What is EGM? What kind of business is discussed in EGM?

A meeting other than the annual general meeting between a company's shareholders, executives and any other members. An EGM is usually called on short notice and deals with an urgent matter An extraordinary general meeting (EGM) of a company is a general meeting of all members of a company (this usually means shareholders) other than the AGM. Like an AGM, an EGM gives shareholders a chance to vote on important decisions. An EGM may be called at any time. An EGM is therefore called when a decision needs to be made that cannot wait for the next AGM. There are also some decisions that, by law or by a company's articles, require an EGM: in this case the EGM may take place immediately before or after the next AGM. An EGM is called by the directors of a company. Shareholders with a stake of over 10% (in combination) may force an EGM. Reasons for calling an EGM include:

approving a major acquisition allowing major shareholders to arrange the removal directors with whom they have disagreed changing the name of the company Approving major changes to a company's financial structure that require a reduction or increase in share capital.

About Restricted Stock Awards: A Restricted Stock Award Share is a grant of company stock in which the recipients rights in the stock are restricted the shares vest (or lapse in restrictions). The restricted period is called a vesting period. Once the vesting requirements are met, an employee owns the shares outright and may treat them as he/she would any other share of stock in her/his account. Vesting Period: Vesting period refers to the time period required to achieve full rights/privileges associated with a profit-sharing or retirement plan offered by an employer. How do Restricted Stock Award Plans work? Once an employee is granted a Restricted Stock Award, the employee must decide whether to accept or decline the grant. If the employee accepts the grant, he may be required to pay the employer a purchase price for the

grant. After accepting a grant and providing payment (if applicable) the employee must wait until the grant vests. Vesting periods for Restricted Stock Awards may be time-based (a stated period from the grant date), or performance-based (often tied to achievement of corporate goals.). When a Restricted Stock Award vests, the employee receives the shares of company stock or the cash equivalent (depending on the companys plan rules) without restriction. About Restricted Stock Units: Restricted Stock Units are shares of stock that an employee is eligible for after a certain restriction is fulfilled. Typically, the restriction is time-based, but it can be tied to just about any other factor. Once an employee is granted Restricted Stock Units, the employee must decide whether to accept or decline the grant. If the employee accepts the grant, he or she may be required to pay the employer a purchase price for the grant. Each company structures these in different ways. After accepting a grant and providing payment (if applicable), the employee must wait until the grant vests. Vesting periods for Restricted Stock Units may be time-based (a specific period from the grant dates) or performance-based (tied to achievement of specific corporate goals). Once the Restricted Stock Units vest, the employee receives the shares of company stock or the cash equivalent (depending on the company's plan rules). The Restricted Stock Awards are differing from Restricted Stock Units What is shareholder shareholder activism? activism? How can a company identify

What is shareholder activism? The active involvement of stockholders in their organization is shareholder activism. They can resolve issues laid down in the annual and other general meetings. They can also raise concerns over financial matters or even social causes such as protection of the environment. Shareholder Activism is also known as Relationship Investing. Shareholder activism is one of the three basic strategies of socially responsible investing, including screening and community investing. Of the three, its the approach that involves the most communication between equity owners and a companys management. By exercising their proxy vote, attending annual meetings, corresponding with management and submitting resolutions, socially responsible investors can make their priorities known to the directors and managers of their companies and try to influence corporate behavior.

Shareholder activists include public pension funds, mutual funds, unions, religious institutions, universities, foundations, environmental activists and human rights groups. Shareholder activism can be exercised through shareholder proposals, proxy battles, publicity campaigns, litigation and negotiations with management. Activist investor A person who attempts to use his or her rights as a shareholder of a publiclytraded corporation to bring about social change. Some of the issues most often addressed by shareholder activists are related to the environment, investments in politically sensitive parts of the world and workers' rights (sweatshops). The term can also refer to investors who believe that a company's management is doing a bad job and who attempt to gain control of the company and replace management for the good of the shareholders. Although shareholders don't run a company, there are ways for them to influence the board of directors and management. These can range from dialogue with management to voice their concerns about a particular issue to formal proposals that are voted on by all shareholders at a company's annual meetings.

The impetus for a shareholder action can vary. An investor might discover after the fact that a company in which it owns stock was acting in a manner contrary to their principles. They might learn of a poor record with the environment or questionable corporate governance. Rather than simply sell their stock, the investors would act to correct the problem. In other cases, shareholder activists might identify a company that has ties to a government known for its human rights violations. To pressure the company into severing its ties, the activists will acquire stock and begin a campaign. The primary emphasis of activist shareholders has been to focus on the poorly performing firms in their portfolio and to pressure the management of such firms for improved performance thus enhancing shareholder value. A key feature of this activism derives from SEC. The SEC's Shareholder Proposal Rule 14a-8 allows shareholders to submit issues for inclusion in the proxy material and for subsequent presentation at the AGM. If such issues are properly presented in the AGM, they will be voted on. The use of shareholder proposal resolutions is often an expedient way in which activist shareholders can pursue their agendas.

Activist investors are likely to vote against the management, possibly at EGMs forced by themselves. Activist shareholders are also likely to put pressure on management to take (or refrain from) various actions. Things activist shareholders may do include:

Force the spin-off of business, or even the complete breakup of a group. Block take-overs, or limit the price at which the occur. Limit directors pay and fire directors. Force a change of strategy. Impose CSR policies

Example In India we have seen human rights movements on Dow Chemicals in the Bhopal gas leak case. An Activist investor will

Establish dialogue with the management on issues that concern you. Influence the corporate culture. Use the corporate democracy provided by law. Increase general awareness on social and human rights issues concerning the organization. Internet and mass media are effective tools in building up pressure on the management.

Some key reasons that investors may wish to pursue shareholder activism: to procure a return of capital, to ensure a different corporate strategy is pursued so as to realize improved performance and profitability, e.g., seeking to recognize value by de-merging businesses, to ensure changes to a company's board, in pursuit of a special interest - ie, groups aligned with environmental, social or ethical agendas, to increase company efficiency by procuring the disposal of underperforming assets, or to influence the outcome of a takeover or other M&A activity Some activists deliberately accumulate substantial stakes in undervalued companies to force changes that will increase the share price so they can sell at a profit. Others, such as long-time or majority stakeholders, may object to current management practices, prefer an independent board of directors, or want a voice in executive pay. While they seek improvement to the bottom line, they may also be committed to strengthening the company in other ways.

Individual investors who want their voice to be heard on corporate matters can take the following approaches also Know your company well. Check its web site regularly for company announcements. Check its investor relations page for quarterly and annual filings with the SEC. Carefully read the company proxy materials sent before the annual meeting. Theyll include resolutions that the company or other shareholders have submitted and upon which individual owners can vote. Carefully read material provided by mutual fund managers. Understand how the managers of funds that hold your money are voting on environmental or social resolutions. Attend the companys annual meeting if possible. You would have the right to be recognized and speak on a resolution. The major cause for the financial crisis, which culminated in the collapse of Lehman Brothers, was driven not only by easy credit conditions, but also by poor corporate governance practices in a number of financial institutions. These practices include poor risk management, poor management oversight, irrational financial innovation, reckless and predatory lending practices and a compensation regime that encouraged short-term risk-taking at the expense of long term value creation. One major reason why these activities continued unabated is because of the limited engagement by shareholders with the management of these institutions, as investors opted to take a more passive approach. The breakdown in corporate governance outlined above highlights the classic agency problem in which management teams sometimes pursue objectives which, though attractive to them, often conflicts with the goals of the shareholders. Due to the disengagement of shareholders in the management of these entities, it was easy for the management to engage in activities that did not maximize the long-term value of the business. There are a number of benefits to be derived from increased shareholder engagement. It promotes better corporate governance. Furthermore, it could lead to improved returns for shareholders as value-destroying activities are discouraged, thereby enabling management to embark on value-enhancing activities. It could also lead to improved profitability for the business. Moreover, it also helps bridge any misalignment between the objectives of management and shareholders. In order to reduce the intensity and occurrences of similar financial crises, it is essential that shareholders take a more active stance with the management team of the companies in which they invest. With lessons learned from the current financial crisis, there is likely to be a dramatic change in shareholder activism in a post-Lehman world, and shareholders will play an important part in engineering better corporate governance.

AGM The decisions regarding appointment, removal of BOD and executives and other issues has to be discussed in the General Meeting of the Company. Every company needs to convey General Meeting of its share holders once in an year to ratify the accounts, and other decisions taken in the due course. This meeting is called Annual General meeting. Company law has given obligation to every type of company, public or private, limited by shares or by guarantee, with or without share capital or unlimited company to conduct annual general meeting once in a year. The gap between two AGMs should not be more than 15 months. The prerequisites of a valid AGM are similar to any other Board meeting. i.e., 1. A notice of at least 21 days before the meeting must be given to members. 2. The notice must state that the meeting is an annual general meeting. 3. The time, date and place of the meeting must be mentioned in the notice. 4. Quorum 5. Appointment of proxy There are two types of businesses will be discussed in the AGM 1. Ordinary Business 2. Special Business Things discussed in any AGM a. Auditors report b. Financial status of the company c. Dividend policy d. Director nominations and approvals e. Ratification of any other decisions taken by the Board earlier.

AS ORDINARY BUSINESS 1. To receive and adopt the audited financial statements and the reports of the Directors and auditors 2. Declaration of dividend. 3. To re-elect the retiring Directors / appointment of new directors and to authorize the Board to fix their remuneration for the ensuing year. 4. To appoint the auditors for the ensuing year and to authorize the Board to fix their remuneration. AS SPECIAL BUSINESS Any other issue other than the ordinary business as stated above will be called as Special Business What is Angel investing? Does it differ from Venture investing? Angel Investor An angel investor or angel is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to pool their investment capital. Angel Investor is also known as a Business Angel or Informal Investor. Although typically reflecting the investment judgment of an individual, the actual entity that provides the funding may be a trust, business, limited liability company, investment fund, etc. Angel capital fills the gap in start-up financing between "friends and family" who provide seed funding, and venture capital Angel investments bear extremely high risk. As such, they expect a very high return on investment.

Why Angel Investor when there are other sources of funds? While the investor's need for high rates of return on any given investment can thus make angel financing an expensive source of funds, cheaper sources of capital, such as bank financing, are usually not available for most early-stage ventures, which may be too small or young to qualify for traditional loans Venture capital Venture capital (VC) is financial capital provided to early-stage and highpotential companies. The venture capital fund makes money by owning

equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software etc. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software etc. DIFFERENCES An Angel provides capital for a business start-up where as Venture capital provides capital at early sage of business. An Angel funding involves a higher risk than normal venture capital funding since the investor does not see any existing project to evaluate for funding.

Angel investments are usually lower (in the tens-thousands to hundred-thousands of dollars) as against normal venture capital investment (in the hundred-thousands to millions of dollars). Beneficial Owner: The individual who enjoys the benefits of owning a security or property, regardless of whose name the title is in. Entity that enjoys the possession and/or benefits of ownership (such as receipt of income) of a property even though its ownership (title) is in the name of another entity (called a 'nominee' or 'registered owner'). Use of a nominee (who may be an agent, custodian, or a trustee) does not change the position regarding tax reporting and tax liability, and the beneficial-owner remains responsible. Proxy will be filed by the companies. In those companies, companies are obligated to disclose the ownership information of Key management (Insiders) and Substantial Shareholders (More than 5%). The reason is all these owners have the ability to participate and influence the decisions being taken by the companies as they are controlling/strategic shareholders of the company. All insiders and principal shareholders (more than 10%) are obligated to file form 3, 4 & 5. All the strategic shareholders (more than 5%) and non-strategic owners having > 20% shares are obligated to file 13D All the non-strategic owners >5% are obligated to file 13G

Equivalent to the above SEC form there will be notifications for all the international companies being filed by the parties with stock exchange or regulatory bodies. Explain the concept of black-scholes Option pricing model. The Black Scholes Model is one of the most important concepts in modern financial theory. It was developed in 1973 by Fisher Black, Robert Merton and Myron Scholes and is still widely used today, and regarded as one of the best ways of determining fair prices of options The Black-Scholes model is a tool for pricing equity options. The BlackScholes model, often also called using its full name Black-Scholes Option Pricing Model, is an approach for calculating the value of a stock option, let it be a call option or a put option. The basic idea behind the Black-Scholes model is that the price of an option is determined implicitly by the price of the underlying stock. How does the Black-Scholes model work? The Black-Scholes model is a mathematical model based on the notion that prices of stock follow a stochastic process, which is also referred to as random walk. Assuming that stock prices follow random walk, it already suggests that we will need to involve some math and statistics. The Black-Scholes formula consists of three parts. The main equation and two formulas for calculating parameters.

This part of the Black-Scholes formula tells us that the price of a Europeanstyle call option with expiration date in time T written on stock S is equal to the price of the stock adjusted for volatility, interest rate, and spread minus present value of the stock delivery price (or a strike price) also adjusted for volatility, interest rate, and spread. The parameters d1 and d2 in the Black-Scholes formula can be calculated the following way:

The d1 and d2 are parameters to the phi in the first equation. Phi represents a cumulative distribution function of Normal distribution. In layman terms, we calculate the parameters d1 and d2 and look up a corresponding tabularized value in a book, and then we plug those values back into the first formula. The Black-Scholes formula for a European-style put option is very similar to the Black-Scholes formula for a call option. It is the following:

This Black-Scholes formula tells us that a value of a put option can be calculated as a present value of the stock delivery price minus the price of the stock, both adjusted for volatility, interest rate, and spread. Black-Scholes formula calculation example The Black-Scholes formula is used to calculate the value of an option. We can demonstrate the working of the Black-Scholes formula on an example. Let us assume that the current price of shares of company XYZ is $100 and you would like to get an option to purchase one share of XYZ company stock for $95. The option expires in three months. We also assume that the stock pays no dividends. The standard deviation of the stocks returns is 50% per year, and the risk-free rate is 10% per year, we can calculate the value of the option as follows: d1 = [ln($100/$95) + (0.10 + 0.25/2) * 0.25]/ 0.50 * 0.25 = 0.43 d2 = 0.43 0.50 * 0.25 = 0.18 N(0.43) = 0.6664 N(0.18) = 0.5714 Plugging these parameters into the formula, we get: C(S, T) = $100 * 0.6664 - $95 * e
-(0.10 * 0.25)

* 0.5714 = 66.64 - 52.94 = $13.70

Note, this Black-Scholes formula example is used to value a call option.

Topic:

Define Board meetings and class meetings and its requisites. How many times a board should meet in a year and what is the valid board meeting? Board meetings: The affairs of the company are managed by the board of directors. The directors should often meet to discuss various matters regarding the management and administration of the affairs of the company in the best interest of the shareholders and the public interest. Formal meeting of the board of directors of an organization, held usually at definite intervals to consider policy issues and major problems. Presided over by a chairperson of the organization or his or her appointee, it must meet the quorum requirements and its deliberations must be recorded in the minutes. Under the doctrine of collective responsibility, all directors (even if absent) are bound by its resolutions. Resolutions passed at the board meetings. 1. 2. 3. Power to issue debentures Power to invest the funds of the company Power to make loans etc

A meeting of the board of directors shall be held at least once in every three months and at least four such meetings shall be held in every year. Four board meetings are held in a calendar year, one in each quarter and the interval between two meetings may be more than three months. Notice of meetings

(1) Notice of every meeting of the Board of directors of a company shall be

given in writing to every director for the time being in India, and at his usual address in India to every other director.

(2) Every officer of the company whose duty it is to give notice as

aforesaid and who fails to do so shall be punishable with fine. Quorum for meetings (1) In this section(a) The total strength of the Board of directors of a company as determined in pursuance of this Act, after deducting there from the number of the directors, if any, whose places may be vacant at the time; and (b) "Interested director" means any director whose presence cannot, by reason of section 300, count for the purpose of forming a quorum at

a meeting of the Board, at the time of the discussion or vote on any matter. (2) The quorum for a meeting of the Board of directors of a company shall be one-third of its total strength (any fraction contained in that one-third being rounded off as one), or two directors, whichever is higher. Provided that where at any time the number of interested directors exceeds or is equal to two-thirds of the total strength, the number of the remaining directors, that is to say, the number of the directors who are not interested present at the meeting being not less than two, shall be the quorum during such time. PROCEDURE WHERE MEETING ADJOURNED FOR WANT OF QUORUM (1) If a meeting of the Board could not be held for want of quorum, then, unless the articles otherwise provide, the meeting shall automatically stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place. (2) The provisions of section 285 shall not be deemed to have been contravened merely by reason of the fact that a meeting of the Board which had been called in compliance with the terms of that section could not be held for want of a quorum. Valid meeting: Generally, companies give at least a weeks notice. If notice of the meeting is not properly give the proceedings at the meeting will be void. Notice must be given even to a director who has stated that he will be unable to attend. If notice of the meeting is not given to one of the directors, meeting of board of directors is invalid and resolutions passed at such meetings inoperative. Notice is not given as required but all the directors attend meeting and do not object to the absence of notice, the proceedings of meeting will be valid. Requisites of a valid meeting: For a meeting to be valid the following conditions must be satisfied. 1. It must be properly conveyed. Means, the person entitled to attend it must have been summoned by the proper authority i.e. normally the chairman of the board of directors. 2. It must be legally constituted. Means, the proper person must be in the chair and the rules as to quorum must be observed and the provisions of the act and the articles must be complied with. 3. The business at the meeting must be validity transacted. the are the the

Class meetings: Class meetings are those meetings which are held by holders of a particular class of shares e.g. Preference shares. Need for such meetings arise when it is proposed to vary the rights of a particular class of shares. Thus, for effecting such changes, it is necessary that a separate meeting of the holders of that class of shares is held and the proposed variation is approved at the meeting. For example, for deciding not to pay arrears of dividends on cumulative preference shares, for which it is necessary to call a meeting of such shareholders and pass the resolution.

27. Differentiate between Business and Financial Investor; and Immediate and Ultimate Parent Company Financial Investor ==================== Financial investor an investor (individual or firm) who makes investment decisions primarily based on the prospect for financial gain; financial investors tend to uses financial skills and methods to increase returns and manage risks. Majorly focuses on _________________ Financial Management Collection and Credit Assessment Example ________ Share holders Financial institutions

Strategic/Business Investor ========================== Individual or firm that adds value to the money it invests with its contacts, experience, and knowledge of market thus brightening the investee's prospects for additional investment and success.

Majorly focuses on _________________ Project Planning and Project Management Marketing and Sales Technology Education and Training Administration and Control

Example ________ Canada Health Infoway is an independent, not-for-profit organization tasked with accelerating the development of electronic health records (EHR) across Canada. The goal of Canada Health Infoway is to contribute to the development of a network of EHR systems, in order to enable efficient communication between health care professionals and bringing a deeper understanding of patient needs. OAO Rosneft Oil Company is an integrated petroleum company owned by the Russian Government. Achieved its objective largely by arranging bilateral deals with strategic investors, such as British Petroleum (BP), Petronas and CNPC,

Immediate and Ultimate Parent Company ======================================= A parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed as a subsidiary of the parent company. Ultimate Parent company _______________________ The very top company listed in a company hierarchy and the ultimate controlling company within a corporate structure

Immediate Parent Company _______________________ "The immediate parent company is...The parent of the smallest group for which group accounts are prepared is The top tier within an organization but may not be the ultimate parent. It should have other companies reporting to it, and would itself report to another legal entity. Differentiate between Business and Financial Investor; and Immediate and Ultimate Parent Company Business investor/strategic investor: an investor who invests primarily for strategic rather than financial (return) purposes. For example, in order to gain future access to a key new technology or product. Or to take control over the management of the company or to play an active role in the decision making process Example: Corporation Z, a large record company, made a strategic investment in a minority equity stake in the startup digital music distributor; they did so in the hopes of learning more about online media marketing, with the possibly of eventually acquiring the startup. Financial Investor: One who lays out money, usually by lending or purchasing, in the expectation of profiting from interest earnings or capital gain. Put quite simply, a financial investor is a person who invests some initial capital in the hopes of gaining a return on this money over time. Any investor who invests primarily for financial returns rather than control over the company. Financial investors make investment decisions primarily based on the prospect of a strong financial return. Immediate Parent Company: A company that has a controlling interest in another company, even though it is itself controlled by a third company, which is the holding company of both companies. Ultimate Parent Company: An ultimate parent company considered as a parent company of a subsidiary entity, and the subsidiary entity has its subsidiary entity.

EX:

Ultimate Parent Company

Immediate Parent Company

Subsidiary Company

EX: Tata Capital, a wholly-owned subsidiary of Tata Sons Limited, the apex holding company of the Tata Group. Introduction Global warming refers to the recent increase in the Earth's temperature. The effects of this climate change are already being felt around the world. Scientists predict that temperatures will rise up to 6C further over the next century. This will cause rises in sea level, extreme weather events such as hurricanes and heat waves, and war and disease, particularly in developing countries. It is now agreed that global warming is caused by greenhouse gases, such as carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, Hydrofluro Carbon, and PFCs emitted by humans into the Earth's atmosphere. The biggest contributor is carbon dioxide, which is generated by burning fossil fuels such as coal, oil or gas. Every time you drive your car or fly in a plane, you are contributing directly to the Earth's change in climate. Most of the world's electricity is also generated from these fuels, despite renewable alternatives such as wind and solar power. The ideal solution to this problem would be for everyone to stop driving, flying, and using electricity. However this is not going to happen in our lifetimes. In fact, rapid economic development in countries such as China and India, as well as ongoing growth in the rest of the world, mean that carbon emissions are still increasing year on year.

But now this is being converted into a product that helps people, countries, consultants, traders, corporations and even farmers earn billions of rupees. This is called as Carbon Credit. What is carbon credit? Carbon credits are certificates issued to countries that reduce their emission of GHG (greenhouse gases) which causes global warming. Carbon credits are measured in units of certified emission reductions (CERs). Each CER is equivalent to one tonne of carbon dioxide reduction. Credits are awarded to countries or groups that have reduced their green house gases below their emission quota. Carbon credits can be traded in the international market at their current market price. Some decades ago a debate started on how to reduce the emission of harmful gases that contributes to the greenhouse effect that causes global warming. So, countries came together and signed an agreement named the Kyoto Protocol. Kyoto Protocol: To protect ourselves, our economy, and our land from the adverse effects of climate change, we must reduce emissions of carbon dioxide and other greenhouse gases. To achieve this goal the concept of Clean Development Mechanism (CDM) has come into vogue as a part of Kyoto Protocol. Kyoto Protocol is an agreement made under the United Nations Framework Convention on Climate Change (UNFCCC) that came into force on February 16, 2005, under which the industrialized countries will reduce their collective emissions of greenhouse gases by 5.2% compared to the year 1990. The main aim is to lower overall emissions of six greenhouse gases - carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, HFCs(Hydrofluro Carbon), and PFCs - calculated as an average over the five-year period of 2008-12. The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol allowing industrialized countries with a greenhouse gas reduction commitment to invest in emission reducing projects in developing countries as an alternative to what is generally considered more costly emission reductions in their own countries. Under CDM, a developed country can take up a greenhouse gas reduction project activity in a developing country where the cost of GHG reduction project activities is usually much lower. The developed country would be given credits (Carbon Credits) for meeting its emission reduction targets, while the developing country would receive the capital and clean technology to implement the project.

Trading In Carbon Credits Emissions trading (ET) is a mechanism that enables countries with legally binding emissions targets to buy and sell emissions allowances among themselves. Currently, futures contracts in carbon credits are actively traded in the European exchanges. In fact, many companies actively participate in the futures market to manage the price risks associated with trading in carbon credits and other related risks such as project risk, policy risk, etc. Keeping in view the various risks associated with carbon credits, trading in futures contracts in carbon allowances has now become a reality in Europe with burgeoning volumes. Currently, project participants, public utilities, manufacturing entities, brokers, banks, and others actively participate in futures trading in environment-related instruments. The European Climate Exchange (ECX), a subsidiary of Chicago Climate Exchange (CCX), remains the leading exchange trading in European environmental instruments that are listed on the Intercontinental Exchange (ICE), previously known as International Petroleum Exchange (IPE). Multi Commodity Exchange of India Ltd. (MCX) entered into a strategic alliance with CCX in September 2005 to initiate carbon trading in India. Various industries that have scope of generation of CERs:

Agriculture Energy ( renewable & non-renewable sources) Manufacturing Fugitive emissions from fuels (solid, oil and gas) Metal production Mining and mineral production Chemicals Afforestation & reforestation

India as a potential supplier India, being one of the leading generators of CERs through CDM, has a large scope in emissions trading. Analysts forecast that its trading in carbon credits would touch US$ 100 billion by 2010. Currently, the total registered CDM projects are more than 300, almost 1/3rd of the total CDM projects registered with the UNFCCC. The total issued CERs with India as a host country till now stand at 34,101,315 (around 34 million), again around 1/3rd of the total CERs issued by the UNFCCC. In value terms (INR), it could be running into thousands of crores.

Further, there has been a surge in number of registered projects in India. In 2007, a total of 160 new projects were registered with the UNFCCC indicating that more than half of all registered projects in India happened last year. It is expected that with increasing awareness this would go further up in the future. The number of expected annual CERs in India is hovering around 28 million and considering that each of these CERs is sold for around 15 euros, on an average, the expected value is going to be around Rs 2,500 core. Advantages : Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air. Business after costing up the alternatives may decide that it is uneconomical or infeasible to invest in new machinery. Instead may choose to buy carbon credits on the open market from organizations that have been approved as being able to sell legitimate carbon credits. It encourages the companies to take possible measures to reduce the emission of poisonous gases. Disadvantages: As it traded as a commodity it is also vulnerable to significant risks. Carbon offsets are unregulated. Some offset firms in the United States and abroad have been caught selling offsets for normal operations that do not actually take any additional C02 out of the atmosphere. The lack of offset regulations has also made marketing problematic. Recently, companies have taken to declaring themselves carbon neutral. But until the Federal Trade Commission determines the guidelines for such terms, its unclear which companies actually merit the distinction. Conclusion: Though this concept of carbon credit has few drawbacks, it is gaining popularity. The main reasons are: It provides an investment opportunity. As the aspect of money is involved, it attracts investors and companies to earn lots of money. It encourages companies to be more environmental friendly and curbs the emissions of poisonous pollutants.

How Capital IQ compensation data differs with SEC, SEDAR and ASX Regulators. SEC discloses last 3 latest fiscal years compensation information on their Annual Reports. SEDAR and ASX disclose only last fiscal year compensation information on their filings. SEC, SEDAR and ASX disclose compensation information on horizontal style like Person Name, Fiscal Year, Salary, Bonus etc. Regulatory filings disclose Key Executives Information whose salary exceed 100000 USD. Regulatory companies coverage is less when compare to Capital IQ Compensation coverage since we cover compensation information through web crawler sources. Dynamic Tools are not available in Regulatory Filings like Excel Plug-in and Screening Option etc. We can view compensation information on company wise only. We have to open all history documents to know entire history of compensation for a particular company. Person wise compensation is not possible. For example Mr. X is a director in 5 companies and receiving compensation from all 5 companies. We have to open all 5 companies documents to know his compensation details.

Capital IQ Compensation disclosure style: We disclose compensation information in vertical style. We disclose As Reported Compensation figures and Calculated Figures (using formulas to derive these calculated figures) on platform. Calculated Data Items (Which are not available on regulatory feeds but providing by Capital IQ) are like 1. Total Annual Cash Compensation 2. Total Short Term Compensation 3. Other Long Term Compensation 4. Total Calculated Compensation 5. Total Value of Options 6. Total Number of Options 7. Other Compensation 8. Total Value of Stock Awards 9. Total Number of Stock Awards 10.Total Compensation Received/Earned We have click through option on platform to audit accuracy of compensation information. We cover compensation information for SEC, SEDAR, ASX, NZX and other International companies like India, Malaysia, Hong Kong, Singapore etc.

We have compensation history from 1998 onwards for most of the companies. We can get highly paid compensation persons information. Compensation data is compatible for Capital IQ Screening and Excel Plug-in, watch list and mail alert features. We can get compensation data on Year wise, Compensation Type like Salary/Bonus etc for all companies. All documents compensation is available for one company is available in one shot. No need to open all documents to get entire compensation history of a company. Person wise compensation display is possible in one shot. What is Clause 49 of listing agreement as per SEBI? Impact on Corporate Governance for Indian companies. Clause 49 of the Listing Agreement to the Indian stock exchange comes into effect from 31 December 2005. It has been formulated for the improvement of corporate governance in all listed companies. In corporate hierarchy two types of managements are envisaged: i) companies managed by Board of Directors; and ii) those by a Managing Director, whole-time director or manager subject to the control and guidance of the Board of Directors.

As per Clause 49, for a company with an Executive Chairman, at least 50 per cent of the board should comprise independent directors. In the case of a company with a non-executive Chairman, at least one-third of the board should be independent directors. It would be necessary for chief executives and chief financial officers to establish and maintain internal controls and implement remediation and risk mitigation towards deficiencies in internal controls, among others. Clause VI (ii) of Clause 49 requires all companies to submit a quarterly compliance report to stock exchange in the prescribed form. The clause also requires that there be a separate section on corporate governance in the annual report with a detailed compliance report. A company is also required to obtain a certificate either from auditors or practicing company secretaries regarding compliance of conditions as stipulated, and annex the same to the director's report. The clause mandates composition of an audit committee; one of the directors is required to be "financially literate".

In its constant endeavor to improve the standards of corporate governance in India, SEBI, in October 2002, constituted a Committee on Corporate Governance under the Chairmanship of Shri N. R. Narayana Murthy. Based on

the recommendations of the said Committee and public comments received thereof, SEBI issued a circular on August 26, 2003 revising Clause 49 of the Listing Agreement. Major changes: The major changes in the new Clause 49 are as follows:

Amendments/additions to provisions relating to definition of independent directors, Strengthening the responsibilities of audit committees, Improving quality of financial disclosures, like Related party transactions and Proceeds from public/rights/preferential issues, Requiring Boards to adopt formal code of conduct and also for senior management, Requiring CEO/CFO certification of financial statements, Improving disclosures to shareholders.

Non-mandatory clauses:

Whistle blower policy. Restriction of the term of independent directors.

Applicability of revised clause: The provisions of the revised Clause 49 shall be implemented as per the schedule of implementation given below: (a) For entities seeking listing for the first time, at the time of seeking inprinciple approval for such listing. (b) For existing listed entities which were required to comply with Clause 49 which is being revised i.e. those having a paid-up share capital of Rs.3 cores and above or net worth of Rs.25 crores or more at any time in the history of the company, by April 1, 2005. Major changes in detail: (1) Amendments/additions to provisions relating to definition of independent directors: While prescribing composition of the Board of a company, Clause 49 prescribes that, if the Chairman of the Board is a non-executive director, at least one-third of the Board should comprise of independent directors and in case he is an executive director, at least half of the Board should comprise of independent directors. As per old Clause 49, definition of independent director was very limited, but in the revised circular, it is wider.

As per new circular, independent director means non-executive director who: (a) Apart from receiving directors 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. (b) Is not related to promoters or persons occupying management positions at the board level or at one level below the board. (c) Has not been an executive of the company in the immediately preceding three financial years. (d) Is not a partner or an executive or was not partner or an executive during the preceding three years, of any of the following: (i) The statutory audit firm or the internal audit firm that is associated with the company, and (ii) The legal firm(s) and consulting firm(s) that have a material association with the company. (e) Is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independence of the director. (f) Is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares. As per old Clause 49, only point (a) was there. Points (b) to (f) are added now. (2) Code of Conduct for Board and senior management: New Clause 49 requires a company to lay down a code of conduct for all Board members and senior management of the company. This code of conduct shall be posted on the website of the company. All Board members and senior management personnel shall affirm compliance with the code on an annual basis. The Annual Report of the company shall contain a declaration to this effect signed by the CEO. Senior management means personnel of the company who are members of its core management team excluding the Board of Directors. Normally, this would comprise all members of management one level below the executive directors, including all functional heads. (3) Disclosures:

A. Proceeds from public issues, rights issues, preferential issues, etc: Clause 49 (Revised) requires that whenever money is raised through an issue (public issues, rights issues, preferential issues, etc.), the company shall disclose to the audit committee, the uses/applications of funds by major category (capital expenditure, sales and marketing, working capital, etc.), on a quarterly basis as a part of their quarterly declaration of financial results. Further, on an annual basis, the company shall prepare a statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and place it before the audit committee. Such disclosure shall be made only till such time that the full money raised through the issue has been fully spent. The statutory auditors of the company shall certify this statement. The audit committee shall make appropriate recommendations to the Board to take up steps in this matter. B. Basis of related party transactions: Revised circular on Clause 49 contains detail disclosure related to related party transactions. Following information as basis of related party transactions should be disclosed: (i) A statement in summary form of transactions with related parties in the ordinary course of business shall be placed periodically before the audit committee. (ii) Details of material individual transactions with related parties, which are not in the normal course of business, shall be placed before the audit committee. (iii) Details of material individual transactions with related parties or others, which are not on an arms length basis, should be placed before the audit committee, together with Managements justification for the same. (4) CEO/CFO certification: Most important change in the existing Clause 49 is inclusion of CEO/CFO certification. Mainly this certification requires a CEO or CFO to certify to the Board that : (The CEO means the Managing Director or Manager appointed in terms of the Companies Act, 1956 and the CFO means the whole-time Finance Director or any other person heading the finance function and discharging that function.) (a) They have reviewed financial statements and the cash flow statement for the year and that to the best of their knowledge and belief:

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; (ii) these statements together present a true and fair view of the companys affairs and are in compliance with the existing accounting standards, applicable laws and regulations. (b) There are, to the best of their knowledge and belief, no transactions entered into by the company during the year, which are fraudulent, illegal or violative of the companys code of conduct. (c) They accept responsibility for establishing and maintaining internal controls and that they have evaluated the effectiveness of the internal control systems of the company and they have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify these deficiencies. (d) They have indicated to the auditors and the audit committee: (i) Significant changes in internal control during the year; (ii) Significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and (iii) Instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the companys internal control system. Non-mandatory requirement: (1) Independent directors may have a tenure not exceeding, in the aggregate, a period of nine years, on the Board of a company. (2) The board may set up a remuneration committee to determine the companys policy on remuneration packages for executive directors. This committee may comprise of at least three directors, all of whom should be non-executive directors and the Chairman of the committee should be an independent director. (3) A half-yearly declaration of financial performance, including summary of the significant events in the last six-months, may be sent to each household of shareholders. Audit qualifications: (4) Mechanism for evaluating non-executive Board Members by peer group should be in place. This Peer Group evaluation could be the mechanism to

determine whether to extend/ continue the terms of appointment of nonexecutive directors. (5) Whistle blower policy should be made and implemented. This is a mechanism for employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the companys code of conduct or ethics policy.

27. Explain different company types and company statuses? Company Type: Public Investment firm: a financial institution that sells shares to individuals and invests in securities issued by other companies Private Investment firm: that owns and manages financial assets, including commercial loan portfolios, real estate tax liens, real estate and others. Public Company: A company that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or in the over the counter market. Private Company: A company whose shares are not traded on open market. Private Fund: Funds available in the private sector without government involvement, Trade Association: Individuals and companies in a specific business or industry organized to promote common interests. Foundation/ Charitable institution: A charitable organization is a type of non-profit organization (NPO). The term is relatively general and can technically refer to a public charity (also called "charitable foundation," "public foundation" or simply "foundation") or a private foundation. Assets/ products Corporate Investment Arm Financial Service Investment Arm

Support or guarantee: Investment Group: Educational Institution: Arts Institution: Labor Union: Government institution: Religious institution: Company Status: Acquired: Acquisition is the process through which one company takes over the controlling interest of another company. Liquidating: Liquidation is usually the last stage of a workout plan or bankruptcy proceeding for a company. Non-Operating Shell Company: a company that has no independent assets or operations of its own, but is used by its owners to conduct specific business dealings or maintain control of other companies. Operating: A group/company which is controlled and operated on its own. Operating subsidiary: is an entity that is controlled by a separate higher entity Out of Business: refers to a company ceasing its operations following its inability to make a profit or to bring in enough revenue to cover its expenses. Reorganizing: A significant modification made to the debt, operations or structure of a company. Pre-Event profile: What are the differences between Limited Liability Limited Partnership and General Partnership? Company,

In the USA individuals wishing to operate a business under a partnership, can choose to form three types of partnership: general partnership, limited partnership and limited liability partnership General Partnership

In the commercial and legal parlance of most countries, a general partnership or simply a partnership refers to an association of persons or an unincorporated company with the following major features: Created by agreement, proof of existence and estoppel. Formed by two or more persons The owners are all personally liable for any legal actions and debts the company may face It is a partnership in which partners share equally in both responsibility and liability. The assets of the business are owned on behalf of the other partners, and they are each personally liable, jointly and severally, for business debts, taxes or tortious liability By default, profits are shared equally amongst the partners. However, a partnership agreement will almost invariably expressly provide for the manner in which profits and losses are to be shared. Each general partner is deemed the agent of the partnership. Therefore, if that partner is apparently carrying on partnership business, all general partners can be held liable for his dealings with third persons. By default a partnership will terminate upon the death, disability, or even withdrawal of any one partner. However, most partnership agreements provide for these types of events, with the share of the departed partner usually being purchased by the remaining partners in the partnership. By default, each general partner has an equal right to participate in the management and control of the business. Disagreements in the ordinary course of partnership business are decided by a majority of the partners, and disagreements of extraordinary matters and amendments to the partnership agreement require the consent of all partners Unless otherwise provided in the partnership agreement, no one can become a member of the partnership without the consent of all partners, though a partner may assign his share of the profits and losses and right to receive distributions Limited Partnership: If a partnership has both general partners and limited partners, it is sometimes termed a "limited partnership." In a limited partnership there are two types of partners - general and limited. Each type of partner has different rights and responsibilities.

 A limited partnership is an entity distinct from its partners. As with a "partnership," the general partners deal with the day-to-day operations of the partnership and they have liability for debts and for actions of the partners. Limited partners do not participate in day-to-day operations of the partnership and they bear no liability for debts or actions of the partnership. With a limited partnership, each of the general partners has unlimited liability for the debts of the partnership, but the limited partner's exposure to the debts of the partnership is limited to the contribution each has made to the partnership. With certain minor exceptions, the reporting for tax purposes is the same as for a general partnership. A limited partnership consists of one or more general partners (i.e., those who are generally liable for the business) and one or more limited partners (i.e., those who have limited liability). If the statutory requirements are not followed, a limited partnership will be treated as a general partnership; therefore, it is important that you consult with an attorney in creating a limited partnership. Limited liability company A limited liability company (LLC) operates like a partnership, but it has members instead of partners, and an operating agreement instead of a partnership agreement. A limited liability company provides limited liability for all of its members, but typically can be treated as a partnership for federal income tax purposes. State laws may differ as to whether it is treated as a partnership or a corporation for state income tax purposes. It can be managed by all of the members or can have centralized management in one or more of the members. The advantage to an LLC is that the liability of members is limited to their investment. Most states allow a single-member LLC to form. A single-member LLC is taxed as a sole proprietorship, while a multiplemember LLC is taxed as a partnership. Strategic Alliance: Strategic Alliance is mutual Coordination of strategic planning and management in order to achieve long term objectives between two organizations. Under this, each organization will work independently and

no separate entity is formed. Strategic Alliance is considered as less risky due to less legalities. Strategic alliances are defined as cooperative relationships between organizations that meet the following criteria: Partners share resources, capabilities and/or knowledge on a continuing basis. The alliances have strategic intent for the partners. Alliance objectives include the sharing and/or exchange of products, services, knowledge and profits The alliance is a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. It is not legally binding Example: A producer of natural carbonated beverages was operating with no money to build, rent or operate any bottling facilities, it persuaded a regional beer company to use its excess capacity to bottle the beverages. Joint Venture: is a legal entity formed between two or more parties to undertake an economic activity together. Under JV two firms join and form a separate legal entity and operate as per partnership Act. The JV can be between individuals or corporations The JV parties agree to create, for a finite time, a new entity and new assets by contributing equity. They then share in the revenues, expenses, and assets and "control" of the enterprise. A joint venture is more legally binding, better for tax purposes and good business, but the strategic alliance is more flexible and often not as capital intensive. It also involves less lawyers if you decide to break the alliance! Examples: 1) Sony-Ericsson is a joint venture by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to make mobile phones. The stated reason for this venture is to combine Sony's consumer electronics expertise with Ericsson's technological leadership in the communications sector. Both companies have stopped making their own mobile phones. 2) Virgin Mobile India Limited is a cellular telephone service provider company which is a joint venture between Tata Tele service and Richard Branson's Service Group. Currently, the company uses Tata's CDMA network to offer its services under the brand name Virgin Mobile, and it has also started GSM services in some states.

Differentiate Vesting Date and Vesting Schedule concept Vesting: "Vesting" refers to your portion of ownership in the money that has been given to you. In law, vesting is to give an immediately secured right of present or future enjoyment. One has a vested right to an asset that cannot be taken away by any third party, even though one may not yet possess the asset. An option is said to vest when the holder is eligible to Exercise it. Options that are exercisable are also called vested. Those that may not be exercised are unvested. Typically, options vest over time according to a prescribed Vesting schedule. So, vesting date is a day on which the options vest. Vesting schedule The timetable that specifies when options Vest, or become exercisable. A typical vesting schedule is 25% per year on the anniversary of the grant date. That means that after one year up to 25% percent of the options granted may be exercised; after two years, up to 50%; after three years, up to 75%; after four years, all of the grant. Cliff vesting An arrangement under which all options Vest at the same time.

Performance-based Vesting Under performance-based vesting, options Vest only if specifed performance criteria are met. For example, options may vest if annual earnings per share exceed a certain target by a specified date.

Reverse vesting An increasingly common Vesting schedule in stock option plans offered by pre-IPO companies. Under this arrangement, an option holder is allowed to exercise options immediately they are granted. For each option exercised,

the option holder receives a share of Restricted stock, which itself is subject to vesting requirements. The restricted stock may be forfeited if the vesting requirements are not met. The employer corporation usually holds the restricted stock in an escrow account until vested. The company may retain the right to repurchase any unvested restricted stock if the holder's employment is terminated. Stock Options Stock options give employees the right to buy company stock at a set price, regardless of the stock's current market value. The hope is that the stock's market price will rise above the set price before the option is used, giving the employee a chance at a quick profit. Stock option plans can come with any of the basic forms of vesting. In a cliff plan, all of the options offered to an employee become operable on the same date. In a graded plan, employees are allowed to exercise only a portion of their options at a time. If employees, for example, are granted options on 100 shares with a five-year cliff vesting schedule, they must work for the company for five more years before they can exercise any of the options to buy shares. In a five-year graded schedule, they might be able to buy 20 shares per year until they reach 100 shares in the fifth year. Because most stock option grants are not part of an employee's retirement plan, their vesting schedules are not limited by the same federal rules that govern matching contributions

What are the differences between Business, Product and Geographic Segments? What are the related classification systems are available in CIQ? What are the differences between Business, Product and Geographic Segments? A Segment can be divided into two categories, Business Segment & Geographical Segment. Business Segment as a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A business segment can be a division, subsidiary, or

other part of a company that reports financial results such as sales, operating income, and assets. Product Segment is in details about different categories in products, which is under pipe line in our segment profile process. Geographical Segment as a group of assets and operations engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments. Example (extract from source document)

What are the related classification systems are available in CIQ? 1. The Standard Industrial Classification (SIC) The Standard Industrial Classification (abbreviated SIC) is a United States government system for classifying industries by a four-digit code. Established in 1937, it is being supplanted by the six-digit North American Industry Classification System, which was released in 1997; however certain government departments and agencies, such as the U.S. Securities and Exchange Commission (SEC), still use the SIC codes.

2. The North American Industry Classification System (NAICS) The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the Standard Industrial Classification (SIC) system. It was developed jointly by the U.S. Economic Classification Policy Committee (ECPC), Statistics Canada , and Mexico's Instituto Nacional de Estadistica y Geografia , to allow for a high level of comparability in business statistics among the North American countries. 3. The Global Industry Classification Standard (GICS) The Global Industry Classification Standard (GICS) is an industry taxonomy developed by Morgan Stanley Capital International (MSCI), and Standard & Poor's (S&P) for use by the global financial community. The GICS structure consists of 10 sectors, 24 industry groups, 68 industries and 154 sub-industries into which S&P has categorized all major public companies. The system is similar to ICB (Industry Classification Benchmark), a classification structure maintained by Dow Jones Indexes and FTSE Group. GICS is used as a basis for S&P and MSCI financial market indexes in which each company is assigned to a sub-industry, and to a corresponding industry, industry group and sector, according to the definition of its principal business activity.

What is Double Trigger Effect? Employee Stock Options (ESOP) offered by a company to its employees entitle them to buy shares of the company at a future date and in a predetermined manner. ESOPs provide an opportunity to the employees to acquire a stake in the company and are intended to create an ownership attitude and align their interests with those of the company. ESOPs give a right and not an obligation on the employees to buy shares of the company at a future date at a pre determined price (generally the company's current stock price).

One of the ways a company can reward its employees is by granting them stock options. A stock option is just that - an option, or a choice - to buy shares. Your options give you the opportunity to buy your companys shares in the future at a price determined at the time of grant. If the stock price goes up, your options would be valuable. If the stock price goes down, then you simply don't use your option - there's no risk to you. What is vesting? Vesting has two components: Vesting percentage and Vesting period. Vesting percentage refers to that portion of total options granted, which you will be eligible to exercise. Vesting period is the period on the completion of which the said portion can be exercised.

The following table presents an example of an employee who is granted 200 options on January 1, 2004 with a vesting schedule of 30%, 30% and 40% at the end of one, two and three years from the date of grant respectively. Vesting Details Percentage Date Options vested Acceleration The saving grace acceleration. Date of grant: January 1,2004 1st Vesting 2nd Vesting 3rd Vesting 30% January 1,2005 60 30% January 1,2006 60 40% January 1,2007 80

for individuals exposed

to a vesting

program is

An acceleration clause accelerates vesting of stock in pre-defined situations. One commonly pre-defined situation is Acquisition (change of control). For example, you might have a clause in your plan that states that 25% of all unvested options accelerate in the event the company is acquired. Single trigger acceleration In single trigger acceleration, the vesting is accelerated when an acquisition occurs. Double trigger acceleration Double trigger acceleration means that there are two kinds of events that can trigger the vesting of options. Double trigger acceleration usually refers to a situation in which the options plan grants partial acceleration on an acquisition, and then further acceleration (perhaps full, perhaps additional

partial) if the employee must work for the acquirer for a predetermined period or be dismissed by the acquirer. Please go through the following link for better understanding http://www.markpeterdavis.com/getventure/2008/12/accelerationtriggers.html http://www.burningdoor.com/askthewizard/2007/06/options_acceleration.html What is the Estimated Payment in the Event of Change in Control

In Compensation process we collect different type of compensation data items like Salary, Bonus and Prerequisites etc. In 2007 we got request from Compustat (its part of S&P) to collect Estimated Payments in the event of Termination and Change in Control Data items. As per SEC rules every company should disclose estimated amounts if an executive terminated from the company in following situations.

Termination with out cause (Some times company terminate employee with out giving any explanation why they are going to removing him. At the time company need to paid some compensation to employee. Generally employee gets huge value in these cases. All these terms and conditions are disclosed in their employment agreement.) Termination with cause (Good Reason) Change in Control Change in control with resignation Death Disability Resignation

Following are collection policies regarding Estimated Payment in the even t of Change in Control. Estimated Payments in the Event of Change in Control (CIC): The total amount an executive would receive in case there is a change in control of the company at the current fiscal year end. Note: 1. All the related columns should be added for an executive if total is not given. 2. If no amounts are specified then nothing will be collected. 3. If payments for Termination and No Termination upon change in control (CIC) are given, then only Termination amounts should be collected. 4. If termination payments within 12 months and after 12 months of change in control are given then payments within 12 months should ONLY be collected.

5. When potential payments in the event of termination without cause and change in control are disclosed for two different periods under two different plans then payments related to current fiscal year should ONLY be collected. 6. When potential payments are disclosed for current & previous fiscal years then payments related to current fiscal year should ONLY be collected. What is fundamental analysis? Does it really work in the markets where you invest? Introduction Whenever we are going to invest in a company it is necessary to understand what the company position and its market and the industry. We should never blindly invest in a company. To understand the company position basically we have two types of analysis 1. Fundamental Analysis 2. Technical Analysis Fundamental Analysis Fundamental Analysis is method of evaluating a security (bond, note, share) by investigating the intrinsic value of the company and its future performance. Fundamental analysis includes 3 types of analysis: 1. Economic analysis 2. Industry analysis 3. Company analysis On the basis of these three analyses the intrinsic value of the shares are determined. This is considered as the true value of the share. If the intrinsic value is higher than the market price it is recommended to buy the share. If it is equal to market price hold the share and if it is less than the market price sell the shares Economic analysis Economic analysis is a process to understand the strengths and weaknesses of an economy condition. Global Economy The globalization affects a companys competition, and exchange rate and etc. Domestic Economy prospects of exports, price

Gross Domestic Product (GDP) GDP is the measure of the total production of goods and services in an economy. Growing GDP indicates an expanding economy. An Indian economy is affected by both agricultural production and industrial production and services. Unemployment The unemployment rate indicates how the economy operates at full capacity. Inflation Inflation is the rate at which the general level of prices is rising. High rate of inflation indicates economy is operating with full associated with demand for goods and services exceed production capacity. Interest Rates As interest rate determines the present value of cash flows, high interest rate affects demand for housing and high-value consumer durables. The real interest rate is an important factor for business activity. Budget Deficit The budget deficit is the difference between government spending and revenues. Higher budget deficit indicates higher government borrowing which pressure up interest rates. The excessive government borrowing will crowd out private borrowing if the borrowing is unchecked. Fiscal deficit is budget deficit plus borrowing. Higher fiscal deficit indicates higher government spending on unproductive spending. Other Factors: Money supply, Fiscal Policy, Monetary Policy, Labour Productivity, Index of consumer expectations, New acquisition of plants and machinery by Corporates, Tax collections by the Government, FII investments, and FDI investments. Industry Analysis Major Classifications The industry can be classified by product and services in the categories like Consumer Discretionary Consumer Staples Energy

Financials Healthcare Industrials Information Technology Materials Telecom Utilities Growth industry: The major characteristics of a growth industry are higher rate of expansion, growth in earnings, and independent of the business cycles. Between 40s and 60s, industries like photography, colour television, computers, pharmaceuticals, office equipments were growth industries. Communication equipments, Software, genetic engineering, and environmental/waste management are the recent growth industries. Cyclical industry: It is most likely to benefit from a period of economic prosperity and suffer from economic recession. Consumer durables are the major cyclical industry. Defensive industry: is likely to get least affected during the periods of economic downswing as consists of items necessary for existence. The demand for these products is considered to be counter cyclical. Food processing industry, consumer non-durables fall in the category of defensive industry. Company Analysis Company Analysis can be classified in to two 1. Business Intelligence Analysis 2. Financial Statements Analysis 1. Business Intelligence Analysis 1. 2. 3. 4. 5. 6. 7. Business of the Company Organization Structure of the Company Key Developments Corporate Governance Business Relations Competitors Ownership Data

2. Financial Statements Analysis

Income Statement About Income and Expenses Balance Sheet- About Assets and Liabilities Cash Flow StatementRatios Grant Date: The date on which an employee receives a stock option. That date is often the effective start date listed in your employment contract. If youve already been working for a while without an employment contract (which is common and fine), it might be worth trying to negotiate that your grant date should be backdated to when you started working. If founders plan to give themselves options, then incorporating as soon as possible will allow the founders to set a grant date and start their vesting. What is an Action Date? The Action Date is the effective date of the exclusion. Difference is it is a date when the options are granting and when the options are exercised.

Does venture capital and private equity mean same? If not, where they differ? If yes, what is common in them? Venture Capital Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies or ventures with limited operating history, which cannot raise funds by issuing debt. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity. Venture capitalists should have a greater incentive to improve a companys operations because theyre working with early-stage companies. Their involvement depends on the firms focus, the stage of the company, and how much the entrepreneur wants them to be involved. Private Equity

Private equity consists of investors and funds that make investments directly into private companies. Equity capital that is not quoted on a public exchange. Capital for private equity is raised from retail and institutional investors, and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet. The majority of private equity consists of institutional investors and accredited investors who can commit large sums of money for long periods of time. Private equity investments often demand long holding periods to allow for a turnaround of a distressed company or a liquidity event such as an IPO or sale to a public company. Common Things in PE and VC: Technically, venture capital is just a subset of private equity. They both invest in companies, they both recruit former bankers, and they both make money from investments rather than advisory fees. How are Private Equity and Venture Capital different? Investment: PE firms make large investments at least $100 million up into the ten billions for large companies. VC investments are much smaller often below $10 million for early-stage companies. Company Types: PE firms buy companies across all industries (manufacturing sector, service sector etc), whereas VCs are focused on technology, bio-tech, and clean-tech. % acquired: PE firms almost always buy 100% of a company in an LBO, whereas VCs only acquire a minority stake less than 50%. Structure: VC firms use only equity whereas PE firms use a combination of equity and debt. Stage: PE firms buy mature, public companies whereas VCs invest mostly in early-stage sometimes pre-revenue companies. Risk and return: In PE number of investments is smaller and the investment size is much larger if even 1 company failed, the fund would fail. SO, PE mostly invest in mature companies. In VC the investment is small and more in number. Even though few investment fail that could be recovered in ne profitable investment. Use of Leverage: Nill or little in VC but its is very high in PE

What is Insider Trading: 1) Insider trading is the trading of a corporation's stock or other securities (e.g. bonds or stock options) by individuals with potential access to non-

public information about the company. In most countries, trading by corporate insiders such as officers, key employees, directors, and large shareholders may be legal, if this trading is done in a way that does not take advantage of non-public information.

2) Insider trading can be illegal or legal depending on when the insider makes the trade: it is illegal when the material information is still nonpublic--trading while having special knowledge is unfair to other investors who don't have access to such knowledge. Illegal insider trading therefore includes tipping others when you have any sort of nonpublic information. Directors are not the only ones who have the potential to be convicted of insider trading. People such as brokers and even family members can be guilty.

Insider trading is legal once the material information has been made public, at which time the insider has no direct advantage over other investors. The SEC, however, still requires all insiders to report all their transactions. So, as insiders have an insight into the workings of their company, it may be wise for an investor to look at these reports to see how insiders are legally trading their stock. Who are Insiders: Such as corporate insiders such as officers, key employees, directors, and large shareholders Rules for Insider Trading: Insider trading is not always a crime. The term refers to two relatively common practices: that of when people inside a company buy or sell shares of a stock from their own company--and report that trade after execution--or when someone trades a security based on nonpublic information about that company. The former practice is completely legal, although controversial, while the latter is a crime punishable by fines or prison. Penalties for Insider Trading: Amount of penalty for person who committed violation The amount of the penalty which may be imposed on the person who committed such violation shall be determined by the court in light of the facts and circumstances, but shall not exceed three times the profit gained or loss avoided as a result of such unlawful purchase, sale, or communication. Amount of penalty for controlling person The amount of the penalty which may be imposed on any person who, at the time of the violation, directly or indirectly controlled the person who committed such violation, shall be determined by the court in light of the

facts and circumstances, but shall not exceed the greater of $1,000,000, or three times the amount of the profit gained or loss avoided as a result of such controlled person's violation. Judicial actions by Commission authorized Intellectual property rights Patents are legal titles granting the owner the exclusive right to make commercial use of an invention. To qualify for patent protection, inventions must be new, non-obvious, and commercially applicable. The term of protection is usually limited to 20 years, after which the invention moves into public domain. Utility Models (or petty patents), as an adjunct to the patent system, are typically granted for small, incremental innovations. Their term of protection is far shorter (typically four to seven years). Patent Certificate

Industrial Designs Industrial design rights are intellectual property rights that protect the visual design of objects that are not purely utilitarian. A registered design consists of the creation of a shape, configuration or composition of pattern or color, or combination of pattern and color in three dimensional form containing aesthetic value. Registering your design makes it easier to prosecute if it's ever copied. It also gives you up to 25 years of protection. Trademarks

Trademarks are words or symbols that distinguish goods and services in the marketplace, like logos and brand names. Examples: Brand Name: Coca Cola, Aqua Fresh A slogan: Every Thing keeps going right Toyata A Logo: A Nike Tick, or the McDonald M Specific Shape: The Coca Cola Bottle Geographical Indications Similar to trademarks, identify a product (e.g., Simla Apple) with a certain city or region. Copyright: Copyright automatically protects written and recorded works. That includes everything from books and music to photos and films, lyrics to photographs and knitting patterns It may help protect the work by displaying the symbol, owner name, and the year in which it was created. Buying a copyright protected work doesn't give the right to broadcast or copy it - even for private use (e.g. making copies of CDs). Using copyright protected works usually requires contacting the owner or a collecting society who may agree a license. You can register Fiction, Poetry, Non-fiction, Scripts, Music, Lyrics, Photographs, Drawings, Websites, Graphics, Computer programs, Databases, Legal documents, Logos, Paintings, or any other recorded creative works. Other non-traditional forms of IPRs include: Layout designs for Integrated Circuits Protect producers of semiconductors. Protection is limited to the design of an integrated circuit with the term of protection limited typically for ten years. Title holders have the right to prevent unauthorized reproduction, importation, sale or other distribution of the layout design for commercial purposes. Plant breeders rights (PBRs) Protect new plant varieties that are distinct from existing varieties, uniform, and stable. Exclusive rights, in principle, include the sale and distribution of the propagating materials for a minimum of 15 years. Protection of Trade Secrets

Protects businesses from the unauthorized disclosure or use of confidential information. Such confidential information includes inventions not yet at the patenting stage, ways of organizing business, client lists, purchasing specifications, and so on. Registered trade mark and Service Trade Mark: Under the Trade Marks Act 1994, any sign which is capable of being represented graphically and is capable of distinguishing goods and services of one business from those of another may be a registered trade or service mark subject to certain exceptions including resemblance to existing marks. Such signs include brands, names, designs, titles, and shapes of goods or packaging. The applicant must specify one or more of the 42 classes of goods or services in which the mark is to be used. Investment Bank An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of Securities. An Investment Bank may assist companies involved in mergers & acquisitions, provides ancillary services such as market making, fixed incomes instruments, equity securities. Types of Groups within an Investment Bank Groups Broadly speaking, there are two types of groups within a typical investment bank (or investment banking division): 1. Product Groups 2. Industry Groups (also called sector groups or domains). The three most well known product groups are mergers and acquisitions (M&A), leveraged finance (lev fin) and restructuring. Bankers in product groups have product knowledge and tend to execute transactions (respectively, M&A transactions, leveraged buyouts (LBOs) and restructuring transactions/bankruptcies). Industry Groups: Bankers in Industry Groups cover specific industries and tend to do more marketing activity (pitching). Industry bankers tend also to have more of the relationships with companies senior management than do product bankers (though some senior product bankers have excellent relationships as well). Examples of common industry groups include FIG (Financial Institutions Group), Healthcare, Consumer/Retail, Industrials, Energy and Utilities, Natural Resources, TMT (Telecom, Media and Technology), Gaming and Lodging and Real Estate. Often subgroups exist within the broader group. For example, a Healthcare group may be segregated into biotechnology, medical

devices, managed care, pharma, etc. Though not covering a specific industry, one other group that falls under the category of industry groups is Financial Sponsors. Bankers in a Financial Sponsors group cover (have relationships with and market their services to) private equity firms. Ex: ICICI securities JP morgan Investment bankers vs Investment manager How do you understand the investment in stock market really an investment/gambling/speculation/arbitrage? Stock Market The stock market is an organized and regulated financial market where securities (bonds, notes, shares) are bought and sold at prices governed by the forces of demand and supply. Stock market serves as (1) Primary market where corporation, governments, municipalities and other incorporated bodies can raise capital by channeling savings of investors into productive ventures. (2) Secondary markets where investors can sell, their securities to other investors for cash, thus reducing the risk of investment and maintaining liquidity in the system. Investment: To commit money or capital in order to gain a financial return. Investing is saving for specific goals, such as retirement. If a person invests money in the market with even a hint of thought of selling it once the price rises is not at all an investment. The investment is done based on the fundamental analysis. It is characterized by some or most of the following: Sufficient research has been conducted The odds are favorable, the behavior is risk averse Systematic approach is being taken Emotions, such as greed and fear play no role, the activity is ongoing and done as part of a long-term plan The activity is not motivated solely by entertainment. Investment is for passive investors. Ex: A person purchases shares of Reliance companies worth 10,000 intending to hold them for a long term and expecting at least Rs 50 dividends on them. An investment is said to be genuine if it has been made keeping in mind certain expected rate of return in mind. In the above case if that person had just taken the reliance shares without expecting the dividends then it is not a genuine investment.

Gamble: Gambling is an artificial activity which is solely based on the intuition and is not at all dependent on the economic activity. The gambling does not involve any kind of analysis. The gambling is of very short period when compared to speculation. EX: A person putting all his earnings in horse race or in a casino or in the cards is said to be taking a gamble as he doesnt know if he is going to win and there are very less chances of him winning that. Any activity in which money is put at risk for the purpose of making a profit, and which is characterized by some or most of the following: Little or no research has been conducted The behavior is risk-seeking; an unsystematic approach is being taken Emotions, such as greed and fear play a role. Events not done as part of a long-term plan The activity is significantly motivated by entertainment or compulsion No net economic effect results. Gambling is based on luck and emotions. The day trading resembles gambling: the participant gets in, the price moves up or down, and he/she gets out, usually in a matter of minutes. The major difference between the investment and gambling seems to be the participants relative willingness to accept risk. Investors take only the risks they should take, while gamblers also take some risks they shouldnt take. Would you rather have $50 or a 50/50 chance at $100? If you take the $50, youre an investor. If you go for all or nothing, youre a gambler. Arbitrage: Purchasing and selling the same security at the same time in different markets to take advantage of a price difference between the two separate markets. The profit opportunity must be a riskless one. The transactions i.e buying in one market and selling in the other must occur as near to simultaneously as possible, and the prices at which the asset is traded are both known with certainty at the time of the trade Speculation: Speculation is the buying, holding, and selling of stocks, commodities, currencies, collectibles, real estate, or any valuable thing to profit from fluctuations in its price instead of buying it for use or for income-dividends, rent etc. Speculating is an attempt to forecast the psychology of the market. Speculation is the name of an active investor. Speculation involves more risk

but is a form of investment. Speculation is defined as buying and selling the instruments without taking their delivery. It is also called as non-delivery based transaction. Speculators are those who have no exposure to underlying asset. The speculators are trading for very short duration of time and their main motive is to earn profits as there are changes in the prices within a short duration of time. The speculators are exposed to risk as they are employing their assets without much study and in the process provide liquidity in the market. The decision is taken by doing the technical analysis. EX: A person buys 50 shares of BHEL at 3000 rupees and as a result of market fluctuations their price rises to 4000 rupees just in few minutes then the person sells off those shares to get a profit of Rs.1000 this is known as speculation. Conclusion: Investing, speculating, gambling, and arbitrage each represent bets that attempt to gain advantage of or take from one another. The kind of activity (whether its investment/speculation/gambling/arbitrage) depends on the following factors: Extent of information available for the investors; The money involved Kind of investors. The internet has enabled online brokerages and other financial web sites to revolutionize retail investing, which on the balance is a tremendous benefit to both individual investors and the economy in general. However, the widespread accessibility of cheap online trades has also attracted some people who enjoy betting and view online trading as a new form of entertainment. A lot of so-called investors dont do nearly as much research as they should. Many buy on tips or rumors, or based on some analysts price target, without doing their own exhaustive research. It feels right to call such behavior gambling. Investment gone badly is called a speculation. Speculation gone badly is called a gamble. All are interrelated.

ISIN is an internationally recognized ticker symbol of a company. Do you agree with the above statement? If not, explain. TICKER SYMBOL: A stock symbol or ticker symbol is a short abbreviation used to uniquely identify publicly traded shares of a particular stock on a particular stock market. A stock symbol may consist of letters, numbers or a combination of both. Ex: RELIANCE INDUSTRIES LTD is called as RIL

 What is ISIN Number? ISIN (International Securities Identification Number) is a unique identification number for a security across universe. Its structure is defined in ISO 6166. Securities for which ISINs are issued include bonds, commercial paper, equities and warrants. The ISIN code is a 12-character alpha-numerical code that does not contain information characterizing financial instruments but serves for uniform identification of a security at trading and settlement. Ex: English Indian Clays Limited (Indian Company) ISIN No: INE 267 F 01024 Securities with which ISINs can be used include debt securities, shares, options, derivatives and futures. The ISIN identifies the security, not the exchange (if any) on which it trades; it is not a ticker symbol. For instance, Daimler AG stock trades through almost 30 trading platforms and exchanges worldwide, and is priced in five different currencies; it has the same ISIN on each, though not the same ticker symbol. ISIN cannot specify a particular trading location in this case, and another identifier, typically MIC (Market Identification Code) or the three-letter exchange code, will have to be specified in addition to the ISIN. So, ISIN is NOT an internationally recognized ticker symbol of a company. What is market efficiency? Are the markets where you buy securities are efficient? A market is any one of a variety of systems, institutions, procedures, social relations and infrastructures whereby businesses sell their goods, services and labor to people in exchange for money. There are many markets. The nature of business transactions could define markets. Financial markets facilitate the exchange of liquid assets. Financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis. Examples: Stock market, bond market, Futures market, Money market, Currency markets etc Market Efficiency

The degree to which stock prices reflect all available, relevant information. Efficient Market Hypothesis (EMH) The efficient market hypothesis states that a market cannot be outperformed because all available information is already built into all stock prices. EMH asserts that financial markets are "informationally efficient". That is, one cannot consistently achieve returns in excess of average market returns, given the information publicly available at the time the investment is made. Market efficiency has varying degrees: strong, semi-strong, and weak. Stock prices in a perfectly efficient market reflect all available information. These differing levels, however, suggest that the responsiveness of stock prices to relevant information may vary. Weak EMH claims that prices on traded assets (e.g., stocks, bonds, or property) already reflect all past publicly available information. Semi-strong EMH claims both that prices reflect all publicly available information and that prices instantly change to reflect new public information. Strong EMH additionally claims that prices instantly reflect even hidden or "insider" information.

Options: Company will issue options to employees. If a company issues options, it issues when the market price is less than the Option price. Ex: The Market price of the share is Rs. 20. The issuing price of the option is RS. 15. Here we have some rules for the options: Exercise price or Strike Price. The issuing price is always less than or equal to the Market price. 1. Grant Date: or issuing date the date should be as per the company rules and regulations. Ex. 1/1/2011. It is the date at which options are given to the employee. Employee acquires the right to options only. (He has to wait to exercise the option) 2. Exercise Date: The Company prescribes the date when the option can be exercised. Ex. 31/12/2011. The option cannot be exercised before this date. 3. Vesting Period: it begins after Exercise date. This period should be as per the company rules and regulations. It means the employee can exercise the option anytime between Exercise Date and Vesting Period.

Ex. 31/2014. Exercise Option: is an option that may be exercise at the time of given company date. Ex. 31/12/2011. It the options has been availed then it is call Exercised. If the market price of the share falls then the employee will not exercise the options, He still has time ( 3 yrs) to exercise the option, in case the shares prices go up. He has time to wait until the vesting period is ending. In this period the options are called Exercisable. If the market price is not growing up then the employee may never take the options. not Exercised and vesting period expired means Options have expired. The main difference between Exercisable Options and Exercised Options are when the employee has bought the options is called Exercised Options and when he holds the options to avail in future, they are called Exercisable Options.

ORDINARY AND SPECIAL RESOLUTIONS (1) A resolution shall be an ordinary resolution when at a general meeting of which the notice required under this Act has been duly given, the votes cast (whether on a show of hands, or on a poll, as the case may be), in favour of the resolution (including the casting vote, if any, of the chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any, cast against the resolution by members so entitled and voting. (2) A resolution shall be a special resolution when (a) the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolution; (b) The notice required under this Act has been duly given of the general meeting; and

(c) The votes cast in favour of the resolution (whether on a show of hands, or on a poll, as the case may be) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, are not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.

RESOLUTIONS REQUIRING SPECIAL NOTICE (1) Where, by any provision contained in this Act or in the articles, special notice is required of any resolution, notice of the intention to move the resolution shall be given to the company not less then 1[fourteen days] before the meeting at which it is to be moved, exclusive of the day on which the notice is served or deemed to be served and the day of meeting. (2) The company shall, immediately after the notice of the intention to move any such resolution has been received by it, give its members notice of the resolution in the same manner as it gives notice of the meeting, or if that is not practicable, shall give them notice thereof, either by advertisement in a newspaper having an appropriate circulation or in any other mode allowed by the articles, not less than seven days before the meeting.]

1. Substituted by Act 65 of 1960, sec. 50, for "twenty-eight days" (w.e.f. 28-12-1960).

2. Substituted by Act 65 of 1960, sec. 50, for sub-sections (2) and (3) (w.e.f. 28-12-1960).

AN OVERVIEW OF SERVICE TAX IN INDIA Service Tax: It is an indirect tax. Service tax is a tax on services provided .The provisions of service tax are contained in chapter V of the Finance Act, 1994 and

administered by the Central Excise Department. The word Service is not defined in Finance Act, 1994. The provisions relating to Service Tax were brought into force with effect from 1st July 1994. It extends to whole of India except the state of Jammu & Kashmir. The services, brought under the tax net in the year 1994-95, are as below: (1) Telephone (2) Stockbroker (3) General Insurance Now around 100 services are added in the list. Article 265 of the Constitution lays down that no tax shall be levied or collected except by the authority of law. Schedule VII divides this subject into three categoriesa) Union list (only Central Government has power of legislation) b) State list (only State Government has power of legislation) c) Concurrent list (both Central and State Government can pass legislation). Applicability of Service Tax: The Act extends to whole of India except the state of Jammu and Kashmir. Service tax not applicable on Export of services, subject to Conditions given in Export of service rules, 2005. Illustration: Mr. J of Jammu and Kashmir is providing advertisement service in the state of Jammu and Kashmir as well as in other parts of India. Service tax is not applicable for services rendered in the state of Jammu and Kashmir. However, he is liable to pay service tax on those services which are rendered outside the state of Jammu and Kashmir. Service tax liability is based on the place where the service has been rendered, but not the place from which the service is provided. Rate of Service Tax: At present, the effective rate of Service tax is 10.30 %. The above rate comprises of Service tax @ 10 % on Gross Value of taxable service. Education cess [EC] @ 2 % on service tax amount. Secondary and Higher Education cess [SHE] @ 1 % on service tax amount. Taxable Service: The Act provides the list of services to which the Act applies in section 65 (105) of the Act. At present there are 106 services covered under the service tax net. Taxable Value:

Valuation under service tax is only with reference to the valuation rules namely Service Tax (Determination of Value) Rules, 2006. Taxable Event in Service Tax: When service provider receives the advance from service receiver against taxable services. When services are rendered by service provider. When Services are rendered in certain cases as defined in sec 68 (2) read with rule 2(1)(d) Persons Liable To Service Tax: Any provider of taxable service whose aggregate value of taxable service received in any financial year exceeds Rs.10,00,000/An input service distributor. Service receivers as specified in sec 68 (2) of Finance Act. Goods and Service Tax (GST), is going to replace Service Tax in near future. Presentation: Whom do you call as a Passive investor? How do you identify an investor as passive? An investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Usually the strategy will be designed around the investor's risk-return tradeoff: some investors will prefer to maximize expected returns by investing in risky assets, others will prefer to minimize risk, but most will select a strategy somewhere in between. Passive Investment: An investment strategy involving limited ongoing buying and selling actions. Passive investors will purchase investments with the intention of long-term appreciation and limited maintenance. Passive investors are individuals who choose to not take an active role in the management of their investments. Also refer as buy-and-hold or a couch potato investor Strategy involves securing an investment or set of investments and allow them to ride for an extended period of time. This approach is often employed by investors who prefer to focus on long-term investment opportunities that are likely to yield an equitable return over time.

Passive investors are individuals who choose to not take an active role in the management of their investments. Sometimes referred to as a buy-and-hold or a couch potato investor, the strategy involves securing an investment or set of investments and allow them to ride for an extended period of time. This approach is often employed by investors who prefer to focus on longterm investment opportunities that are likely to yield an equitable return over time. The passive investor focuses on investment opportunities that do not carry a great deal of risk. As a result, the need to monitor the periodic increases and decreases in security prices is eliminated. The idea is that even if there is some amount of fluctuation with the investment, the combination of upward and downward movements will offset one another over time, and still allow the investor to yield a decent return at some point in the future. A passive investor may secure many different types of investments as a means of growing a portfolio. As part of the foundation, he or she may choose to go with stock options that have a history of consistent performance in a variety of economic climates, and are less likely to experience any severe drops in price. Along with stocks, the investor using a passive investing approach may also go consider bond issues that are structured to provide returns over a longer period of time, such as ten to twenty years. Passive investing is very different from an active investing strategy, in which the investor monitors the movement of investments closely, and buys and sells based on that movement. Often, the passive investor is more concerned with creating financial security over the long term, while an active investor seeks a return in the short term as well as providing a basis for security over the long term. A passive investor may change his or her approach from passive to active at any time, making it possible to adjust to changing circumstances if the need arises.

An investment strategy is a set of rules, behaviors or procedures, designed to guide an investor's selection of an investment portfolio. Usually the strategy will be designed around the investor's risk-return tradeoff: some investors will prefer to maximize expected returns by investing in risky assets, others will prefer to minimize risk, but most will select a strategy somewhere in between. Passive strategies are often used to minimize transaction costs, and active strategies such as market timing are an attempt to maximize returns. One of the better known investment strategies is buy and hold. Buy and hold is a long term investment strategy, based on the concept that in the long run equity markets give a good rate of return despite periods of volatility or decline. A purely passive variant of this strategy is indexing where an investor buys a small proportion of all the shares in a market index such as the S&P 500, or more likely, in a mutual fund called an index fund or an exchange-traded fund (ETF).

This viewpoint also holds that market timing, that one can enter the market on the lows and sells on the highs, does not work or does not work for small investors, so it is better to simply buy and hold. The smaller, retail investor more typically uses the buy and hold investment strategy in real estate investment where the holding period is typically the lifespan of their mortgage. Who will decide the price band in an issue? How one can know how the price band was fixed? Corporate generally raise capital in the primary market through IPOs. IPO offering can be made through the fixed price method, book building method or combination of both. Fixed Price Issue:- Price of shares fixed at the time of issue. Book Building Process: - In this method, the issuer doesnt fix the price for shares; instead issuer gives the price range (e.g., 80 100). The price range can be known as Price Band. The entire price process (IPO) begins with appointment of Lead Manager (Investment Banker). Initially the issuer consults with Lead Manager and draft a Redherring Prospectus (Draft Prospectus and Offer Prospectus), which does not mention the price of the issue but include other details the issue about the size of the issue, past history of the company and Price Band. The basis of issue price is disclosed in the offer document. The issuer required to disclose in detail about the qualitative and quantitative factors justifying the issue price. Capital market regulatory body decides the price of an issue. Do you agree with the above statement? Explain taking the case of India.

No, Indian primary market usher in an era of free pricing in 1992. Following this, the guidelines have provided that the issuer in consultation with Merchant Banker shall decide the price. There is no price formula stipulated by SEBI. SEBI does not play any role in price fixation. The company and merchant banker are however required to give full disclosures of the parameters which they had considered while deciding the issue price. There are two types of issues, one where company and Lead Merchant Banker fix a price (called fixed price) and other, where the company and the Lead Manager (LM) stipulate a floor price or a price band and leave it to market

forces to determine the final price (price discovery through book building process). Issue Price: The price at which a companys Share is offered initially in the primary market is called as the Issue Price. When they begin to be traded, the market price may be above or below issue price.

Example: The government fixed Coal Indias mega IPO issue price at Rs. 245 per share, the upper end of initial offer price range. The government would fetch over Rs. 15,000 crore by issuing 63.16 crore shares of Coal India at a price of Rs. 245 per share. It will offer a discount of five per cent to retail investors. The issue price has been fixed at Rs. 245 per share. The government will raise over Rs. 15,000 crore, Coal Minster Sriprakash Jaiswal said, after a meeting of the Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee. The board of Coal India meeting is on to approve the issue price. The company is expected to list on stock exchanges on November 4.

Do you agree with the statement private equity firms acquire only publicly-traded companies? If not, why? What is private equity? The term private equity refers to a range of investments that are not freely tradable on public stock markets. A private equity firm is an

investment manager that makes investments in the private equity of operating companies. Private equity firms raise money for two types of funds: venture capital funds and buyout/growth funds. At its core, private equity is simple: PE firms establish funds that raise capital from investors who are referred to as limited partners, or LPs. The private equity firms known as general partners, or GPs invest their own capital along with the capital raised from investors. They borrow additional funds from banks and other lenders. With the combination of equity and the borrowed funds, the general partners buy companies that they believe could achieve significantly greater growth and profitability with the right infusion of talent and capital. The major private equity investors include the pension funds, endowments and foundations. PE by the Numbers: Equity investments by PE firms from 2001 through Q1 2010: $296 billion (Source: Thomson Reuters) PE funds raised in 2009: $246 billion (Source: Preqin) PE transactions in 2009: 925 (Source: Preqin) Total value of private equity transactions in 2009: $76.4 billion (Source: Preqin) Largest PE investments by industry in 2009: Business Services; Consumer Products; Healthcare; Industrial; Information Technology. Share of investments in PE funds from pension funds, endowments, foundations: 66% (Source: Preqin) Number of PE firms in U.S.: 1,824 (Source: PitchBook) Number of PE firms worldwide: 2,560 (Source: PitchBook)

http://www.pegcc.org/pe-by-the-numbers_2008/ Example: Private equity funds in India: ICICI Ventures: ICICI Venture is one of the largest and most successful private equity firms in India with funds under management in excess of USD 2 billion. UTI Ventures. Do you agree with the statement private equity firms acquire only publicly-traded companies? If not, why? Private equity transactions take many forms.

Private equity may involve the acquisition of a private company with the intent of providing its founders the capital necessary to take its performance to the next level. It may involve the acquisition of a division of a large company , with the purpose of offering the newly-independent business the management focus and resources needed to achieve a new mission. Or it may involve a public to private transaction in an effort to undertake improvements that would be difficult to achieve given the short-term earnings focus of the public markets. Private equity firms focus on long-term performance.

Most recently, public-to-private transactions have gained the most attention. These transactions offer a way of increasing the value of businesses by temporarily transferring ownership from millions of public shareholders to a much smaller number of private owners. Without the pressures from outside shareholders looking for short-term gains, owners and managers can focus in a laser-like way on what is required to improve the medium to long-term performance of the company. This structure makes it far easier to align the interests of owners with those of managers, who also have a direct stake in the success of the company.

Is the term private equity fund a synonym for hedge fund? Explain in detail? Private equity fund: Private equity fund is a collective investment scheme used for making investments in various equity (and to a lesser extent debt) securities according to one of the investment strategies associated with private equity. Private equity funds are typically limited partnerships with a fixed term of 10 years (often with annual extensions). A private equity fund is raised and managed by investment professionals of a specific private equity firm (the general partner and investment advisor).

 Typically, a single private equity firm will manage a series of distinct private equity funds and will attempt to raise a new fund every 3 to 5 years as the previous fund is fully invested. Hedge fund: A hedge fund is an investment fund open to a limited range of investors that undertakes a wider range of investment and trading activities than traditional long-only investment funds, and that, in general, pays a performance fee to its investment manager. Every hedge fund has its own investment strategy that determines the type of investments and the methods of investment it undertakes. Hedge funds, as a class, invest in a broad range of investments including shares, debt and commodities. Some people consider the fund created in 1949 by Alfred Winslow Jones to be the first hedge fund. [citation needed] As the name implies, hedge funds often seek to hedge some of the risks inherent in their investments using a variety of methods, most notably short selling and derivatives. However, the term "hedge fund" has also come to be applied to certain funds that, as well as (or instead of) hedging certain risks, use short selling and other "hedging" methods as a trading strategy to generate a return on their capital. In most jurisdictions hedge funds are open only to a limited range of professional or wealthy investors who meet certain criteria set by regulators, and are accordingly exempted from many regulations that govern ordinary investment funds. The exempted regulations typically cover short selling, the use of derivatives and leverage, fee structures, and the rules by which investors can remove their capital from the fund. Light regulation and the presence of performance fees are the distinguishing characteristics of hedge funds. The net asset value of a hedge fund can run into many billions of dollars, and the gross assets of the fund will usually be higher still due to leverage. Hedge funds dominate certain specialty markets such as trading within derivatives with high-yield ratings and distressed debt. Private Equity Fund and Hedge Fund: Equity: A Stock or any other security representing an ownership interest. On a companys balance sheer, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). Also refered to as shareholders equity.

Private Equity: Equity Securities of companies that are not listed on a public Exchange. Transfer of private equity is strictly regulated; therefore, any investor looking to sell his/her stake in a private company has to find a buyer in the absence of a marketplace. Private Equity generally occur in three ways They are: 1 2 3 A merger or Sale Initial Public Offering Recapitalization

Merger or Sale: The combining of two or more entities into one, through a purchase acquisition or a pooling of interests. Differs from a consolidation in that no new entity is created from a merger. Or Company can sale or can wind up. Initial Public Offering: The first sale of stock by a company to the public. The most common reason for a company to initiate an IPO is in order to raise more capital. Recapitalization: A change in a companys capital structure, such as an exchange of bonds for stock. Recapitalization is often undertaken with the aim of making the companys capital structure more stable, and sometimes to boost the companys stock price (for example, by issuing bonds and buying stock). Companies that do not want to become hostile takeover targets might undergo a recapitalization by taking on a very large amount of debt, and issuing substantial dividends to their shareholders (this makes the stock riskier, but the high dividends may still make them attractive to shareholders). Private Equity Fund: Private equity fund is a collective investment scheme used for making investments in various equity (and to a lesser extent debt) securities according to one of the investment strategies associated with private equity. Private equity funds are typically limited partnerships with a fixed term of 10

years (often with annual extensions). At inception, institutional investors make an unfunded commitment to the limited partnership, which is then drawn over the term of the fund. Hedge Fund: Hedge funds are investment vehicles that explicitly pursue absolute returns on their underlying investments. What does it mean to hedge? Not, in fact, an esoteric gardening term, to hedge means to manage risk. Any given money manager may make an allocation/investment that could be described as speculative, if this same manager simultaneously make an allocation to an allocation/investment specifically designed to balance or counter-act any negative performance from his speculative position then this would be his hedging postion. What is private equity? What entities claim a major portion of private equity (say in U.S.)? Equity capital that is not quoted on a public exchange, Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity. Capital for private equity is raised from retail and institutional investors, and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet.

Characteristics: Private equity funds tend to have much longer investment horizons than funds that hold publicly-traded securities. There are several reasons for this. First, securities issued by private companies (as well as private placements from public companies) are highly illiquid, since they are not traded in public securities markets. Also, the opportunities for resale to another party are highly limited, with possible contractual and regulatory constraints adding to the difficulties. Second, some private equity funds tend to act as partners in managing the companies that they back, rather than being merely passive investors.

What entities claim a major portion of private equity? The majority of private equity consists of institutional investors and accredited investors who can commit large sums of money for long periods of time. Private equity investments often demand long holding periods to allow for a turnaround of a distressed company or a liquidity event such as an IPO or sale to a public company.

Private Equity serves the need of changing the short term mind set and enhances growth Short-Term vs. Long-Term Obviously, there are differences between short-term and long-term investments. Short-term investments are designed to be made only for a little while, and hopefully show a significant yield, whereas long-term investments are designed to last for years, showing a slow but steady increase so that there is a significant yield at the end of the term Advantages of Short-Term Investments The main advantages to short-term investments are the potential for fast growth and the fact that the term may only last a few weeks to a few months. Though there tends to be more fluctuation in many forms of short-term loans, these loans allow more control over your money and it usually isn't out of your possession for very long. Disadvantages of Short-Term Investments As mentioned above, short-term investments tend to be a bit riskier and show a much higher rate of fluctuation than their long-term counterparts. While there is a good chance that you'll make money with a short-term investment, there is also a chance that you'll lose money. This is especially the case when dealing with the stock market, since many of the short-term investments made with stocks and bonds involve precision timing to sell when the stocks or bonds are at their peak just before they begin to drop. Advantages of Long-Term Investments Just the opposite of short-term investments, long-term investments have the ability to gain small amounts of money over a longer period of time. The slow-but-steady pace of long-term investments allow for a much greater degree of stability and a much lower risk than short-term investments.

They also are ideal for making your savings or retirement fund grow... the investments usually continue to grow over the years, maturing just as you need them. Disadvantages of Long-Term Investments Of course, the main disadvantage of long-term investments is that they increase in value slowly and can take years to mature. For those individuals who need a high yield in a short period of time, longterm investments are definitely not the way to go... between the fees that are associated with some types of investment and the small fluctuations that any investment will experience, many long-term investments might actually go down in value before they begin to climb over time. General ways of investing: Putting savings into a bank Lending it to someone Buying stocks (includes Equity capital, Preferential, Private equity.) Buying a house Buying gold and silver Buying mutual funds Now the question is how private equity is influencing short term mindset? Private Equity is the Equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity. Capital for private equity is raised from retail and institutional investors, and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet. The majority of private equity consists of institutional investors and accredited investors who can commit large sums of money for long periods of time. Private equity investments often demand long holding periods to allow for a turnaround of a distressed company or a liquidity event such as an IPO or sale to a public company. Benefits of Private equity: Private equity provides capital that is both committed, and long-term, to help unquoted companies succeed and experience more growth. Private equity can help if you want to (1) start up a company, (2) expand your business, (3) buy out a portion of your parent company, (4) revive or turn around a company

Raising private equity for your company is very different than applying for a loan from a bank or other lender. If you obtain funding from a lender, whether your business succeeds or fails, the lender has a legal right to all of the interest on the loan as well as on the interest on the repayment of the capital. When private equity is invested in your company, the shareholders have a stake in your company. This means that the amount of money the investor earns is dependent on the profit and growth of the company. You may be wondering if your company is attractive to potential private equity investors. Most small companies are developed with the main goal of providing the owner with a good level of living as well as satisfaction at having their own business. These small businesses are not usually used as a private equity investment since they are not likely to provide a large enough financial return to make them worth the time for large investors. You can recognize large entrepreneurial businesses by their potential for growth as well as their business objectives. Many times you won't be able to recognize these entrepreneurial businesses by their current size so it's important to keep their potential in mind. Private equity firms are most often interested in those businesses that are able to show that they have the potential for growth within five years. These companies must be able to show that an experienced team of individuals, who have the ability to turn their business goals into a reality, manages them. Companies that are backed by private equity will usually grow much faster than other types of businesses. This is due to the combination of capital and experienced management skills that comes from the company's executives to set them apart from different types of financing. Private equity is a great way for your company to achieve success, as well provide your business with a stable background for making decisions based on strategy. A company can increase in value for the owners without the private equity firm having anything to do with the management of day-to-day business matters. You may have a smaller portion of the whole picture for a while when your company is in the hands of private equity, but in the long run you'll have more than you bargained for. Many private equity companies will work with other finance providers to help you put together a funding plan that is right for your business. Due to above advantages, even short term investors are showing interest towards Private equity.

Key differences between private equity and quoted equity funds Private Equity Private Equity Funds

Quoted Equity Funds Control and influence Private equity funds usually own a substantial or controlling stake in the business. Individual private equity investments are controlled using a detailed legally binding shareholders agreement that establishes the contractual rights and obligations of the company, its management and the investors. Funds investing in quoted companies usually acquire small minority stakes, which offer no control and no special rights. Institutional shareholders may be influential, but have no Contractual control. Financial structure of individual investments Private equity transactions are financed using a combination of the private equity funds own capital, and third-party debt provided on a deal-by-deal basis; thus there is usually a degree of debt in a private equity funds individual investments. The financing structure of a private equity investment usually requires the business managers to personally invest in the company they manage. They share the risks and rewards of the business. Funds that invest in quoted shares do not increase the borrowings of the company that they invest in. They may have borrowings within their fund structure, but they do not introduce debt as part of their investments. The rewards for management in quoted companies are a matter for the remuneration committee, not the shareholders. Managers are not generally required to buy shares in their company although they may benefit from capital growth through option schemes. Information prior to investment Private equity funds will undertake substantial financial commercial and legal due diligence prior to making an investment. Quoted company funds have access to and rely only on publicly available information on the companies they invest in. Information and monitoring while invested Private equity fund managers receive wide ranging commercially sensitive information including detailed monthly management information and board minutes from each company the fund is invested in, and also often have board representation. Investors in private equity funds receive regular detailed information and commentary on each of the private equity funds investments from the fund managers, including opinions on future prospects. The guidance for this communication is summarized in the EVCA Reporting Guidelines. Quoted fund

managers predominantly rely on company announcements, management presentations and analysts research to monitor their investments. Investors in quoted funds receive no detailed information on the operations or management of the individual investments. Liquidity in underlying investments Private equity investments is illiquid: private equity funds cannot generally sell a portion of their investments and therefore rely on a sale of the whole company to achieve a capital gain. Quoted shares are freely tradable, albeit in small parcels, on whatever stock exchange they are quoted. Quoted funds can therefore readily vary the proportion of their investment in any company.

Proxy ============ A person authorized by a shareholder to cast his/her vote at a shareholder meeting or at another time. Proxy statement ============ According to the Securities and Exchange Commission (SEC), a proxy statement is a document that provides security holders with the necessary information enabling them to vote in an informed manner on matters intended to be acted upon at security holders' meetings What does a Proxy statement include? ======================== The proxy statement should contain relevant, factual information concerning the matter to be voted on. Issues covered in a proxy statement can include proposals for new additions to the board of directors, information on directors' salaries, information on bonus and options plans for directors, and any declarations made by company management. The meetings for which the proxy statement is distributed may be the standard annual meeting or a special meeting. A proxy statement exist to help shareholders make informed decisions at these meetings. Who is a Nominee Director? ==================

A Person who acts as a non-executive director on the board of directors of a firm, on behalf of another person or firm, such as a bank, investor, or lender. Alternate director ============ An alternate director is a person who is appointed to attend a board meeting on behalf of the director of a company, where the principal director is unable to attend. The law relating to alternate directors varies from country to country, but in most jurisdictions, the alternate director has the same powers to attend, speak and vote at meetings as the principal director would have had, had the alternate not been appointed.

What is Voting by Proxy? ================= Proxy voting and delegated voting are procedures for the delegation a member's power to another member of a voting body to vote in his absence. A person so designated is called a "proxy" and the person designating him is called a "principal."

Who is Proxy? Rights of the Proxy. When the rights of the Proxy would be lapsed? Can he act as a quorum for a meeting? Who is Proxy? A person authorized to act for another. The written authorization to act in place of another An agent legally authorized to act on behalf of another party. Shareholders not attending a company's annual meeting may choose to vote their shares by proxy by allowing someone else to cast votes on their behalf. (1) Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of himself; but a proxy so appointed shall not have any right to speak at the meeting: Provided that, unless the articles otherwise provide(a) this sub- section shall not apply in the case of a company not having a share capital;

(b) a member of a private company shall not be entitled to appoint more than one proxy to attend on the same occasion; and (c) a proxy shall not be entitled to vote except on a poll. (2) In every notice calling a meeting of a company which has a share capital, or the articles of which provide for voting by proxy at the meeting, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy, or, where that is allowed, one or more proxies, to attend and vote instead of himself, and that a proxy need not be a member. If default is made in complying with this sub- section as respects any meeting, every officer of the company who is in default shall be punishable with fine which may extend to five hundred rupees. (3) 1[ Any provision contained in the articles of a public company, or of a private company which is a subsidiary of a public company, which specifies or requires a longer period than forty- eight hours before a meeting of the company, for depositing with the company or any other person any instrument appointing a proxy or any other document necessary to, show the validity or otherwise relating to 1. Subs. by Act 65 of 1960, s. 47, for sub- section (3). the appointment of a proxy in order that the appointment may be effective at such meeting, shall have effect as if a period of forty- eight hours had been specified in or required by such provision for such deposit.] (4) If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number of persons specified in the invitations- are issued at the company' s expense to any member entitled to have a notice of the meeting sent to him and to vote thereat by proxy, every officer of the company who knowingly issues the invitations as aforesaid or willfully authorizes or permits their issue shall be punishable with fine which may extend to one thousand rupees: Provided that an officer shall not be punishable under this sub- section by reason only of the issue to a member at his request in writing of a form of appointment naming the proxy, or of a list of persons willing to act- as proxies, if the form or list is available on request in writing to every member entitled to vote at the meeting by proxy.

(5) The instrument appointing a proxy shall(a) be in writing; and (b) be signed by the appointer or his attorney duly authorized in writing or, if the appointer is a body corporate, be under its seal or be signed by an officer or an attorney duly authorized by it. (6) An instrument appointing a proxy, if in any of the forms set out in Schedule IX, shall not be questioned on the ground that it fails to comply with any special requirements specified for such instrument by the articles.

(7) Every member entitled to vote at a meeting of the company, or on any resolution to be moved thereat, shall be entitled during the period beginning twenty- four hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect the proxies lodged, at any time during the business hours of the company, provided not less than three days' notice in writing of the intention so to inspect is given to the company. Notice required of termination of proxys authority (1) This section applies to notice that the authority of a person to act as proxy is terminated (notice of termination). (2) The termination of the authority of a person to act as proxy does not affect (a) whether he counts in deciding whether there is a quorum at a meeting, (b) the validity of anything he does as chairman of a meeting, or (c) the validity of a poll demanded by him at a meeting, unless the company receives notice of the termination before the commencement of the meeting. (3) The termination of the authority of a person to act as proxy does not affect the validity of a vote given by that person unless the company receives notice of the termination (a) before the commencement of the meeting or adjourned meeting at which the vote is given, or (b) in the case of a poll taken more than 48 hours after it is demanded, before the time appointed for taking the poll. (4) If the companys articles require or permit members to give notice of termination to a person other than the company, the references above to the company receiving notice have effect as if they were or (as the case may be) included a reference to that person. (5) Subsections (2) and (3) have effect subject to any provision of the companys articles which has the effect of requiring notice of termination to be received by the company or another person at a time earlier than that specified in those subsections. This is subject to subsection (6). (6) Any provision of the companys articles is void in so far as it would have the effect of requiring notice of termination to be received by the company or another person earlier than the following time

(a) in the case of a meeting or adjourned meeting, 48 hours before the time for holding the meeting or adjourned meeting; (b) in the case of a poll taken more than 48 hours after it was demanded, 24 hours before the time appointed for the taking of the poll; (c) in the case of a poll taken not more than 48 hours after it was demanded, the time at which it was demanded. (7) In calculating the periods mentioned in subsections (3)(b) and (6) no account shall be taken of any part of a day that is not a working day. What are the primary reasons that are making now a days a public company to become a private one (exclude M&As)?

Eliminating the costs of being a public reporting company .

Reduced regulatory and reporting requirements private companies face can free up time and money to focus on long-term goals. Being private frees up management's time and effort to concentrate on running and growing a business, as there are no SOX regulations to comply with. Thus, the senior leadership team can focus more on improving the business's competitive positioning in the marketplace Reducing the potential liability for directors and officers, especially following the Sarbanes-Oxley Act.

There are tremendous regulatory, administrative, financial reporting and corporate governance bylaws to comply with for the public companies. These activities can shift management's focus away from operating and growing a company and toward compliance with and adherence to government regulations. For instance, the Sarbanes-Oxley Act of 2002 (SOX) imposes many compliance and administrative rules on public companies. SOX require all levels of publicly traded companies to implement and execute internal controls. The most contentious part of SOX is Section 404, which requires the implementation, documentation and testing of internal controls over financial reporting at all levels of the organization. Reducing or eliminating the obligation to disclose competitive business information

As there is no regulatory requirement, a private company can go-on with their strategies in the businesses and are not obliged to disclose any information. Allowing a company to leave behind the managing for the next quarter approach of managing market expectations in favor of allowing management to manage for longer term goals.

Public companies must also conduct operational, accounting and financial engineering in order to meet Wall Street's quarterly earnings expectations. This short-term focus on the quarterly earnings report, which is dictated by external analysts, can reduce prioritization of longerterm functions and goals such as research and development, capital expenditures and the funding of pensions, to name but a few examples. Allowing for corporate governance flexibility free from the requirements of the Securities Exchange Act and securities market regulations.

Private companies do not have corporate governance rules and compliance issues, thus can focus their potentials to the fullest for the development of the business.

What do you mean by back filling and Reverse Engineering? Back Filling: The general meaning for back filling is, refilling an excavated area. In technical terms, Back Filling means collecting the historical data for a span of time period apart from collecting the current or latest data for a data set or data base. For ex: In company profiles process, the segment profiling process has been recently added. As of the processing date, the data available in the latest source can be presented with the help of recent latest fillings. If the customer wants to view the historical data of the particular company, there would not be any data since we have been into this process every recently. For that, we have to collect the historical data from a certain period of time. So, the process of gathering/collecting data from previous reports is being termed as Back Filling. Reverse Engineering: Reverse engineering is the process of discovering the technological principles of a device, object, or system through analysis of its structure, function, and operation. It is the process of analyzing the system by going backwards through the development cycle. Reverse engineering is a process of examination only. Reasons for reverse engineering: Interoperability, which refers systems to work together the ability of diverse

 Lost documentation Product analysis, such as to examine how a product works and what components it consists of Digital update/correction Security auditing Acquiring sensitive data by disassembling and analyzing the design of an existing system The purposes of reverse engineering include: security auditing removal of copy protection to avoid access restrictions often present in consumer electronics customization of embedded systems in-house repairs or retrofits After a system has been reverse engineered, generally reengineering of the system might take place, which means the examination and alteration of a system to reconstitute it in a new form to add new functionality or to correct errors.

How a Chairman is is appointed? Roles/duties of chairman in the meetings? Chairman Emeritus? Chairman Elect?

A Chairman is an important element of the meetings. He is elected to lead the board of directors, preside over meetings, and lead the board to consensus from the disparate points of view of its members. How is a Chairman appointed? Generally a chairman is appointed/elected for the following meetings: In case of Board meetings and General meetings, companies name their chairman in the Articles of association by which the Board of directors or board may elect a chairman and determine the period for which he holds the office, otherwise Board of directors may select the chairman among the directors present at the meeting itself, when the AOA is silent. In case of Committee meetings chairman is appointed by the committee formed for a particular taskex: audit committee. or the members present may choose one of their number to be the chairman of the meeting. If no such chairman is elected or present in the meetings within five minutes in case of board meetings and 15 minutes in case of general meetings, after the time appointed for holding the meetings, the director may choose one of their numbers to be the chairman of the meeting.

Role/duties of the Chairman in the meetings?

Chairing the committees

o

Board

and

general

meetings,

and

relevant

Board

The Primary duty of a chairman of a meeting is to ensure the presence of quorum and to conduct the meeting in a peaceful atmosphere so that the business on the agenda is transacted in an orderly fashion. Quorum is the minimum number of members necessary to conduct a meeting. If there is no quorum, the chairman has to adjourn the meeting.

The chairman may adjourn the meeting at his own discretion when he feels that peaceful conduct of the meeting is not possible. Ensuring that all the participating directors get an opportunity to express their views. He should be impartial in the meeting and should see that the minority is not stifled or oppressed in any way. Maintaining sufficient and effective communication with shareholders

At a meeting of Board of directors, the chairman may allow any additional business to be transacted either with the consent of the meeting or at his own discretion, but at a general meeting, he cannot allow to discuss any matter for which a due notice has not been given. At the conclusion of meeting, he should declare the meeting closed. He must ensure that minutes of proceedings of all the meetings contain a correct summary of the proceedings

Chairman Emeritus: Emeritus term is used when a person of importance in a given profession retires, so that his former rank can still be used in his title. Chairman Emeritus is used in case of a person who has retired from active service, but retaining rank or title. This is particularly useful when establishing the authority of a person who might comment, lecture, or write on a particular subject. Chairman Elect? A Chairman-elect is a member of an organization who has been elected Chairman but who has not yet officially taken office, as it is still occupied by the current outgoing Chairman. Who are securities professionals and how SEC supervises them? Security Professional is a term used in United States financial services regulations. It is a company or other organization that trades in securities for its own account or on behalf of its customers. Security Professionals are Dealers Brokers Associated Persons of a Broker-Dealer Investment advisors Intermediaries

As they deal with huge amount of clients (public) money, their operations need to be supervised by some governing body. In US SEC will act as the controlling body for all the security professionals. Brokers and Dealers generally must register with the SEC.

A broker-dealer may not begin business until: It has properly filed Form BD, and the SEC has granted its registration; It has become a member of an SRO (Self-Regulatory Organization); It has become a member of SIPC, the Securities Investor Protection Corporation; It complies with all applicable state requirements; and Its "associated persons" have satisfied applicable qualification requirements. An important part of the SEC's role is supervision of the securities markets and the conduct of securities professionals. The SEC serves as a watchdog to protect against fraud in the sale of securities, illegal sale practices, market manipulation, and other violations of investors' trust by broker-dealers, investment advisers, and other securities professionals. In general, individuals who buy and sell securities professionally must register with the appropriate SRO, meet certain qualification requirements, and comply with rules of conduct adopted by that SRO. The broker-dealer firms for which they work must, in turn, register with the SEC and comply with the agency's rules relating to such matters as financial condition and supervision of individual account executives. In addition, broker-dealer firms must also comply with the rules of any exchange of which they are a member and, usually, with the rules of the NASD. The SEC can deny registration to securities firms and, in some cases, may impose sanctions against a firm and/or individuals in a firm for violation of federal securities laws (such as, manipulation of the market price of a stock, misappropriation of customer funds or securities, or other violations). The SEC polices the securities industry by conducting inspections and working in conjunction with the securities exchanges, the NASD, and state securities commissions Antifraud Provisions 1. Duty of Fair Dealing 2. Suitability Requirements 3. Duty of Best Execution 4. Customer Confirmation Rule 5. Disclosure of Credit Terms 6. Restrictions on Short Sales (Regulation SHO) 7. Trading During an Offering (Regulation M) 8. Restrictions on Insider Trading 9. Restrictions on Private Securities Transactions

Shareholder Proposal:

A shareholder proposal is a resolution that is put forward for consideration at a corporation's annual meeting by an individual shareholder or a group of shareholders rather than by the corporation's board of directors. Typical shareholder proposals involve voting rights, compensation, and corporate charitable contributions. management

If the holder gives timely notice of his or her intentions, the firm's management must include the proposal in the proxy statement and must give the other shareholders a chance to vote for or against the proposal, unless the SEC gives the company special permission to exempt it. Generally, a shareholder makes a shareholder proposal to force the company to do something that the management does not want it to do. As a result, management tends to urge shareholders to vote against shareholder proposals. However, management may negotiate with activist investors to make changes in corporate policy to avoid the threat of a shareholder proposal. Any shareholder who owns more than 1% of the company is permitted to initiate a shareholder proposal.

What is rule 14a-8? Rule 14a-8 provides an opportunity for a shareholder owning a relatively small amount of a company's securities to have his or her proposal placed alongside management's proposals in that company's proxy materials for presentation to a vote at an annual or special meeting of shareholders. It has become increasingly popular because it provides an avenue for communication between shareholders and companies, as well as among shareholders themselves. The rule generally requires the company to include the proposal unless the shareholder has not complied with the rule's procedural requirements or the proposal falls within one of the 13 substantive bases for exclusion described in the table below.

What do you know about a shareholder proposal? If you are a shareholder owning a relatively small amount of a company's securities. Can you come up with a shareholder proposal?

Shareholder Proposal

A proposal that is submitted by a shareholder for action at a forthcoming annual meeting. If the holder gives timely notice of his or her intentions, the firm's management must include the proposal in the proxy statement and must give the other shareholders a chance to vote for or against the proposal. Typical shareholder proposals involve voting rights, management compensation, and corporate charitable contributions. A shareholder proposal is a resolution that's put forward for consideration at a corporation's annual meeting by an individual shareholder or a group of shareholders rather than by the corporation's board of directors. A shareholder who has owned at least $2,000 worth of stock or 1% of a company's outstanding shares for at least a year is entitled to offer a proposal. In most cases, management opposes these proposals and urges shareholders to vote against them. However, management may negotiate with activist investors to make changes in corporate policy to avoid the threat of a shareholder proposal. A shareholder proposal must be included in proxy materials unless the corporation receives authorization from the Securities and Exchange Commission (SEC) to omit it.

The Shareholder Proposal Process: http://www.cooley.com/files/ALERT_Shareholder_Proposal.pdf Rule 14a-8 -- Proposals of Security Holders http://taft.law.uc.edu/CCL/34ActRls/rule14a-8.html

What is SOX act? What are the important recommendations of SOX act regarding Corporate Governance? What is the importance/role of Independent Directors in the Corporate Governance? What is SOX act? The Sarbanes-Oxley Act of 2002 (often shortened to SOX) is legislation enacted in response to the high-profile Enron and WorldCom financial scandals to protect shareholders and the general public from accounting

errors and fraudulent practices in the enterprise. The act is administered by the Securities and Exchange Commission (SEC), which sets deadlines for compliance and publishes rules on requirements. Sarbanes-Oxley is not a set of business practices and does not specify how a business should store records; rather, it defines which records are to be stored and for how long. Named after Senator Paul Sarbanes and Representative Michael Oxley, who were its main architects What are the important recommendations of SOX act regarding Corporate Governance? SarbanesOxley contains 11 titles that describe specific mandates and requirements for financial reporting. Each title consists of several sections, summarized below. 1. Public Company Accounting Oversight Board (PCAOB) Title I consists of nine sections and establishes the Public Company Accounting Oversight Board, to provide independent oversight of public accounting firms providing audit services ("auditors"). It also creates a central oversight board tasked with registering auditors, defining the specific processes and procedures for compliance audits, inspecting and policing conduct and quality control, and enforcing compliance with the specific mandates of SOX. 2. Auditor Independence Title II consists of nine sections and establishes standards for external auditor independence, to limit conflicts of interest. It also addresses new auditor approval requirements, audit partner rotation, and auditor reporting requirements. It restricts auditing companies from providing non-audit services (e.g., consulting) for the same clients. 3. Corporate Responsibility Title III consists of eight sections and mandates that senior executives take individual responsibility for the accuracy and completeness of corporate financial reports. It defines the interaction of external auditors and corporate audit committees, and specifies the responsibility of corporate officers for the accuracy and validity of corporate financial reports. It enumerates specific limits on the behaviors of corporate officers and describes specific forfeitures of benefits and civil penalties for non-compliance. For example, Section 302 requires that the company's "principal officers" (typically the Chief Executive Officer and Chief Financial Officer) certify and approve the integrity of their company financial reports quarterly [3] 4. Enhanced Financial Disclosures

Title IV consists of nine sections. It describes enhanced reporting requirements for financial transactions, including off-balance-sheet transactions, pro-forma figures and stock transactions of corporate officers. It requires internal controls for assuring the accuracy of financial reports and disclosures, and mandates both audits and reports on those controls. It also requires timely reporting of material changes in financial condition and specific enhanced reviews by the SEC or its agents of corporate reports. 5. Analyst Conflicts of Interest Title V consists of only one section, which includes measures designed to help restore investor confidence in the reporting of securities analysts. It defines the codes of conduct for securities analysts and requires disclosure of knowable conflicts of interest. The roles of securities analysts, who make buy and sell recommendations on company stocks 6. Commission Resources and Authority Title VI consists of four sections and defines practices to restore investor confidence in securities analysts. It also defines the SECs authority to censure or bar securities professionals from practice and defines conditions under which a person can be barred from practicing as a broker, advisor, or dealer. 7. Studies and Reports Title VII consists of five sections and requires the Comptroller General and the SEC to perform various studies and report their findings. Studies and reports include the effects of consolidation of public accounting firms, the role of credit rating agencies in the operation of securities markets, securities violations and enforcement actions, and whether investment banks assisted Enron, Global Crossing and others to manipulate earnings and obfuscate true financial conditions. 8. Corporate and Criminal Fraud Accountability Title VIII consists of seven sections and is also referred to as the Corporate and Criminal Fraud Act of 2002. It describes specific criminal penalties for manipulation, destruction or alteration of financial records or other interference with investigations, while providing certain protections for whistle-blowers. 9. White Collar Crime Penalty Enhancement Title IX consists of six sections. This section is also called the White Collar Crime Penalty Enhancement Act of 2002. This section increases the criminal penalties associated with white-collar crimes and conspiracies. It recommends stronger sentencing guidelines and specifically adds failure to certify corporate financial reports as a criminal offense.

10. Corporate Tax Returns Title X consists of one section. Section 1001 states that the Chief Executive Officer should sign the company tax return. 11. Corporate Fraud Accountability Title XI consists of seven sections. Section 1101 recommends a name for this title as Corporate Fraud Accountability Act of 2002. It identifies corporate fraud and records tampering as criminal offenses and joins those offenses to specific penalties. It also revises sentencing guidelines and strengthens their penalties. This enables the SEC the resort to temporarily freeze transactions or payments that have been deemed "large" or "unusual".

What is the importance/role of Independent Directors in the Corporate Governance? Clause 49 of the listing agreement defines independent directors as follows: A. apart from receiving directors remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its senior management or its holding company, its subsidiaries and associated companies; B. as not related to promoters or management at the board level or at one level below the board; C. has not been an executive of company in the immediately preceding three financial years; D. is not a partner or an executive of the statutory audit firm or the internal audit firm that is associated with the company, and has not been a partner or an executive of any such firm for the last three years. This will also apply to legal firm(s) and consulting firm(s) that have a material association with the entity. E. is not a supplier, service provider or customer of the company. This should include lessor-lessee type relationships also; and F. is not a substantial shareholder of the company, i.e. owning two percent or more of the block of voting shares.

Independent directors are the cornerstone of good corporate governance. Theirs is the duty to provide an unbiased, independent, varied and experienced perspective to the board. The independent directors are expected to function on behalf of the shareholders and investors to protect their interests. Their duties fall under two broad categories: the duty of loyalty to the shareholders and the duty of taking utmost care in approving any proposals of the management of a firm. Independent directors are the trustees of good corporate governance. An active and involved board consisting of professional and truly independent directors plays an important role in creating trust between a company and its investors, and is the best guarantor of good corporate governance. Increasingly, institutional investors, both in India and internationally, are closely scrutinizing the corporate governance practices and the quality of boards before taking investment decisions. As Indian companies look towards accessing funds from foreign institutional investors and tapping global financial markets, the credentials of their independent directors will become important. Finally, competent and qualified independent directors play an important role in the stewardship and strategy formulation of companies. Corporate that have appointed such directors to their Board have benefited immensely from their guidance and inputs. Can You Explain Statement In Lieu Of Prospectus? What is meant by Vetting of prospectus - explain in detail Prospectus: Prospectus is a legal document that institutions and businesses use to describe the securities they are offering for participants and buyers. A prospectus commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties and any other material information. In the context of an individual securities offering, such as an initial public offering, a prospectus is distributed by underwriters or brokerages to potential investors. Offer document" means Prospectus in the case of a public issue or offer for sale and Letter of Offer in the case of a rights issue which is filed with Registrar of Companies (RoC) and Stock Exchanges. An offer document covers all the relevant information to help an investor to make his/her investment decision. Statement in lieu of prospectus

A statement in lieu of Prospectus is filed by: a. Company which does not issue a prospectus or which does not go to allotment on a Prospectus issued (Sch III & Section 70 of the Companies Act,1956) In this case if the promoters or directors feel that they can mobilise resources through personal relationships and contacts, and, therefore, the shares or debentures are not offered to the public [Section 56(3)]. In such cases, the company is required to file a statement called statement in lieu of prospectus' with the Registrar of Companies (RoC). b. Private Company on becoming a Public Company (Sch IV & Sec 44(2)(b) of the Companies Act,1956) (It means a private company is ceasing to be private company) It is required to file to obtain Certificate of Commencement of Business. For this with out filing of Prospectus, a company needs to file Statement in lieu of Prospectus to complete such formality. Vetting of prospectus A draft prospectus is prepared giving out details of the Company, promoters background, Management, terms of the issue, project details, modes of financing, past financial performance, projected profitability and others. Additionally a Venture Capital Firm has to file the details of the terms subject to which funds are to be raised in the proposed issue in a document called the placement memorandum. (a) Appointment of underwriters: The underwriters are appointed who commit to shoulder the liability and subscribe to the shortfall in case the issue is under-subscribed. For this commitment they are entitled to a maximum commission of 2.5 % on the amount underwritten. (b) Appointment of Bankers: Bankers along with their branch network act as the collecting agencies and process the funds procured during; the public issue. The Banks provide temporary loans for the period between the issue date and the date the issue proceeds becomes available after allotment, which is referred to as a bridge loan. (c) Appointment of Registrars: Registrars process the application forms, tabulate the amounts collected during the issue and initiate the allotment procedures.

(d) Appointment of the brokers to the issue : Recognized members of the Stock exchanges are appointed as brokers to the issue for marketing the issue. They are eligible for a maximum brokerage of 1.5%. (e) Filing of prospectus with the Registrar of Companies : The draft prospectus along with the copies of the agreements entered into with the Lead Manager, Underwriters, Bankers, registrars and Brokers to the issue is filed with the Registrar of Companies of the state where the registered office of the company is located. (f) Printing and dispatch of Application forms : The prospectus and application forms are printed and dispatched to all the merchant bankers, underwriters, brokers to the issue. (g) Filing of the initial listing application : A letter is sent to the Stock exchanges where the issue is proposed to be listed giving the details and stating the intent ;of getting the shares listed on the Exchange. The initial listing application has to be sent with a fee of Rs. 7,500/-. (h) Statutory announcement: An abridged version of the prospectus and ;the Issue start and close dates are published in major English ;dailies and vernacular newspapers. (i) Processing of applications: After the close of the Public Issue all the application forms are scrutinized, tabulated and then shares are allotted against these application. (j) Establishing the liability of the underwriter : In case the Issue is not fully subscribed to, then the liability for the subscription falls on the underwriters who have to subscribe to the shortfall, incase they have not procured the amount committed by them as per the Underwriting agreement. (k) Allotment of shares: after the issue is subscribed to the minimum level, the allotment procedure as prescribed by SEBI is initiated. (l) Listing of the Issue : The shares after having been allotted have to be listed compulsorily in the regional stock exchange and optionally at the other stock exchanges. A stock appreciation right (SARs) is a method for companies to give their management or employees a bonus if the company performs well financially. Such a method is called a 'plan'.

Stock appreciation rights (SARs) and phantom stock are very similar plans. Both essentially are cash bonus plans, although some plans pay out the benefits in the form of shares. SARs typically provide the employee with a cash payment based on the increase in the value of a stated number of shares over a specific period of time. Phantom stock provides a cash or stock bonus based on the value of a stated number of shares, to be paid out at the end of a specified period of time. SARs may not have a specific settlement date; like options, the employees may have flexibility in when to choose to exercise the SAR. Phantom stock may pay dividends; SARs would not. When the payout is made, it is taxed as ordinary income to the employee and is deductible to the employer. Some phantom plans condition the receipt of the award on meeting certain objectives, such as sales, profits, or other targets. These plans often refer to their phantom stock as performance units. Phantom stock and SARs can be given to anyone, but if they are given out broadly to employees, there is a possibility that they will be considered retirement plans and will be subject to federal retirement plan rules. Careful plan structuring can avoid this problem. Because SARs and phantom plans are essentially cash bonuses or are delivered in the form of stock that holders will want to cash in, companies need to figure out how to pay for them. Does the company just make a promise to pay, or does it really put aside the funds? If the award is paid in stock, is there a market for the stock? If it is only a promise, will employees believe the benefit is as phantom as the stock? If it is in real funds set aside for this purpose, the company will be putting after-tax dollars aside and not in the business. Many small, growth-oriented companies cannot afford to do this. The fund can also be subject to excess accumulated earnings tax. On the other hand, if employees are given shares, the shares can be paid for by capital markets if the company goes public or by acquirers if the company is sold. If phantom stock or SARs are irrevocably promised to employees, it is possible the benefit will become taxable before employees actually receive the funds. A rabbi trust, a segregated account to fund deferred payments to employees, may help solve the accumulated earnings problem, but if the company is unable to pay creditors with existing funds, the money in these trusts goes to them. Telling employees their right to the benefit is not irrevocable or is dependent on some condition (working another five years, for instance) may prevent the money from being currently taxable, but it may also weaken employee belief that the benefit is real. Finally, if phantom stock or SARs are intended to benefit most or all employees and defer some or all payment until termination or later, they may be considered de facto ERISA plans. ERISA (the Employee Retirement Income Security Act of 1974) is the federal law that governs retirement plans. It does not allow non-ERISA plans to operate like ERISA plans, so the plan could be ruled subject to all the constraints of ERISA. This does not necessarily have to be a problem, because ERISA is not a valid law in most countries. However, for this might be a consideration for people living in the United States, where ERISA is applicable. Similarly, if there is an explicit or

implied reduction in compensation to get the phantom stock, there could be securities issues involved, most likely anti-fraud disclosure requirements. Plans designed just for a limited number of employees, or as a bonus for a broader group of employees that pays out annually based on a measure of equity, would most likely avoid these problems. Moreover, the regulatory issues are gray areas; it could be that a company could use a broad-based plan that pays over longer periods or at departure and not ever be challenged. Phantom stock and SAR accounting is straightforward. These plans are treated in the same way as deferred cash compensation. As the amount of the liability changes each year, an entry is made for the amount accrued. A decline in value would create a negative entry. These entries are not contingent on vesting. In closely held companies, share value is often stated as book value. However, this can dramatically underrate the true value of a company, especially one based primarily on intellectual capital. Having an outside appraisal performed, therefore, can make the plans much more accurate rewards for employee contributions. It is expected that hedge fund and private equity fund managers will begin to more frequently use SARs in order to circumvent IRS code 457A while maintaining proper alignment of long term incentives for employee and investors.

Topic - What is the difference between subsidiary, affiliate, sister, and holding/parent company? Subsidiary Company A company which is under the control of other (parent) company is referred to Subsidiary Company. As per definition: A company whose voting stock is more than 50% controlled by another company, usually referred to as the parent company. The company that is being controlled by such parent company is Subsidiary Company. Affiliate Company If a company has any relation with the other companies in terms of stock or in terms of interest (Control) or in terms of ownership then we can say that both are affiliate companies. As per definition: A type of inter-company relationship in which one of the companies owns less than a majority of the other company's stock, or a type of inter-company relationship in which at least two different companies are subsidiaries of a larger company. For example, Discovery Communications. owns 40% of BBC corporation's common stock and 75% of CNN Communications Corp. In this case, Discovery and BBC have an affiliate relationship, and Discovery is CNN's subsidiary.

For the purposes of filing consolidated tax returns, IRS regulations state that a parent company must possess at least 80% of a company's voting stock in order to be considered affiliated. Sister Company A company which is owned by the same parent company as another company. One parent company can have one or many subsidiaries, which all are sister companies to each other. Parent Company A company that controls other companies by owning an influential amount of voting stock.

Symbology: Apart from the data that is generated internally, we also obtain certain other kinds of data from vendors that specialize in their field. A large number of the records in our database are created through feeds and the feed management team is responsible for validating such records at the time of ingestion. Data attached through feeds, has associated symbols that can be used to verify this data.

Simply Stocks Status D&B DUNS Simply Stocks Company IDs S&P GVKey

Inactive 462709846 52776 2 7 7 6 9

What are SS-Active and SS-Inactive companies and what is the treatment for those companies in PSBD. Companies with SS Active status are processed by the Public BD team and those companies with SS Inactive status are processed by the private BD team. Differentiate Stock Option Vs Stock Grants. Introduction Options: Options are financial instruments that can provide the individual investor the right to do something.

Stock Option: A stock option is a contract which conveys to its holder (individual investor) the right, but not the obligation, to buy or sell shares of the underlying security at a specified price on or before a given date. After this given date, the option ceases to exist. Stock Grants: Grants are primarily given to employees of a company as a way to motivate them and share profits with the company. Stock Option Vs Stock Grants Stock options are given to Individual investors, whereas Stock grants are given to employees of the company. There is no vesting period for Stock options purchased by investors, whereas Stock grants may be restricted in terms of when and at what price an employee can redeem the option. Stock grants do not lose value as they age. Stock option become worthless if the stock price falls Ex: A stock option grant with a strike price of Rs.10 has no value when the stock trades at Rs.8. Restricted stock awarded when trading at Rs.10 is still worth Rs.8. A stock option has lost 100% of its value. The restricted stock has only lost 20%. Expenses incurred to do stock grant is tax deductible as per cash compensation to employees. Stock option expenses are NOT tax deductible.

TYPES OF ADR PROGRAMS

The ADR is a great way to invest in a foreign company and keep your money in the domestic market at the same time. The term ADR stands for American depository receipt and it comes in several different forms A Depositary Receipt is a negotiable certificate that usually represents a company's publicly traded equity or debt. An American Depositary Share ("ADS") is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company's home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate. An ADR is a negotiable instrument that represents an ownership interest in securities of a non-US company. ADRs enable investors to invest in non-US securities without concern for often complex and expensive cross-border transactions, and offer substantially the same economic, corporate and voting rights enjoyed by domestic shareholders of the non-US issuer. ADRs are quoted and traded in US dollars, and are settled according to procedures governing the US market. To the extent dividends are paid on the underlying securities, ADRs pay dividends in US dollars. Why do companies have ADR programs? Increase and diversify shareholder base in US Improve overall stock liquidity Raise visibility in the US marketplace (with customers, suppliers, and peers) Facilitate US employee stock plans Raise capital in the US or use as acquisition currency (if listed ADR i.e. Level 2 or 3 ADR)

Why do investors buy ADRs? Convenience: ease of holding and trading, as ADRs are like holding a US stock (no need to sell and clear offshore) Larger trading window (from European opening to US close) There are four main parties that come into play with ADRs:

1. The issuing corporation is the first party. This is typically a large foreignbased corporation that is already listed on a major foreign exchange. Rather than dual list its shares on its home exchange and on a U.S. exchange, the issuer sells a bulk amount of its shares to a trusted U.S. party - a recognized bank.

2. A U.S. bank is the second party in this process; by accepting the issuing company's shares and selling representative certificates to investors, the bank is said to sponsor the security, making it accessible to investors in the ADR's local market. Essentially, the bank accepts the shares from the foreign corporation, stores all of them in its vault, and prints a bunch of certificates that represent the shares. Those certificates are then issued to investors via an exchange.

3. A major U.S. exchange (i.e. NYSE or Nasdaq) then lists the bank's certificates for trading, allowing investors to buy and sell ADR units just as they would normal shares. (For further reading, see Getting To Know Stock Exchanges.) Investors set market prices for the ADRs through the bidding process, pricing and freely trading the units back and forth in U.S. dollars. Because they are ADRs, investors avoid the problem of converting into foreign currency each time the units are bought and sold. They also don't have to deal with foreign trading rules or laws; however, the appropriate Securities and Exchange Commission (SEC) rules do apply. 4. The SEC is the fourth major party involved in ADRs. While it plays no direct role in the issuance and trading of the ADR units, the SEC requires ADR issuers to file certain documents with the SEC before allowing the proposed ADR units to be issued and traded in the U.S. markets.

Types of ADR programs When a company establishes an American Depositary Receipt program, it must decide what exactly it wants out of the program and how much they are willing to commit. For this reason, there are different types of programs that a company can choose.

Unsponsored shares Unsponsored shares are ADRs that trade on the over-the-counter (OTC) market. These shares have no regulatory reporting requirements and are issued in accordance with market demand. The foreign company has no formal agreement with a custodian bank and shares are

often issued by more than one depositary . Each depositary handles only the shares it has issued. Due to the hassle of unsponsored shares and hidden fees, they are rarely issued today. However, there are still some companies with outstanding unsponsored programs. In addition, there are companies that set up a sponsored program and require unsponsored shareholders to turn in their shares for the new sponsored. Often, unsponsored will be exchanged for Level I depositary receipts. Not set up with the involvement of the issuer (possible to have multiple depositary banks) Traded OTC No additional reporting/requirements (i.e. no SOX, no 20-F, etc.) Depositary good faith belief in satisfaction of 12g3-2(b) exemption Level I Level 1 depositary receipts are the lowest sponsored shares that can be issued. When a company issues sponsored shares, it has one designated depositary acting as its transfer agent. A majority of American depositary receipt programs currently trading are issued through a Level 1 program. This is the most convenient way for a foreign company to have its shares trade in the United States. Level 1 shares can only be traded on the OTC market and the company has minimal reporting requirements with the U.S. Securities and Exchange Commission (SEC). The company is not required to issue quarterly or annual reports. It may still do so, but at its own discretion. If a company chooses to issue reports, it is not required to follow US generally accepted accounting principles (GAAP) standards and the report may show money denominations in foreign currency. Companies with shares trading under a Level 1 program may decide to upgrade their share to a Level 2 or Level 3 program for better exposure in the U.S. markets. Traded OTC No additional reporting/requirements (i.e. no SOX, no 20-F, etc.) Rely on 12g3-2(b) exemption (now automatic) Level II (listed) Level 2 depositary receipt programs are more complicated for a foreign company. When a foreign company wants to set up a Level 2 program, it must file a registration statement with the SEC and is under SEC regulation. In addition, the company is required to file a Form 20-F annually. Form 20-F is the basic equivalent of an annual

report (Form 10-K) for a U.S. company. In their filings, the company is required to follow GAAP standards. The advantage that the company has by upgrading their program to Level 2 is that the shares can be listed on a U.S. stock exchange. These exchanges include the New York Stock Exchange (NYSE), NASDAQ, and the American Stock Exchange (AMEX). While listed on these exchanges, the company must meet the exchanges listing requirements. If it fails to do so, it will be delisted and forced to downgrade its ADR program.

Listed in the U.S. (NYSE, NASDAQ, AMEX) SEC registered (hence need to comply with SOX, prepare full registration statement, 20- F, etc.) Level III (offering) A Level 3 depositary receipt program is the highest level a foreign company can have. Because of this distinction, the company is required to adhere to stricter rules that are similar to those followed by U.S. companies. Setting up a Level 3 program means that the foreign company is not only taking some of its shares from its home market and depositing them to be traded in the U.S.; it is actually issuing shares to raise capital. In accordance with this offering, the company is required to file a Form F-1, which is the format for an Offering Prospectus for the shares. They also must file a Form 20-F annually and must adhere to GAAP standards. In addition, any material information given to shareholders in the home market, must be filed with the SEC through Form 8K. Foreign companies with Level 3 programs will often issue materials that are more informative and are more accommodating to their U.S. shareholders because they rely on them for capital. Overall, foreign companies with a Level 3 program set up are the easiest on which to find information. Sponsored by the issuer Same as Level 2 (i.e. listed in the U.S.), but capital raised at the time of the listing SEC registered (hence need to comply with SOX, prepare F-1, 20-F, etc.) Restricted programs

Foreign companies that want their stock to be limited to being traded by only certain individuals may set up a restricted program. There are two SEC rules that allow this type of issuance of shares in the U.S.: Rule 144-A and Regulation S. ADR programs operating under one of these 2 rules make up approximately 30% of all issued ADRs.

144-A Some foreign companies will set up an ADR program under SEC Rule 144(a). This provision makes the issuance of shares a private placement. Shares of companies registered under Rule 144-A are restricted stock and may only be issued to or traded by Qualified Institutional Buyers (QIBs). No regular shareholders will have anything to do with these shares and most are held exclusively through the Depository Trust & Clearing Corporation, so the public often has very little information on these companies. 144-A shares may be issued alongside of a Level 1 program. Regulation S The other way to restrict the trading of depositary shares is to issue them under the terms of SEC Regulation S. This regulation means that the shares are not and will not be registered with any United States securities regulation authority. Regulation S shares cannot be held or traded by any U.S. Person as defined by SEC Regulation S rules. The shares are registered and issued to offshore, non-US residents. Regulation S shares can be merged into a Level 1 program after the restriction period has expired

Disadvantages of Unsponsored Programs Issuers loss of control over relationship with investors. - unilaterally sets the ratio of shares represented by each ADR and the program fees; - has no obligation to provide company communications to investors or exercise the investors voting rights. The existence of multiple unsponsored programs with potentially variable fees and terms could cause confusion or discontent among investors. Advantages of Sponsored Programs Issuer can negotiate the program terms: ratio of shares per ADR, fees, rights to shareholder information and voting. Issuer and depositary can modify the terms of the program.

 Issuer maintains control over its investor relations. Often little or no cost to the issuer, as program fees pay for start up and program maintenence Notes: Private Placement: The sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market. Qualified Institutional Buyer - QIB Primarily referring to institutions that manage at least $100 million in securities including banks, savings and loans institutions, insurance companies, investment companies, employee benefit plans, or an entity owned entirely by qualified investors. Rule 144A A 1990 SEC rule that facilitates the resale of privately placed securities that are without SEC registration. The rule was designed to develop a more liquid and efficient institutional resale market for unregistered securities Rule 12g3-2(b): issued by the Securities and Exchange Commission (SEC), allows a foreign company to get an exemption from registering securities under the Securities Exchange Act of 1934 that will be offered privately to institutional investors in the United States. The exemption is granted if the offering will not be listed on an exchange and is not a primary offering, and if the information that is public in the home country of the issuer is either made available to the SEC or is posted on the companys website in English. Form F-1: A filing with the Securities and Exchange Commission (SEC) required for the registration of certain securities by foreign issuers. SEC Form F1 is required to register securities issued by foreign issuers for which no other specialized form exists or is authorized. Form 20-F: A form issued by the Securities and Exchange Commission (SEC) that must be submitted by all "foreign private issuers" that have listed equity shares on exchanges in the United States. Form 20-F calls for the submission of an annual report within six months of the end of the company's fiscal year, or if the fiscal year-end date changes. The goal of Form 20-F is to standardize the reporting requirements of foreign-

based companies so that investors can evaluate these investments alongside domestic equities. What do you call the investors who expect returns only after 7-10 years? This is relating to Venture Capital investors. Normally the time duration of any project taken over by venture capitalists is more than 5+ years. As the Venture capitalists are long-term investors who take a very active role in their portfolio companies. When a venture capitalist makes an investment he/she does not expect a return on that investment for 7-10 years, on average. What impact do these investors have on the economy? Venture capital activity has a significant impact on global economies. Venture capital is a catalyst for job creation, innovation, technology advancement, international competitiveness and increased tax revenues. According to the economic impact of venture capital study, Venture-Impact, produced by Global Insights, originally venture backed companies have created companies that accounted for more than 10.4 million jobs. Who is a venture capitalist?

A venture capitalist is a person or an organization, who invests in a business venture, providing capital for start-up or expansion. Venture capitalists look for a higher rate of return than would be given by more traditional investments. Often they also provide management and industry expertise and business connections with other firms and venture capitalists.

Where do they invest? They typically invest where at least 25 percent annual returns within three to seven years are feasible, and often demand 50 percent or more ownership to exercise control over the investee firm to offset their high risk. Venture capitalists are typically very selective in deciding what to invest in; as a rule of thumb, a fund may invest in one in four hundred opportunities presented to it. Funds are most interested in ventures with exceptionally high growth potential, as only such opportunities are likely capable of providing the financial returns and successful exit event within the required timeframe. An individual venture capitalist will often select just a few prized investments.

Venture capitalist firms, on the other hand, can command billions of dollars in earnings and investments, depending on their size and their area of influence. Some venture capitalists have investments all over the world. Some VCs, especially the big ones, also have affiliate banks that provide the cash flow. Some even have subsidiaries that use the money in other investments to keep it rolling. Where do they get money from? Historically, venture capitalists relied on wealthy individuals as their primary investor base. These days, venture capitalists are an accepted part of the institutional landscape, so they solicit investments in their funds mainly from institutions. Institutions most likely to invest in venture capital are insurance companies. How they realize returns on their investment? Their objective usually is to bring the business to its initial public offering (IPO) stage so that they can sell their shareholdings to the public at high profit, and get out. Example: In 2000, Benchmark Partners Overall, the upstart firm turned its first $85 million investment fund into about $7.8 billion- a ninety-two fold increase. Vested Awards Vs Vested Options Vested Awards

The incentives given in the form of stock awards will be given to those key employees who wish to have them for the long term. As employees normally have to remain with the business to get this benefit. A Restricted Stock Award Share is a grant of company stock in which the recipients rights in the stock are restricted until the shares vest (or lapse in restrictions).

The restricted period is called a vesting period. Once the vesting requirements are met, an employee owns the shares outright and may treat them as she would any other share of stock in her account. Vesting periods for Restricted Stock Awards may be time-based (a stated period from the grant date), or performance-based (often tied to achievement of corporate goals.) The employee must decide whether to accept or decline the grant. If the employee accepts the grant, he may be required to pay the employer a purchase price for the grant. When a Restricted Stock Award vests, the employee receives the shares of company stock or the cash equivalent (depending on the companys plan rules) without restriction.

Stock Options A stock option is an ability to purchase a specific numbers of shares of a company's stock at a future date at a specific, pre-set price. Stock options have a vesting period, typically 4 to 5 years, during which a proportion of the shares in the option are made available to you. During this vesting period you can sell only the portion of the shares that have vested. If employee leaves the company before options vest then stock options will be forfeited.

Difference An employee receiving a Restricted Stock Award is not taxed at the time of the grant (assuming no election under Section 83(b) has been made, as discussed below). Instead, the employee is taxed at vesting, when the restrictions lapse. Stock options aren't usually taxed until you exercise them, which gives you some control over when you pay your taxes. Restricted shares are taxed in the year they vest, whether you sell them or not. Issuing restricted stock is a better motivating tool than granting stock options for 3 reasons. 1. Many employees don't understand stock options. They don't know that they have to take action to realize any gain.

2. Restricted stock can't become worthless like stock options. Even if the stock price falls, restricted stock retains some intrinsic value. Eg: A stock option grant with a strike price of $10 has no value when the stock trades at $8. Restricted stock awarded when trading at $10 is still worth $8. A stock option has lost 100% of its value. The restricted stock has only lost 20%. 3. When a restricted stock award vests, the employee who received the restricted stock becomes an owner of the company. Stock options, on the other hand, do little to instill a sense of ownership. They are viewed by most as a high risk gamble that has a potentially great reward. Restricted stock awards are better treated on the financial statements than stock options.

What do you know about a buyout/growth fund? Is there any difference between buyout fund and venture capital firm? Growth Fund A diversified portfolio of stocks that has capital appreciation as its primary goal, with little or no dividend payouts. Portfolio companies would mainly consist of companies with above-average growth in earnings that reinvest their earnings into expansion, acquisitions, and/or research and development. Buyout Funds Buyout funds represent a significantly larger market segment within private equity compared to venture capital. Mega-cap buyout funds typically will take public companies private through a leveraged buyout. Mid-market funds will purchase private companies or divisions of larger companies. Buyout funds add value by restructuring operations, by buying opportunistically when companies are selling at less than their intrinsic value, or by capturing gains by adding to or restructuring existing debt. They can realize these gains through a later public offering, selling the company to another buyer or by recapitalizing (borrowing and using the proceeds to pay a special dividend). Venture capital Venture capital is a broad subcategory of private equity that refers to equity investments made, typically in less mature companies, for the launch, early development, or expansion of a business. Venture investment is most often found in the application of new technology, new marketing concepts and new products that have yet to be proven. Venture capital is often sub-divided by the stage of development of the company ranging from early stage capital used for the launch of start-up companies to late stage and growth capital that is often used to fund expansion of existing business that are generating revenue but may not yet be profitable or generating cash flow to fund future growth.

Buyout funds differ from venture capital funds in a number of ways:

They are usually highly leveraged Cash flows to investors are typically more stable and start sooner Returns are not as subject to measurement error

Why do we have EQA despite having Internal QA or Random QA? Explain Internal Errors and External errors treatment and impact on the employee Error rate. What is extrapolation? EQA (External QA): EQA is the master and final check done on the data that is ready to be delivered to the client. It represents the client perspective of viewing data and ensures that the data that is being delivered to client is flawless to the maximum extent. Internal QA or Random QA: Internal QA or Random QA is done on the data processed by relatively new comers to the process, who need time to settle in and give a qualitative data output. Depending on the resources and time deadlines, and other data issues, the Internal QA or Random QA is strengthened within a process. Why EQA when there is IQA or RQA: 1) EQA represents the client perspective in data viewing, whereas IQA or RQA represents the data viewing in the perspective of process, which means IQA or RQA is more focused on policy deviations whereas EQA is focused on the data delivery to the client. 2) IQA or RQA is done by peers and belong to the same process and department, and hence a master check on those files would fall in the scope of EQA 3) IQA or RQA would leave the sample of data processed by process persons who are given a capability for No QA, which means their quality is reaching the expectations of client or read for client view; EQA would consider a check on that data which is already certified as ready for client viewing since there is a possibility of mistakes and errors at any stage 4) IQA or RQA considers higher percentage of data processed for checking since the employees with relatively less experience need more check on them; EQA considers smaller (15%) of data processed Internal and external error treatment: 1) Since the IQA or RQA is based on a bigger sample, the error is directly charged to the process person based on the error category, assuming that the error relates to only that particular file. The errors charged at

IQA or RQA is reviewed finally by the manager, in case the error gets rejected by the production person 2) The sample considered for EQA is 15% of the total production, and if an error is found at one instance the error is extrapolated by 6.667. There will be EQA bounce cases where the errors charged by EQA will be challenged by the production teams What is Extrapolation? The sample considered by EQA is 15% and an error instance will relate to only documents out of the 15% sample, and since the sample is 15%, the error points need to be extrapolated to represent the 100% of documents, and the logic being the higher the sample the more will be the errors. Ex: Extrapolation is the method where the negative points charged per error would be multiplied by 6.66 times so as to round it to 100%.