be so due and owing.

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AND furthermore that the said Vendor has good right, full power, absolute authority and title to grant, convey, sell, transfer, assign and assure the trade or business of selling garments and other textile articles unto and to the use of the said Purchaser in the manner hereunder indicated together with the benefit of the tenancy according to the nature and tenure of the contract. AND THIS INDENTURE ALSO WITNESSES that in pursuance of the said agreement in this behalf and in consideration of the premises, the said Purchaser do hereby agree with the said Vendor that he, the said Purchaser, shall and will from time to time and at all times hereafter execute and perform all outstanding contracts and orders and engagements and/or otherwise save harmless, indemnify and keep indemnified the said Vendor and his estate and effects against all losses, claims, demands, costs, charges and expenses as against the several sums of money which by the said books appear to be due and owing from the said Vendor in respect or the said trade and business, and also from and against the contracts and engagements to which by the said books the said Vendor appears to be now liable and or performance or non-performance thereof. AND THIS INDENTURE ALSO WITNESSES that the said Vendor do hereby irrevocably nominate, appoint and constitute the said Purchaser as his attorney for him and in his name to do, execute and perform all acts, deeds, and things as shall be necessary or requisite to carry on the said business as his successor and for that purpose to represent him before all appropriate authorities and in all courts of law and to sue for, recover, realise and to give good valid discharges for all moneys due and payable to him on account of or in connection with the said trade or business hereby assigned and appropriate the same for his use and purposes. IT IS FURTHER AGREED that the names of the parties hereto shall, unless inconsistent with the context, include as well the heirs, administrators or assigns of the respective parties as the parties themselves. IN WITNESS WHEREOF the Vendor and the Purchaser have set their hands to the Agreement of sale the 15th day of December, 2010 in the presence of the witnesses: Signed, sealed and delivered Greenacre Holdings Limited Divya Management Limited 15. Draft a memorandum of mortgage by deposit of title deeds. Memorandum that this 13th day of March, 2010, Mr. Anand Sharma, son of Mr. Vijay Sharma, resident of 43 Chowringhee Road, Kolkata 700 071 (hereinafter referred to as the mortgagor), as benef icial owner, has deposited with Mr. Abhishek Sanganeria, son of Mr. Deen Dayal Sanganeria, resident of 33/1 NS Road, Kolkata 700 001, (hereinafter referred to as the mortgagee), the original title deeds comprised in the Schedule A hereto, relating to the premises belonging to the said mortgagor and situated at Faridabad (more clearly described in Schedule B hereto) with intent to create a charge thereon for securing repayment to the said mortgagee of the sum of Rs. 10,00,000 (Rupees Ten lakhs only) this day lent and advanced by the said mortgagee to the said mortgagor on demand with interest for the same from this date at the rate of 12% per annum. The said mortgagor do hereby undertake as and when required by the said mortgagee to execute and register at the costs of the said mortgagor a legal mortgage in such form and containing such covenants and provisions as he may reasonably require. Dated this 13th day of March, 2010 Mortgagor Mortgagee

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SCHEDULE-I DESCRIPTION OF THE TITLE DEEDS DEPOSITED a) Indenture of Lease dated 10/01/1995 executed between Rajdhani Unnayan Kartripakkha and Mr. Anand Sharma. b) Photocopy of final survey report issued by RAJUK dated 06/11/1994 c) Photocopy of the proposal sheet of Mutation Case No. 8089/03 dated 28/09/2003 and original copy of the DCR. d) Ground Rent Payment Receipt No. G 378910. SCHEDULE II SCHEDULE OF THE MORTGAGED PROPERTY All that piece and parcel of land measuring 5 Katha situated within District Dhaka, P. S. Uttara, Sub-Registry Office Gulshan, Mouza Faidabad being Plot No. 51 (fifty one), Road-Lake Drive, Sector No. 7 (seven) of the layout plan prepared by the Rajdhani Unnayan Kartripakkha alongwith all constructions and structures constructed or to be constructed thereon with all other rights, interests, title, easements etc. attached or appertaining to the land. Short note on English mortgage and mortgage by conditional sale. English mortgage The mortgagor binds himself to pay the money and transfers the property absolutely subject to the condition that the property will be retransferred on payment of the mortgage money. Mortgage by conditional sale The mortgage is with a condition that in the event of failure to pay money the transaction is treated as sale. On payment, the sale shall become void. Possession of the property shall remain with the mortgagee. Draft a deed for surrender of lease. THIS DEED OF SURRENDER OF LEASE executed on the 10th day of April, 2012, between Mr. Ram Kapoor son of Mr. Atmaram Kapoor, residing at 41 Chowringhee Road, Kolkata 700 071, hereinafter called the Lessor of the one part and Ms. Priya Sharma, daughter of Mr. Shivraj Sharma, residing at 4 Lovelock Place, Kolkata 700 019, hereinafter called the Lessee of the other part. WHEREAS by an Indenture dated 5th August, 2002 made between the parties hereto and registered before the SubRegistrar, Kolkata, it was witnessed that the said Lessor, did in consideration of the rent thereby and thereunder reserved and of the covenants and conditions to be observed and performed on the part of the said Lessee as therein contained granted and demised by way of lease the property fully mentioned and described in the schedule hereto for a term of 20 years. AND WHEREAS such lease is in full force and virtue and all rents and conditions reserved by and contained thereunder on the part of the Lessee to be paid, observed and performed by the said Lessee upto the date of these presents. AND WHEREAS the lessee was at all material times and is presently in possession of the property since the execution of the lease. AND WHEREAS for personal reasons and consideration, the said Lessee having desired to be relieved from any further payment of such rent and performance of the covenants and conditions approached the said Lessor for a surrender of the said lease and delivery of the possession of the property. AND WHEREAS the said Lessor has agreed to accept from the said Lessee a surrender of the aforesaid lease of the said premises.
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NOW THE DEED WITNESSES that in pursuance of the said agreement and in consideration of a sum of Rs. 5,00,000 (Rupees Five lakhs only) being the token consideration paid by the said Lessor to Lessee, the said Lessee as beneficial user of the said property do hereby give up and relinquish all his leasehold estate and interest in and surrender and deliver possession to the said Lessor of the premises comprised in and by the said Deed of Lease. TO HOLD the same as before execution of the lease by the Lessor. TO HOLD THE INTENT and object that the same shall stand determined to all intents and purposes and that the residue of the said term of 10 years created by the said Deed of Lease, and all other rights and interests of the said Lessee in the said premises under or by virtue of the said Deed shall stand extinguished and merged in the reversion freehold and inheritance of the premises with immediate effect as if the said lease was never granted nor intended. AND THIS INDENTURE further witnesses that in consideration of the surrender of the lease which is accepted by the Lessor, the said Lessor do hereby release and discharge the Lessee, his successor and estate from all claims, demands and liabilities on account of future rent and or arising out of performance or non-performance or hereinbefore recited Indenture of Lease. IN WITNESS WHEREOF the parties above named have put their signatures the day and year above. Signed, sealed and delivered Lessee Lessor Schedule of Property All that one Flat being No. 5/B, containing an area of 1258 square feet more or less on the fifth floor of the building commonly known as Poonam being premises No. 5/2, Russel Street, P.S. - Park Street, in the town of Kolkata. Draft a deed for lease of plant and machinery. THIS DEED OF LEASE made this 29th day of September, 2011 between Shri Avinash Aggarwal, son of Shri Mahesh Aggarwal, resident of 36 Rafi Ahmad Kidwai Road, Kolkata 700 001, (hereinafter called "the Lessor"), which expression shall, unless repugnant to the context, include his heirs, legal representatives, assigns etc. of the one part and Shri Sandeep Gattani, son of Gopal Gattani, resident of 41, Lake Town, Block B, Kolkata 700 056, (hereinafter called "the Lessee), which expression shall, unless repugnant to the context, include his heirs, leg al representatives, assigns etc., of the other part. THIS DEED OF LEASE FOR PLANT AND MACHINERY WITNESSES AS FOLLOWS: LEASE: The Lessor hereby agrees to lease to Lessee and the Lessee hereby agrees to take on Lease from Lessor, subject to the terms of this Lease Agreement (hereinafter referred to as the "AGREEMENT"), plant and machineries (hereinafter referred to as the "EQUIPMENT") described in the Schedule annexed hereto. PERIOD: The Lessee shall take the equipment for its use on lease for the term to commence from the date of payment by the Lessor to the supplier and to terminate at the end of 36 months from the date of such commencement. The period of lease may be extended for such period and on such terms and conditions as may be agreed upon by and between the parties hereto. (Subject to the concurrence of Lessor's Bankers). RENTAL: In consideration of the above, the Lessee shall pay to the Lessor, Lease rent at the rate of Rs. 25,000/- per month, for the entire period of the Lease. Such rent shall be payable by the Lessee to the Lessor's [designated Bankers Standard Chartered Bank for and on behalf of the Lessor] within seven days of the same becoming due and payable. The lease rent shall be due and payable on the first day of each calendar month, commencing from the calendar month in which the period of lease commences, provided that the lease rent for the calendar month in which the period of lease commences shall become payable on the commencement of the lease period. Lessee will pay on demand as late charges, an amount equal to two per cent (2%) per month of each instalment of lease rent or part thereof that remains unpaid for a period of more than seven (7) days. It is expressly understood by the parties hereto that time shall be the
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essence of this Agreement, in so far as it relates to the obligations or commitments of the lessee. WARRANTIES: The Lessee has made the selection of the Equipment based upon its own judgement prior to the purchase thereof by the Lessor and expressly declares that it has not relied upon any statements or representations made by Lessor, makes no express or implied warranties including those of merchantability or fitness for particular use of the Equipment and hereby disclaims the same. The Lessor shall not be responsible for any repairs, service or defects in the Equipment or the operation thereof. However, the Lessor agrees that Lessee shall be entitled to the benefits of the manufacturer's warranties in respect of the Equipment. TITLE, IDENTIFICATION, OWNERSHIP OF EQUIPMENT: No right, title or interest in the Equipment shall pass to Lessee by virtue of these presents. Conditioned upon Lessee's compliance with and fulfilment of the term of conditions of this Agreement, the Lessee shall have the right to have and retain possession and use of the Equipment for the full term of lease including the extended term if agreed to. Lessor may require plates or makings to be affixed to or placed on the Equipment, indicating Lessor's interests therein (and the interests of its Bankers). Lessor and Lessee hereby confirm that their intent is that the Equipment shall at all times remain the property of the Lessor. Lessee also agrees and undertakes not to sell, assign, sublet, pledge, hypothecate or otherwise encumber or suffer a lien upon or against any interest in this Agreement or the Equipment, or to remove except for the purposes of repairs with prior intimation to the Lessor the Equipment from the factory or office site where originally put to use or allow any third person to use the equipment without the prior consent of the Lessor in writing. The equipment hereunder leased, will be delivered by the manufacturers/ suppliers to the location specified by Lessee. Lessor shall not be responsible for any damage incurred to the Equipment during delivery. Lessor will request the manufacturers/suppliers to effect delivery on or before the date of commencement of the rentable, but if for whatever reasons, delivery is not affected by the manufacturers/suppliers by the date, lessor shall not be liable for any loss suffered by the Lessee thereby. Lease rentals shall be deemed to commence from the date of disbursement for the actual purchase made with the consent of the lessee. INDEMNITY: Lessee agrees to comply with all laws, regulations and orders relating to the possession, operation, and use of the Equipment and assumes all risks and liabilities arising from or pertaining to the possession, operation or use of the Equipment. Lessee does hereby agree to indemnify and keep indemnified and hold safe and harmless the Lessor from and covenants and undertakes to defend Lessor against any and all claims, costs, expenses, damages and liabilities whether civil or criminal, of any nature whatsoever, arising from or pertaining to the use, possession, operation or transportation of the Equipment. Any fees, taxes or other lawful charges paid by Lessor upon failure of Lessee to make such payments, shall become immediately due from Lessee to make such payments, shall become immediately due from Lessee to Lessor. Lessee further covenants and undertakes to indemnify and keep indemnified the Lessor against loss of Equipment by seizure by any person other than the Lessor for any reason whatsoever, or resulting from any form of legal process initiated by any person other than the Lessor, provided that such indemnity shall not cover such loss as arises out of any neglect or default on the part of the Lessor. Lessee further agrees to indemnify and keep indemnified the lessor against all risks and liabilities whether civil or criminal, arising from the possession, use, operation or storage of the Equipment and for injuries or deaths of persons or damage to property arising from the above. USE, INSPECTION: Lessee will cause the Equipment to be operated in accordance with manufacturers' manuals or instructions, if any, and in so far as applicable by competent and duly qualified personnel only and in accordance with applicable Government regulations, if any, and for business purposes only. Lessor shall have the right from time to time during the normal business hours on any working day to enter upon Lessee's premises or elsewhere after prior notice for the purpose of confirming the existence, condition and proper maintenance of the Equipment. REPAIRS, LOSS AND DAMAGE: During the term of the Lease and any renewal thereof, Lessee, at its own cost and expenses will keep all Equipments in good repair, condition and working order and shall furnish all parts, mechanisms, devices and servicing required thereof. All such parts, mechanisms and devices shall immediately be deemed part of the Equipment for all purposes hereof and shall become the property of the Lessor. In the event, any item of Equipment is lost, stolen or destroyed or damaged beyond repair for any reason, Lessee shall promptly pay the Lessor the

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instalments of lease rentals then remaining unpaid less insurance claims received by Lessor, in respect of insurance effected in pursuance of this Agreement, whereupon Lessor will transfer to Lessee, without recourse of warranty, all of Lessor's right, title and interest, if any, in such items. If, however, the insurance claim received by the Lessor exceeds the amount of unpaid rentals, the Lessor shall forthwith pay the difference to the Lessee. INSURANCE: Lessee shall obtain and maintain for the entire term of this Agreement at its own expense, comprehensive insurance against loss or destruction or damage to the Equipment including without limitations destruction or loss by fire, theft and such other risks or loss as are customarily insured against on the type of Equipment leased hereunder and by businesses in which Lessee is engaged and in such amounts as shall be satisfactory to lessor, provided however that the amount of insurance against loss or destruction or damage to the Equipment shall not be less than the greater of the full replacement value of the Equipment or the instalments of lease rentals then remaining unpaid hereunder plus any renewal options entered into pursuant to this Agreement. Each insurance policy will name Lessee as insured and note Lessor's (and its Bankers') interests as loss payee. Lessee shall furnish to Lessor a certificate of insurance or other satisfactory evidence that such insurance coverage is in effect. FURTHER ASSURANCE: 1. During the term of this Agreement, Lessee shall provide if so asked for by Lessor annual audited accounts of the Lessee. 2. Lessor hereby covenants that the Equipment is the absolute property of the Lessor and undertakes not to sell or transfer the same to any party except as to hypothecate, mortgage or create a charge in favour of a Bank or Financial Institution. The Lessor shall inform the Lessee of any such mortgage or hypothecation. 3. Lessee irrevocably agrees that the lease rentals will be increased by any incremental taxes, if any, whether Sales Tax or Excise Duties or any other related and consequential charges, if any, levied on this transaction now or hereafter as also by any increase in purchase price of the asset in the intervening period between placement of the order and its acceptance and the eventual delivery of the Equipment. 4. Lessee further irrevocably stipulates that at no time during the period of this lease agreement will the Lessee attempt to capitalise the leased asset on Lessee's balance sheet and Lessee and Lessor irrevocably agree that ownership of the Equipment during the tenure of the lease as specified herein and inclusive of any renewal options that the parties hereto may concur to indisputably vests with the Lessor. 5. The Lessor does hereby agree to indemnify and keep indemnified and hold safe and harmless the Lessee from and against any loss or damage caused to or suffered by the Lessee on account of any action taken by the Bank or Financial Institution for non-satisfaction or breach of the conditions of the loan granted by the Bankers to the Lessor. In case of Lessor's failure to make payment of principal and/or interest of the loan and on being called upon by the Bank or Financial Institution to pay to them all or any instalments of rental and the Lessee making such payment the Lessor agrees that such payment to the Bankers or Financial Institution made by the Lessee of the sums due under this Agreement, shall be considered as having been paid to the Lessor, towards the Lessor's dues hereunder. In that event, the Bank shall have no right of recourse to possession of Equipment so long as the Lessee meets with lease rental payments falling due under this Agreement. 6. The Lessor hereby agrees to inform its Bankers about this arrangement and obtain their confirmation to the same. SURRENDER: Upon expiration or earlier termination of the lease, Lessee shall deliver to the Lessor the said Equipment at such a place as Lessor may specify in good repairable condition and working order, normal wear and tear resulting from the proper use of the Equipment and damage by fire not caused by the negligence of the Lessee shall be excepted. EVENTS OF DEFAULT: An event of default shall occur hereunder if Lessee: 1. fails to pay any instalment of lease rentals or part thereof or other payment required hereunder when due and such failure continues for a period of 10 days after written notice is sent from Lessor; or 2. fails to perform or observe any other covenant condition or agreement to be performed or observed by it hereunder or breaches any representation or provision contained herein or in any other document furnished to the Lessor in connection herewith and such failure or breach continues unremedied for a period of ten days (if such breach is

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3. 4. capable of being remedied within ten days) after written notice is sent from the Lessor; or without Lessor's consent, attempts to remove (except for repairs), sell, transfer, encumber, part with possession or sublet any item of Equipment; or shall commit an act of bankruptcy or become insolvent or bankrupt or make an assignment for the benefit of creditors, or consent to the appointment of a Trustee or Receiver or either shall be appointed for Lessee or for substantial part of its property without its consent, or bankruptcy, reorganisation or insolvency proceedings shall be instituted by or against Lessee; or shall suffer an adverse material change in the financial condition from the date hereof, and as a result thereof Lessor deems itself or any of its equipment to be insecure; or shall be in default under any other agreement at any time executed with Lessor.
5. 6.
REMEDIES: Upon the occurrence of any default and at any time thereafter the Lessor would declare all future rentals due and to become due hereunder for the full term of the lease immediately due and payable and on such declaration being made by Lessor, Lessee shall forthwith provide to the Lessor the present value of the said sums due discounted at the rate of 12% per annum and upon Lessee failing to make the said payment within 30 days thereof Lessor may in its discretion do any one of the following: (a) Take action for recovery as liquidated damages for loss of bargain and not as penalty, of any amount equal to all unpaid lease rental payment which in the absence of a default would have been payable by Lessee hereunder for the full term thereof plus interest thereon at the rate of 2% p.m. for the period until receipt of the said amount; (b) Upon notice to Lessee terminate this Agreement and all Schedules executed pursuant hereto and forfeit the amounts paid by Lessee by way of rentals and demand the Lessee to return all equipment to Lessor at Lessor's own risk and expenses in the same condition as delivered, ordinary wear and tear and damage by fire not caused by the negligence of Lessor excepted, at such location as the Lessor may designate and upon failure of Lessee to do so within 14 days from the date of demand, enter upon premises where such Equipment is located and take immediate possession of and remove the same, all without liability to Lessor or its Agent for such entry or for damage to property or otherwise. Lessor may detach and dismantle the Equipment from any part of the freehold or process machinery to which it may be affixed without the written permission of Lessee; (c) Sell all the Equipments at public or private sale or lease to others with 7 days' Notice on account and at the risk of Lessee and appropriate the net sale proceeds or realisation of rental towards the present value of all the future rentals declared to be immediately due and payable at the rate of 12% per annum as aforesaid and to recover from the Lessee the shortfall or deficit together with interest thereon at the rate of 2% p.m. but the Lessor shall not in any such action or for duty to account to Lessee for such action or for any surplus realised by the Lessor by sale or lease. (d) The remedy referred to hereinabove is intended to be in addition to any other remedy available to Lessor at law provided however that on the Lessee making payment to the Lessor at any time before action under Clauses (a) or (b) above taken by Lessor of the present value of all future lease rentals as provided herein before, the Lessee shall retain all the equipment leased hereunder for its own use and the Lessor further undertakes to transfer all its title and interest on the said Equipment to the Lessee on receipt of payment as referred to hereinabove. WAIVER: Any expressed or implied waiver by the Lessor of any default shall not constitute a waiver of any other default by Lessee or a waiver of any of Lessor's right. All original rights and powers of the Lessor under this Agreement will remain in full force, notwithstanding any neglect, forbearance or delay in the enforcement thereof, by the Lessee of this Agreement shall not be deemed as waiver of any continuing or recurring breach by the Lessee of this Agreement. NOTICES: Any notices or demands required to be given herein shall be given to the parties hereto in writing and by post or by hand delivery at the address herein set forth or to such other addresses as the parties hereto may hereafter substitute by written notice given in the manner prescribed herein above.

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This Agreement and other contracts executed between the parties hereto pursuant to this Agreement cannot be cancelled or terminated except as expressly provided herein. Lessee hereby agrees that Lessee's obligations to pay all lease rentals and any other amounts owing hereunder shall be absolute and unconditional. This Agreement cannot be amended except in writing and shall be binding upon and to the benefit of the parties hereto their permitted successors and assigns. The captions in this Agreement are for convenience only and shall not define or limit any of the terms hereof. ARBITRATION: All disputes, differences, claims and questions, whatsoever, which shall arise either during the subsistence of this Agreement or afterwards between the parties and/or their respective representatives touching these presents or any clause or thing herein, contained or otherwise in any way relating to or arising from these presents shall be referred to the arbitration of two Arbitrators, one to be appointed by each party to the dispute and such arbitration shall be in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or reenactment thereof for the time being in force. By execution hereof, the signor hereby certifies that he has read this Agreement, including the Schedule hereto and that he is duly authorised to execute this Agreement on behalf of the Lessee. IN WITNESS WHEREOF each of the parties hereto has caused this agreement to be executed in duplicate on this 29th day of September, 2011. Signed, sealed and delivered in the presence of : 1. 2. SCHEDULE DETAILS OF MACHINERY SL.NO PARTICULARS 01. KL-2- AUTO MATCH MAKING MACHINE 02. VEESON MAKE BOILER 03. SHRINK WRAPPING MACHINE 04. OUTER MULTILINE FEEDING SYSTEM Draft an agreement for assignment of business debts. QTY 1 NO 1 NO 1 NO 1 NO. Lessor Lessee
19.
THIS DEED OF ASSIGNMENT made this 9th day of August, 2012 between Mr. Dipak Ghosh, son of Mr. K. C. Ghosh, resident of 1A Heysham Road, Kolkata 700 072 (hereinafter called "the assignor") of the one part, and Mr. B. Bhattacharya, son of Mr. Kiron Bhattacharya, resident of 43 Golf Green, Kolkata 700042 (hereinafter called "the assignee") of the other part. WHEREAS the assignor has, for some time been carrying on the business of selling carpets in the course whereof the several persons whose names, addresses and occupations are mentioned in the Schedule appended hereto, have become lawfully debtors to him and so for the several sums of money set opposite to their respective names; AND WHEREAS the assignor has contracted with the assignee for the absolute sale to him of the said business debts for the sum of Rs. 50,00,000/- (Rupees Fifty Lakhs only). NOW THIS DEED WITNESSES that in consideration of the sum of Rs. 50,00,000/- (Rupees Fifty Lakhs only) now paid to the assignor by the assignee (the receipt whereof the assignor hereby acknowledges), the said assignor, as beneficial owner, does hereby transfer, sell and assign unto and to the use of the said assignee, all the several said debts, and sums of money specified in the said Schedule which are now due and owing to the assignor to have and to receive them for his absolute use and benefit with absolute power, authority and liberty to enforce payment thereof by

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suit or otherwise and that the assignor does hereby covenant with the assignee that all the several debts are lawfully due to him and the parties by whom they are payable are alive, and further that he has not entered into any arrangement with any of them and that the assignor shall at all times hereafter do, execute and perform all such and other acts, deeds, things, or writings as may be reasonably required for realization of the said debts, and further and better and more effectively transferring and/or assuring them or any of them in favour of the assignee. IN WITNESS WHEREOF the assignor and the assignee do hereto affix their signatures on the day, month and the year above mentioned at Kolkata. Witness: Witness: Schedule Sl No. 20. Name of the person Address Amount due (Assignor) (Assignee)
What are the conditions for assignment of trademarks? Section 37 of the Trademarks Act, 1999 deals with the power of registered proprietor of a trademark to assign his rights in trademark Further Section 38 provides that a registered trademark shall be assignable and transmissible, whether with or without goodwill of the business concerned and in respect either of all goods or services in respect of which the mark is registered or some of those goods or services An unregistered trademark cannot be assigned without goodwill of the business concerned . Explain the requirements relating to dissolution of a partnership firm. Dissolution may take place with the intervention of court or without such intervention Dissolution without Courts intervention may take place by Agreement between the partners Adjudication as insolvent of all the partners or all but one Business of the firm becoming unlawful By expiry of the term fixed By death of a partner By insolvency of a partner By notice in writing in case of partnership at will. Draft a notice in newspapers for dissolution of partnership. Notice is hereby given that the partnership lately subsisting between us the undersigned, ABC & Co., carrying on business as a firm of Chartered Accountants, at 41 Chowringhee Road, Kolkata 700 071, under the style or firm of ABC and has this day been dissolved by mutual consent. All debts due to and owing by the said late firm will be received and paid by the said A, who will continue to carry on the said business under the same style and firm. Dated: Sd/- A, B and C
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23. Draft a deed for revocation of trust. THIS DEED is made on the 3rd day of June, 2011 by Mr. A. Prasad, son of Mr. Bhanu Prasad, resident of A43, Salt Lake, Kolkata 700 064 (hereinafter called "the Settlor") of the one part AND Ms. R. Agarwal, daughter of Mr. Shiv Agarwal, resident of 45 Park Street, Kolkata 700 071 (hereinafter called "the Trustee") of the other part. WHEREAS by a Deed of Trust dated 5th March, 2002 the Settlor transferred him property specified therein to the Trustee upon trust to sell the same and with the proceeds of the sale to pay the debts due from the Settlor to the several creditors named in the said deed; AND WHEREAS the trust created as aforesaid has not yet been communicated to any of the aforesaid creditors; AND WHEREAS the Settlor now desires to revoke the said trust and to make other arrangements for the discharge of his aforesaid debts. NOW THIS DEED WITNESSES that the Settlor hereby revokes the trust created by the aforesaid deed of trust. IN WITNESS WHEREOF parties have signed this deed on the 3rd day of June, 2011. Signed, sealed and delivered in the presence of : 1. 24. 2. Distinguish between revocable and irrevocable POA. Settlor Trustee
25.
A POA executed in favour of a person can always, at the discretion of the donor thereof, be revoked If a donee has an interest in the matters covered by the POA, which forms the subject matter thereof, the POA in the absence of express contract cannot be terminated to the prejudice of such interest . A POA executed, in which the done himself as an interest, is irrevocable Such irrevocable POA is executed in favour of the financial institutions by a company who offer financial assistance to the latter. Such a POA also requires registration. A power of attorney is revocable if the principal reserves the right to revoke the power at any time. Once the principal revokes the power, the agent can no longer act on the principal's behalf. But a power of attorney can be made irrevocable if the document includes a provision that specifically states that the principal gives up the right of revocation or otherwise indicates that the power is irrevocable. As a practical matter, an irrevocable power of attorney is rarely used and is typically limited to a specific purpose. The power of attorney becomes irrevocable only when it is coupled with interest namely consideration. Where a power of attorney is coupled with interest, as stated above the stamp duty would be equal to conveyance. All other power of attorneys are revocable. Irrevocable powers of attorney are relatively rare, though, because they essentially operate like any other power of attorney, but are not unilaterally revocable by the principal. An irrevocable power of attorney can have a sunset provision, ending the assignment on a particular date or condition, but remains irrevocable until that time unless the parties agree to terminate. Draft a special POA to be filed with RoC at the time of incorporation of a company. Shri B. C. Mukherjee, Secretary, to represent us before the Registrar of Companies in connection with the incorporation of our Company under the name of BFIL Securities Limited. He is authorised to make any modification, alteration, correction, additions, in the Memorandum and Articles of Association and other documents filed with the Registrar of Companies for the registration of the Company. He is also authorised to collect the certificate of incorporation.

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Date: Accepted. S/o Secretary Explain the Validity of pre-incorporation contracts. Contracts before incorporation Before incorporation of a company, promoters enter into a contract to acquire some property / right However company is not bound by its pre-incorporation contracts The legal position is that since presence of two consenting parties is necessary for a contract, and the company before incorporation is a non-entity, the promoters cannot act as agents for the company, which is yet to come into existence It cannot also ratify the same But the company can enter into a new contract known as novation of promoters contracts. Draft an agreement by a company for adopting a pre-incorporation contract. This Agreement made at New Delhi on this 6th day of February, 2012 between Shri Ravi Varma, son of Shri Vikash Varma, resident of 12, Belgachia Main Road, Kolkata 700 058 of the first part, Shri Sandeep Gattani, son of Shri Gopal Gattani, resident of 54, VIP Road, Kolkata 700 054, of the second part and AB & Co. Ltd., a company incorporated under the Companies Act, 1956 and having its registered office at 36 Rafi Ahmad Kidwai Road, Kolkata 700 001 (hereinafter referred to as 'the company') of the third part. Whereas after the execution of the contract on 10th January, 2012 (hereinafter referred to as "the said contract") between Shri Ravi Varma, the vendor, and Shri Sandeep Gattani on behalf of the company, the said company AB & Co. Ltd. has been incorporated under the Companies Act, 1956. Now it is hereby agreed by and between the parties hereto as under: The said contract dated 10th January, 2012 is hereby adopted by the company and shall be binding on the said Shri Ravi Varma and on the company in the same manner and shall take effect in all respects as if the company had been in existence at the date of the agreement. Shri Sandeep Gattani who actually signed on behalf of the proposed company shall be discharged from all liability under the said contract as the company had adopted and ratified the said contracts. In witness whereof the parties hereunto have put their hands and signatures and the company has caused its common seal affixed in the presence of Shri A and Shri B, two directors who have set their respective hands and signatures the day and year first herein above written in terms of the Resolution passed in its Board of Directors in their meeting held on 5th February, 212. Witnesses: 1. 2. Director Director Signatures of Ravi Varma . Sandeep Gattani . Directors
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28. Draft an underwriting agreement. Shree Securities Limited 16 Sarat Bose Road, Kolkata 700 024 Ref. No. 26/2012 The Board of Directors ABC Limited 34, AJC Bose Road Kolkata 700 026 Dear Sir(s), Re: Proposed Public Issue of Equity Shares We, hereby record the terms on which we (hereinafter referred as "underwriters") have agreed to underwrite 10,00,000 Equity Shares of the aggregate nominal value of Rs 10/- per share out of the total issue of 20,00,000 Equity Shares to be offered to the public at Rs. 150/- each for cash at par. 1. The prospectus as approved by the underwriters will be delivered to the Registrar of Companies, West Bengal, on or before 15th March, 2012 for registration in accordance with the provisions of Section 60 of the Companies Act, 1956. Sufficient number of copies of the prospectus and application forms shall be printed and made available to the underwriters, brokers and members of the public who intend to apply for the Equity Shares as soon as possible thereafter. Underwriters shall be entitled to arrange sub-underwriting with respect to their respective commitments for their own account on terms to be arranged at their discretion with their sub-underwriters. If by the closing date of the subscription list or such earlier date as may be agreed to by the underwriters, the Equity Shares offered to the public are not subscribed in full by the public and the application money payable in respect thereto is not received by you, you will within 14 days or such extended time as may be agreed to by the underwriters, notify the underwriters in writing as to the amount/number of Equity Shares which have not been so subscribed. The underwriters shall within 21 days after the receipt of such intimation apply for and subscribe such unsubscribed amount/number of Equity Shares and pay or procure to be paid the money payable on application in respect of such Equity Shares in proportion that the amount underwritten by each of them bears to the total amount of the issue. In determining the amount/number of Equity Shares to be taken up by the underwriters the following factors shall be taken into consideration: (a) In no circumstances will the underwriters be liable to take up Equity Shares more than the amount underwritten by them. (b) All applications made before the closing of the subscription list by the underwriters, or on forms of application bearing the stamp of the underwriters, and not withdrawn in the meantime shall be taken into account in pro tanto reduction of the liability of the underwriters under this underwriting agreement. After scrutiny of the applications received, the total shortfall shall first be allocated among all persons who have underwritten the issue and who have not fulfilled their quota, in proportion to the amount underwritten by each of them. Credit shall be given to each underwriter who has not fulfilled his quota in relation to applications made by members of the public independently proportionately to the amount underwritten by each under writer, any amount or such credit being in excess of the commitment of any underwriter being similarly shared Date: 5th February, 2012
2. 3.
4.
(c)
(d)

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proportionately by the others. 5. 6. Subject to the terms of the prospectus, you will allot Equity Shares for which applications have been received as soon as possible and despatch Equity Share Certificates within six months of such allotment. In consideration of the underwriting you will, within 14 days from the date on which we shall have fulfilled our obligation, pay the underwriters a commission at the rate of two and a half per cent on the issue of the amount/ number of Equity Shares underwritten by the underwriters. Notwithstanding anything stated above the underwriters shall have the option to be exercised by them at any time prior to the date fixed finally for publication of the "Announcement" of terminating underwriting arrangement in the event of a complete breakdown or dislocation of business in the financial markets of the cities of Calcutta, Bombay, Madras and Delhi due to war, insurrection, civil commotion or any other serious or sustained or political or industrial disturbances or if the whole present basis of Stock Exchange prices in any such city should undergo substantial change through the occurrences of such catastrophe or similar event at present not foreseen. In the event of underwriters exercising such option they shall be released from all obligations arising out of the underwriting agreement. Our offer is valid subject to your subscription list opening on or before 1 st April, 2012.
7.
8.
Please acknowledge receipt of this letter and intimate to us your acceptance of the terms and conditions mentioned above. Thanking you, Yours faithfully, 29. For Shree Securities Limited Draft a letter of offer to the prospective Company Secretary. Welcomgroup Hotels Private Limited 8/2 Kiron Shankar Roy Road Kolkata 700 027 Date: 1st April, 2012
Ref. No. 23/2012 Mr. B. C. Mukherjee 5/2 M G Road Kolkata 700 001 Dear Sir,
I have been directed to advise you that the Board of Directors of the company have decided to appoint you as Secretary of the company and the said assignment is hereby offered to you. You are requested to join the service of the company on or before 15th April, 2012 and contact the undersigned so that you may be introduced to the concerned persons before you start functioning. 1. 2. You will be considered to have been appointed with effect from the day you actually join duty. The company shall pay to you a monthly basic salary of Rs. 50,000/- per month in the time scale of pay of Rs. 800/- per month with other allowances as are applicable to other employees of the company in the same time scale of pay, You will enjoy other benefits like the medical expenses reimbursement, leave travel allowance, bonus etc. as may
3.

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be permissible under the company's service rules. 4. 5. 6. You shall be allowed casual leave/sick leave/festival holidays, weekly off days and earned leave as per rules of the company. You will be on probation for a period of six months and on your services during the said probation period being found satisfactory the Board of Directors may consider you for confirmation in the said post. During the period of your probation, your services may be terminated by the company without any notice and you may also leave the service of the company at twenty-four hours' notice. On confirmation, however, the contract of' employment may be terminated by either party by giving the other, thirty days' written notice or paying thirty days' salary in lieu thereof. The company may terminate your services even after confirmation without giving you any notice if you are found by the Board of Directors of the company not performing your assigned duties and your statutory duties properly and to the satisfaction of the Board. As Company Secretary you shall be exclusively responsible: (a) for complying with all the provisions of the Companies Act and the various Rules framed thereunder; (b) maintaining all the statutory and non-statutory essential registers, books, files, records, papers etc.; (c) preparing and filing with the Registrar of Companies and other concerned authorities the required reports, returns, documents, papers etc. complete in all respects and within the prescribed periods of time; and (d) for carrying out the instructions, directions and advice of the Board of Directors of the company given to you from time to time. You shall devote your whole time and attention to the work of the company during your tenure as Company Secretary and shall work with due diligence and using your abilities to your best. You shall obey the orders of the Board of Directors of the company. You shall do your best to promote the interest of the company and shall faithfully serve the company.
7.
8.
9.
10. You shall not disclose to any unauthorised person during your employment as Secretary of the company an information obtained by you in relation to the business and corporate policies of the company with special reference to the company's policy regarding the issue of rights shares, bonus shares, time and quantum of payment and/or declaration and payment of dividends from time to time. Please convey your acceptance of the offer and the terms and conditions attached thereto by signing the carbon copy of this letter and returning the same to the company within a period of seven days from the receipt hereof. Thanking you. Yours truly For Welcomgroup Hotels Private Ltd. (A. B. Das) Managing Director I accept the above offer of the post of Company Secretary with all the terms and conditions attached thereto and shall join on.. (B. C. Mukherjee) Company Secretary

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30. Explain the various points to be kept in mind while drafting petitions / applications. 31. They should contain all the particulars required to be alleged by law They should state all the material facts They should be precise as well as concise They should state the grounds on which they are based Certain petitions / applications are also required to be supported with an affidavit They should contain the name of the court, number and cause title of the suit followed by names of the parties and provisions of law under which it is made. Explain the various considerations before drafting a written statement. Denial of the averments contained in the plaint / petition in case any para is not denied specifically it is presumed to have been admitted by the defendant Submit the facts which are in the nature of defence and present them in a concise manner Attach all relevant correspondence, invoice, challan etc. After drafting of the reply, the attorney is required to sign the same The written statement must be supported by an affidavit If any point is not included in the plaint no evidence could be let on that point While pleading against fraud or misrepresentation the party must state the particulars in the pleadings The prayer clause should be drafted properly. What do you mean by counter affidavit? Pleadings filed by the defendant in answer to the claims set out by the plaintiff in the form of an affidavit and / or supported by an affidavit is called counter affidavit. The rule of pleadings as are applicable to a written statement, apply to a counter affidavit as well. Filing of counter affidavit is mandatory when the defendant is so required by the Court. Failure of defendant to do so, will not entitle him, as of right, thereafter to file it. Short note on writ of mandamum and writ of quo warranto. Writ of Mandamum Expression mandamus means a command A command issued to direct any person, corporation, inferior court or government authority to do a particular specified thing The said thing is in the nature of a public duty Can be issued against any public authority Does not lie against President or Governor or private party. Writ of Quo Warranto It is to pray for an inquiry into the legality of the claim which a person asserts to an office or franchise and to oust him from such a position It is issued when the office is of a public and of a substantive nature; the office is created by a Statute or by the Constitution itself; and the respondent must have asserted his claim to the office. It can be issued even though he has not assumed charge of the office.
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34. Draft a special leave petition. CIVIL APPELLATE JURISDICTION IN THE MATTER OF: Special Leave Petition under Article 136 of the Constitution of India AND IN THE MATTER OF: ABC Company Ltd., a company registered under the Companies Act through Mr. J. Singh, Managing Director, the company having its registered office at 15 M G Road, Kolkata 700 001. Petitioner Versus 1. Mr. R. Tandon, son of Mr. K. N. Tandon, resident of 6/4 Alipore Road, Kolkata 700 020 2. Union of India through the Secretary, Ministry of Corporate Affairs, New Delhi. 3. The Registrar of Companies, West Bengal Respondents May it please the Hon'ble Chief Justice of India and His Lordship's Companion Judges of the Supreme Court. The petitioner-appellant-(company) MOST RESPECTFULLY SHOWETH: 1. That the petitioner is a company duly incorporated under the provisions of the Companies Act, having its registered office at 15 M G Road, Kolkata 700 001 and is challenging by way of this Special Leave petition the judgment and order of the High Court of West Bengal at Calcutta dated in proceeding under Section 433 of the Companies Act. That the questions of law involved in this matter are as follows: (a) Whether the High Court has fallen into error in taking the view that it is just and equitable that the petitioner company should be wound up? (b) Whether it would be a good ground for winding up of the petitioner-company that two of its directors are not an speaking terms and there is, thus, a deadlock in the administration of the affairs of the company. That respondent No. 1 herein had filed a petition before the Hon'ble High Court of West Bengal at Calcutta seeking the relief of winding up of the petitioner company which petition was contested by the petitioner-company inter alia on the grounds that the company should not be wound up. That the High Court after hearing the parties through their respective counsel allowed the said petition, holding that sufficient grounds had been made out for winding up of the petitioner-company (or any other relief claimed in the petition before the High Court). That the aforesaid findings and the final judgement/order of the High Court are assailed on the following, amongst, other.
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GROUNDS 5.1 That the aforesaid Order of High Court of West Bengal at Calcutta is erroneous. 5.2 That the said High Court did not take into account that the petitioner company has full intention to carry on its business.

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5.3 That an opportunity of being heard was not given to the petitioner company. That the petitioner has not filed any appeal or other proceeding relating to this matter in this Hon'ble Court or any other Court. RELIEF The petitioner-company accordingly prays that this Hon'ble Court be pleased to grant Special Leave to Appeal in the matter and to allow the appeal, set aside the impugned judgement/order passed by the High Court and dismiss the petition filed by the respondent in the High Court. PETITIONER AFFIDAVIT IN THE HON'BLE SUPREME COURT OF INDIA IN THE MATTER OF: ABC Company Ltd., a company registered under the Companies Act through Mr. J. Singh, Managing Director, the company having its registered office at 15 M G Road, Kolkata 700 001. Petitioner Versus 1. Mr. R. Tandon, son of Mr. K. N. Tandon, resident of 6/4 Alipore Road, Kolkata 700 020 2. Union of India through the Secretary, Ministry of Corporate Affairs, New Delhi. 3. The Registrar of Companies, West Bengal Respondents AFFIDAVIT I, Mr. J, Singh, do hereby solemnly affirm and state as under: 1. 2. 3. That I am the Managing Director of the petitioner-company and am fully aware of and conversant with the relevants facts concerning the matter in issue in this petition. That the contents of the accompanying Special Leave Petition are true and correct to the best of my knowledge and belief. That no relevant fact has been concealed or kept back in the S.L.P. DEPONENT I, further solemnly affirm at Kolkata this 15 day of May, 2012 that the above averments are true and correct. Nothing has been kept back or concealed. DEPONENT 35. Distinguish between revision and review of applications? Review It refers to a case whereby an aggrieved party may apply to the Court to recall the case for further consideration It is made in a case where appeal is allowed but no appeal has been made or no appeal is allowed It is made on application by the party to the suit Revision It refers to a case where the HC revises an order passed by a subordinate court It is made in a case for which no appeal lies It is made suo moto by the Court
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36. Explain the various kinds of professional etiquettes. Dressing etiquette Always wear neat and nicely pressed formal clothes. Choose corporate shades while you are picking up clothes for your office wear. Ties for men should compliment. Women should avoid wearing exposing dresses and opt for little but natural make-ups. Heels should be of appropriate or modest height. Men need to keep their hair (including facial hair) neatly trimmed and set. Always polish your shoes. Keep your nails clean. Wear clothes which you are comfortable in and can carry well. This is very important while you are in a business meeting or client presentation. Handshake etiquette Always rise when introducing or being introduced to someone. Shake hands with your right hand. Shake hands firmly (but not with a bone crushing or fish-limp grip), and with only one squeeze. Hold it for a few seconds (only as long as it takes to greet the person), and pump up and down only once or twice. Make eye contact while shaking hands. Communication etiquette Always speak politely. Listen to others attentively. A good listener is always dear to every client. While speaking over telephones, always greet the other person while starting and ending the call. Speak only when the other person has finished talking instead of interrupting in between. Show interest in what other people are doing and make others feel good. Stand about an arms length away while talking to others. Question another person in a friendly, not prying, manner. Make eye contact when talking to others. Be polite. Avoid foul language, unkind statements, and gossip. Keep your conversations short and to the point. Maintain your sobriety and politeness even if the client speaks something offensive or rude and avoid replying back in harsh tone/words Invitation etiquette Reply by the date given in the invitation, so that the host or hostess knows what kind of arrangements to make for the event, food is not wasted, and unnecessary expense is eliminated. If an RSVP card is not included, respond by calling or sending a brief note. If you cancel after initially accepting an invitation, phone your regrets as soon as possible. Send a note of regret following the phone conversation. Dont ask for permission to bring a guest unless the invitation states. Arrive at the event promptly, but not too early. Mingle and converse with the other guests. Dont overstay your welcome. Extend your thanks as you leave. Dining etiquette Always be courteous while official dinners. Offer the seat to your guest first. If you are the guest, be punctual and thank the host for the dinner.

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Wait until you receive your hosts signal. Initiate conversations while waiting for the food. Never begin eating any course until everyone has been served or the host/hostess has encouraged you to do so. Chew quietly; dont speak with your mouth full. Avoid pointing the knife or fork towards the other person while eating and speaking. Allow your guest to select the menu and wine. If something unwanted has gone to your mouth, place the napkin in front of your mouth tactfully and bring it out instead if putting your hand inside the mouth to get rid of it. Learn the basic table manners before you go out to dine with a potential client or an important business meet. Explain the procedure of compounding under FEMA. Compounding of contraventions can be understood as a lay man to be a method to compromise or settle the matter either before or after adjudication, but certainly before enforcement of the order of the court. Section 15 of the Foreign Exchange Management Act, 1999 provides for compounding Permissible within 180 days from the date of receipt of application by the Director of Enforcement Once compounded, no further proceeding shall be initiated Sum worked out has to be paid within 15 days from compounding Facility of compounding only available once in 3 years What do you mean by consent orders ? Consent order means an order for settling administrative or civil proceedings between the regulator and a person who may prima facie be found to have violated securities laws Section 15T of SEBI Act provides that no appeal shall lie on an order made with the consent of the parties Such orders can be passed at any stage where violation has been found When such proposal is submitted by a party it will be examined by a high powered Committee headed by a retired HC judge Thereafter the Committee will submit its views to the Authority where proceedings are pending Only available for offences under the SEBI Act, SCRA and Depositories Act After passing of order, it shall be published and placed on the SEBI website Certain defaults including insider trading, front running, failure to make an open offer, redress investor grievances and respond to the summons issued by SEBI are excluded from the consent process. The defaults falling in the category of fraudulent and unfair trade practices, which in the opinion of SEBI are very serious and/or have caused substantial losses to the investors, shall also not be consented No consent application shall be considered, if any violation is committed within a period of two years from the date of any consent order. However, if the applicant has already obtained more than two consent orders, no consent application shall be considered for a period of three years from the date of the last order. No consent application shall be entertained by SEBI before the completion of investigation / inspection.
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CS Solutions Hazra & Girish Park, Kolkata Study CS from the Experts CORPORATE RESTRUCTURING AND INSOLVENCY
1. Explain the terms compromise and arrangements. The expression compromise has not been defined by the Companies Act, 1956 The term implies the existence of a dispute. In other words, compromise denotes an agreement between two or more persons for the ascertainment of their rights when there is some question in controversy between them or some difficulty in the enforcement of their rights Arrangement involves a readjustment of rights and liabilities of the members or creditors or any class of them; however there need not be any dispute for an arrangement Section 390 provides that the term 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 those methods The term arrangement is wider than compromise. It includes any form of internal reorganization of the company or its affairs as well as scheme for amalgamation of two or more companies A few examples of arrangement are - issue of fully paid up shares to pay off debentures - creditors agreeing to waive a part of their dues - preference shareholders surrendering their right of arrears of dividend - exchange of companys assets for shares in a newly formed company Distinguish between horizontal and vertical mergers. Horizontal merger is a combination of two or more firms in the same area of business. It is a merger of two companies which are essentially operating in the same business. The main purpose of this type of merger is to obtain economies of scale in production by eliminating duplication of facilities, reducing of competition, reduction of cost, increase in share price and market segments. For example the merger of ICICI Bank and Bank of Rajasthan is a horizontal merger. Vertical merger on the other hand is a combination of two or more firms involved in different stages of production or distribution of the same product. It is a merger of one company with another having different stages of production / distribution process of the same product / service. The main objective of these mergers is to increase the profitability by the previous distributors. For example ICICI Limited with ICICI Bank is an example of vertical merger with backward linkage as far as ICICI Bank is concerned. Vertical merger takes the form of forward or backward merger. When a company combines with the supplier of materials, it is called backward merger and when it combines with the customer, it is known as forward merger. What do you mean by effective date and appointed date in case of mergers and amalgamations ? Transfer date or Appointed Date this is usually the first day of the financial year preceding the financial year for which audited accounts are available with the companies. This is the cut-off date from which all the movable and immoveable properties including all rights, powers, privileges of the Transferor Company shall be transferred to deemed to be transferred without any further act to the Transferee Company Effective Date - The date with effect from which the assets of the Transferor Company will be transferred to the Transferee Company describing briefly the nature of assets and also the rights & liabilities of the Transferor Company. In other words this is the date on which the transfer and vesting of the undertaking of the Transferor Company shall take effect i.e. all the requisite statutory approvals have been obtained.
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4. Explain the special majority approvals required for mergers? In terms of Section 391 of the Companies Act, 1956, the resolution relating to the approval of amalgamation has to be approved by members representing : a majority in number AND 3/4th in value of the members present and voting either in person or by proxy The 3/4th value is to be computed with reference to the paid-up capital held by members present and voting at the meeting Maknam Investments Ltd. In determining whether a resolution has been passed by the requisite majority or not, the members remaining neutral or not participating in voting are to be ignored Hindustan General Electric Corporation Limited Which combinations require approval of CCI and what are the exemptions in this regard? Amalgamations / mergers exceeding the below-mentioned ceilings attract Sections 5 & 6 of the Competition Act, 2002 -:
Assets Jointly, the parties to the acquisition, including the enterprise being acquired have Jointly, the acquiring group, together with the enterprise being acquired have Either in India Turnover Exceeding Rs. 4500 crores Exceeding Rs. 18000 crores Or Globally Assets Exceeding 750 million USD including atleast Rs. 750 crores in India Exceeding 3 billion USD including atleast Rs. 750 crores in India Turnover Exceeding 2250 million USD, including atleast Rs. 2250 crores in India Exceeding 2250 million USD, including atleast Rs. 2250 crores in India
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Exceeding Rs. 1500 crores Exceeding Rs. 6000 crores
In terms of the said Sections, no person or enterprise shall enter into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and such a combination shall be void. Any person or enterprise, who or which proposes to enter into a combination, shall give notice to CCI disclosing the details of the proposed combination, within 30 days of approval of the said proposal by its board of directors or execution of any agreement or other document for acquisition No combination shall come into effect until 210 days have passed from the day on which the notice has been given to the CCI or CCI has passed orders, whichever is earlier. The following combinations do not require approval of CCI : Acquisition of not more than 25% shares or voting rights in any company, solely as an investment or in the ordinary course of business. Acquisition of further shares or voting rights in cases where the acquirer, prior to acquisition, holds 50% or more shares. Acquisition of shares / voting rights / control / assets by one person or enterprise of another person or enterprise within the same group. Acquisition of assets not directly related to the business activity of the party acquiring the asset or made solely as an investment or in the ordinary course of business. Acquisition of stockin-trade, raw materials, stores, spares and other current assets in the ordinary course of business. Acquisition of shares or voting rights pursuant to sub-division or consolidation of shares, bonus issue or rights issue, not leading to acquisition of control. Combinations taking place entirely outside India with insignificant local nexus and effect on markets in India. Mergers / amalgamations between holding companies and wholly-owned subsidiary companies Increase in shareholding pursuant to buy back of shares, provided the same does not result in acquisition of control.

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6. Short note on stamp duty on amalgamations. Under Section 3 of the Indian Stamp Act, 1899, every instrument mentioned in Schedule I appended to the Stamp Act executed in India on or after the 1st Day of July 1899 is chargeable to duty as mentioned in the said Schedule I Further Section 3 of the Indian Stamp Act defines instrument as including every document by which any right or liability is or purports to be created, transferred, limited, extinguished or recorded By virtue of Section 2(g) of the Bombay Stamp Act, the order of the Court ordering the transfer of assets and liabilities of the transferor Company to the transferee Company is deemed to be a conveyance. "Conveyance" includes, a) a conveyance on sale, b) every instrument, c) every decree or final order of any Civil Court, d) every order made by the High Court under Section 394 of the Companies Act, 1956 (I of 1956) in respect of amalgamation of companies; by which property, whether moveable or immovable, or any estate or interest in any property is transferred to, or vested in, any other person, inter vivos, and which is not otherwise specifically provided for by Schedule I. In Li Taka Pharmaceuticals Ltd vs. State of Maharashtra , the Bombay HC held that an order of the Court u/s 394 is based upon a compromise between two companies of transferring assets and liabilities of one company to another company and that order is an instrument within the definition of the Bombay Stamp Act. Similar view was taken by the SC in Hindustan Lever vs. State of Maharashtra with respect to the Bombay Stamp Act The Delhi HC also held a similar view in Delhi Towers Limited vs. GNCT of Delhi. Further the Calcutta HC in Gemini Silk Ltd. vs. Gemini Overseas Ltd , an order sanctioning a scheme of reconstruction or amalgamation is covered by the definition of the words conveyance and instrument and therefore the same is liable to stamp duty. Subsequently, a Division Bench of the Calcutta HC adopted a contrary view in Madhu Indra Limited vs. RoC and set aside the decision of the Single Bench in the Gemini Silk case. However in Emami Biotech Limited and Anr, ITP Limited and Anr and Brijbhumi Agents Private Limited and Others, the Calcutta HC confirmed the view that an order of the High Court sanctioning a scheme of amalgamation or demerger under section 394 of the Companies Act, 1956 will be considered as conveyance and an instrument under the provisions of the Indian Stamp Act, 1899 Thus a HC order u/s 394 is liable to stamp duty in those states where the state stamp law provides for such stamp duty. For example, Maharashtra, Gujarat, Karnataka, WB, MP and Rajasthan. State whether additional fees needs to be paid on the increased authorized capital on the amalgamated company? Under the Companies Act when the Authorised Share capital of a company are increased, registration fee is required to be paid in terms of Schedule X. In Jaypee Greens Ltd, the Allahabad HC held that where a combined authorized capital of the amalgamated company exceeds the authorized capital of the transferor and transferee company, no further fee is required to be paid. Similar view has been held by the Bombay HC in YOU Telecom India Pvt. Ltd and Delhi HC in Hotline Hol Ceilings P Ltd. However the Calcutta HC in Areva T&D India Ltd holds an opposite view. The judgment of SC on the matter is awaited.
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8. Can the CG order amalgamation of two companies? In order to speed up the procedure for amalgamation of companies, the CG may in public interest order amalgamation of companies under Section 396 of the Companies Act, 1956 The CG shall prepare a draft scheme of amalgamation. In cases where the rights and interests of a member in the new company is less than those he possessed before amalgamation. CG may provide for payment of such compensation by the new company as it may deem fit Any person aggrieved by such an order of compensation may appeal to the CLB within 30 days from the date of publication of assessment of compensation in the Official Gazette. Distinguish between partial bid and competitive bid under the Takeover Regulations. Partial bid is made for acquiring part of the shares of a class of capital where the offeror intends to obtain effective control of the offeree through voting power. In other words, the offeror bids for the whole of issued shares of one class of capital in a company other than the equity share capital carrying voting rights. Such acquisitions attract public announcement under Regulation 4 of the SAST Regulations. On the other hand, competitive bids are made under Regulation 20 of the SEBI Takeover Regulations 2011 by any person other than the acquirer within 15 working days from the date of detailed public announcement. The competitive offer shall be for at least such number of shares which when taken together with his existing holdings equals the number of shares held by the original acquirers together the number of shares for which the present offer is made. After competitive offer, the original bidder will have the option of revising his offer provided the revised terms are more favourable to the shareholders of the target company. All the provisions of these Regulations shall apply to competitive bid as are applicable to a normal bid. Accordingly, mandatory bids are required to be made mandatorily under the SEBI Takeover Regulations 2011. Competitive bids are made voluntarily by persons other than the acquirer. Define the terms promoter, control and persons acting in concert under the Takeover Regulations. Promoter Regulation 2(1)(s) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 defines promoter having the same meaning as in the SEBI ICDR Regulations and includes a member of the promoter group. Promoter includes: (i) the person or persons who are in control of the issuer; (ii) the person or persons who are instrumental in the formulation of a plan or programme pursuant to which specified securities are offered to public; (iii) the persons named in the offer document as promoters. A director or officer of the company or a person, if acting as such merely in his professional capacity, shall not be deemed as a promoter. Promoter group includes: (i) the promoter; (ii) an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of the person or of the spouse); and (iii) in case promoter is a body corporate (A) a subsidiary or holding company of such body corporate; (B) any body corporate in which the promoter holds 10% or more of the equity share capital or which holds 10% or more of the equity share capital of the promoter; (C) any body corporate in which a group of individuals or companies or combinations thereof which hold 20% or more of the equity share capital in that body corporate also holds 20% or more of the equity share capital of the issuer; and (iv) in case the promoter is an individual (A) any body corporate in which 10% or more of the equity share capital is held by the promoter or an immediate
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relative of the promoter or a firm or Hindu Undivided Family in which the promoter or any one or more of his immediate relative is a member; (B) any body corporate in which a body corporate as provided in (A) above holds 10% or more, of the equity share capital; (C) any Hindu Undivided Family or firm in which the aggregate shareholding of the promoter and his immediate relatives is equal to or more than 10% of the total. Financial Institutions, Scheduled Banks, FIIs and Mutual Funds shall not be deemed to be a promoter or promoter group merely by virtue of their shareholding. Control Regulation 2(1)(e) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - control shall include right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner. Persons acting in concert Regulation 2(1)(q) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 defines person acting in concert as - persons who, with a common objective or purpose of acquisition of shares or voting rights in, or exercising control over a target company, pursuant to an agreement or understanding, formal or informal, directly or indirectly co-operate for acquisition of shares or voting rights in, or exercise of control over the target company. - the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established : (i) a company, its holding / subsidiary company, or companies under the same management / control (ii) (ii) a company, its directors, and any person entrusted with the management of the company (iii) (iii) directors of companies referred to in (i) and (ii) above and their associates (iv) promoters and members of the promoter group (v) immediate relatives (vi) mutual fund with sponsor or trustee or asset management company (vii) a collective investment scheme and its collective investment management company, trustees (viii) a venture capital fund and its sponsor / trustee and AMC (ix) foreign institutional investors with sub-accounts (x) merchant bankers and portfolio managers with their clients as acquirer (xi) banks with financial advisers, stock brokers of the acquirer, or any company which is a holding company, subsidiary or relative of the acquirer (xii) any investment company / fund with any person who has an interest in such investment company or fund as a shareholder or unitholder having not less than 10% of the paid-up capital of the investment company, and any other investment company or fund in which such person or his associate holds not less than 10% of the paid-up capital of that investment company. Explain the obligations of merchant banker. The merchant banker shall prior to PA ensure that the acquirer is able to implement the offer firm arrangements for funds to fulfil the obligations under the offer are in place. The merchant banker shall furnish a due diligence certificate to SEBI which shall accompany the draft letter of offer. He shall ensure that the contents of PA & the letter of offer are true, fair and adequate and based on reliable sources He shall ensure that market intermediaries engaged for the purposes of the open offer are registered with SEBI. He shall exercise diligence, care and professional judgment to ensure compliance with these regulations.
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He shall not deal on his own account in the shares of TC during the offer period. He shall file a report with SEBI within 15 working days from the expiry of the tendering period, confirming status of completion of various open offer requirements. Explain the provisions relating to escrow account in the SEBI Takeover Code. Not later than 2 working days prior to detailed PA, the acquirer shall create an escrow account. The escrow amount shall be calculated in the following manner:
Consideration payable in public offer Not exceeding ` 500 crores Exceeding ` 500 crores the Amount to be deposited in the escrow account
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25% of the consideration payable assuming full acceptances 25% of the consideration upto ` 500 crores and additional 10% of the balance amount For offers subject to minimum level of acceptances, then 100% of the consideration in respect of minimum level of acceptance or 50% of the total consideration shall be deposited in cash in the escrow account
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The escrow account shall consist of (a) cash deposited with a scheduled commercial bank (b) bank guarantee in favour of the merchant banker (c) deposit of acceptable securities with appropriate margin, with the merchant banker or (d) any combination of the above The merchant banker shall not release the escrow account till 30 days from completion of payment of consideration to the shareholders In case of non-fulfilment of obligations under these Regulations, SEBI shall forfeit the escrow account either in full or in part In case of forfeiture of escrow account, the amount deposited shall be distributed as follows: 1/3rd to the target company 1/3rd to the IEPF 1/3rd to be distributed pro rata among shareholders who have accepted the offer. What are the exemptions from making public announcement under the creeping acquisition route? In terms of Regulation 10,the following are the exemptions from making public offer under the creeping acquisition route Acquisition of shares by any shareholder of a target company, upto his entitlement, pursuant to a rights issue Acquisition of shares by any shareholder of a target company, beyond his entitlement, pursuant to a rights issue, subject to fulfillment of the following conditions, (a) the acquirer has not renounced any of his entitlements in such rights issue; (b) the price at which the rights issue is made is not higher than the ex-rights (c) price of the shares of the target company, Increase in voting rights in a target company of any shareholder pursuant to buy-back of shares, subject to the following (a) such shareholder has not voted in favour of the resolution authorising the buy-back (b) in the case of a shareholder resolution, voting is by way of postal ballot (c) the increase in voting rights does not result in an acquisition of control by such shareholder over the target company.

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14. Explain the various defence strategies for takeovers. Poison Pill the target company aims to make its stock less attractive to the acquirer by making shareholders (except the acquirers) buy more shares at a discount. The aim is to dilute the shares held by the acquirer and make the takeover bid more difficult. There are two types of poison pill strategies filp in allows existing shareholders to buy more shares at a discount flip over allows stockholders to buy the acquirers stake at a discounted price White Knight white knight is a company that gallops in to make a friendly takeover offer to a target company that is facing a hostile takeover from another party Macaroni Defence this is a tactic by which the TC issues a large number of bonds that comes with the guarantee that they will be redeemed at a higher price if the company is taken over. Golden Parachute this is a measure in which lucrative benefits are offered to the current top executives of the company which includes stock options, bonuses etc. Greenmail A spin-off of the term blackmail, greenmail occurs when a large block of stock held by an unfriendly company is repurchased by the TC at a substantial premium to destroy any takeover attempt of the company Pac-Man Defence a defensive tactic used a targeted firm in which the target firm turns around and tries to acquire the other company that has made the hostile takeover attempt. Crown Jewel Defence it is a strategy in which the TC sells off its most attractive assets to a friendly 3 rd party to spin off the valuable assets in a separate entity. Staggered Board Defence wherein only a certain % of the companys directors are replaced every year making it difficult for an acquirer to seize control Bankmail Defence wherein the bank of a target firm refuses financing options to firms with takeover bids thereby imposing financial restrictions on the acquirer. People pill Defence wherein the entire management team of the TC threatens to quit in the event of a coercive takeover. Explain the terms management buy out and leveraged buy out. Leveraged Buyouts Simply put it is the purchase of a company by using a small investment and a large loan LBO also called Highly Leveraged Transaction occurs when a financial sponsor gains control of a majority of a target companys equity through the use of borrowed money or debt It is essentially a strategy involving the acquisition of shares of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company The purpose of LBOs is to allow companies to make large acquisitions without having to commit a lot of capital. In an LBO, there is usually a ratio of 70% debt to 30% equity. LBOs can increase management commitment and effort because they have greater equity stake in the company. In a publicly traded company, managers typically own only a small percentage of the common shares, and therefore can participate in only a small fraction of the gains resulting from improved managerial performance. After an LBO, however, executives can realize substantial financial gains from enhanced performance. LBOs can often act to revitalize a mature company. In addition, by increasing the companys capitalization, an LBO may enable it to improve its market position. Successful LBOs also tend to create value for a variety of parties. For example, empirical studies indicate that the firms shareholders can earn large positive abnormal returns from leveraged buyouts. Similarly, the post-buyout investors in these transactions often earn large excess returns over the period from the buyout completion date to the date of an initial public offering or resale.
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Management Buyouts MBO occurs when a company's managers buy or acquire a large part of the company . The goal of an MBO may be to strengthen the managers' interest in the success of the company. In most cases, the management will then make the company private. Management teams typically want to gain independence and autonomy, apart from having the power to influence strategic decisions and give the company future direction The purpose of such a buyout from the managers' point of view may be to save their jobs, either if the business has been scheduled for closure or if an outside purchaser would bring in its own management team. They may also want to maximize the financial benefits they receive from the success they bring to the company by taking the profits for themselves. This is often a way to ward off aggressive buyers. There are three ways of financing such buyouts debt financing, private equity financing and vendor financing MBOs have assumed an important role in corporate restructurings beside mergers and acquisitions. Key considerations in an MBO are fairness to shareholders, price, the future business plan, and legal and tax issues. One recent criticism of MBOs is that they create a conflict of interest an incentive is created for managers to mismanage (or not manage as efficiently) a company, thereby depressing its stock price, and profiting handsomely by implementing effective management after the successful MBO. Examples - In 2007, the private equity firm Blackstone Group agreed to buy Indian back-office company Intelenet Global Services, marking its first MBO in India. Write short notes on funding through ECBs and ADRs / GDRs. Funding through ECBs External Commercial Borrowings are commercial loans in the form of bank loans, buyers credit, suppliers credit, securitised instruments etc. available from non-resident lenders with minimum average maturity of 3 years ECBs can be raised under both the automatic and approval routes Automatic route permitted for real estate, industrial sector including small and medium enterprises Corporates except financial intermediaries are eligible for accessing ECB under automatic route Individuals, trusts and non-profit organisations are not permitted to raise ECBs Funding through ADRs / GDRs Funding through ADR / GDR facilitates raising of funds from foreign markets at lower cost as compared to domestic issue. The following are the requirements to be complied with for issuing ADR / GDR: In accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India A company can issue ADRs / GDRs if it is eligible to issue shares to persons resident outside India under the FDI Policy Indian listed companies not eligible to raise funds from the capital market or which are restrained from accessing the securities market are not eligible Unlisted companies can raise funds but they would require prior listing in the domestic market No monetary limit No end use restrictions except real estate or the stock market Voting rights on shares issued under the Scheme shall be as per the provisions of Companies Act, 1956 and in a manner in which restrictions on voting rights imposed on ADR/GDR issues shall be consistent with the Company Law provisions. The pricing of ADR / GDR issues should be made at a price determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the RBI.
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17. Discuss the various methods of valuation of shares. Valuation based on assets This valuation method is based on the assumption that adding the value of all assets of the company and subtracting the liabilities, leaving a net asset valuation, can best determine the value of a business. An asset based valuation can be further separated into four approaches : (i) Book value Historical cost of company assets liabilities. Intangible assets etc. are not considered in this calculation. (ii) Replacement cost (iii) Appraised value (iv) Excess earnings (b) Open market valuation Open market valuation refers to a price of the assets of the company which could be fetched or realized by negotiating sale provided there is a willing seller, property is freely exposed to market, sale could materialise within a reasonable period, orders will remain static throughout this period and without interruption from any purchaser giving an extraordinarily higher bid. (c) Valuation based on earnings P/E = P/ EPS (d) Discounted Cash flow Valuation Method - Discounted cash flow valuation is based upon expected future cash flows and discount rates. Discounted cash flow valuation, relates the value of an asset to the present value of expected future cash flows on that asset. This approach has its foundation in the present value concept, where the value of any asset is the present value of the expected future cash flows on it. Short notes on valuation of slump sale. (a) A direct sale of business, assets and liabilities entirely from one person (the Seller) to another (the Acquirer) on a lock, stock and barrel basis can be described as a "Slump Sale" within the meaning of Section 50B of the Income Tax Act. In a "Slump Sale", the consideration for the transaction should be fixed up for the whole deal without assigning values for individual assets or identifying the extent of individual liability.
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If the sale consideration exceeds the net worth of the business bein g transferred (as on the date of transfer), then
19. the Seller would suffer capital gains tax on such transfer to the extent of such excess. Explain the importance of valuation of brands. It indicates the origin of goods It makes the jobs of the consumers very easy It enables premium pricing Same manufacturer may use different brands to differentiate goods of same description having different quality and value Consumers have more faith on branded goods
It connects the consumers mind to the manufacturer

20. Explain the mechanism for valuation of ESOPs. In terms of the SEBI (ESOP and ESPS) Guidelines, 1999, Fair value of a stock option is the price that shall be calculated for that option in an arms length transaction between a willing buyer and a willing seller.
The fair value shall be estimated using an option-pricing model (for example, the Black- Scholes* or a binomial model) that takes into account as of the grant date the exercise price and expected life of the option, the current price in the market of the underlying stock and its expected volatility, expected dividends on the stock, and the riskfree interest rate for the expected term of the option.

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21. Explain the mechanism for valuation of securities in case of preferential allotment. In terms of SEBI (ICDR) Regulations, 2009, preferential issue can be made at a price not less than the higher of the following: The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the 26 weeks preceding the relevant date; OR The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the 2 weeks preceding the relevant date. Such Issue to QIBs 5 in number shall be made at a price not less than the average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the 2 weeks preceding the relevant date Relevant date means 30 days prior to the date on which general meeting of shareholders is held. Explain the difference between partial demerger and complete demerger. Partial Demerger in this case the existing company also continues to maintain its separate legal entity and the new company being a separate legal identity carries on the spun off business Complete Demerger in this case, the existing company is voluntary would up and its entire business, assets etc are transferred to one or more new companies Short notes on types of demerger. Spin Offs when an existing parent company distributes on a pro rata basis all the shares it owns in a controlled subsidiary to its own shareholders thereby creating a separate legal entity with its own management team and BOD. Such distributions are made in direct proportion to the shareholders current holdings of the parent companys stock Split Offs a process of reorganizing a corporate structure whereby the capital stock of a division or a subsidiary of a corporation or of a newly affiliated company is transferred to the stakeholders of the parent corporation in exchange for part of the stock of the latter Split Ups a process of reorganizing a corporate structure whereby all the capital stock and assets are exchanged for those of two or more newly established companies, resulting in the liquidation of the parent corporation. How do you measure the success of an amalgamated company ? The earning performance of the merged company can be measured by return on total assets and return on net worth. Whether the merged company yields larger net profit than before, or a higher return on total funds employed or the merged company is able to sustain the increase in earnings. The capitalisation of the merged company determines its success or failure. Whether merged company is creating a larger business organisation which survives and provides a basis for growth. Comparison of the performance of the merged company with the performance of similar sized company in the same business in respect of (i) Sales, (ii) assets, (iii) net profit, (iv) earning per share and (v) market price of share. In general, growth in profit, dividend payouts, companys history, increase in size provides base for future growth and are also the factors which help in determining the success or failure of a merged company. Fair market value is one of the valuation criteria for measuring the success of post merger company. Short notes on factors for post merger success. Gain or loss to stakeholders Implementation of objectives Legal requirements Combination of operations Top management changes Management of financial resources
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Financial restructuring Rationalisation of labour cost Production and marketing management
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Corporate planning and control. Explain the procedure of reduction of share capital. Modes of reduction of capital in terms of Section 100 of the Companies Act, 1956, capital of a company may be reduced in the following ways: (a) Extinguishment or reduction of liability on shares in respect of the capital not paid-up (b) With or without extinguishment or reduction of liability on shares in respect of the capital not paid-up, cancellation of any paid-up capital which is lost or unrepresented by the available assets (c) With or without extinguishment or reduction of liability on shares in respect of the capital not paid-up, pay off any paid up share capital which is in excess of the wants of the company Procedure for reduction The company needs specific provision in the AOA + special resolution + approval of Court Every creditor of the company is entitled to object to reduction of capital The court shall prepare a list of the creditors of the company entitled to object and it shall ensure that creditors entitled to object to reduction have given their consents / have been discharged / have been given sufficient security Before approving, Court shall ensure that reduction will be fair considering the interests of all classes of shareholders & it will not be prejudicial to the interests of creditors It may direct the company to add the words and reduced at the end of its name The company shall deliver a certified copy of the Court order and a copy of the minute approved by the Court The reduction shall become effective from the date of registration by RoC Short notes on buy back through stock exchange route and through book building route. Buy Back through stock exchange route The special resolution or the board resolution shall specify the maximum price at which the buy-back shall be made The buy-back shall not be made from the promoters or persons in control of the company The company shall appoint a merchant banker and make a public announcement at least 7 days prior to the commencement of buy-back as prescribed under buy back through tender offer The public announcement shall also contain disclosures regarding details of the brokers and stock exchanges through which the buy-back would be made The buy-back shall be made only on stock exchanges having nationwide trading terminals The buy-back shall be made only through the order matching mechanism except all or none order matching sys tem The company and the merchant banker shall submit the information regarding the shares or other specified securities bought- back to the stock exchange on a daily basis and publish the said information in a national daily on a fortnightly basis and every time when an additional 5% of the buy back has been completed. Buy Back through book building route The special resolution or the board resolution shall specify the maximum price at which the buy-back shall be made The company shall appoint a merchant banker and make a public announcement at least 7 days prior to the commencement of buy-back as prescribed under buy back through tender offer The public announcement shall also contain the detailed methodology of the book-building process, the manner of acceptance, the format of acceptance to be sent by the security holders pursuant to the public announcement and the details of bidding centers The book building process shall be made through an electronically linked transparent facility The number of bidding centres shall not be less than 30 and there shall be at least one electronically linked computer
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terminal at all the bidding centers The offer for buy back shall remain open to the security holders for a period not less than 15 days and not exceeding 30 days The merchant banker and the company shall determine the buy-back price based on the acceptances received The final buy-back price, which shall be the highest price accepted shall be paid to all holders have been accepted for buy-back. Explain the various immunities available to a sick company under SICA. In terms of Section 22 of SICA : No proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of BIFR or, as the case may be, the Appellate Authority The above protection is available when 1. an inquiry is pending or 2. when a scheme of rehabilitation is under preparation or 3. a scheme is under implementation or 4. appeal is pending. Explain the various rights available to a bank / financial institution under the SRFAESI Act for enforcement of security interest. Section 13 of the SRFAESI Act provides for the enforcement of security interest by a secured creditor straight away without intervention of the court, on default in repayment of instalments, and non compliance with the notice of 60 days after the declaration of the loan as a non-performing asset. The Secured Creditor has been defined to mean any bank or financial institution or any consortium or group of banks or financial institutions and includes debenture trustee appointed by any bank or financial institution or securitisation company or reconstruction company or any other trustee holding securities on behalf of a bank or financial institution, in whose favour security interest is created for due repayment by any borrower of any financial assistance Section 13(4) of the Act empowers the recourse to one more of the following measures, after giving proper notice, for the recovery of the secured debts, namely: Take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset; Take over the management of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realize the secured asset; Appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; Require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. In cases of joint financing under consortium or multiple lending arrangements if 60% of the secured creditors in the value agree to initiate recovery action the same is binding on all secured creditors. In case of a company under liquidation, the amount realized from the sale of the secured assets are to be distributed in accordance with the provisions of Section 529A of the Companies Act, 1956.
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Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application to the DRT. Short note on Lok Adalats. The Reserve Bank has advised all scheduled commercial banks and all India financial institutions that they can take up the matter where outstandings are Rs. 10 lakhs and above with Lok Adalats organized by the Debt Recovery Tribunal and Debt Recovery Appellate Tribunal. Lok Adalats do not have any statutory status Hence judgements passed by them do not have any binding effect on the parties The social workers use their moral authority and pursuade the parties to settle the matter on the basis of a reasonable agreement. Settlements arrived at Lok Adalats are not legally enforceable, by themselves. Where settlement has been arrived at, in a matter regarding which no civil suit is pending, the settlement has to be filed before a competent court of civil jurisdiction in the form of a plaint for obtaining a decree in terms of the settlement. On the other hand, where settlement has been arrived at in respect of a matter for which a civil suit is already pending, the settlement has to be filed in the form of a compromise and the court passes necessary decree in the civil suit itself. Short note on Powers of the DRT under the Recovery of debts due to banks and financial institutions Act 1993. If it appears to be Debt Recovery Tribunal it may appoint a receiver of any property, whether before or after the grant of certificate for recovery of debt; remove any person from the possession or custody of the property; commit the same property to the possession, custody or management of the receiver; confer upon the receiver all such powers, as to bringing and defending suits in the courts, or filing and defending applications before the Tribunal and for the realization, management, protection, preservation and improvement of the property, the collection of rents and profits thereof, the application and disposal of such rents and profits, and the execution of documents as the owner himself has, or such of those powers as the Tribunal thinks fit; and appoint a Commissioner for preparation of an inventory of the properties of the defendant or for the sale Debt Recovery Tribunal and Debt Recovery Appellate Tribunal shall not be bound by the procedure laid down in Code of Civil Procedure The recovery may be done in any of the following ways attachment and sale of the movable or immovable property of the defendant; arrest of the defendant and his detention in prison; appointing a receiver for the management of the movable or immovable properties of the defendant. Write note on objectives behind creation of ARCs. The main objective of asset reconstruction company (ARC) is to act as agent for any bank or financial institution for the purpose of recovering their dues from the borrowers on payment of fees or charges, to act as manager of the borrowers asset taken over by banks, or financial institution, to act as the receiver of properties of any bank or financial institution and to carry on such ancillary or incidental business with the prior approval of Reserve Bank wherever necessary. If an ARC carries on any business other than the business of asset reconstruction or securitisation or the business mentioned above, it shall cease to carry on any such business within one year of doing such other business.
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33. The SRFAESI Act has an overriding effect over other laws Explain. In terms of Section 35 of the SRFAESI Act, the provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. In accordance with Section 37, the provisions of this Act or the rules made thereunder shall be in addition to and not in derogation of, the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or any other law for the time being in force. The combined affect of Sections 35 and 37 is that in cases of any conflict with these Acts or any other Act, then the SRFAESI Act, 2002 shall have the over riding effect over such Act or Acts . Explain the various grounds for compulsory winding up. In terms of Section 433 of the Companies Act, 1956, a company shall be compulsorily wound up if : The company has passed a special resolution of its being wound up by the Court Default is made in delivering the statutory report to the Registrar or in holding the statutory meeting The company does not commence business within a year from its incorporation or suspends business for a whole year The number of its members in the case of a public company is reduced below seven and in the case of a private company, below two The company is unable to pay its debts The Court is of the opinion that it is just and equitable that it should be wound up If the company has made a default filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years If the company has acted against the interests of the sovereignty and integrity of India, the security of the state, friendly relations with foreign states, public order, decency or morality If the Court is of opinion that the company should be wound up under the circumstances specified in Section 424G (i.e. winding up of a sick company). Short notes on just and equitable clause for winding up of a company. Following are few circumstances considered to be just and equitable for winding up of a company: Where the whole object of the company was fradulent Where the substratum of the company is gone. Where the main object of the company for which it was incorporated has been completely achieved. Where there is a complete deadlock in the management of the company Where the company is a "bubble" and has no business to carry on e.g. where the main business of the company has been taken over by the Government and there is no prospect of the company doing any other business mentioned in the objects clause of the Memorandum of Association. Where the company is insolvent and its business is being carried on for the benefit of the debenture holders. Where there has been mismanagement and misapplication of funds by the directors of private company Where the petitioner was excluded from all participation in the business of a private company.
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If the company has committed default in making payment to various investors, allegations that directors have
cheated several thousand investors, banks and financial institutions, company has not filed balance sheet for two years and no reply from company to advertisement under Rule 24, the company is liable to be wound up .

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36. Short note on appointment of liquidator in case of voluntary winding up. Members Voluntary Winding Up: in terms of Section 490 of the Companies Act, 1956, the liquidator shall be appointed by the company in general meeting. The remuneration shall also be fixed by the company in general meeting. Company shall inform the appointment of liquidator to the RoC within 10 days. Liquidator shall himself inform the RoC within 30 days. Creditors Voluntary Winding Up: in terms of Section 502 of the Companies Act, 1956, the creditors and the company at their respective meetings may nominate a person to be liquidator, but the person nominated by the creditors shall become the liquidator subject to an application to the Court. If no person is nominated by the creditors, the person nominated by the company shall be liquidator. Further if no person is nominated by the company, the person nominated by the creditors shall be liquidator. Explain the concept of committee of inspection. In terms of Section 503 of the Companies Act, 1956, in a Creditors Volunt ary Winding up, the creditors may at set up a Committee of Inspection consisting of not more than 5 members. In case such a Committee is appointed, the company shall also appoint not more than 5 members on the Committee. The powers and proceedings of such Committee are the same as the committee appointed in compulsory winding up under Section 465 of the Act. The following are the powers: (a) The Committee shall have the right to inspect the accounts of the liquidator at all reasonable times. (b) The Committee shall meet at such times as it may from time to time appoint and the liquidator or any member of the committee may also call a meeting of the committee as and when he thinks necessary. (c) The quorum for a meeting of the Committee shall be one-third of the total number of the members, or two, whichever is higher. (d) The Committee may act by a majority of its members present at a meeting, but shall not act unless a quorum is present. What do you mean by fraudulent preference of creditors in case of winding up? Section 531 of the Companies Act, 1956 provides that every transfer of property, movable or immovable, delivery of goods, payment, execution or other act relating to property made, taken or done by or against the company within six months before the commencement of its winding up shall be deemed, in the event of its being wound up, a fraudulent preference of its creditors and, therefore, invalid. It will amount to a fraudulent preference if it is shown that the company was at the date of transfer unable to pay its debts as they became due; the transaction took place within six months of the presentation of the petition to the Court and in case of voluntary winding up, within six months from the date of the resolution for winding up; the dominant motive of the company, acting by its directors was to prefer one creditor to another; 39. the transaction was made in favour of a creditor. Explain the highlights of UNCITRAL Model law on Cross Border Insolvency. A Model Law is a legislative text that is recommended to countries for incorporation into their national law. Purpose of UNCITRAL Model Law Cooperation between the courts and other competent authorities of a State and foreign States involved in cases of cross-border insolvency; Greater legal certainty for trade and investment; Fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested persons, including the debtor; Protection and maximization of the value of the debtors assets; and Facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving
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employment Applicability of the Model Law Assistance is sought in the enacting State by a foreign court or a foreign representative in connection with a foreign proceeding; or Assistance is sought in a foreign State in connection with a proceeding under the laws of the enacting State relating to insolvency; or A foreign proceeding and a proceeding under the laws of the enacting State relating to insolvency in respect of the same debtor are taking place concurrently; or Creditors or other interested persons in a foreign State have an interest in requesting the commencement of, or participating in, a proceeding under the laws of the enacting State relating to insolvency. Provisions of Model Law A foreign representative may apply directly to the Court The Model Law avoids the need to rely on cumbersome and time-consuming letters rogatory or other forms of diplomatic or consular communications that might otherwise have to be used. Foreign creditors have the same rights regarding commencement and participation in an insolvency proceeding The court may refuse to take an action if the action would be contrary to public policy A foreign representative may apply to the court for recognition of the foreign proceeding in which the foreign representative has been appointed. An application for recognition shall be accompanied by: A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or In the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative. Short note on recommendation of World Bank with respect to Insolvency laws. The World Bank principles have been designed as a broad-spectrum assessment tool to assist countries in their efforts to evaluate and improve core aspects of their commercial law systems that are fundamental to a sound investment climate and to promote commerce and economic growth. Recommendations of the World Bank: (a) Credit Environment Compatible credit and enforcement systems Collateral systems Enforcement systems Credit information systems Informal corporate workouts (b) Insolvency Law systems Commercial insolvency (c) Implementation Institutional and regulatory frameworks (d) Overarching considerations of sound investment climates
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CS Solutions Hazra & Girish Park, Kolkata Study CS from the Experts STRATEGIC MANAGEMENT, ALLIANCES AND INTERNATIONAL TRADE
1. Explain the functions of strategic management. Strategic management is an externally oriented philosophy of managing an organization that links strategic thinking and analysis to organizational action. As an explicit philosophy of managing an organization, strategic management discharge the following functions:
novation, and excellence;
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Explain the steps for implementation of a Knowledge Management Programme. Defining Knowledge Management Strategy: Knowledge management strategy is defined in advance so that a systematic approach is followed. It requires the active involvement of top management so that its commitment and support are ensured. Knowledge management strategy contains the following: (a) What to Share (b) Why to Share (c) How to Share (d) Whom to Share Organizing Knowledge Management Programme: For organizing knowledge management programme, a knowledge management centre should be established. Besides this, the business should undertake the following steps to implement the knowledge management programme: (a) Providing Budget for Sharing Knowledge (b) Communicating the Value of Sharing Knowledge (c) Choosing Technology for Sharing Knowledge (d) Selecting Methods of Sharing Knowledge: (e) Measuring of Performance Reinforcement for Knowledge Management : Reinforcement for knowledge management is necessary to make it a part of organizational processes and practices. It increases the strength of a new behaviour and tends to induce repetition of that behaviour. Reinforcement should be provided so long as knowledge sharing does not get imbibed into personnel. In order to provide reinforcement for knowledge management, the business has to: (a) Introduce New Incentives (b) Provide Support Knowledge Sharing. What are the limitations of strategic management? Uncertain Predictions: Business units are operating in very complex, competitive and dynamic environment. Strategic management, thus, helps to overcome this problem by making trend predictions and framing strategies accordingly. But practically this has become a serious limitation on effective strategic management. Due to increasing complexity and an accelerating rate of change, it becomes more and more difficult to predict the future outcome with certainty i.e. in terms of government policies, regulatory measures, change in technical know-how, global scenario and political conditions etc. Thus, under these conditions, strategic management is very difficult, time consuming and costly exercise. In spite all this, the role of strategic management business cannot be ignored or overlooked. Non-Flexibility: It has been advocated by experts that strategic -management brings non flexibility in the organization through strategic planning. It may be a more serious limitation of strategic management. Strategies are
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selected and implemented in a given set of environment both external as well as internal. The organization sets outs various parameters for its working, for example, designing of organization structure, prescribing rules and procedures, allocating resources, etc. after taking in to account both internal and external factors. In a situation when business unit wants certain change in the light of change in the environment, it becomes difficult. Thus, this internal rigidness - human and procedural may make the strategic planning ineffective and unsound. Contribution of Strategic Management: Another limitation of strategic management is a situation when the managers in the organization are inadequately aware about its contribution to the success of the organization objectives and the way in which strategic management can be undertaken. It has been observed that managers, generally focus their attention on operating problems, ignore more important strategic problems. It is because they are more interested in short-term results. Implementation: The most important limitation of strategic management for a business unit is its implementation. Implementation of policies and strategies is concerned with design and management of systems to achieve the best integration of people, structure, processes and resources in reaching organizational purposes. Implementation basically involves number of interrelated decisions, choices and broad range of activities. It requires the commitment and cooperation of all units, levels and members if it is to succeed. Explain the various techniques of forecasting. Trend Extrapolation Technique: This involves picking a tracking factor or environmental variable, noting its trend (statistically or otherwise), and extending that trend into the future. Lead and lag correlates are often used in the process. Linear and non-linear statistical models and techniques can be used when hard numerical data exist. This normally involves line fitting to historical data, and extending the line into future periods. Most spreadsheet programs and some operating systems have easy-to-use trend line extrapolation routines built into them. Historical Analogy Technique: It involves identification of precursor or concurrent events and simple recognition of the relationship. Under this technique a forecaster really examines a series of analogous (though not identical) events. Because forecasting by analogy is used where historical data are inadequate for the more formal trend extrapolation, its validity and reliability are open to challenge. Delphi Techniques: Under this technique, the divergent expert opinions are consolidated to arrive at a compromise estimate of future. To be precise it basically involves the use of expert opinion through anonymous, interactive, controlled feedback among a group of participants (the expert panel). Normally the panel is polled by questionnaires in a search for opinions on reasonably well-defined issues. Each member responds with a forecast and reasons for it. These responses are then statistically compiled and fed back anonymously to all members of the panel. This routine continues through subsequent interactions as the information is reprocessed by the experts and new forecasts are generated. Ideally the composite results will move towards a consensus. Econometric Models: The econometric models combine statistical tools with economic and business theories to estimate various economic variables and to forecast the intended variable. Basically the econometric models are designed as numerical interpretations of real-world systems (e.g., national economies, ecologies, production systems). They involve the estimation of theoretical and empirically based relationships, which, when taken together, interact quantitatively to produce forecast outcomes. Computers are normally used to make the calculations. An econometric model may be single equation regression model or it may consist of a system of simultaneous equations. The forecast made on the basis of econometric models are much more reliable as compared to other techniques. The unique advantage of this technique is the ability to perform sensitivity analysis where the analyst changes assumptions or estimations within the model to generate varying outcomes. Cross-Impact Analysis Technique: It is a forecasting technique which is designed to assess the interactions among future environmental conditions. The analyst begins these exercises by assuming that a set of future environmental circumstances will come true (e.g., four new industry entrants, each holding a 5% market shares within six years). Through the use of matrix analysis, the analyst then attempts to assess the impact of these circumstances on the possibility and timing of others, (such as price competition). If nothing else, the analyst is able to expose forecasting inconsistencies and to clarify underlying assumptions in the forecasts themselves. Scanning and Monitoring Technique: These are forecasting techniques which involve future thinking. The scan is the equivalent of a 360-degree radar sweep, but monitoring is the choice for specific environmental variables or
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factors which are tracked over time. The latter merely helps to refine and make the gathering and processing of environmental information more efficient. Survey Technology: Under this technique, field surveys are conducted to collect information on the intentions of the concerned people. The survey may be on census or sample basis. Under census survey all the units in the population are taken into account. In sample survey industry analysis, a selected subset of them are surveyed and through their study inferences about the whole population are drawn. Business Barometer Technique: Under this technique experts use economic indicators as barometer to forecast trends in business activities. The basic approach applied under this technique is to construct an index number of relevant economic indicator and to forecast future trends on the basis of movements in the index of economic indicators over the period. Time Series Analysis Technique: It refers to an arrangement of statistical data in a chronological order in accordance with its time of occurrence. It basically reflects the dynamic pace of steady movements of phenomena over a period of time. Important variables of business interest include price, production, investment, consumption, national income, foreign trade and exchange reserves. Time series data on the relevant variable under forecast are used to fit a trend line or a curve graphically. Trend line can be worked out by fitting a trend equation to time series through least square method or some other estimation techniques. Regression Analysis: Regression analysis is the most popular and widely applied forecasting technique used by the experts. It is a mathematical analysis which reveals the relative movements of two or more interrelated series. It is used to estimate the changes in one variable as a result of specified changes in other variable or variables. Generally, the regression and correlation analysis is used for processing the statistical data and deriving a generalized mathematical relationship which, subject to a certain error, can be used for forecasting the expected values of the dependent variables in future if the values of independent variables are known. It is objective method which uses both time series and cross sectional data. Input-Output Analysis: Input-output analysis considers inter industry relationship in an economy depicting how the output of one industry goes to another industry where it serves as an input and thereby makes one industry dependent on another both, as customer of output and as supplier of inputs. An input-output model is a specific formulation of input-output analysis. According to Watson, input-output analysis is the statistical measurement of the inputs and outputs of all industries taken together in an interdependent system of commodity flows. It is based on certain set-off assumptions. Short notes on SWOT analysis and value chain analysis. SWOT Analysis SWOT Analysis, is a strategic planning tool used to evaluate the Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T) involved in a project or in a business venture. It basically involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable for achieving the objective. HELPFUL In achieving the objectives Strengths Opportunities HELPFUL In achieving the objectives Weaknesses Threats
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Internal Origin External Origin
In SWOT analysis Strengths, Weaknesses, Opportunities and Threats can be understood as: Strengths: Attributes of the organization that are helpful in achieving the objective. Weaknesses: Attributes of the organization that are harmful in achieving the objective. Opportunities: External conditions that are helpful in achieving the objective. Threats: External conditions that are harmful in achieving the objective. The aim of any SWOT analysis is to identify the key internal and external factors which are important to achieving

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the objective. Internal factors The strengths and weaknesses internal to the organization. External factors The opportunities and threats presented by the external environment. Identification of SWOT is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOT. The decision makers have to determine whether the objective is attainable, given the SWOT. If the objective is not attainable a different objective must be selected and the process is repeated. The merit of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. SWOT analysis may also be used in pre-crisis planning and preventive crisis management. Value Chain Analysis A value chain can be described as the full range of activities which are required to bring a product or service from conception through the different phases of production to its delivery to final consumers. In the illustrative case study of value chain appended to this topic, the value chain in the fishery sector can be defined as movement of the product (fish) from the landing centers to the final consumer taking into consideration the entire gamut of service providers at the various levels of the chain, the value addition done or the service done to the product before its consumption. There are four elements in the value chain : (i) Design and Product Development (ii) Production (iii) Marketing (iv) Consumption / Recycling. Michael Porter in his famous book Competitive Advantage introduced a generic value chain model that comprises a sequence of activities found to be common to a wide range of firms. Porter identified that the activities of a business could be grouped under two broad headings: (1) Primary Activities It covers those activities which are directly concerned with creating and delivering a product (e.g. component assembly); and (2) Support Activities It includes those activities which are not directly involved in production. It may increase effectiveness or efficiency. It is rare for a business to undertake all primary and support activities itself. Short note on Business Process Reengineering. Business process re-engineering can be defined as the analysis and design of workflows and processes within and between organizations. It is basically the critical analysis and radical redesign of existing business processes to achieve breakthrough improvements in performance measures business process re-engineering is also known as business process redesign, business transformation or business process change methodology. Following steps are considered for business process re-engineering: (i) Developing business vision and process objective: Under this process it is desirable that a vision of organization is defined clearly so that one can put business process function in tune with the vision. Basically organizational vision depicts the challenging position what the organization will be in future. (ii) Identifying the process to be redesigned: Once business vision and process objectives are clearly defined, the organization should focus and identify those processes which needs redesigning. (iii) Measuring the performances of existing processes : Under this step, the organisation should focus on various methods used to measure the performance of a process to determine whether an opportunity exists to improve its efficiency, effectiveness and adaptability. Two popular methods include benchmarking and process evaluation. (iv) Identification of the opportunity for application of information technology : Under this step, the emphasis is placed on application of IT knowledge to support a process and redesign the process accordingly. As against this, under the conventional approach method of process design, firstly it establishes a process and than assesses
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the information requirement. (v) Building prototype of new processes: Under this step, the organization should design a new process on an experimental basis in the light of series of revision and improvement until the redesign process is put in actual operation. The prototype must be tested to measure this performance and incorporate needed changes. It may be noted that the testing should be in realistic environment as far as possible. What are the various environments which effect the success of an organisation? An analytical classification of various environmental factors are as follows:
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-legal environment, -cultural environment, and ECONOMIC ENVIRONMENT: Economic environment is by far the most important environmental factor which the business organizations take into account because a business organisation is an economic unit of operation. Since the measurement of organizational performance is mostly in the form of financial terms, often managers concentrate more on economic factors. The economic environment is important for non-business organizations too because such organizations depend on the environment for their resource procurement which is greatly determined by the economic factors. TECHNOLOGICAL ENVIRONMENT: Technological environment refers to the sum total of knowledge providing ways to do things. It may include inventions and techniques, which affect the ways of doing things, i.e., designing, producing, and distributing products. Technological environment is important for business as it affects the type of conversion process that it may adopt for its purpose. A given technology affects an organisation in the way it is organised and faces competition POLITICAL LEGAL ENVIRONMENT: Political-legal environment consists of laws and regulatory framework and political set-up in which a business unit is operating. The stable political set-up and legal framework in the economy influence the decisions of the organisation. S.H. Robock has developed a conceptual framework for identifying and assessing political risk which may affect business decisions. SOCIO-CULTURAL ENVIRONMENT: Social-cultural environment is another important aspect of environmental scanning in strategic management. It basically refers to the set of values, ideals, attitudes, belief, desires, expectations which distinguish one group from those of another. The organisation needs to be aware of how social and cultural factors can directly influence the way they manage their operations particularly human resources and marketing. GLOBAL ENVIRONMENT: Business organization in every industry is facing the rising tide of globalization. The world has reduced to smaller place as a result of revolution of means of transport and communication and diffusion in information technology. So today, business organization needs to think about setting and producing goods for customers globally. Globalization basically presents existing opportunities and challenges to many companies. Short note on mission of an organization. Mission is a general statement of what distinguish the organization from all other of its types. It should address the basic purpose of the firm, the reasons for which it exists. Mission is the answer of basic question, What is our business? A clear mission statement is essential for effectively establishing objectives and formulating strategies. It is the guiding principle that drives the processes of goal and action plan formulation, a pervasive, although general, expression of the philosophical objectives of the enterprise. Mission should focus on long-range economic potentials, attitude toward customers, product and service quality, employee relations, and attitudes toward owners. It provides identity, continuity of purpose, and overall definition, and should convey the following categories of information. An ideal mission statement should possess the following features:
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Mission should be clear, both in terms of intentions and words used. It should be feasible, neither too high to be unachievable, nor too low to demotivate the people for work. It should be precise but self-explanatory, neither too narrow so as to restrict the organizations activities, nor too broad to make itself meaningless. It should be distinctive, both in terms of the organizations contributions to the society and how these contributions can be made. The role played by mission in guiding the organization is an important one. Specifically it: Serves as a basis for consolidation around the organization's purpose. Provides impetus to and guidelines for resource allocation. Defines the internal atmosphere of the organization, its climate. Serves as a set of guidelines for the assignment of job responsibilities. Facilitates the design of key variables for a control system. Distinguish between objectives and goals. Time: Objectives are timeless, enduring, and unending whereas goals are temporal, time-phased, and intended to be superseded by subsequent goals. Objectives relate to the ongoing activities of an organization, their achievement tends to be open-ended and not bound by time. The objective of survival and growth of a business organization is never completely attained because non-attainability is a possibility. A goal on the other hand is short-lived as it is time bound. Specification: Objectives are stated in broad, general terms, dealing with matters of image, style and selfperception. These are aspirations to be worked in the future. Goals are very specific, stated in terms of a particular result that will be accomplished by a specific date. Goals are more specific and time bound. Focus: Objectives are usually stated in terms of some relevant environment which is external to the organization. Goals on the other hand, are more internally focused and carry important implications about how resources of the organization are utilized or will be utilized in future. Objectives are more generalized statements like maintaining market leadership, striving continuously for technological superiority, etc., whereas a goal may imply a resource commitment requiring the organization to use those resources in order to achieve the desired outcomes. Measurement: Both objectives and goals can be stated in terms, which are quantitatively measured, but the character of measurement is different. Generally quantitative objectives are set in relative terms. For example, Reliance Industries has put its objectives like this: to acquire top position among the Indian companies. This objective may not be achieved in one year, but it is timeless and externally focused, providing a continuing challenge for the company. Quantitative goals are expressed in absolute terms; say 20% increase in sales. The achievement of this goal can be measured irrespective of environmental conditions and competitors actions. Explain the components of the BCG Matrix. The Boston Consulting Group developed the growth-share matrix to analyze the problem of resource deployment among the business units or products of multi-business firms. It is based on product life cycle theory. The business units or products are analyzed by placing each one in the matrix according to their (1) expected growth rate (vertical axis), measured by anticipated growth rate in sales which depends on maturity of industry, and (2) relative market share (horizontal axis), measured as the unit's share divided by that of its largest competitor. The basic idea behind this model is that if a product has a bigger market share or if the products market grows faster, it is better for the organization.
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Stars Invest Cash cows Invest just enough cash to maintain Question marks Remain divested Dogs Liquidate
Thus, the placing products in BCG matrix provide four categories in the portfolio of an organization. Each of the strategic business units categories shown in the (2x2) matrix is explained as follows: Dogs (Low Growth, Low Market Share): Each of businesses or products in quadrant I with low expected growth rates and low relative market standing are labeled as "dogs" or "cash traps." The strategy in this category should consist of cost cutting by divestments, retrenchment, or even liquidation. These units or products are likely to be characterized by high costs, low quality, less effective marketing procedures, and so on, which would collectively contribute to weak competitive position and low potential for profits. The strategy for this category should consist of cost cutting. Question Marks (High Growth, Low Market Share): Those in quadrant II, with high projected growth rates and low market standing, are labeled as Question Mark. The reason is that although they are operating in markets with expected growth potential, they are otherwise experiencing competitive disadvantage. This quadrant has worst cash characteristics of all, because they have high cash demands and generate low returns because of their low market shares. Management can invest cash to correct the market weakness so as to take advantage of expected market growth or, if not convinced of their ability to improve market share, it can retrench, divest, or liquidate to minimize the cash drain. Stars (High Growth and High Market): Products or business units in quadrant III, have both high market standing and high industry growth potential are labeled as stars. They should receive heavy cash investment in order to maintain their market share. Successful resource deployment beyond cash requirements could lead to a superior market share when industry growth potential falls off. Resources should be allocated to these units to grow faster than the competitions in sales and profits. Stars are leaders in the business and generate large amounts of cash. Cash Cows (Low Growth and High Market Share) : A product or business would become a cash generator in quadrant IV. Cash cows have a strong market position in industries that have matured. These products or businesses can thus be "milked" by investing just enough cash to maintain market standing and applying excess cash inflows to the firm's other activities which are growth industries or products. Distinguish between focus strategies and integration strategies. FOCUS STRATEGIES Focus strategies are those which are designed to help an organization target a specific niche within industry. As against low cost leadership and differentiation strategies which are designed to target a broader or industry wide market, focus strategies aim at a specific and typical small niche such as Particular buyer group A narrow segment of given product line A geographical or regional market, and A niche with distinctive special taste and preferences. The basic idea behind a focus strategy is to specialize the firm activities in ways that other borderline (low cost or differentiation) organization cannot perform as well. Superior value, and thus, higher profitability is generated when other borderline organizations cannot specialize their activities as well as a focused organization.
Business growth
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market share
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INTEGRATION STRATEGIES Integration strategies seek mainly, but not exclusively, to acquire a service or product by merging with or acquiring the prior provider. Therefore, the process of integration should be implemented within a framework of goals that spells out the limits of such evaluative criteria as return on sales and investment, pivotal expense items, time, and cash flow. Integration strategies can be achieved in the following ways: (i) Backward Integration (ii) Forward Integration (iii) Horizontal Integration (iv) Vertical Integration Short note on Tactical Planning and McKinseys 7 -S Framework. Tactical Planning Tactical plans have shorter time frames and narrower scopes than strategic plans. Tactical planning provides the specific ideas for implementing the strategic plan. It is the process of making detailed decisions about what to do, who will do it, and how to do it. Tactical planning is micro-oriented and focused on your short term goals, which usually have 1 to 18 months time frames. Tactical planning is contributory to strategic planning. This type of planning is mainly short-term oriented and made at lower levels and is all about how things are getting done. It is designed to apply and implement corporate strategy. The focus is on operations, which includes creating and executing effective and efficient action plans. The following are the characteristics of tactical planning: Tactical planning is formulated at supervisory or lower level of management who are supposed to take appropriate actions for solving operating problems. Tactical planning is short-term duration and directed at short-term actions. Tactical decisions are operational and people-oriented. Tactics are highly dynamic and innovative in approach. Tactical decisions are the means designed to pursue specific ends or goals. Tactical planning is based on functional strategies. Tactics are subject to dynamics of administrative decisions concerning costs, time and resources. Tactical planning applies to all activities and it directly affects the implementation of functional strategies. McKinseys 7-S Framework McKinsey developed the 7-S framework management model which organize seven factors to organize a company in a holistic and an effective way with the objective to diagnose the causes of organization problem and formulate program for improvement due to the implementation of the strategy which are associated with change in the organization. The organizational change is not simply a matter of structure although the structure is a significant variable in the management change. Effective organizational change may be understood to be a complex relationship between the 7-S i.e. strategy, structure, systems, style, skills, staff and shared values (super ordinate goals). The relationship is diagrammatically presented as follows:
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High Medium Low
Invest & grow Invest & grow Invest & grow High
Invest & grow Minimum investment Minimum investment Medium
Caution category Minimum investment Minimum investment Low
The above framework shows that there are a multiplicity of factors which influence an organizations ability to c hange and understand as to how the 7-S model mechanism works: Strategy: Strategy means to achieve objectives. It provides the direction and the scope of the organization over the long-term. Strategy refers to actions the organization plans or undertakes in response to or in anticipation of external environment. It includes purposes, missions, objectives, goals and major action plans and policies. A strategy targets at gaining competitive advantage over rivals. Structure: It is a basic framework to designate responsibilities and functions. Organization structures prefers relatively more durable organizational arrangements and relationship. It prescribes the formal relationship among various positions and activities. System: It is a management tool for planning, decision-making, communication control and the procedures and processes regularly followed by an organization. Systems in the 7-S framework signifies all the rules and regulations, procedures both formal and informal that complement the organizational structure. Style: Style stands for the patterns of behaviour and managerial style of top management over a period of time. It is visible through relationship among the three levels of management or managers, organizational culture which is a reflection of value system. The style has to change with the change in strategy, system and structure. Staff: It is the human resources of the organization i.e., the kind of specialties or professions represented in an organization such as engineers, specialist in different areas: finance, personnel, legal etc. Staffing is the process of recruiting and selecting persons for the organization, training and developing them, placing them in their post so as to reap the potential from each of them. Skills: It means organization and individual capabilities. Skill is an ability or proficiency in performing a particular task. It includes those characteristics which most people use to describe a company. Skills are developed over a period of time and as a result of interaction of a number of factors, performing certain tasks successfully over a period of time, kind of people in the organization, top management style, the organizational structure, the external influences etc. Skills are the dominant capabilities and competencies possessed by the organization through its people. Shared Values (Super-ordinate Goals): Super-ordinate goals stands for companys mission, vision, values, philosophy in the backdrop of which organizational goals and objectives are set and strategies are f ormulated. Its a set of values and aspirations that goes beyond a conventional formal statement of corporate objectives. These are essential as they inspire the members of the organization and provide a definite direction to its operations.
Industry Attractiveness Classroom
Business Unit Strength

Ms. Nidhi Bajaj
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13. Short note on behavioral implementation. Strategic choice is influenced by various subjective factors such as decision styles, attitude to risk and internal power play between the strategists. The strategy implementation process is also influenced by the behaviour and attitude of the strategist along with organizational factors such as corporate culture, corporate values, ethics and organization sense of social responsibility. Behavioural implementation is concerned with those aspects of strategy implementation which have influence on the behaviour of the people in the organization. Since the organization is basically a deliberate creation of human beings for certain specified objectives, the activities and behavior of its members need to be directed in certain way. (i) Leadership: It is the ability to persuade others to achieve the defined objectives willingly and enthusiastically (ii) Organizational culture: It is a set of assumptions, beliefs, values and norms which are shared by people and groups in the organization and control the way they interact with each other and with stakeholder outside the organization. (iii) Organizational Development: It refers to long-term effort supported by top management to improve an organizations problem-solving and renewal process through effective management of organizational change. (iv) Values and Ethics: Values represent basic convictions that a specific mode of conduct is personally or socially preferable to an opposite mode of conduct. Ethics is concerned with moral principles or set of values about what conduct ought to be. (v) Corporate Governance: It is the application of best management practices, compliance of law in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders. (vi) Corporate Social Responsibility: It is a tool used by business and industry to align operations with social and environmental values. (vii) Organizational Politics: Politics can be referred to as actions for seizing, holding, extracting and executing of power by individuals and groups for achieving personal goals. The organization decisions are affected because of organizational politics in such a way that they constitute to personal goals rather than organizational goals. What are the limitations of strategic programming? Required Conditions: The fulfillment of required conditions by an organization is one of the important limitation of strategic programming. Strategic planning is most appropriate to those organizations which are confronted with stable, simple and normal conditions. Further once the organization crosses this limit the following conditions are also fulfilled: Stability Simplicity Industry maturity Capital intensity and External control. Falling visibility of Mechanistic Organizations: Mechanic structure is founded on formal hierarchy taking a changed pyramid to design making it rigid, complex and highly centralized. Lack of freedom and inadequate communication are hindrances to achieve efficiency and disciple. Strategic programming goes well with mechanistic organization. This itself is a limitation that it can not work in other types of organization. Planning Problems: Strategic programming is impossible without planning. In some cases planning leads the organizations away from the main track of progress or normalcy because managers are not aware as to where their intended strategy will take them. Further, planning is inherently a conservative process so much so that the mangers find that it is ill-suited to change course i.e., planning works to conserve the basic orientation of an organization. Difficulties with command and control: There are difficulties in enforcing command and control: Managers in organization develop commands which reflect that their understanding of the plans are derived from the intended strategy. They use the organizational control system to enforce it in order to comply with those commands.
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15. Discuss the types of resistance to organizational change. In the process of strategic change, managers face the problem of resistance to change. People tend to resist many types of changes because it requires new habits or some sacrifices. Likewise social systems tend to resist change because of homeostasis, which implies self-correcting characteristics of human being to maintain equilibrium as a result of change. The reasons underlying resistance to change may be identified as individual resistance and group resistance. Individual Resistance: There are many factors operating at the individual level which are responsible for resistance. Degree of resistance depends on how people feel about the change. Their feelings may be either real or emotional which may be seen in the context of economic; psychological and social factors. (i) Economic Factors: People feel attached to the organization for satisfying their needs. The economic needs i.e. physiological, job security, etc., precede over other needs. People may perceive that they will be adversely affected by the change in terms of their need satisfaction due to: (i) obsolescence of skill; (ii) fear of economic loss; and (iii) reduced opportunity for incentives. (ii) Psychological Factors: It covers those factors which are based on peoples emotions, sentiments and attitudes towards change. These are qualitative rather than quantitative. Major psychological factors responsible for resistance may include: ego defensiveness; status quo; low tolerance of change; lack of trust on change agent and fear of unknown. (iii) Social Factors: People derive need satisfaction, particularly social needs through their mutual compatible interaction and form their own social groups at the workplace for the satisfaction of their social needs. The satisfaction of these needs is affected by a change which people resist. The major social factors causing resistance to change are: (i) desire to maintain existing social interaction; and (ii) feeling of outside interference. Group Resistance: People may express their resistance in the form of group also. The effect of group as a source of resistance may be analysed in terms of nature of group dynamics and vested interests. Group dynamics refers to forces which operate in a group determining the bevahiour of its members. These forces determine how effective a group would be in accepting or rejecting a change. The following nature of group dynamics is important in this context: i. If the group is highly cohesive and members have developed strong belongings to the group, it has strong say in acceptance or rejection of change. ii. If both change agent and people are target for change belong to the same group, the role of group is more effective. iii. The degree of group attractiveness to its members affect how effective the group is in change response. iv. Group can exert more pressure on those factors of the members which are responsible for group being attractive to the members i.e., attitudes, values and behaviors. v. The degree of prestige of group determines the degree of influence the group has over the members and response to change. What do you mean by the Balance Score Card Approach? The balanced score card (BSC) is a strategic planning and management system that is used extensively in business and industry, government, and non-profit organizations worldwide to align business activities to the vision and strategy of the organization. The BSC provides for the development of a conceptual framework model which assigns the strategic mission of the organization with achievable goals and actions measured against pre-determined metrics. It helps to improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. However, the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950s and the work of French process engineers (who created the Tableau de Bord literally, a "dashboard" of performance measures) in the early part of
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the 20th century. The balanced scorecard suggests the following four perspectives: (i) Learning and Growth Perspective : This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge based organization, people; the only repository of knowledge are the main resource. In the current situation of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Government agencies often find themselves unable to hire new technical workers, and at the same time, there is a decline in training of existing employees. (ii) Business Processes Perspective: This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements. These metrics have to be carefully designed by those who know these processes most intimately; with unique missions, these are not something which can be developed by outside consultants. (iii) Customer Perspective: Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators, if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups. (iv) Financial Perspective: The availability of timely and accurate financial data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database system, it is seen that more of the processing can be centralized and automated. But the current emphasis on financial parameters only may lead to the unbalanced situation with regard to other perspectives. There is a need to include additional financerelated data, such as risk assessment and cost-benefit data, in this category. Short notes on HR and R&D key performance indicators. Human Resource Key Performance Indicators Head count control Head count by responsibility Mix of staff analysis Mix of business analysis and staff personnel needs Skilled and non-skilled staff Management personnels vs. operations staff Own labour/outside contractor analysis Workload activity analysis Vacancies existing and expected Labour turnover Labour turnover vs. local economy Percentage of overtime worked to total hours worked Absence from work Staff morale Cost of recruitment Number of applicants per advertisement Number of employees per advertising campaign Staff evaluation techniques Evaluation of staff development plans Monitoring of specific departments, e.g. accounting
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Accuracy of reporting as measured by wrong-allocations and wrong-postings Monitoring of departments long-term performance Pay and conditions vs. competition. Research and Development Key Performance Indicators Evaluation and basic research and development objectives, strategic objectives and project objectives Product improvement against potential market acceptance Research and development against technical achievement criteria against cost and markets Research and development priority vs. other projects Research and development vs. competition Research and development technical milestones Analysis of market needs over the proposed product/service life of R&D outcome Top management audit of research and development projects Major programme milestones Failure rates of prototypes Control by visibility - releases, e.g. definition release, design release, trial release, manufacturing release, first shipment release, research and development release. What are the objectives of risk management? Risk management refers to identification of opportunities and avoiding or mitigating losses . It is a logical and systematic process of establishing the context, identifying, analysing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process, in a way which enables an organisation to minimise losses and maximise opportunities. Broadly speaking, the objectives of risk management is: To provide a structured framework for more effective strategic planning To ensure maximising of opportunities and minimisation of losses To widen management perspective and encourage initiative and pro-active behaviour To contribute to improved organisational efficiency and effectiveness To optimise the use of resources To promote greater openness in decision-making and improve communication To provide senior management with a concise summary of the major risks affecting the organisation and a mechanism to ensure that appropriate resources are directed towards areas of high risk To provide a framework for ensuring that unavoidable risks are adequately insured To provide an effective and systematic approach which enables management to focus on areas of risk in their operations To improve the level of accountability in the organisation To identify and prioritise potential risk events To help in developing risk management strategies and risk management plans To analyse and report identified risk events To find ways to identify and evaluate risks To develop strategies and plans for risk management strategies.
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19. What do you mean by enterprise risk management? Risk management refers to identification of opportunities and avoiding or mitigating losses. It is a logical and systematic process of establishing the context, identifying, analysing, evaluating, treating, monitoring and communicating risks associated with any activity, function or process, in a way which enables an organisation to minimise losses and maximise opportunities. Risk management is also considered as a structured approach in managing uncertainty related to a threat, a sequence of human activities including: risk assessment, strategies development to manage it, and mitigation of risk using managerial resources. Risk management is the process for dealing with uncertainty within a public policy environment. To be precise, risk management is a systematic approach for setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues. The major characteristics of risk management are as under: (i) It is a systematic discipline for dealing with problem of uncertainty (ii) It provides a system of making choices (iii) It is a way for better understanding of potential liability (iv) It is a guide for responding to undesirable events. What are the various strategies for risk mitigation? Transfer Risk: Normally in projects assignments or multifaceted exercises, execution is fought with risks. Different agencies work together and these agencies take care to transfer risk in their areas to another agency which is better equipped to take care of a risk for a consideration. Here the concept of core competence curves in and whenever a particular agency, individual or a firm finds that it is dealing in an area where it does not have the core competence to deal with it seeks the help of another agency which has the specific core competence to transfer its own risk. The risk may be in the form of loss of reputation or sub quality performance and this risk is taken care of through transfer. Tolerate Risk: It is retention of the risk. It is accepting the loss when it occurs. True self insurance falls in this category. Risk retention is a viable strategy for small risks where the cost of insuring against the risk would be greater over time than the total losses sustained. All risks that are not avoided, reduced or transferred are retained by default. This includes risks that are so large or catastrophic that they either cannot be insured against or the premiums would be infeasible. Reduce Risk: By far the greater number of risks will belong to this category. The purpose of treatment is not necessarily to obviate the risk, but more likely to contain the risk to an acceptable level. Internal controls are actions instigated from within the organization (although their effects may be felt outside of the organization) which are designed to contain risk to acceptable levels. Avoid Risk: This method results in complete elimination of exposure to loss due to a specific risk. It can be established by either avoiding to undertake the risky project or discontinuance of an activity to avoid risk. This means that no risky projects are undertaken. Alternatively, a project may be abandoned midway to mitigate the risk while handling a project. Combine Risk: When the business faces two or three risks the overall risk is reduced by combination. This strategy is suitable mainly in the areas of financial risk. Different financial instruments say, shares and debentures are taken in a single portfolio to reduce the risk. Sharing Risk: Insurance is a method of sharing risk for a consideration. For example by paying insurance premium the company shares the risk with companies and the insurance companies themselves share their risk by doing re-insurance. Hedging Risk: Exposure of funds to fluctuations in foreign exchange rates, prices etc., bring about financial risks resulting in losses or gain. The downside risk is often taken care.
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21. Short note on information needs at various levels of management. Top level management Information is needed on a adhoc basis It is often unexpected It is usually predictive of the future events It is usually in the summarized form Large part of the data is acquired from external resources The data is in a unstructured format The information is highly subjective in nature Middle level management The information is of a predictive nature It produces unexpected findings It is comparative in nature It is also in the summary form It is acquired from both internal and external sources Supervisory level of management The information is repetitive in nature They are usually predictive They often describe the past The information is very detailed It usually originates from internal sources It is in a structured form The accuracy level of such information is very high. What are the limitations of MIS ? The quality of the outputs of MIS is basically governed by the quality of inputs and processes. MIS is not a substitute for effective management. It means that it cannot replace managerial judgement in making decisions in different functional areas. It is merely an important tool in the hands of executives for decisionmaking and problem solving. MIS may not have requisite flexibility to quickly update itself with the changing needs of time, especially in the fast changing and complex environment. MIS cannot provide tailor made information packages suitable for the purpose of every type of decisions made by executives. MIS takes into account mainly quantitative factors; thus it ignores non-quantitative factors like morale, attitudes of members of the organization, which have an important bearing on decision-making process of executives. MIS is less useful for making non-programmed decision-making. Such type of decisions are not of routine type and thus they requires information, which may not be available from existing MIS to executives. The effectiveness of MIS is reduced in the organization, where the culture of hoarding information and not sharing with others hold. MIS effectiveness decreases due to frequent changes in top management organizational structure and operational team.
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23. Distinguish between MIS and Decision Support System. MIS Information form is periodic & based on demands Information formats are pre-specified and fixed Information is provided by extraction and manipulation of operational data It provides information about the performance of the organisation It supports the intelligence and implementation stages of decision making It supports structured decisions for operational and tactical planning and control It provides indirect support designed to many managers 24. Decision Support System Information form is interactive required Information formats are adhoc, flexible and adaptable Information is produced by analytical modeling of operational and external data It provides information to confront specific problems or opportunities It supports the intelligence decision, choice and implementation stages of decision making It supports the semi-structured and unstructured decisions for technical and strategic planning and control It provides direct support tailored to the decision making styles of individual managers
What do you mean by artificial intelligence and expert systems? Artificial Intelligence: The effort to develop computer based systems which can behave like humans, with the ability to learn languages, accomplish physical tasks, use a perceptual apparatus, and emulate human expertise and decision making. An example of such an effort is the diagnosis of a specific illness and prescription of a course of treatment by a physician. These are artificial intelligence programs called expert systems that will perform limited diagnosis of an illness with an accuracy rate greater than the physician. The primary areas of artificial intelligence research and applications today are robotics, computer vision, speech recognition, natural language processing, expert systems, and neutral networks. Expert Systems: It is a knowledge intensive computer program which captures the expertise of a human in a limited domain of knowledge and experience. It helps in organizations value added work. The users of an expert system are the people who do value added work which requires a special skill or expertise. It provides tools, information, structured methods for decision making. It stores and provide expert knowledge to support decisions in specific areas. Examples of expert system: System which generate competitive bids. System to help sales people and suggest the best choice for the customer. System which helps in diagnose of failures may be machine or human being. Systems to support a loan approval system. Systems to support training in specialized areas where experts are in scarcity. System to find price inconsistencies between different equity markets. What are the characteristics of an effective internal control system? Internal control of a business includes the whole system of controls i.e. operational, financial and managerial control. Controls are exercised through internal checks by the executives, by internal and statutory auditor and by various committees appointed to examine in-depth, certain aspects of business. Controls are also exercised to some extent by outside bodies like financial institutions; banks etc. who offer term loans for working capital. The main characteristics of an effective internal control system are stated as follows: There should be proper delegation of authority, responsibility and duties within the organisation and any areas of conflict, misunderstanding and overlapping of duties.
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Appropriate monitoring system should exist for an analysis of performance and taking immediate corrective measures. In built facilities should exist for checking, cross checking and reconciliation of data by experienced employees including internal audit personnel, to ensure reliability, adequacy and correctness of all recorded transactions. The internal control system should not be expensive but should be commensurate with the benefits to be derived. The control system should be flexible and adjustable to the changing situational needs and should never be too tight to take away the initiative of the operational executives. There should exist a system of authorisation and record procedures to provide reasonable accounting control over assets, liabilities, revenue and expenditure. The work of one person should become complementary to the work of another with a view to prevent and detect errors and frauds. Selection procedures are carefully screened to ensure that only qualified people are employed. Responsibilities are assigned according to individuals having requisite competence and qualification. The staff should have adequate facilities to carry out their work and duties. There should be plan of organisation which provides the segregation of functional responsibilities and allocation of duties in such a way that none is responsible for the entire transaction. Functional responsibilities should be attainable and not academic. Evaluation of control system is periodically done by internal auditors and weakness revealed therein are brought out suitably for improvements. Appraisal is necessary to keep control alive, vital and effective. Management should not be reluctant to take steps in formulating effective systems of control at any stage or at any line of organisational functioning. Control should be a continuous process and control measures should not be static but dynamic. Control measures, should not be taken as substitutes for judgement. Control measures should be well conceived and operate with maximum efficiency and should not taken as substitutes for judgement. Controls should not be duplicating and repeating to avoid extra costs in their applications. Distinguish between internal check and internal audit. Internal check It is an arrangement of duties allocated in such a way that work of one person is automatically checked by another No special staff is needed Objective is to reduce errors and frauds Checking goes on uninterruptedly and is automatic 27. Explain the need for strategic alliances. Most firms enter into alliances out of need. According to an executive, With alliances, we can do more for less. Whatever the needs driving alliance formation, managements must take the time to analyse why an alliance is the best strategy. The president of an Automotive industry had once explained, Understanding why you need a partnership is the most critical step. Sorting out the whys in the equation will in turn dictate the answers to key issues such as with whom you want to collaborate, how the partners will combine their strengths, and how the venture will be structured and managed. The record suggests that ten main strategic factors reduce the whys in most alliance equations: Satisfy customer demands: Customer demands in many markets are changing. For example, in office automation, customers now prefer a systems solution and want to rely on a single company to s ervice all equipment. Share R & D costs: High financial stakes and a cut-throat global market have fuelled a spate of competitive alliances in a number of industries. Fill knowledge gaps: Companies that are leaders in their fields can maintain that position by using alliances to Internal audit It is an independent review of operations and records Separate staff is engaged for this purpose Objective is to disclose the errors and frauds Internal auditor has to see that the work is correct and done accordingly to the rules
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capture new developments, and keep their technological resource base ahead of the competition. Make scale economies: Alliances can achieve the scale needed to amortise investments. Make scope economies: Alliances can enlarge dramatically the scope of a companys operations. Alliances focusing on scope help counter the ever-shorter product cycle of modern technology. Jump market barriers: However potent the producer companys name may be in its home markets, that company may not market even its mature products best in international markets. Alliance marketing, franchising, distribution and licensing deals can leave a development-focused company free to concentrate on new products. Speed product introduction: The narrowing of the development-to-market lead time has been a crucial feature of the past decade. In many sectors, the first company to introduce a new product enjoys a dominant market position and stands the best chance of recouping costs before the competition arrives to drive prices down-or before patent protection expires. Pre-empt competitive threats: In industries in which a few large players increasingly dominate markets, some companies resort to an if you cant beat them, join them approach. Use excess capacity: A large number of companies have used the restructuring effect of manufacturing alliances to soak up excess capacity. Cut exit costs: Participants can use alliances to cut the costs of leaving a business. What are the steps for preparing for strategic alliances? The important steps necessary for good alliance creation and management are: Developing qualitative and quantitative partner criteria : The organisational culture and norms should be analysed, personnel functions should be analysed and the proposed criteria of partner to be selected should be outlined. Developing a list of prospective partners: It is essential that the partner analysis is proactive and not reactive. A partner that approaches a company may not be the optimum partner. It is therefore, necessary to examine other opportunities, if they exist. Accordingly, a list of prospective partners should be prepared. Partner Selection: While selecting a partner, companies must list the prospective standards against which they can measure the merits of a prospective partner; the most important being the three Cs of successful alliances namely, Compatibility, Capability and Commitment. Obtaining internal approvals: The policies should be completely unambiguous and clear internal approvals should be obtained from the CEO and top advisory personnel to avoid embarrassment later. Creating an implementation plan: Alliances conceived entirely by the planning and corporate departments without the active participation of the operational managers, who will ultimately have responsibility for the implementation of projects are bound to fail. It is therefore, essential that the operating managers are involved in at least the later stage of the negotiation process. Final predeal evaluation of all the relevant information Negotiating the deal Managing the legal process What are the factors for success in strategic alliances? Dynamic management structure Encouragement of calculated initiatives Systematic task setting Equal distribution of authority Streamlined communication channels Development of multi-manager roles
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30. Short note on different kinds of Joint Ventures. Equity Joint Venture: The equity joint venture is an arrangement whereby a separate legal entity is created in accordance with the agreement of two or more parties. The parties undertake to provide money or other resources as their contribution to the assets or other capital of that legal entity. The entity is generally established as a limited liability company and is distinct from either of the parties which participate in its creation. The newly created company, thus, becomes the owner of the resources contributed by the parties to the joint venture arrangement. Each of the parties in turn becomes the owner of the company having equity in the company. Contractual Joint Venture: The contractual joint venture might be used where the establishment of a separate legal entity is not needed or the creation of such a separate legal entity is not feasible in view of one or the other reasons. The contractual joint venture agreement can be entered into in situations where the project involves a narrow task or a limited activity or is for a limited term or where the laws of the host country do not permit the ownership of property by foreign citizens. For the purposes of contractual joint venture, the relationship between parties is set forth in the contract or agreement concluded between them. What are the points to be kept in mind while drafting foreign collaboration agreement? The collaboration agreement should generally contain the following comprehensive clauses: (1) In case of agreement for provision of technical know-how definition and characteristics of the subject-matter of the know-how; the mode of transfer of technical know-how i.e. the time and place of transfer and whether the transfer is absolute or for a specified period; clause safeguarding secrecy of the technology; training of the technical personnel of the Indian company by the foreign collaborator; performance guarantee in regard to the achievement of the required qualities, standard of the product, quantities to be produced and minimum standard of performance with suitable indemnity clause; conferring of licence or patent right for the technical know-how and the product to be manufactured; mode and method of payment i.e. whether a lump-sum or by way of royalty or technical fees; who would own the future improvements in the technology by the transferee made by the transferor of the technology; (2) In case of agreement for a joint venture care must be taken to provide for the equity participation by the foreign company under a joint venture agreement; the agreement should also provide for the type of share capital and the mode of payment for acquiring the shares; the constitution of the Board of Directors with election, number of directors and the powers of the Board; who will run the management of the company, and pre-emption rights on the shares of the company. the mode of declaration and distribution of the dividends; the area of marketing of the products; restriction on any change in the ownership ratio; other provisions as incorporated under an agreement for supply of technical know-how. Draft an arbitration clause in a foreign collaboration agreement in line with the ICA recommendation. All disputes or differences whatsoever arising between the parties out of or relating to the construction, meaning and operation or effect of this contract or the breach thereof shall be settled by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration.
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33. Explain the restrictive clauses in foreign collaboration agreements. Restrictions after expiration of Industrial Property Rights or Loss of Secrecy of Technical Know-how: The expiration of the term of patent in a technology transfer agreement signifies that the knowledge and invention covered by such patent enters into public domain and any interested party can use such patent without any obligation. Therefore, any restriction or future payment or any other obligations in respect of such an industrial property rights should be invalid. Where the supplier of the technology imposes any restriction after the expiration of the intellectual property rights, such restriction is deemed to be the restrictive practice. Restrictions after Expiration of Arrangements: The use of such clauses in technology transfer agreements generally oblige the company acquiring technology to pay royalties during the entire duration of manufacture of product or the application of the process involved, without specifying any time limit. Sometimes these clauses also contain restrictions to be continued even after the expiration of the agreement, for example, restrictions on competition, restriction on Research and development activities and specially, the acqu iring companys obligation to keep secret and not to make use of the confidential information even after the expiration of the life of the arrangement. Restrictions on Research and Development: Such restrictions in the technology transfer agreement generally involve limitations on the research and development policies and activities of the company acquiring technology. The use of such clauses affects directly or indirectly the possibilities for the technological development capabilities of the recipient company. Such provisions also restrict the freedom of recipient party to undertake its own Research and development programmes. Non-Competition Clauses: The Non-competition clauses in the technology transfer transactions include the restrictions on freedom of technology acquiring company to enter into arrangements to use or purchase the competing technologies or products not furnished or designated by the company supplying technology. These clauses directly or indirectly affect the acquiring companys capabil ity of competition. Some of the noncompetition clauses which may have direct effect, oblige the recipient company not to manufacture or sell competing products or not to acquire competing technology. Tying Arrangements: Tying clauses in a technology transfer agreement requires the licensee to obtain raw materials, spare parts, intermediate products for use with licensed technology, only from the licensor or its nominees. These clauses also oblige the acquiring company to use personnel designated by the supplier. The main reason behind the use of tying clauses by the company supplying technology seems to be based on the fact that it wants to preserve an exclusive right to supply necessary processed or semi-processed inputs, to maintain quality control, and to expand their profit margin. Export Restrictions: Export restrictions in a transfer of technology agreement may include clauses restricting or prohibiting the export of products manufactured by the transferred technology. These clauses restrict the export of such products to certain markets or permission to export to certain markets and requirement of previous permission for exports. The restrictions can be classified into following three categories: Price Fixing: Price fixing clauses in a technology transfer arrangement involve the practices where the supplier company reserve the right to fix the sale or resale price of the product manufactured by the imported technology. In certain cases the imposition of resale conditions might be justified, e.g. where the supplier company practices a legal selective distribution system, the supplier may impose the conditions on his distributor only to sell to qualified dealers. Restrictions on Field of Use, Volume or Territory : Restrictions on the field of use authorises supplier company to restrict use of the technology or reserving some uses of technology for self-exploitation or exploitation by third parties. The practices concerning the volume restrictions may consist of minimum production requirements or maximum output. The volume of production may also be controlled by higher royalties to be paid beyond a certain production quota or to produce by manufactured goods in a prescribed package with a certain weight. Grant-back Provisions: The grant-back provisions in the technology transfer transactions provides for flow of technical information and improvements to the supplier. These provisions oblige the recipient company to transfer to the supplier of technology, free of cost, any invention or improvement made in the imported technology. The grant-back provisions may be characterised as unilateral, exclusive or non -exclusive. A unilateral grant-back

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provision establishes unilateral flow of technical information or improvement by recipient without any reciprocal obligation of the supplier company. Exclusive Sales and Representation Arrangements: Such practices prohibit the freedom of the technology recipient company to organise its own distribution system. Such clauses in the technology transfer agreement prohibit the technology receipient company from entering into exclusive sales or representative contract with any third party, other than the supplier or a party designated by the supplier company. In other words, under these clauses the recipient company becomes handicapped and has to be dependent on the suppliers distribution channels. Therefore, in the presence of such clauses the recipient company cannot supply the product to the parties to whom it wishes to supply. Use of Quality Controls: Quality control and product standards are very important for an entrepreneur. The quality product is of great importance for the supplier company particularly when it involves a trade mark or service mark. The poor quality of product may injure the reputation of supplier attached with its trade mark. With a view to avoid injury to its reputation the supplier company may impose restrictions to manufacture the product of a certain quality. Quality control clauses generally involve in the licensing of trade marks. Restrictions on Use of Personnel: The restrictions on the use of personnel are imposed by the supplier company on the basis of non-availability of trained local personnel and high risk or delays which might occur if untrained local staff is used. These clauses may impose a heavy social cost on the community of the host country, specially where the supplier obliges the recipient company to use expert personnel, reserve certain managerial or technical positions for experts or impose discriminatory conditions on the recruitment of local personnel. Restrictions on Publicity: Generally the restrictions on publicity obliges the recipient company to spend a minimum amount or to undertake a certain quantity of advertising. Such practices may relate to the content, channels or amount to be spent on publicity. Restrictions on publicity may be justified where the publicity or advertisement is of the nature which is injurious to the goodwill of the supplier. Short note on investment in an entity which is engaged in financial services sector. The Indian Party : Should be registered with the authorities in India for conducting the financial sector activities. Should have earned profits during the preceding 3 financial years from the financial sector activities. Has obtained approval from the authorities both in India and abroad. Has fulfilled the prudential norms relating to capital adequacy as prescribed in India Short note on Issue of share against import of capital goods and against pre-incorporation expenses. Issue of shares against import of capital goods Issue of equity shares against import of capital goods is permissible under the Government route subject to the following conditions: The import of capital goods is made by a resident in India in accordance with the EXIM Policy. There is an independent valuation of the capital goods by a third party. The application should clearly indicate the beneficial ownership and identity of the importer company as well as the overseas entity. Applications complete in all respects, for conversions of import payables for capital goods into FDI being made within 180 days from the date of shipment of goods. Issue of shares against pre-incorporation expenses Issue of shares against pre-incorporation expenses is permissible under the Government route subject to the following conditions: Submission of returns for remittance of funds by the overseas promoters for the expenditure incurred. Verification of the pre-incorporation expenses by the statutory auditors. Payment being made directly by the foreign investor to the company. The applications, complete in all respects, for capitalisation being made within the period of 180 days from the date
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36. of incorporation of the company. Short notes on QFI Investment scheme and Issue of ADRs / GDRs. QFI Investment scheme QFIs as defined therein to mean non-resident investors, other than SEBI registered FIIs and SEBI registered FVCIs, who meet the KYC requirements of SEBI QFIs shall be permitted to invest through SEBI registered Depository Participants (DPs) only in equity shares of listed Indian companies through recognized brokers on recognized stock exchanges in India as well as in equity shares of Indian companies which are offered to public in India in terms of the relevant and applicable SEBI guidelines/regulations The individual and aggregate investment limits for the QFIs shall be 5% and 10% respectively of the paid up capital of an Indian company. These limits shall be over and above the FII and NRI investment ceilings prescribed under the Portfolio Investment Scheme for foreign investment in India. Issue of ADRs / GDRs In accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India A company can issue ADRs / GDRs if it is eligible to issue shares to persons resident outside India under the FDI Policy Indian listed companies not eligible to raise funds from the capital market or which are restrained from accessing the securities market are not eligible Unlisted companies can raise funds but they would require prior listing in the domestic market No monetary limit No end use restrictions except real estate or the stock market Voting rights on shares issued under the Scheme shall be as per the provisions of Companies Act, 1956 and in a manner in which restrictions on voting rights imposed on ADR/GDR issues shall be consistent with the Company Law provisions. The pricing of ADR / GDR issues should be made at a price determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the RBI Short note on Overseas investment by registered trust / society. Registered trusts and societies engaged in manufacturing / educational sector can make investment in the same sector in JV / WOS with prior RBI approval. Conditions for Trust Trust should be registered under the Indian Trust Act, 1882 The Trust deed permits the proposed investment overseas The proposed investment should be approved by the trustees AD is satisfied that the Trust is KYC (Know Your Customer) compliant and is engaged in a bonafide activity The Trust has been in existence at least for a period of 3 years The Trust has not come under the adverse notice of any Govt. agency. Conditions for Society The Society should be registered under the Societies Registration Act, 1860 The Memorandum of Association and rules and regulations permit the Society to make the proposed investment which should also be approved by the governing body/council or a managing/executive committee AD is satisfied that the Society is KYC (Know Your Customer) compliant and is engaged in a bonafide activity The Society has been in existence at least for a period of 3 years The Society has not come under the adverse notice of any Govt. agency.
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38. How is GATT different from WTO? GATT It is a set of rules with no institutional foundation It was applied on a provisional basis It applies to trade in goods Dispute settlement system was slow It has contracting parties 39. Short note on SAFTA. The Agreement on South Asian Free Trade Area (SAFTA) is an agreement reached on January 6, 2004 at the 12th SAARC summit in Islamabad, Pakistan. It created a free trade area of 1.6 billion people in Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The seven foreign ministers of the region signed a framework agreement on SAFTA to reduce customs duties of all traded goods to zero by the year 2016. The SAFTA agreement came into force on January 1, 2006 and is operational following the ratification of the agreement by the seven governments. SAFTA requires the developing countries in South Asia (India, Pakistan and Sri Lanka) to bring their duties down to 20% in the first phase of the two year period ending in 2007. In the final five year phase ending 2012, the 20% duty will be reduced to zero in a series of annual cuts. The least developed nations in South Asia (Nepal, Bhutan, Bangladesh and Maldives) have an additional three years to reduce tariffs to zero. India and Pakistan have signed but not ratified the treaty. It replaces the earlier Agreement on SAARC Preferential Trading Arrangement (SAPTA) and may eventually lead to a full-fledged South Asia Economic Union. The SAPTA was signed on 11 April 1994 and entered into force on 7 December 1995, with the following principles: (a) overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into account their respective level of economic and industrial development, the pattern of their external trade, and trade and tariff policies and systems; (b) negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews; (c) recognition of the special needs of the Least Developed Contracting States and agreement on concrete preferential measures in their favour; (d) inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms. Short note on objectives of SAARC. The main objectives of SAARC is To promote the welfare of the people of socio-economic developments within SAARC countries; and To develop productive relationship with regional and international organizations. What are the various components of the European Union? European Union has four main institutions, which are as follows: 1. THE COUNCIL OF MINISTERS: Highest decision making body, Comprised of ministers from national governments of each of the member states, Meets once in a week either in Brussels or in Luxemburg, Decides/deliberate upon legislation and policy; Major responsibilities/functions: a) It is the unions legislative body; b) It co-ordinates the broad economic policies of the member states; c) It concludes on behalf of the EU, international agreements with one or more states or international WTO It is a permanent institution with its own secretariat Its commitments are full and permanent It applies to trade in goods, services and TRIPs Dispute settlement system is faster It has members
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organizations; d) It shares budgetary authority with parliament; e) It takes decisions necessary for framing and implementing the common foreign and security policy; f) It co-ordinates the activities of member states and adopts measures in the field of police and judicial cooperation in criminal matters. 2. THE EUROPEAN PARLIAMENT: By It is democratically elected body with 626 members, directly elected citizens of all member countries; The MEPs(member of European parliament) are elected for 5 years; Major responsibilities/functions: a) It shares with the council the power to legislate; b) It shares budgetary authority with the council of ministers; c) It exercises democratic supervision over the European commission; d) It scrutinizes the activities the activities of other EU institutions. 3. THE EUROPEAN COMMISSION: It is unions executive body; It does the administrative work like drafting the proposals for legislations, implementing the legislations etc.; The headquarters of the European commission is in Brussels; Commissioners are nominated by its member govts and approved by the European parliament; Term of office is 5 years. Major responsibilities/functions; a) It has the right to initiate draft legislation and therefore presents legislative proposals to parliament and the council; b) It implements the European legislation, budget and programmes adopted by parliament and the council; c) It acts as a guardian of the treaties and together with the court of justice, ensures that community law is properly applied; d) It represents the union on the international stage negotiates international agreements, chiefly the field of trade and co-operation. 4. THE EUROPEAN COURT OF JUSTICE; It adjudicates all legal issues and disputes regarding European law; It has one judge form each member country; It is situated at Luxemburg; The term of office is 6 years. What do you mean by the MFN Principle and the principle of national treatment? MFN Principle Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members. This principle is known as most-favoured-nation (MFN) treatment.
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Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods
traded within the group discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. In general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners whether rich or poor, weak or strong.

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Principle of National Treatment Imported and locally produced goods should be treated equally at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. National treatment only applies once a product; service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally produced products are not charged an equivalent tax. Short note on TRIMs and Rule of Origin. TRIMs The Trade-Related Investment Measures (TRIMs) Agreement applies only to measures that affect trade in goods. These are rules that apply to the domestic regulations a country applies to foreign investors, often as part of an industrial policy. Policies such as local content requirements and trade balancing rules that have traditionally been used to both promote the interests of domestic industries and combat restrictive business practices are now banned. Trade Related Investment Measures is the name of one of the four principal legal agreements of the WTO trade treaty. TRIMs are rules that restrict preference of domestic firms and thereby enable international firms to operate more easily within foreign markets. Under the agreement, countries must inform fellow-members through the WTO of all investment measures that do not conform with the agreement. Developed countries had to eliminate these in two years (by the end of 1996); developing countries had five years (to the end of 1999); and least-developed countries seven. In July 2001, the Goods Council agreed to extend this transition period for a number of requesting developing countries. The agreement establishes a Committee on TRIMs to monitor the implementation of these commitments. The agreement also says that WTO members should consider, by 1 January 2000, whether there should also be provisions on investment policy and competition policy. This discussion is now part of the Doha Development Agenda. Rule of Origin Rules of origin as those laws, regulations and administrative determinations of general application applied to determine the country of origin of goods except those related to the granting of tariff preferences. The Agreement on Rules of Origin covers only rules of origin used in non-preferential commercial policy instruments, such as MFN treatment, anti-dumping and countervailing duties, safeguard measures, origin marking requirements and any discriminatory quantitative restrictions or tariff quotas, as well as those used for trade statistics and government procurement. WTO ensures that Rules of origin are transparent They do not have restricting, distorting or disruptive effects on international trade They are administered in a consistent, uniform, impartial and reasonable manner They are based on a positive standard Rules of origin are used: to implement measures and instruments of commercial policy such as anti-dumping duties and safeguard measures; to determine whether imported products shall receive most-favoured-nation (MFN) treatment or preferential treatment; for the purpose of trade statistics; for the application of labelling and marking requirements; and for government procurement. Short note on WIPO and the Doha Ministerial Conference.
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WIPO World Intellectual Property Organisation (WIPO) with its headquarters at Geneva was established by a convention on 14th July, 1967 which entered into force in 1970. It has been a specialized agency of the United Nations since 1974 and administers a number of international unions or treaties in the area of intellectual property such as the Paris and Berne Convention. The objective of WIPO is to promote respect for use of intellectual property throughout the world through cooperation among Member States and to ensure administrative co-operation among the IPR Unions. It is dedicated to developing a balanced and accessible international intellectual property (IP) system, which rewards creativity, stimulates innovation and contributes to economic development while safeguarding the public interest. WIPOs vision is that IP is an important tool for the economic, social and cultural development of all countries. This shapes its mission to promote the effective use and protection of IP worldwide. The five strategic goals defined in the 2006 2007 Budget are: (a) To promote an IP culture; (b) To integrate IP into national development policies and programs; (c) To develop international IP laws and standards; (d) To deliver quality services in global IP protection systems; and (e) To increase the efficiency of WIPOs management and support proces ses. Doha Ministerial Conference Current trade negotiation round which commenced in Nov, 2001 The objective was to lower trade barriers around the world which will facilitate increase of global trade Significant differences are between developed nations led by EU, USA and Japan and major developing countries led by India, Brazil, China and South Africa Major issues (a) Agriculture commitment to substantial improvements in market access, reductions of all forms of export subsidies and substantial reductions in trade distorting support (b) Access to patented medicines balance of interests between pharmaceutical companies in developed countries that held patents in medicines and the public health needs in developing countries (c) Special and differential treatment for developing countries (d) Implementation issues being faced by developing countries in implementation of agreements because of limited capacity or lack of technical assistance Other issues (a) NAMA (b) Trade and Investment (c) Trade and competition (d) Transparency in governmental procurement (e) Trade facilitation (f) Trade and environment What were the various issues discussed at the Hong Kong Ministerial Conference? The Ministers renewed their resolve to complete the Doha Work Programme fully and to conclude the negotiations launched at Doha successfully in 2006. Agricultural Negotiations: The Ministers reaffirmed their commitment to the mandate on agriculture as set out in Doha Ministerial Declaration and to the framework adopted by the General Council. Cotton: The Ministers reaffirmed their commitment, to ensure having an explicit decision on cotton within the agriculture negotiations and through the Sub-Committee on Cotton ambitiously, expeditiously and specifically, as follows:
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All forms of export subsidies for cotton will be eliminated by developed countries in 2006. On market access, developed countries will give duty and quota free access for cotton exports from leastdeveloped countries (LDCs) from the commencement of the implementation period. The Members committed themselves to give priority in the negotiations to ensure that trade distorting domestic subsidies for cotton production be reduced more ambitiously than under whatever general formula is agreed and that it should be implemented over a shorter period of time than generally applicable. NAMA negotiations: The Ministers reaffirmed their commitment to the mandate for negotiations on market access for non-agricultural products and all the elements of the NAMA framework. Services negotiations: The negotiations on trade in services shall proceed to their conclusion with a view to promoting the economic growth of all trading partners and the development of developing and least-developed countries, and with due respect for the right of Members to regulate. TRIPS negotiations: Taking note of the report of the Chairman of the Special Session of the Council for TRIPS setting out the progress in the negotiations on the establishment of a multilateral system of notification and registration of geographical indications for wines and spirits, Ministers agreed to intensify these negotiations in order to complete them within the overall time-frame for the conclusion of negotiations that were foreseen in Doha Ministerial Declaration. What do you mean by dumping? Explain the various types of dumping. Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value. This is an unfair trade practice which can have a distortive effect on international trade. Anti dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect. Thus, the purpose of anti dumping duty is to rectify the trade distortive effect of dumping and re-establish fair trade. The use of anti dumping measure as an instrument of fair competition is permitted by the WTO. Dumping occurs when the export price of goods imported into India is less than the Normal Value of like articles sold in the domestic market of the exporter. Imports at cheap or low prices do not per se indicate dumping. The price at which like articles are sold in the domestic market of the exporter is referred to as the Normal Value of those articles. Normal Value: The normal value is the comparable price at which the goods under complaint are sold, in the ordinary course of trade, in the domestic market of the exporting country or territory. If the normal value cannot be determined by means of domestic sales, the Act provides for the following two alternative methods: (i) Comparable representative export price to an appropriate third country. (ii) Cost of production in the country of origin with reasonable addition for administrative, selling and general costs and for profits. Export Price: The export price of goods imported into India is the price paid or payable for the goods by the first independent buyer. Types of Dumping 1. Sporadic Dumping For a short term Unloading of stocks by a foreign producer The firm regards its costs as fixed and marginal costs as zero 2. Intermittent Dumping For a medium term To secure a foothold in a foreign market Conscious decision to lower prices to drive the competitors away from the market 3. Continuous Dumping For a long term Practically not possible for a firm to sustain losses for a long term
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47. Explain the concept of boxes in case of agricultural subsidies. In WTO terminology subsidies under Agreement on Agriculture are identified by boxes, which have an analogy similar to colours of traffic lights: Green Permitted Amber Slow Down Red - Forbidden But the Agriculture Agreement has no red box although domestic support exceeding the reduction commitments in the amber box is prohibited. There is a blue box for subsidies that are related to programmes that limit production. AMBER BOX: All domestic support measures considered to distort production and trade fall into the amber box. It is defined in Article 6 of the Agriculture Agreement as all domestic supports except those described in the blue and green boxes. These include measures to support prices or subsidies directly related to production quantities. The total value of these measures must be reduced. WTO members have commitments to reduce their trade-distorting domestic supports in the amber box (i.e. to reduce the total aggregate measurement of support or AMS). These supports are subject to limits de minimis supports are allowed 5% of agricultural production for developed countries & 10% for developing countries. BLUE BOX: The Blue Box is an exemption from the general rule that all subsidies linked to production must be reduced or kept within defined minimal levels. It covers payments directly linked to acreage or animal numbers, but under schemes, which also limit production, by imposing production quotas or requiring farmers to set aside part of their land. These are generally given to farmers of developed countries to limit the production because the home market is small and is given as a sort of unemployment allowance. In other words it is the amber box with conditions conditions designed to reduce distortion. Any support that would normally be in the amber box will be placed in the blue box if the support also requires the members to limit production. GREEN BOX: In order to qualify for the green box, subsidies must not distort trade or at most cause minimal distortion. They have to be government funded and must not involve price support. These are in the nature of programmes that are not targeted at particular products and may include direct income supports for farmers that are related to current production levels or prices. They also include environmental protection and regional development programmes. DEVELOPMENT BOX: Subsidies in this category refer to certain concessions granted to developing countries specially LD Cs on the ground of Special and Differential Treatment and include subsidies granted for the development of these econom Explain the central concept of nullification or impairment.
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The concept of nullification or impairment of benefits is central to dispute settlement in the WTO. In case of violation of an agreement, nullification or impairment is presumed to exist. This means that there is
normally a presumption that a breach of the rules has an adverse impact on other WTO Members. In such a case, it will be up to the Member against which the complaint is brought to rebut the charge.
In the absence of a violation by another WTO Member, i.e. in a situation of "non-violation nullification or
49. impairment" or as a result of any other situation, no presumption applies and the complaining party bears the burden of proof of establishing the existence of a nullification or impairment. Short note on the Panel Stage of dispute settlement procedure. Panels are like tribunals. But unlike in a normal tribunal, the panelists are usually chosen in consultation with the countries in dispute. Only if the two sides cannot agree does the WTO director-general appoint them. This only happens rarely. Panels consist of three (occasionally five) experts from different countries who examine the evidence and decide

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who is right and who is wrong. The panel's report is passed to the Dispute Settlement Body, which can only reject the report by consensus. Panelists for each case can be chosen from a permanent list of well-qualified candidates, or from elsewhere. They serve in their individual capacities. They cannot receive instructions from any government. If the consultations have failed to settle a dispute within 60 days after the date of receipt of the request for consultations, the complaining party may request the establishment of a panel. An earlier request for a panel is permitted if the consulting parties jointly consider that consultations have failed to settle the dispute (Article 4.7 DSU). A request for the establishment of a panel must be made in writing. It must indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly. The panel will be established at the latest at the DSB meeting following that at which the request first appears as an item on the agenda of the DSB, unless the complaining party no longer requests it or the DSB decides by consensus at that meeting not to establish a panel. If the complaining party so requests, a special meeting of the DSB must be convened for the purpose of establishing the panel within 15 days of the request, provided that at least 10 days' advance notice is given.
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Panel Stage: It can be further subdivided into the following: Before the first hearing: each side in the dispute presents its case in writing to the panel. First hearing: the case for the complaining country and defence: the complaining country (or countries), the responding country, and those that have announced they have an interest in the dispute, make their case at the panels first hearing. Rebuttals: the countries involved submit written rebuttals and present oral arguments at the panels second meeting. Experts: if one side raises scientific or other technical matters, the panel may consult experts or appoint an expert review group to prepare an advisory report. First draft: the panel submits the descriptive (factual and argument) sections of its report to the two sides, giving them two weeks to comment. This report does not include findings and conclusions. Interim report: The panel then submits an interim report, including its findings and conclusions, to the two sides, giving them one week to ask for a review. Review: The period of review must not exceed two weeks. During that time, the panel may hold additional meetings with the two sides. Final report: A final report is submitted to the two sides and three weeks later, it is circulated to all WTO members. If the panel decides that the disputed trade measure does break a WTO agreement or an obligation, it recommends that the measure be made to conform with WTO rules. The panel may suggest how this could be done. Explain the role of Director General in dispute settlement. The Director-General of the WTO may, acting in an ex officio capacity, offer good offices, conciliation or mediation with a view to assisting Members to settle a dispute. Such an offer may normally be made during the consultation period, but good offices, conciliation or mediation may, with the agreement of the parties to the dispute, continue while the panel process proceeds. In a dispute settlement procedure involving a least-developed country Member, when a satisfactory solution has not been found during consultations, the Director-General will, upon request by a least-developed country Member, offer his or her good offices, conciliation or mediation in order to help the parties to the dispute, before a request for a panel is made. The Director-General may also be requested, in certain circumstances, to appoint panel members. This is the case where, within 20 days after the date of the establishment of a panel, there has been no agreement among the parties on the composition of the panel. The Director-General can act only at the request of either party in the dispute.

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The Director-General may appoint an arbitrator in cases where it is necessary to determine the reasonable period of time for implementation or where a suspension of concessions or other obligations has been authorized by the DSB and the Member concerned objects to the level of suspension proposed, or claims that the principles and procedures to be followed when considering what concessions or other obligations to suspend were not respected.
DUE DILIGENCE AND CORPORATE COMPLIANCE MANAGEMENT

1. What are the objectives of Due Diligence? Due diligence is an analysis and risk assessment of an impending business transaction . Following are the few objectives of due diligence: Collect material of information from the target company. Conduct a SWOT analysis to identify the strength and to uncover threats and weaknesses. For improving the bargaining position depending on SWOT analysis. To take an informed decision about an investment. Identification of areas where representations and warranties are required. To provide a desired comfort level in a transaction. To ensure complete and accurate disclosure. Bridge the gap between the existing and expected. To take smooth / accurate action / decision. To enhance the confidence of stake holders. Distinguish between Due Diligence and Audit. Due Diligence Limited to financial analysis Based on historical data Mandatory Positive assurance Post mortem analysis Always uniform Recurring event Explain the Role of CS in IPOs and FPOs. Planning stage (a) Deciding the time line (b) Compliance related issues (c) Importance of corporate governance (d) Structure of the Board (e) Promoters consent (f) Method of issuance of shares Due diligence (a) Company contracts and leases (b) Legal and tax issues (c) Corporate issues (d) Financial assets (e) Financial statements Audit Includes analysis of financial statements, business plan, management structure etc. Covers future growth prospects in addition to historical data Mandatory based on transaction Negative assurance Required for future decision Varies from transaction to transaction Occasional event
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(f) Creditors and debtors (g) Legal cases against the company Appointing advisors and other intermediaries Offer document (a) Drafting the offer document (b) Filing with SEBI (c) In-principle approval of Stock Exchanges (d) Filing with Stock Exchanges (e) Complying with the comments received from SEBI (f) Filing with RoC Issue period Allotment of shares Listing Post issue compliances (a) To ensure proper compliance with the Listing Agreement (b) Redressal of shareholders complaints (c) Timely filing of required reports with RoC / SEBI / Stock Exchanges Short note on reservation on competitive basis in a public issue. In case of a public issue the company may make reservation on competitive basis out of the issue size excluding promoters contribution and net offer to public in favour of the following categories of persons: (a) employees of the company including employees of the promoting companies (b) shareholders (other than promoters) of listed promoting companies and listed group companies The reservation on competitive basis shall be subject to following conditions: (a) the aggregate of reservations for employees shall not exceed 5% of the post issue capital (b) value of allotment to any employee shall not exceed ` 2 lakh (c) reservation for shareholders shall not exceed 10% of the issue size any unsubscribed portion in any reserved category may be added to any other reserved category and the unsubscribed portion, if any, after such inter-se adjustments among the reserved categories shall be added to the net offer to the public category. Short note on Fast Track Issues. Certain companies are exempted from the requirement from the requirement of filing draft offer document with SEBI and SEs and obtaining in-principle approval from SEs subject to fulfillment of the following conditions : The shares of the company have been listed on any stock exchange having nationwide terminals for a period of at least three years immediately preceding the date of filing the prospectus with RoC or letter of offer with designated SE. The average market capitalisation of public shareholding of the company is at least Rs. 3,000 crores The annualized trading turnover of the shares of the company during 6 calendar months immediately preceding the month of filing the prospectus with RoC or letter of offer with designated SE has been at least 2% of the weighted average number of shares listed during the said six months period The company has redressed at least 95% of the total investor complaints received till the end of the quarter immediately preceding the month of filing the prospectus with RoC letter of offer with designated SE. The impact of auditors qualifications, if any, on the audited accounts of the company in respect of the financial years for which such accounts are disclosed in the offer document does not exceed 5% of the PAT of the company for the respective years No prosecution proceedings or show cause notices issued by SEBI are pending against the company or its
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promoters or whole time directors as on the date of filing the prospectus with RoC letter of offer with designated SE. The entire shareholding of the promoter group is held in dematerialized form. Explain the methodology for pricing in preferential allotment. In terms of SEBI (ICDR) Regulations, 2009, Preferential issue can be made at a price not less than the higher of the following: - The average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the 26 weeks months preceding the relevant date; OR - The average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the 2 weeks preceding the relevant date. Such Issue to QIBs 5 in number shall be made at a price not less than the average of the weekly high and low of the closing prices of the related shares quoted on a stock exchange during the 2 weeks preceding the relevant date Relevant date means 30 days prior to the date on which general meeting of shareholders is held Where warrants are issued on a preferential basis relevant date shall be 30 days prior to the date on which the holder of the warrants becomes entitled to apply for shares of the company Short notes on obligations of debenture trustees under SEBI Listing of Debt Regulations. The Debenture Trustee shall be vested with the requisite powers for protecting the interests of debenture holders including a right to appoint nominee directors on the board of the company in consultation with the institutional holders of such securities. The Debenture Trustee shall carry out its duties and perform its functions under the SEBI (Listing of Debt Securities) Regulations, 2008, SEBI (Debenture Trustees) Regulations, 1993, the trust deed and offer document, with due care, diligence and loyalty. The Debenture Trustee shall ensure disclosures of all material events on an ongoing basis. He shall supervise the implementation of the conditions regarding creation of security for the debt securities and debenture redemption reserve. Short note on inter-se transfers between promoters. In terms of Regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, acquisition pursuant to inter se transfer of shares are exempted from the requirement of making public announcement, provided the transfers are amongst qualifying persons, being, immediate relatives; persons named as promoters in the shareholding pattern filed by the target company for not less than 3 years prior to the proposed acquisition; a company, its subsidiaries, its holding company, other subsidiaries of such holding company, persons holding not less than 50% of the equity shares of such company, other companies in which such persons hold not less than 50% of the equity shares, and their subsidiaries subject to control over such qualifying persons being exclusively held by the same persons; persons acting in concert for not less than 3 years prior to the proposed acquisition, and disclosed as such; shareholders of a target company who have been persons acting in concert for a period of not less than 3 years prior to the proposed acquisition and are disclosed as such and any company in which the entire equity share capital is owned by such shareholders in the same proportion as their holdings in the target company without any differential entitlement to exercise voting rights in such company. For purposes of availing of the exemption under this clause, if the shares of the target company are frequently traded, the acquisition price per share shall not be higher by more than 25% of the volume-weighted average market price for a period of 60 trading days preceding the date of issuance of notice for the proposed inter se transfer.
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9. Short note on disclosures that are required to be made in a public announcement. In terms of Regulation 15 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the following are required to be stated in the public announcement: name and identity of the acquirer and persons acting in concert with him; name and identity of the sellers, if any; nature of the proposed acquisition such as purchase of shares or allotment of shares, or any other means of acquisition of shares or voting rights in, or control over the target company; the consideration for the proposed acquisition that attracted the obligation to make an open offer for acquiring shares, and the price per share; the offer price, and mode of payment of consideration; and offer size, and conditions as to minimum level of acceptances. Explain the penal provisions on non-compliance of SEBI Takeover Code. Any person violating any provisions of the regulations shall be liable for action in terms of these regulations and the SEBI Act. If the acquirer or any PACs fails to carry out the obligations under the regulations, the entire or a part of the sum in the escrow account shall be liable to be forfeited and the acquirer or such a person shall also be liable for action in terms of the regulations and the Act. The BOD of the TC failing to carry out the obligations under the regulations shall be liable for action in terms of the regulations and the SEBI Act SEBI may, for failure to carry out the requirements of the regulations by an intermediary, initiate action for suspension or cancellation of registration of an intermediary holding a certificate of registration under Section 12 of the SEBI Act For any mis-statement to the shareholders or for concealment of material information required to be disclosed to the shareholders, the acquirers or the directors where the acquirer is a body corporate, the directors of the TC, the merchant banker to the public offer and the merchant banker engaged by the TC for independent advice would be liable for action in terms of the regulations and the Act. The penalties referred to above may include: (a) criminal prosecution under section 24 of the Act; (b) monetary penalties under section 15H of the Act; (c) directions by SEBI to protect the interests of the investors and the securities market; (e) cease and desist order in proceedings under section 11D of the Act; (f) adjudication proceedings under section 15HB of the Act. Further Section 24 of the SEBI Act provides that if any person contravenes the provisions of this Act or of any rules / regulations, he shall be punishable with imprisonment for a term which may extend to 10 years or with fine which may extend to ` 25 crores or with both. Also Section 15H of the SEBI Act provides that if any person fails to disclose his shareholding or fails to make a PA to acquire shares, he shall be liable to a penalty of ` 25 crores or three times the amount of profits made, whichever is higher. Once the violation of statutory regulations is established, imposition of penalty becomes sine qua non of violation and the intention of the parties committing such violation becomes totally irrelevant Multiplus Holding Ltd. Mistaken interpretation of regulation is not an excuse to absolve offender from consequences of an offence SAT in Satyadeva Prakash Sinha Explain the requirements relating to publication and submission of quarterly results by a listed company. In terms of Clause 41 of the Listing Agreement, Listed company shall furnish audited or un-audited financial results on a quarterly basis in the prescribed
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pro-forma, within 45 days from the end of the quarter Company shall also submit audited financial results for the entire financial year within 60 days of the end of the financial year. The company shall also submit the audited financial results in respect of the last quarter alongwith the results for the entire financial year, with a note that the figures of last quarter are the balancing figures between audited figures in respect of the full financial year and the published year to date figures upto the third quarter of the current financial year. In case of submission of unaudited results, they shall be subject to limited review by statutory Auditors and such report shall be submitted to Stock Exchange within 45 days from the end of the quarter. In case the company opts to submit audited financial results they shall be accompanied by Audit Report. Listed company shall inform date of the Board / Committee Meeting and shall also simultaneously issue a press release in at least 1 national newspaper and one regional language newspaper - at least 7 clear days (i.e. 9 days) in advance of the date of the meeting. Listed company shall make announcement of the results to Exchanges - immediately within 15 minutes of the closure of the Board / Committee Meeting. Results also to be published in at least one English daily newspaper circulating in the whole or substantially the whole of India and in one newspaper published in the regional language where the registered office of the company is situated - within 48 hours of the conclusion of the Board Meeting. However, where the company has submitted to the SE consolidated financial results in addition to stand-alone financial results, it shall publish only consolidated financial results in the newspapers. In case the company publishes only consolidated financial results, it shall also publish Turnover, PBT and PAT on a standalone basis. Results shall be approved by the Board of Directors (BOD) or a committee thereof, (consisting of not less than 1/3rd of total no. of directors and shall include MD and 1 Independent Director) other than the Audit Committee. While placing results before the Board, the CEO and CFO of the company shall certify the fact that the results do not contain any false or misleading information and that they do not omit any material fact, which may make the results misleading. Results shall be signed by the Chairman or MD or Whole time Director. Limited review Report shall be placed before BOD, before submission to Stock Exchanges, in case variations between unaudited and audited financials is greater than 10 %. Quarterly unaudited financial results should also be accompanied by Segment wise revenue, results and capital employed as per the format provided. Explain the requirements of the Listing Agreement relating to composition, role etc. of Audit Committee. In terms of Clause 49 of the Listing Agreement, Audit Committee is required to be set up, consisting of: Minimum of three members of which two third of the members to be independent. All members shall be financially literate and at least one member to have accounting or related financial management expertise Chairman of the committee shall be an independent Director. The Chairman shall remain present in AGM to answer shareholders queries. The committee should invite company executives as it considers appropriate (particularly the head of finance function) to be present in the meeting of the committee. Functioning of Audit Committee 1. Audit committee shall meet at least four times a year. 2. Not more than four months shall lapse between two Meetings. 3. The quorum shall be of two members or one-third of the members of the audit committee, whichever is higher and minimum of two independent Directors. Powers of the Audit Committee To investigate any activity within its terms of reference.
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To seek information from any employee. To obtain outside legal or other professional advice. To secure attendance of outsiders with relevant expertise, if it considers necessary.
Role of Audit Committee 1. Oversee the Company's financial reporting process and the disclosure of the financial information to ensure that the financial statement is correct, sufficient and credible. 2. Recommending the appointment and removal of external auditor, fixation of auditor, fixation of audit fee and also approval for payment for any other services. 3. Approving the appointment of CFO after assessing the qualifications, experience and background etc. of the candidate. 4. Reviewing with management the annual financial statements before submission to the board, focusing primary on : a) Any changes in accounting policies and practices. b) Major accounting entries based on exercise of judgement by management c) Qualifications in draft audit report. d) Significant adjustments arising out of audit. e) The going concern assumption. f) Compliance with Accounting Standards. g) Compliance with stock exchanges and legal requirements concerning financial statements. h) Any related party transactions i.e. transactions of the company of material nature, potential conflict with the interests of company at large. i) Reviewing with the management, external and internal "auditors, the adequacy of internal control system, internal audit function etc. j) Reviewing, with the management, the statement of uses / application of funds raised through an issue. (Public issue, rights issue, preferential issue, etc.) Mandatory Review of following information by Audit Committee Management discussion and analysis of financial condition and results of operations; Statement of significant related party transactions as defined by management; Management letters/letters of internal control weaknesses issued by the statutory auditors; Internal audit reports relating to internal control weaknesses; and The appointment, removal and terms of remuneration of the Chief internal auditor. 13. Short note on the concept of Independent Director as defined under the Listing Agreement. In terms of Clause 49 of the Listing Agreement, 'Independent director' means a non-executive director of the company who: 1. apart from receiving director's remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries and associates which may affect independence of the director. 2. is not related to promoters or persons occupying management positions at the board level or at one level below the board; 3. has not been an executive of the company in the immediately preceding three financial years; 4. Is not a partner or an executive or was not partner or an executive during the preceding three years, of any of the statutory audit firm or the internal audit firm that is associated with the company, and/or the legal firms(s) and consulting firm(s) that have a material association with the company. 5. Is not a material supplier, service provider or customer a lessor or lessee of the company, which may affect independence of the director, and is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares.

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14. 6. Is not less than 21 years of age. Preparation of Cash Flow Statement is mandatory for listed companies Comment. In terms of Clause 32 of the Listing Agreement, listed company will give Cash Flow Statement along with the Balance Sheet and Profit and Loss Account. The Cash Flow Statement will be prepared in accordance with the Accounting Standard on Cash Flow Statement (AS-3) issued by the Institute of Chartered Accountants of India, and the Cash Flow Statement shall be presented only under the Indirect Method as given in AS-3. The statement shall be issued under the authority of the Board and shall be signed on behalf of the Board of Directors in the manner provided for the authentication of Balance Sheet and Statement of Profit and Loss in Section 215 of the Companies Act, 1956. What is the penalty for non-compliance of Listing Agreement? Section 23(2) of Securities (Contract) Regulation Act, 1956 person imprisonment for a term upto 10 years and fine of Rs. 25 crores or both Section 23E of Securities (Contract) Regulation Act, 1956 company fine of Rs. 25 crores The Stock Exchange may suspend dealing in securities for breach or non-compliance of Listing Agreement The Stock Exchange may delist companies which have been suspended for a period of 6 months for non-compliance with Listing Agreement Short note on the process of dematerialization. Investor opens account with the Depository Participant Fills demat request form for registered shares Investor lodges Demat Request Form and certificates with Depository Participant Depository Participant intimates Depository Depository intimates Issuer Depository Participant sends certificates and Demat Request Form to Issuer Issuer confirms demat to Depository Depository credits investors account Is Internal audit of DPs mandatory? The two Depository service providers in India, viz., National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Limited (CDS) have allowed Company Secretaries in Whole-time Practice to undertake internal audit of the operations of Depository Participants (DPs). NSDL - Every Participant shall ensure that an internal audit in respect of the operations of the Depository is conducted at intervals of not more than six months by a qualified Chartered Accountant or a Company Secretary holding a certificate of Practice and a copy of the internal audit report shall be furnished to the Depository. The report is required to be submitted to NSDL for the period 1 st April to 30th September by 15th November and for the period from 1st October to 31st March by 15th May. CDSL - Every Participant shall ensure that an internal audit in respect of the operations of the Depository is conducted at intervals of not more than six months by a qualified Chartered Accountant or a Company Secretary holding a certificate of Practice and a copy of the internal audit report shall be furnished to the Depository. The report is required to be submitted to CDSL for the period 1 st April to 30th September by 15th November and for the period from 1st October to 31st March by 15th May.
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18. Short note on the agreements entered into by the DPs. A DP is required to enter into two important agreements in course of demat trading: (A) Agreement with the Depository (B) Agreement with the Client / Investors Explain the procedure for creation of pledge on dematerialized securities. If the beneficial owner wants to create a pledge of securities, it shall apply to the Depository through DP DP after satisfaction shall make a note in its records of the notice of pledge and forward the application to the Depository The Depository on appropriate confirmations from pledgees shall create the pledge within 15 days of receipt of application On receipt of intimation, DPs of both pledgor and pledgee shall intimate the parties Short notes on ADRs and GDRs. American Depository Receipt / Global Depository Receipt means any instrument in the form of a depositary receipt or certificate created by the Overseas Depositary Bank outside India and issued to non-resident investors against the issue of ordinary shares or FCCBs of issuing company. Eligibility Requirements Indian Company should be eligible to raise funds from the Indian capital market Company should not be restrained from accessing the securities market by SEBI Unlisted Indian companies issuing GDRs / FCCBs shall be required to simultaneously list themselves on Indian Stock Exchanges. The company shall have a consistent track record of good performance (financial or otherwise) for a minimum period of 3 years. FCCBs shall be denominated in any convertible foreign currency and the ordinary shares of an issuing company shall be denominated in Indian rupees. The company shall deliver the ordinary shares or bonds to a Domestic Custodian Bank who will, in terms of agreement, instruct the Overseas Depositary Bank to issue GDRs to non-resident investors against the shares or bonds held by the Domestic Custodian Bank. Other Provisions There are no end use restrictions on the funds raised through GDRs / FCCBs except that the funds cannot be used for real estate and investment in the capital market. The pricing of GDRs for listed companies should not be less than the average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the 2 weeks preceding the relevant date. The "relevant date" means date of the meeting in which the Board of the company or the Committee of Directors duly authorized by the Board of the company decides to open the proposed issue.
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Explain the various approvals required for issuing GDRs. Approval of the Board of Directors and shareholders of the Company. For issuing FCCB's exceeding $ 100 million, approval of the Ministry of Finance is required. The maximum amount that the company can raise through issue of FCCB's is $ 750 million. Approval of the RBI. In-principle consent of banks / financial institutions.

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22. Short note on various requirements of the Companies (Issue of IDRs) Rules, 2004. IDR means any instrument in the form of a depository receipt created by Domestic Depository in India against the underlying equity shares of issuing company. Eligibility for issue Its pre-issue paid-up capital and free reserves are at least US$ 50 million and it has a minimum average market capitalization (during the last 3 years) in its parent country of at least US$ 100 million It has a continuous trading record or history on a stock exchange in its parent country for at least 3 immediately preceding years. It has a track record of distributable profits in terms of section 205 of the Companies Act, 1956, for at least three out of immediately preceding 5 years It fulfills such other eligibility criteria as may be laid down by SEB! from time to time in this behalf. What are the advantages of entering into a Joint Venture? Rapidly move to decisively seize opportunities before they disappear Respond more quickly to change Adapt with greater flexibility Increase a companys market share Gain access to a new market or beat others to that market Quickly shore up internal weaknesses Gain a new skill or area of competence Short note on the requirements the FEMA Regulations relating to Liaison Office. Companies incorporated outside India may establish Liaison Offices with specific approval of RBI which can only undertake liaison activities acting as a channel of communication between Head Office and parties in India Application to RBI alongwith MOA and AOA and Certificate of registration in the country of incorporation Initial permission granted by RBI generally valid for 3 years Have to file annual activity reports to RBI Entities from Nepal are allowed to establish only Liaison Offices in India. Track Record - profit making record during the immediately preceding 3 financial years Net worth USD 50,000 Explain the various requirements of FEMA Regulations relating to setting up of JVs by Indian companies abroad. Limits on Investment 400% of the net worth of the Indian Party as on the date of the last audited accounts Ceiling is not applicable if investment is made out of funds held in EEFC Account or out of funds raised through ADRs / GDRs. The above ceiling will include contribution to capital, loans granted and 100% guarantees issued to or on behalf of JV / WOS. Proposals from the Indian party for undertaking financial commitment without equity contribution in JV / WOS may be considered by the RBI under the approval route. Conditions The Indian Party should not be on the RBIs Exporters Caution list / list of defaulters All transactions should be routed through one branch of an authorized dealer Where the investment is > USD 5 million, valuation of the shares of the company shall be made by a Merchant
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Banker Where investment is by way of swap of shares, irrespective of the amount, valuation of the shares of the company shall be made by a Merchant Banker. Approval of FIPB shall also be required for investment by swap of shares. This automatic route facility is not available for investment in Pakistan. An Indian company may acquire shares of a foreign company engaged in a bonafide business activity, in exchange of ADRs / GDRs issued to the latter provided (a) The ADRs / GDRs are listed on an overseas SE (b) The ADRs / GDRs are backed by underlying fresh equity shares issued by the Indian party (c) The total holding in the Indian entity by PROI does not exceed sectoral caps (d) Valuation of shares of the foreign company shall be as per recommendations of an Investment Banker if the shares are not listed or based on the current market capitalization of the foreign company arrived on the basis of monthly average price on any SE abroad for the preceding 3 months. Creation of charge in the form of pledge / mortgage / hypothecation on the immovable / movable property and other financial assets of the Indian Party and their group companies will require approval of RBI under the approval route within the overall limit fixed (presently 400%) for financial commitment. Methods of Funding overseas JV / WOS Drawal of foreign exchange from an AD in India Capitalization of exports Swap of shares Proceeds of ECBs / FCCBs In exchange of ADRs / GDRs Balance held in EEFC Account of the Indian Party Proceeds of foreign currency funds raised through ADRs / GDRs Explain the process of conducting legal due diligence. Entering into of MOU Determination of scope of legal due diligence Calculation of time frame Drafting of various questionnaires and checklists Obtaining access to records Interaction with management and key managerial persons Interaction with regulatory authorities Checking of regulatory and contractual compliances Analysis of financial and non-financial information Investigation of material issues Drafting of preliminary report Discussions with the management Finalisation of report Determination of strategy Short note on the possible hurdles of carrying out legal due diligence. Non availability of information Unwillingness of target companys personnel in providing complete information Providing of incorrect information Complex tax policies and hidden liabilities Multiple regulations and its applicability
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Process in providing data Absence of proper MIS Explain the elements of an effective compliance management program. Compliance dashboard Policy and procedure management Event management Rules and regulations Audit management Quality management Training management Compliance task management What is the legal requirements relating to conducting secretarial audit ? 30. A Practising Company Secretary shall conduct the audit It would relate to the current financial year of the company Only member of ICSI holding Certificate of Practice can be appointed as secretarial auditor The auditor shall submit his report to the BOD Clause 204 of the Companies Bill, 2012 mandates secretarial audit for all listed companies and other prescribed class of companies. Explain the provisions of the Listing Agreement of various Stock exchanges relating to conduct of share transfer audit. No statutory requirement Required to be done for the purpose of Annual return Clause 47 of the Listing Agreement requires listed companies to appoint CS as a compliance officer who will be responsible for monitoring share transfer process and report to the Stock Exchanges insist that the Registrar and Share Transfer Agent to produce a certificate from Practising Company Secretary that all transfers have been completed on time BSE requires such certificate not only for transfers but also for sub-division, consolidation, renewal of share certificate etc. BSE also insists such certificates for in house Registrar and Share Transfer Agent to be submitted to exchanges within 24 hours of receipt Explain the professional responsibility for issue of Compliance certificate by PCS. Company Secretaries must take adequate care while issuing Compliance Certificate Any failure or lapse on the part of CS in issuing such Certificate attracts penalty under Section 628 for false statement - 2 years + fine PCS will also be guilty of professional misconduct under the provisions of the Companies Secretaries Act, 1980 It is imperative for the PCS to exercise great care and caution while issuing the Compliance Certificate and also adhere to the highest standards of professional ethics and excellence in providing his services. What are the requirements relating to issue of Compliance Certificate by PCS? In terms of Companies (Compliance Certificate) Rules, 2001: Compliance certificate shall be in the format prescribed in the rules It shall relate to the financial year of the company It is required to be filed with RoC within 30 days of AGM It shall be attached with the Directors Report
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It shall be laid down at the AGM PCS shall send a communication to the earlier incumbent Qualification, reservation, adverse remarks may be stated by the PCS Explain the requirements relating to Search Reports by various banks and financial institutions. Banks and FIs while granting loans to companies obtain a status report on the position of borrowings made by the company and particulars of charges created by the company on its assets It acts as a tool to confirm and evidence information on status of charges Requirements of financial institutions and lenders Power of a company and directors to enter into an agreement Borrowing limits of the company u/s 293(1)(d) List of members of the company Copies of resolutions passed by the company What are the advantages of securities management? Advantages to company 1. Elimination of misstatements 2. Maintenance and updation of records 3. Early corrective measures 4. Expeditious redressal of grievances 5. Relief from unintended violation of laws 6. Reduction of litigations 7. Expeditious disposal of securities related matters 8. Sustained investors confidence Advantages to investors Advantages to regulators Advantages to compliance officers Advantages to statutory auditor Explain the role of PCS under the SEBI Act and NSE requirements. Role of PCS SEBI Act and regulations Appear before SAT Certify non-promoter holdings shareholder pattern under clause 35 Certify compliance of conditions of corporate governance Certify maintenance of adequate security cover in respect of listed securities Conduct internal audit of portfolio managers Certify that all refund orders / allotment letters in respect of the previous issue were despatched within time Role of PCS NSE Following details submitted by trading member to SE 1. Details of directors / promoters 2. Details of shareholding pattern 3. Details of dominant group of corporates 4. Details of dominant group of firms 5. Undertaking from relative / corporates of persons constituting dominant promoter group Approval for listing certificate confirming that entire pre-preferential holding of allottee is locked in for a period of 6 months
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Approval of listing in case of mergers etc. certificate of net worth pre and post the scheme
GOVERNANCE, BUSINESS ETHICS AND SUSTAINABILITY

1. Write short note on CIIs Corporate Governance Code. The full board of a company should meet minimum 6 times a year at an interval of 2 months Listed company with turnover of Rs. 100 crores should have independent directors as follows 1. 30% - if Chairman is NED 2. 50% - if Chairman and MD is same A single person shall hold directorships in maximum 10 listed companies NEDs should become active participants in boards, not passive advisors, have clearly defined responsibilities with the board, know how to read balance sheet etc. NEDs should be paid commissions @ 1% of net profits If a Director has attended less than 50% of the board meetings, then this fact should be stated in his re-appointment resolution Annual plans, show cause notices, serious accidents etc. should be put before the Board of Directors of a company Listed companies with turnover of Rs. 100 crores or paid up capital of Rs. 20 crores should have Audit Committee Audit Committee should consists of 3 members, all NEDs Committee should have clearly defined Terms of reference Listed companies should give information about high and low monthly averages of their share prices, statement of value added etc. in its Annual report Consolidation of Accounts should be optional Stock Exchanges should insist on a certificate from CEO and CFO of the company FIs should re-write their covenants to eliminate nominee directors except in serious debt default A company should disclose all ratings obtained from credit rating agencies Companies which default in repayment of fixed deposits should not be permitted to accept further deposits and declare dividend till the default is made good. What are the recommendations of the Kumara Mangalam Birla Committee on Corporate Governance? Led to inclusion of Clause 49 in the Listing Agreement Applicable to listed companies with paid-up capital of Rs. 3 crores or net worth of Rs. 25 crores The Non-executive Directors on Board should not be less than 50% of the Board of Directors In case of Executive Chairman - at least half of the Board should comprise of independent directors or in case of non-executive chairman - at least one-third of board should comprise independent directors The Board meeting to be held at least four times a year. The gap between two Board meetings shall not exceed more than four months Non-Executive Chairman should be entitled to maintain Chairmans office at the expense of the company A qualified and independent Audit Committee should be set up by the company Audit Committee shall consist of: 1. Minimum of three members of which two third of the members to be independent. 2. All members shall be financially literate and at least one member to have accounting or related financial management expertise 3. Chairman of the committee shall be an independent Director. A Remuneration Committee comprising atleast 3 directors, all of whom shall be non-executive, and with an independent Chairman shall be set up. The Board shall also set up a Shareholders Grievance Committee to specifically look into shareholders grievances
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Details of non-compliance by the company including penalties and strictures imposed by the Stock Exchanges, SEBI or any other statutory authority on any matter relating to capital markets during the last 3 years should be disclosed to the Stock Exchanges. There should be an Auditors certificate on corporate governance in the Annual report as annexure to the Directors Report. Write short note on recommendations of Naresh Chandra Committee. Auditors disqualifications 1. Prohibition of direct financial interest in audit client 2. Prohibition of receiving any loans / guarantees from or on behalf of the audit client 3. Prohibition of business and personal relationship with the audit client 4. Prohibition of service or cooling off period 5. Prohibition of undue dependence on audit client Auditor not to provide book keeping, internal audit etc. services to the company Audit partner and 50% of audit engagement team should be rotated every 5 years Auditors qualifications should be distinctly stated in the accounts Replacement of auditor should be done through a special resolution Before appointment the auditor should give a certificate of independence to the company Audit Committee shall be the first point of reference for the auditors CEO and CFO certificate in case of listed companies with paid up capital and free reserves of Rs. 10 crores or turnover of Rs. 50 crores Three QRBs should be constituted by ICAI, ICSI and ICWAI Minimum board size in case of listed companies with paid up capital and free reserves of Rs. 10 crores or turnover of Rs. 50 crores 7 of which minimum 4 shall be independent directors Directors should be permitted to participate in board meetings through tele / video conferencing The statutory limit on sitting fees should be reviewed Exemption to NEDs from civil and criminal liabilities under Companies Act, NI Act, ESI Act etc. Independent directors should be required to attend atleast one training session before becoming a director Corporate Serious Fraud Office should be set up by MCA with specialists Short note on the Report of the Cadbury Committee. Cadbury Report 1992 chairman Sir Adrian Cadbury Every public company should be headed by an effective board which can both lead and control the business There should be a clearly accepted division of responsibilities at the head of a company, which will ensure a balance of power and authority, such that no one individual has unfettered powers of decision All boards will require a minimum of 3 NEDs and majority IDs NEDs not to participate in share option schemes Directors training should be mandatory All directors should have access to the advice and services of the CS Companies to draw up Codes of ethics or standards of best practices for their employees Companies should have audit committee, nominations committee and remuneration committee Directors should make a statement in the report and accounts on the effectiveness of their system of internal control and the auditors should report thereon Detailed disclosures on directors remuneration should be made Institutional investors should make a positive use of their voting rights and should take a positive interest in BOD composition
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5. What are the requirements relating to training of directors and performance evaluation of Board? Training of Directors An important aspect of Board effectiveness would be appropriate attention to development and training of independent directors on the lines of management development and training. The normal expectation is that independent directors having been invited to join the Board due to their rich background and expertise, may not need any training. As the Board of Directors is primarily responsible for good governance practices, which is quite different from management, it calls for new areas of knowledge and different skills. Training should encompass both a thorough induction programme and an ongoing training and development opportunities for the board members. Since the Board composition is getting more diverse a system of formal training and evaluation is very important to foster trust, cohesion and communication among board members. Performance evaluation of Board A formal evaluation of the Board and of the individual directors is one potentially effective way to respond to demand for greater board accountability and effectiveness. Feedback about the performance of individual board members can help them enhance their skill as directors and can motivate them to be better board members. Major factors for performance evaluation The quality of the issues that get raised discussed and debated at the meetings of the Board and its Committees. The guidance provided by the Board in light of changing market conditions and their impact on the organisation. The methodology adopted by the Board to solve issues referred to them such as, the homework done by the Board on the problem presented to them, the information they seek to get a complete picture of the situation, the points of view presented to solve the issue, the harmonization of remedial measures proposed by the Board and ensuring the implementation of the solution by the management with appropriate and timely review mechanism. The effectiveness of the directions provided by the Board on the issues discussed in meetings. Explain the role of Independent Directors. Balance the often conflicting interests of the stakeholders. Facilitate withstanding and countering pressures from owners. Fulfill a useful role in succession planning. Act as a coach, mentor and sounding Board for their full time colleagues. Provide independent judgment and wider perspectives. What are the barriers to effective leadership? Time management Resistance to risk taking Strategic planning Complexity Micro management Clinging to tradition Confused roles Past habit
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8. Short note on relation between directors and executives. The Board and executive leadership need to work together based on mutual respect, trust and commitment. The executive management can help the Board govern more and manage less by adopting the following three methods: Use a comprehensive strategic plan that has been developed in conjunction with the board, and supplement it with regular progress reports. Provide the board with relevant materials before board meetings, and explain why the materials are coming to the attention of the board. Facilitate board and board committee discussions so that the board stays focused on the larger issues. What are the mandatory committees required under law? Clause 49 of the Listing Agreement provides for constitution of the following mandatory committees: Audit Committee : Audit Committee is required to be set up, consisting of: 1. Minimum of three members of which two third of the members to be independent. 2. All members shall be financially literate and at least one member to have accounting or related financial management expertise 3. Chairman of the committee shall be an independent Director.
Mandatory Review of following information by Audit Committee
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Management discussion and analysis of financial condition and results of operations; Statement of significant related party transactions as defined by management; Management letters/letters of internal control weaknesses issued by the statutory auditors; Internal audit reports relating to internal control weaknesses; and The appointment, removal and terns of remuneration of the Chief internal auditor.
Shareholders Grievance Committee: The same is required to be formed with the Chairman as a Non-executive
10. director. The committee to specifically look into the redressal of shareholders and investors complaints like - nonreceipt of transferred shares, non-receipt of Balance Sheet, non-receipt of declared dividend etc. Write short notes on Remuneration Committee and Shareholders Grievance Committee. Remuneration Committee To determine the remuneration packages of executives / directors Not mandatory under Clause 49 SEBI ESOP Guidelines provides that when a company wishes to grant ESOPs it has to constitute Compensation Committee Such Committee shall consist of majority of Independent Directors The Committee shall formulate the detailed terms and conditions of ESOS Shareholders Grievance Committee In terms of Clause 49 of the Listing Agreement, every listed company is required to set up a Shareholders / Investors Grievance Committee with Non-executive Director as the Chairman of the Committee. The Committee to specifically look into the redressal of shareholders and investors complaints like - non-receipt of transferred shares, non-receipt of Balance Sheet, non-receipt of declared dividend etc. The number of meetings of such Committee shall be in accordance with the exigencies of business requirements.

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11. What are the roles and responsibilities of company with respect to internal controls? CEO and CFO Certificate: It is the responsibility of the CEO and CFO to : (a) Establish and maintain the internal controls (b) Evaluate effectiveness of internal control system (c) Disclose deficiencies in the design or operation of internal controls (d) Take steps to rectify these deficiencies (e) Inform the auditors and the Audit Committee of any significant change in the internal control systems. Management: It is the role of management to implement board policies on risk and control. In fulfilling its responsibilities, management should identify and evaluate the risks faced by the company for consideration of the board and design, operate and monitor a suitable system of internal control which implements the policies adopted by the board. Board of Directors: A strong and active Board, particularly when coupled with effective upward communication channels and capable financial, legal and internal audit functions, is often the best needed framework for internal control effectiveness and adequacy. Internal Auditors: Internal Auditors play an important role in evaluating the effectiveness of control systems, and contributing to ongoing effectiveness. Employees: All employees should collectively have the necessary knowledge, skills, information and authority to establish, operate and monitor the systems of internal control. What are the advantages of risk management? Better informed decision making Less chances of major problems in new and ongoing activities Increased likelihood of achieving corporate objectives. What are the various international requirements relating to corporate governance? USA Sarbanes Oxley Act It created the Public Company Accounting Oversight Board to monitor auditors SOX Act barred certain services not to be rendered by the auditors Auditors are required to submit their report to the audit committee on all critical accounting policies and practices Audit Committee of companies must ensure that companies have procedures that ensure compliance with GAAP prescribed by FASB USA NYSE Listing Rules Listed companies must have majority of independent directors Listed companies must have audit committee minimum 3 members, all independent and financially literate and atleast one with accounting or related financial management expertise Listed companies must have remuneration committee and nominating / CG committee consisting entirely of independent directors UK Combined Code of Corporate Governance Listed companies are required to disclose in their annual report on how they have complied with such rules Atleast one half of the Board, excluding the Chairman should consist of independent NEDs There should be separate Chairman and CEO Companies should constitute audit committee with atleast 3 members Companies should constitute remuneration committee with atleast 3 members Companies should constitute nomination committee with majority of independent NEDs
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Australia ASX Corporate Governance Council Comply or explain principle Companies must have majority of independent directors Listed companies must have audit committee minimum 3 members, all independent and financially literate and atleast one with accounting or related financial management expertise Listed companies must have remuneration committee and nomination committee consisting of majority independent directors Write short note on Corporate Governance in PSUs. For listed PSUs Clause 49 of the Listing Agreement is applicable For unlisted PSUs separate Guidelines as detailed below have been prescribed (a) The Board of Directors 1. Should contain optimum combination of functional, nominee and independent directors 2. Maximum 50% functional directors 3. Nominee directors maxm. 2 4. Independent directors - Listed PSUs minm. 50% - Unlisted PSUs minm. 33.33% 5. Govt. directors should not exceed 1/6th of the Board (b) Policy of appointing single Chairman-cum-MD should continue (c) Board meetings 4 and one in every 3 months (d) Board shall lay down a code of conduct for its employees (e) A Director shall not be a member of more than 10 committees and chairman of more than 5 committees (f) The Board should have a formal Board charter clearly defining the roles and responsibilities of the Board and individual directors (g) The company shall undertake training programme for its new Board members (h) The CPSE shall have an Audit Committee and a Remuneration Committee. What are the factors influencing CSR? Globalisation Governments and inter governmental bodies Advances in communication technology Consumers and investors interests Serious breaches of ethics Increasing awareness It reduces the risk of business disruptions Write Short note on the advantages of good corporate citizenship. CSR creates a favorable public image which attracts customers CSR builds up positive image encouraging social involvement of employees which in turn develops a sense of loyalty towards the organization helping in creating a dedicated workforce Society gains through better neighborhoods and employment opportunities Public needs have changed leading to changed expectations from consumers The companys social involvement discourages excessive regulation or intervention from the Governm ent The internal activities of the organization have an impact on the external environment The good public image of an organization encourages other organisations in the neighborhood to adapt themselves to achieve their social responsiveness
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Companies can better address the grievances of their employees Financial institutions are increasingly incorporating social and environmental criteria into their assessment of projects. Write short note on UN Global Compact on CSR. Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Labour Standards Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation. Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. Write short note on role of institutional investors in good corporate governance. The Cadbury Committee (1992) states: "Because of their collective stake we look to the institutions in particular, with the backing of the Institutional Share Holder's Committee to use their influence as owners to ensure that companies in which they have invested comply with the code". Kumara Mangalam Birla Committee on institutional investors observed that: 1. Institutional shareholders have acquired a large stake in equity share capital of listed companies. In some of the listed companies they are the major shareholders and own shares largely on behalf of the retail shareholders. 2. They have a special responsibility given the weightage of their votes and have a bigger role to play in corporate governance as retail investors look upon them for positive use of their voting rights. 3. The report recommends that Institutional investors maintain an arm's length relation with the management. Role of Institutional Investors Take active interest in the BOD composition Be vigilant Maintain regular and systematic contact at senior level for exchange of views on management, strategy, performance and quality of management Ensure that voting intentions are translated into practice Evaluate CG performance of the company What do you mean by shareholder activism? Shareholder activism refers to the active involvement of stockholders in their organization. Active participation in company meetings is a healthy practice. In India, shareholders have been granted certain rights under the Companies Act, 1956 such as: right to vote on election of directors, changes in companies articles, and any other policy matters like compensation, salary, remuneration, sitting fees etc of directors; right to transfer and registration of shares;
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obtain relevant information on the company on timely and regular basis; electing members of the board; and share the residual profit. Explain the benefits of good corporate communication. Corporate Communications is all about managing perceptions and ensuring effective and timely dissemination of information, positive corporate image, smooth and affirmative relationship with all stakeholders. Corporate Communication promotes: Strong corporate culture Building corporate identity Reasonable corporate philosophy Genuine sense of corporate citizenship An appropriate and professional relationship with the press Building corporate brand reputation. Short notes on NFCG and OECD. NFCG National Foundation for Corporate Governance Set up by MCA in partnership with ICSI, ICAI and CII Internal structure consists of Governing council chaired by Minister of Corporate Affairs Board of trustees headed by Secretary, MCA Executive directorate OECD Organisation for Economic Cooperation and Development Established in 1961 was one of the first non-governmental organization to spell out the principles that should govern corporates OECD Principles of Corporate Governance They call on governments to have in place an effective institutional and legal framework to support good corporate governance practices . They call for a corporate governance framework that protects and facilitates the exercise of shareholders' rights . They also strongly support the equal treatment of all shareholders, including minority and foreign shareholders. They recognise the importance of the role of stakeholders in corporate governance. They look at the importance of timely, accurate and transparent disclosure mechanisms They deal with board structures, responsibilities and procedures. What are the objects of IOD, UK? The Institute of Directors, UK, is a non-party political business organization established in the UK in 1903. Objects of IOD are: To promote for the public benefit high levels of skill, knowledge, professional competence, and integrity on the part of directors, and equivalent office holders To promote the study, research and development of the law and practice of corporate governance To represent the interests of members and of the business community to government and in all public forums To advance the interests of the members of the Institute and to provide facilities and benefits to them.
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23. What are the various ethics philosophies? Deontological ethics or deontology: It focuses on the rightness or wrongness of actions emphasizes on the relationship between duty and morality of human actions. In this case, an action is considered morally good because of some characteristic of the action itself, not because that the consequence of the action is good. Teleology: It is ethical theory that holds that the ends or consequences of an act determine whether an act is good or evil. Enlightened egoism: It holds that good is based on the pursuit of self-interest. It takes into account harms, benefits and rights for a persons own welfare. Utilitarianism: It is the idea that the moral worth of an action is solely determined by its contribution to overall utility, i.e. its contribution to happiness or pleasure as summed among all persons. Relativism: It is the idea that some elements or aspects of experience or culture are relative to other elements or aspects. It holds that there are no absolute truths in ethics and that what is morally right or wrong varies from person to person and from society to society. Virtue Ethics theory: It is a branch of moral philosophy that emphasizes character, rather than rules or consequences, as the key element of ethical thinking. What are the various advantages of business ethics? Shareholders invest their money into a company and expect a certain level of return from that money in the form of dividends and/or capital growth. Customers pay for goods, give their loyalty and enhance a company's reputation in return for goods or services that meet their needs. Employees provide their time, skills and energy in return for salary, bonus, career progression, learning. Devise a model code of business conduct and ethics. A Model Code of Conduct may contain the following: Company Values. Avoidance of conflict of interest. Accurate and timely disclosure in reports and documents that the company files before Government agencies, as well as in Company's other communications. Compliance of applicable laws, rules and regulations including Insider Trading Regulations. Maintaining confidentiality of Company affairs. Non-competition with Company and maintaining fair dealings with the Company. Standards of business conduct for Company's customers, communities, suppliers, shareholders, competitors, employees. Prohibition of Directors and senior management from taking corporate opportunities for themselves or their families. Review of the adequacy of the Code annually by the Board. No authority of waiver of the Code for anyone should be given. What are the features of good ethics programme? Leadership: executives and supervisors care about ethics and value as much as they do about the bottom lime Consistency between words and actions: top management practices what it preaches Fairness: the organization operates fairly Openness: people talk openly about ethics and values Just rewards: ethical behavior is rewarded Value driven: the ethics and compliance programme is driven by values.
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27. Short note on Ethics Audit. The following are some of the steps in Ethics Audit: The first step in conducting an audit is securing the commitment of the firm's top management. The second step is establishing a committee or team to oversee the audit process. The third step is establishing the scope of the audit. The fourth step should include a review of the firm's mission values, goals, and policies. The fifth step is identifying the tools or methods that can be employed to measure the firm's progress and then collecting and analyzing the relevant information. The sixth step is having the results of the data analysis verified by an independent party. The final step in the audit process is reporting the audit findings to the board of directors and top executives and, if approved, to external stakeholders. What do you mean by stakeholders in an organisation? In a business context, investors & shareholders, employees, suppliers, govt. agencies, communities, and many others who have a stake or claim in some aspect of companys products, operations, markets, industry and outcomes are known as stakeholders The classic definition of stakeholder is any group of individuals who can affect is affected by the achievement of the organisations objectives There are two types of stakeholders: (a) Primary stakeholders whose continued association is absolutely necessary for a firms survival employees, customers, investors, as well as governments and communities (b) Secondary stakeholders - who do not typically engage themselves with the company and thus are not essential for its survival media, trade associations and special interest groups. Short note on Activity Analysis. Parasite Helping Self Injuring others Martyr Helping Others Injuring Self 30. Write Short note on Caux Round Table. The Caux Round Table (CRT) is based on the belief that the world business community should play an important role in improving economic and social conditions It is based on two basic ethical ideals - kyosei and human dignity. The Japanese concept of "kyosei" means living and working together for the common good enabling cooperation and mutual prosperity to coexist with healthy and fair competition. "Human dignity" refers to the sacredness or value of each person as an end, not simply as a mean to the fulfillment of others' purposes or even majority prescription. General Principles of CRT The Responsibilities of Businesses - Beyond Shareholders toward Stakeholders The Economic and Social Impact of Business - Toward Innovation, Justice and World Community Business Behavior - Beyond the Letter of Law Toward a Spirit of Trust Respect for Rules Support for Multilateral Trade Win-win situation Helping Self Helping others Total Loss Injuring Self Injuring others
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Respect for the Environment Avoidance of Illicit Operations What do you mean by ethical dilemma? It involves the need to choose from among two or more morally acceptable courses of action, when one choice prevents selecting the other; or, the need to choose between equally unacceptable alternatives Steps to resolve Consider the consequences Analyze the actions Make decision and act with commitment Evaluate the system What are the principles of sustainable development? Principle of Intergenerational equity: need to preserve natural resources for future generation. Principle of sustainable use: use of natural resources in a prudent manner without or with minimum tolerable impact on nature. Principle of equitable use: Use of natural resources by any state / country must take into account its impact on other states. Principle of integration: Environmental aspects and impacts of socio-economic activities should be integrated so that prudent use of natural resources is ensured. What do you mean by corporate sustainability? Corporate sustainability encompasses strategies and practices that aim to meet the needs of stakeholders today while seeking to protect, support and enhance the human and natural resources that will be needed in the future. The Australian government defines Corporate Sustainability as "encompassing strategies and practices that aim to meet the needs of the stakeholders today, while seeking to protect, support, and enhance the human and natural resources that will be needed in the future." Aspects of Corporate Sustainability Absolute Value Creation for the Society Ethical Corporate Practices Worth of Earth through Environmental Protection Equitable Business Practices Corporate Social Responsibility Innovate new technology/process/system to achieve eco-efficiency Creating Market for All Switching over from Stakeholders Dialogue to holistic Partnership Compliance of Statutes Explain the methods for sustainability reporting. Life cycle assessment tracks the environmental impacts of a product from its raw materials through disposal at the end of its useful life Ecological footprint measure of human demand on the earths ecosystems Environmental performance index method of quantifying and numerically benchmarking the environmental policies of a countrys policies
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35. Write Short notes on Dow Jones Sustainability Index and GRI Reporting framework. Dow Jones Sustainability Index The Dow Jones Sustainability Indices are the first global indices tracking the financial performance of the leading sustainability-driven companies worldwide, it was launched in 1999. The Dow Jones Sustainability World Index comprises of more than 300 companies that represent the top 10% of the leading sustainability companies out of the biggest 2500 companies in the Dow Jones World Index. GRI Reporting framework The GRI Reporting Framework is intended to serve as a generally accepted framework for reporting of an organisations economic, environmental and social performance. The Sustainability Reporting Guidelines or G3 Guidelines are the cornerstones of the GRI Reporting Framework. These Guidelines are divided into the following parts : (a) Reporting principles Materiality Stakeholder inclusiveness Sustainability context and completeness (b) Reporting guidance (c) Standard disclosures Write Short notes on UN Conference on Environment and Development and Rio Declaration on Environment and Development. UN Conference on Environment and Development Agenda 21 is a blueprint on how to make development socially, economically and environmentally sustainable. The Rio Declaration on Environment and Development it has 27 principles defining the rights and responsibilities of nations as they pursue human development and well-being. A statement of forest principles they guide the management, conservation and sustainable development of all types of forests, as essential to economic development and the maintenance of all forms of life. The United Nations Framework Convention on Climate Change aims to stabilize greenhouse gases in the atmosphere at levels. The Convention on Biological Diversity it requires the countries to adopt ways and means to conserve the variety of living species, and ensure that the benefits from using biological diversity are equitably shared. Rio Declaration on Environment and Development Human beings are at the centre of concerns for sustainable development States have the sovereign right to exploit their own resources pursuant to their environmental and developmental policies The right to development must be fulfilled so as to equitably meet the environmental and developmental needs of present and future generations Environmental protection should constitute an integral part of the developmental process All states and all people shall cooperate in the essential task of eradicating poverty The special needs and situation of developing countries particularly the least developed should be given special priority States should cooperate in the spirit of global partnership to protect, conserve and restore the health and integrity of the Earths ecosystem To achieve sustainable development and a higher quality of life for all people, States should reduce and eliminate unsustainable patterns of production and consumption and promote appropriate demographic policies States should cooperate to strengthen endogenous capacity building for sustainable development
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Environment issues are best handled with participation of all concerned citizens, at all levels States should enact effective environmental legislation States should cooperate to promote a supportive and open international economic system that would lead to economic growth and sustainable development in all countries States should develop national law regarding liability and compensation for the victims of pollution and other environmental damage States should effectively cooperate to discourage or prevent the relocation and transfer to other States of any activities and substances that cause severe environmental degradation In order to protect the environment, the precautionary approach should be widely applied by all States National authorities should endeavour to promote the internalization of environmental costs States should immediately inform the other States of any natural disasters Women play an vital role in environmental management and development . What do you mean by Kyoto Protocol? Adopted in Kyoto Japan in 1997 at UNFCCC Conference and came into force in 2005 As of Sept, 2011, 191 states have signed and ratified the Protocol Under the Protocol, 37 countries (Annex I countries) commit themselves to reduction of four greenhouse gases (GHG) and all member countries give general commitments The Protocol allows for several flexible mechanisms such as emission trading, clean development mechanism and joint implementation to allow Annex I countries to meet their GHG emission limitations by purchasing GHG emission reduction credits from elsewhere through financial exchanges that reduce emissions in non-Annex I countries from other Annex I countries with excess allowances The objective of the UNFCC was to establish a legally binding international agreement, whereby all the participating nations commit themselves to tackling the issue of global warming and greenhouse gas emissions The target was an average reduction of 5.2% from 1990 levels by the year 2012 Each Annex I country is required to submit an annual report of inventories of all GHG emissions. The countries nominate a person called designated national authority to create and maintain its greenhouse gas inventory How does the Ryland vs. Fletcher rule applied in the Bhopal Gas tragedy? Rule of Ryland vs. Fletcher: "We think that that the rule of law is, that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape. He can excuse himself by showing that the escape was owing to the plaintiffs default; or perhaps that the escape was the consequence of vis major or the act of God...... and it seems but reasonable and just that the neighbour, who has brought something on his own property which was not naturally there, harmless to others so long as it is confined to his own property, but which he knows to be mischievous if it gets on his neighbours, should be obliged to make good the damage which ensues if he does not succeed in confining it to his own property". In the Bhoapl Gas disaster which happened on the night of 2nd or 3rd Dec, 1984, there was a gas leak in the plant of Union Carbide India Limited In 1989, the Supreme Court awarded US $ 470 million to the Govt. of India on behalf of all Bhopal victims in full and final settlement of all the past, present and future claims arising from the disaster. Short note on the Corporate Manslaughter and Corporate Homicide Act in UK. For prosecuting companies and other organisations where there has been a gross failing, throughout the organisation, in the management of health and safety with fatal consequences. The Act, which came into force on 6 April 2008, clarifies the criminal liabilities of companies including large organisations where serious failures in the management of health and safety result in a fatality.
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Prosecutions will be of the corporate body and not individuals, but the liability of directors, board members or other individuals under health and safety law or general criminal law, will be unaffected. And the corporate body itself and individuals can still be prosecuted for separate health and safety offences. Companies and organisations should keep their health and safety management systems under review, in particular, the way in which their activities are managed and organised by senior management. Explain the various water pollution cases decided in India. Kanpur tanneries - Jajmau area near Kanpur - 1988 The Court has issued various notices to these tanneries but many industrialists have not bothered either to respond to the notice or to take elementary steps for the treatment of industrial effluent before discharging the same into the river. The Court hence issued directions for the closure of those tanneries which have failed to take minimum steps required for the primary treatment of industrial effluent. The Court further held that closure of such tanneries may bring unemployment, loss of revenue, but life, health and ecology have greater importance to the people. Role of Municipalities - Kanpur Nagar Mahapalika - 1988 The Kanpur Nagar Mahapalika has not yet submitted its proposals for sewage treatment works to the State Board constituted under the Water Pollution Act There are a large number of dairies in Kanpur - Kanpur Nagar Nahapalika may either direct the dairies to be shifted to a place outside the city so that the waste accumulated at the dairies does not ultimately reach the river Ganga or in the alternative it may arrange for the removal of such waste by employing motor vehicles to transport such waste from the existing dairies The Nagar Mahapalika should immediately take action to prevent the collection of manure at private manure pits inside the city The Kanpur Nagar Mahapalika should also take immediate steps to increase the size of the sewers in the labour colonies so that the sewage may be carried smoothly through the sewerage system. Wherever sewerage line is not yet constructed, steps should be taken to lay it. Immediate action should also be taken o construct sufficient number of public latrines and urinals for the use of the poor people in order to prevent defecation by them on open land. The practice of throwing corpses and semi-burnt corpses into the river Ganga should be immediately brought to an end Whenever applications for licences to establish new industries are made in future, such applications shall be refused unless adequate provision has been made for the treatment of trade effluents flowing out of the factories. It is the duty of the Central Government to direct all the educational institutions throughout India to teach, atleast for one hour in a week, lessons relating to the protection and the improvement of the natural environment In order to rouse amongst the people the consciousness of cleanliness of environment the Government of India and the Governments of the States and of the Union Territories may consider the desirability of organising 'Keep the city clean' week and 'Keep the village clean' week in every city, town and village throughout India at least once a year. Kolkata tanneries - Tangra, Tiljola, Topsia and Pagla Danga- 1997 The Calcutta tanneries shall relocate themselves from their present location and shift to the new leather complex set up by the West Bengal Government The Calcutta tanneries shall deposit 25% of the price of the land with the concerned authority. The subsequent instalments shall be paid in accordance with the terms of the allotment letters issued by the State Government. The Pollution Control Board shall issue public notice to this effect. The State Government shall hand over the possession of the plots allotted to the tanneries before April 15, 1997. The State Government shall render all assistance to the tanneries in the process of relocation. The use of the land which would become available on account of shifting/relocation/closure of the tanneries shall be
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permitted for green purposes. All the Calcutta tanneries shall stop functioning at the present sites on September 30, 1997. The State Government shall appoint an authority / Commissioner, who with the help of the Board and other expert opinion and after giving opportunity to the polluting tanneries concerned, assess the loss to the ecology/environment in the affected areas. The said authority shall further determine the compensation to be recovered from the polluter - tanneries as cost of reversing the damaged environment. The Court imposed pollution fine of Rs. 10,000 each on all the tanneries in the four areas of Tangra, Tiljola, Topsia and Pagla Danga. The workmen employed in the tanneries shall have continuity of employment at the new place where the tannery is shifted. The period between the closure of the tannery at the present site and its restart at the place of relocation shall be treated as active employment and the workmen shall be paid their full wages with continuity of service. All those workmen who agree to shift with the tanneries shall be given one years wages as "shifting bonus" to help them settle at the new location.
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Important Topics For CS Final Examination June, 2013 (With Answers)

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