Unit 5 | unit 5 business organizations and e governance

COILAE

Unit - 5

Business Organizations and E-Governance

5.1 Sole Traders

Introduction

The only trade is that the oldest and most ordinarily used sort of business. It's as old as civilization. Historically, business seems to possess started with this type of organization. With the event of science and technology, business needs have increased and new sorts of organizations are developed. This organization is additionally referred to as sole proprietorship, sole proprietorship, and single entrepreneurship. within the only trade association, the individual is on top of things. He makes all the investments, shares all the risks, receives all the profits and manages and controls the business himself.

Businesses are generally small-scale, as sole proprietors rely totally on their own resources. The business is typically run with the assistance of a loved one, but he may hire people to require care of the day-to-day activities of the business. As far as his responsibilities are concerned, it's unlimited.

The creditor also has the proper to say his personal property. Sole proprietors are shaping the fate of concern. it's the power of the management to work out the longer term of the business. His power is unlimited and his decision is final. In fact, he's the sole organizer, manager, controller, and master of his business.

However, the only proprietor must be someone who has the power to conclude a contract. Business conduct should even be permitted by law. In some cases, you'll be expected to get a license from the competent authority before starting a business. These procedures must be completed beforehand. Usually, as within the case of companies and co-operatives, no other legal form is required to start out one trade business.

Anyone can start or end the sole trading business at any time. this type of business may be a show for one person, which person's abilities may certainly be limited. He might not be ready to handle all situations himself. Therefore, he can make mistakes. He must take a cautious approach, as his responsibilities are unlimited and can depend upon one person.

Definition:

To give you a transparent picture of your organization's only sort of trade, here are some important definitions.

(I) L.H. Haney:

"Individual entrepreneurship may be a sort of business that takes responsibility, directs the business, and puts the individual in danger of failure alone in its head." consistent with Haney, the business isn't only its management, but its management. it's within the hands of 1 one that is additionally liable for the risks.

(II) James Stephenson:

A sole proprietor may be a one that runs a business on his own, not only the owner of the capital of the business, but also usually organizes, manages and assumes responsibility for all profits or losses. James Stevenson emphasizes that the only trade business is funded by himself and is administered alone consistent with his management capabilities. he's also liable for the success or failure of this business.

(Illness) S.R. Davor:

"A sole proprietor is someone who runs his own business without the assistance of a partner. He brings in his own capital and uses all his workforce. He also pays as a gift. I’m being helped by others. "

According to Davar, the only proprietor uses only his resources and doesn't get the assistance of his partner. With the rise in jobs, he may hire some people to assist him get purchased their jobs. Adding a partner changes the form of the organization because it becomes a Partnership issue.

A sole proprietor is someone who uses mm's resources to start out a business, hire people to manage the business on their own, and bear all the advantages and risks of the business on its own.

Characteristics of Personal Business:

(I) Individual Initiatives:

This business starts with the initiative of 1 person. He prepares a blueprint for the venture and coordinates various factors of production. He may hire others to assist, but he has ultimate authority and responsibility. All profits and losses are taken by one individual.

(II) Unlimited Liability:

In a single trade, business liability is unlimited. The owner is liable for all losses arising from the business. Responsibility isn't only the investment in his business, but also his personal property is liable for his business obligations.

(III) Management and Control:

The owner manages the whole business on his own. He makes various plans and executes them under his own supervision. Someone may help him, but the last word control lies with the owner.

(IV) Motivation:

One is the only owner of the business. He receives all profits and suffers losses, if any. There is a direct relationship between effort and reward. The more he works, the more he will earn. He is eager to expand his business activities. He doesn't want to enter the speculative business because of the high risk.

(V) Secret:

All important decisions are made by the owner himself. He keeps all business secrets only to him. Business secrets are very important for small businesses. By keeping the business secret, he prevents competitors from entering the same business.

(VI) There is one sole proprietor and one sole proprietor.

Legally, sole proprietorships and their businesses are not separate entities. The loss of his business is his loss and the debt of his business is his debt.

(VII) Owners and businesses coexist:

In a single trade business, there is no independent business with the owner. Business and owner exist together. If the owner dies, goes bankrupt, or is removed from the scene, the business will be dissolved.

(VIII) Limited Business Area:

The sole proprietorship generally has a limited business area, because of the limited resources and management capabilities of the sole proprietor. He can only arrange limited funds and can oversee small businesses. All decisions are to be made by the owner, so the area of business is limited by his management ability.

(IX) No legal Proceedings:

You can start a stand-alone trading business without any legal proceedings. No formation or registration is required.

(X) Any start and end:

The sole proprietor may start the business at his will and may dissolve it at his discretion as well.

(XI) Freedom in trade choices:

Sole proprietors are free to decide what type of business they want to start. He is not supposed to consult anyone to make such a decision.

(XII) Profit Sharing:

The sole proprietor is the single owner of the business and he receives all the benefits himself. He puts all his efforts into the business and enjoys all the fruits of his work.

Purpose of Independent Trade Business:

A single trade business is established by one person with his or her own resources.

This form of organization is set up for the following purposes:

(I) Channel Individual funds:

Individuals have a small surplus with them. These funds are not enough to set up a large company. People may not like to risk their money in businesses that have no say or control. Instead of keeping your money idle, it's better to set up a small business. Therefore, a single trade business provides a channel for the productive use of individual funds.

(II) Strengthening Distribution Channels:

The only trading business is generally small-scale. People have set up small retail stores under the sole proprietorship. Retailers are an important link in the distribution chain. He is in direct contact with consumers. Without the active involvement of only one trader, the distribution channel from producer to consumer cannot be successful.

(III) Serving Consumers:

Small traders come into direct contact with consumers. Consumers want to buy their daily requirements from the nearest location. The only trader has a store wherever it is available to consumers. Consumers save time by purchasing daily necessities from the nearest retail store.

(IV) Create self-employed Opportunities:

By launching the only trading business, the owner created jobs for himself. Instead of looking for a job outside, this is a form of organization that helps people create their own jobs.

(V) Avoid Concentration of Wealth:

To avoid the concentration of wealth in a small number of funds, a single trading business helps its distribution among many people. When a large number of people enter different businesses, it may be small, but it helps to distribute economic wealth.

(VI) Supporting Large Companies:

The success of large businesses is also related to the support provided by small business units. Smaller units provide ancillary services to larger units. Larger units require many smaller components, from smaller units. As such, a single trade business serves large units by providing everything they do not want to manufacture in-house. In Japan, all large units rely on supply from small units.

Purpose of Independent Trade Business:

A single trade business is established by one person with his or her own resources.

This form of organization is set up for the following purposes:

(I) Channel Individual Funds:

(II) Strengthening Distribution Channels:

(III) Serving Consumers:

(IV) Create Self-Employed Opportunities:

By launching the only trading business, the owner created jobs for himself. Instead of looking for a job outside, this is a form of organization that helps people create their own jobs.

(V) Avoid concentration of wealth:

(VI) Supporting large companies:

The Only Trade Business Formation:

A single trade business is such a form of organization that does not require any procedures to establish it. Anyone can start a business whenever they want. There are no legal requirements to form a single trading business. However, if some businesses require prior government sanctions, such procedures must be completed.

The usual decisions to launch all businesses are also made in single trade businesses. The first decision is the choice of a particular business area. To make this decision, you must first assess the potential demand for the product if it is in the manufacturing sector, or the presence of the consumer if it is in the retail industry.

Next, you need to evaluate the resource requirements and availability. In general, the only trader relies on family resources to start a business. With the expansion of banking facilities in most places, single companies are now beginning to use credit lines to expand their jobs. Choosing the right site is very important in a single trade business.

Choosing where to start a business is very important, as most retailers are in the hands of single merchants. Customer requirements must be taken into account when choosing a business site.

Customers want to buy their personal necessities at the nearest location, but they want to go to the main shopping center to buy durable consumer goods such as TVs, refrigerators, washing machines, and music systems. The business is set up with various factors in mind. The stand-alone trading business can be closed by the owner at any time. As with other forms of organization, no legal process is required to liquidate this business. Setting up and liquidating a single trade business is both easy.

Legal Status of a Single Trade Business:

The following points explain the legal position of a single trade business.

(I) There is no specific law that requires registration, etc. for this business. The joint-stock company must be established under the Companies Act of 1956, the Partnership company is subject to the Partnership Act of 1932, and the only trading business is not subject to anything. Such a decree. Therefore, this business may be started and dissolved at the discretion of the owner, regardless of statutory provisions.

(II) Single trade business is subject to general land law. If there is a provision to obtain a license to start a specific business, the sole proprietor also obtains a license before starting such a business. Those who want to start a wine shop are expected to get a license from the state government. Sole proprietors who want to enter this business are certainly expected to comply with this law.

(III) The sole proprietor and her business are the same. Business exists only with sole proprietors. If he dies or otherwise disappears from the scene, the business will be dissolved. The owner and his business have one personality.

(IV) The sole proprietorship's liability is unlimited. When a business is dissolved, there is no distinction between business assets and private assets of a sole proprietor, and business loans and personal loans.

Self-Employed Suitability:

The amount of capital and management skills required for a particular business influences decisions about the shape of the organization. Smaller businesses have fewer capital requirements and sole proprietorships are the most appropriate form of organization.

The need for capital is increasing due to the improvement of industrial technology and the devising of new production methods. Other forms of organizations such as Partnerships and corporations have also become popular. There are certain types of companies where the sole proprietorship is still the most appropriate form of organization. This type of organization is also suitable for certain situations.

These situations are as follows:

(I) If the market is local:

If the market for products is confined to a particular location, the scale of business operations will be small. The amount of capital required is low and normal management skills are sufficient. In this situation, the sole proprietorship is best. Most retailers are managed by only one trader.

(II) If you need personal contact with the customer:

Personal contact with the customer may be required. Customers may have preferences or preferences for certain things. In this situation, a self-employed organization is suitable. Doctors and lawyers need to be in direct contact with patients and clients. Customers may like to sew their clothes together. Therefore, in all of these cases, the sole proprietor will be more useful.

(III) Speculative Business:

In a speculative business, product demand and prices change rapidly. Businessmen need to make quick decisions. Sole proprietors can make immediate decisions depending on the situation. He doesn't have to talk to anyone else. So, he can decide things for himself. No other organization is as speculative as the sole proprietorship.

Social Desirability of Private Business:

Sole proprietorship restrictions have necessitated the development of other forms of organization. The widespread use of other forms of organization does not mean that sole proprietorships have been excluded. Rather, it continues to be the most popular form of organization in all countries. This form of organization also has social desirability.

Its social need is due to the following reasons.

(I) Employment of a large number of people:

This form of organization can be started alone, but he takes others to help. The number of only traders is very large in all countries and they employ many as their helpers. Therefore, sole proprietors can provide employment to a large number of people.

(II) Need for less capital:

This form of organization can be undertaken by anyone by any means. Even people with few resources can start a business on a small scale. Vegetable sellers can start a business for hundreds of rupees and regain capital at the end of the day. Therefore, this type of form encourages people to do independent business.

(III) Low risk:

In general, the sole proprietorship is started on a small scale and less investment is made. Because of the low risk, you can change your business if it is not appropriate.

(IV) Offering low-priced products:

In this way, we provide consumers with products at low prices. The only number of traders is large, they are in fierce competition with each other, and consumers are offered products at competitive rates. In general, business expenses are low. This allows the only trader to sell their products at a lower price.

(V) Equal Distribution of Income:

This form of organization acts as a constraint on the monopoly tendencies of other forms of organization. Many people enter the business. Therefore, this results in an equal distribution of income. Everyone can invest their savings and get a fair return on it. When a business is in the hands of a few, it brings a concentration of wealth in the hands of only some.

(VI) Useful for small producers:

The only trader buys goods from small producers and sells them to consumers. Many intermediaries are excluded from distribution channels. Some of the profits that the intermediary earns in the form of commissions are left to the producers and some are passed on to consumers in the form of low prices.

(VII) Helping Consumers:

Consumers are helped by some traders in making their purchases. The only trader opens a store on the street so that consumers can buy from nearby stores. Merchants supply products even at the front door.

(VIII) Functions as a training center.

The only trading business offers the opportunity to learn business techniques. With less investment, you can afford to learn by trial and error. You can expand it later by bearing the various strengths and weaknesses of your business. Therefore, this is a good organizational form for receiving business training.

Advantages

1. Easy to form: Forming and organizing a sole proprietor's business is very easy and easy. There is no legal procedure.

2. Easy to manage: A small organization. The owner can easily manage it.

3. Profit incentives: Sole proprietors enjoy all the benefits for themselves. The motivation for this profit is an incentive to work hard.

4. Quick decision: He is the only organizer, so he can make quick decisions. He can act swiftly in response to changes in the market.

5. Customer contact: He is the owner and manager of concern. By building good relationships with our customers, we will be in a position to personally study their tastes and needs.

6. Business secrets: He can keep business secrets for himself. Keeping confidential is an important issue for all types of corporate organizations.

7. Smooth operation: Since he is a sole proprietor, there is no disagreement or controversy. It helps the smooth execution of concerns.

8. Efficiency and economy: Organizations are small. He can be a close director. He can reduce the cost of management and all sorts of waste. He can run his business efficiently.

9. Flexibility: Business changes can be adopted at any time. Flexibility is promoted with a small investment. It can be moved from place to place very easily.

10. Family Training: He gets the help of his family members in maintaining business. His children are trained in business activities.

11. Self-Employed: Easy to get started with small units. Nationalized banks are also supporting this direction.

12. Social Benefits: It offers many individuals an opportunity. Many can become entrepreneurs with limited resources.

13. Tax Benefits: Income tax is levied on the sole proprietor's personal income, not on the interests of concern. Therefore, it is advantageous.

Restrictions or Disadvantages of Sole Proprietors

The Sole Proprietorship also suffers from certain serious limitations (weaknesses).

1. Limited Capital: The use of limited capital means only limited profits. If you need to grow your business, you may not have enough resources.

2. Limited Skills: Since there is only one man, management ability is limited.

3. Limited Borrowing Capacity: The sole proprietor's borrowing capacity is limited to the extent of his financial position.

4. Unlimited liability: The creditor can withdraw the loan amount not only from the assets of the business, but also from his personal assets. Therefore, his liability is unlimited.

5. Make Hurry Decisions: The sole proprietor makes all the decisions himself. So, there may be a hasty and thoughtless decision

6. Short-lived: If the sole proprietor has no children, or if his children are not interested in continuing the business, the business will be terminated. We do not guarantee a continuous presence in this type of business.

7. No division of labor: Since it is a small unit, it is not possible to introduce a division of labor into management.

8. Employee reliance: With business expansion, it is inevitable that owners will rely on paid managers.

9. Limited Business Area: The business is small. Therefore, the activity cannot go beyond a specific area.

10. Lack of Economies of Scale: Sole proprietors have only small businesses. He is unable to do a large business due to lack of financial resources. Therefore, he cannot enjoy the economy of large-scale production, buying and selling.

Key takeaways:

A private business is an unincorporated business with only one owner who pays personal income tax on profits.

Sole proprietors are easy to set up and dismantle because of the lack of government involvement and are popular with small business owners and contractors.

Many sole proprietors will be rebuilt in LLC in sync with the expansion of the company.

For example, the debt of a sole proprietor is also the debt of the owner. However, the profits of the sole proprietor are also the profits of the owner, as all profits flow directly to the business owner.

The main advantages of sole proprietorship are the benefits of pass-through tax mentioned above, ease of creation, and low rates of creation and maintenance.

The disadvantages of sole proprietors are the unlimited liability of owners across businesses and the difficulty of raising capital through established channels, especially through the issuance of shares and the acquisition of bank loans and credit lines. is.

Therefore, an entrepreneur begins as an entity with unlimited liability.

As your business grows, you often move to limited liability companies such as LLCs and LLPs, or companies such as S Corp, C Corp, and Benefit Corp.

A sole proprietor is very different from a company (corp.), a limited liability company (LLC), or a limited liability Partnership (LLP) in that no separate legal entity is created.

As a result, sole proprietorship owners are not exempt from the debt borne by the entity.

5.2 Partnerships

What is a Partnership?

A Partnership is a type of business in which a formal agreement is reached between two or more people who agree to be co-owners, share the responsibility of running the organization, and share the income or loss generated by the business.

In India, all aspects and functions of the Partnership are managed under the 1932 India Partnership Act. This particular law is a Partnership between two or more individuals or parties that accepts to share the benefits generated by the business under the supervision of all members or on behalf of other members. It explains.

Partnership Features:

Some of the features of the Partnership are:

1. Agreement between partners: It is a group of two or more individuals, and a Partnership arises from an agreement or contract. Agreements form the basis of associations between partners. Such an agreement is in writing. Oral agreements are fair and legal. To avoid controversy, it's always good if the partner has a copy of the written agreement.

2. Two or more: At least two people must have a common goal in order to articulate the Partnership. In other words, the minimum number of partners in a company is two. However, there is a limit to the maximum number of people.

3. Profit Sharing: Another important element of Partnership is that agreements between partners must share the benefits and losses of trading concerns. However, the definition held by the Partnership law is clear. Partnerships are associations between people who have agreed to share business interests, and loss sharing is implicit. Therefore, it is important to share profits and losses.

4. Business Motivation: It is important for a company to run any business and should have a motivation to make a profit.

5. Mutual Business: Partners are both owners and agents of the company. Actions taken by one partner can affect other partners and companies. We can conclude that this serves as a test of Partnership for all partners.

6. Unlimited Liability: All partners in the Partnership have unlimited liability.

Types of Partnership

Partnerships can be divided into different types by state or place of business. Here are some general aspects of the three most common types of Partnerships.

General Partnership

A Partnership is made up of two or more owners who run the business. In this Partnership, each partner represents a company with equal rights. All partners have the right to participate in management activities, decision making and manage the business. Similarly, profits, liabilities, and liabilities are evenly shared and evenly divided.

In other words, the definition of a Partnership can be described as a Partnership in which rights and responsibilities are equally shared in terms of management and decision making. Each partner must take full responsibility for the debts and responsibilities incurred by the other partners. If one partner is sued, all other partners are considered responsible. The creditor or court holds the personal assets of the partner. Therefore, most partners do not choose this Partnership.

Limited Partnership

This Partnership includes both general and limited partners. The General Partner has unlimited liability and manages the business and other limited liability partners. A limited liability company has limited control over its business (limited to his investment). They have nothing to do with the day-to-day operations of the company.

In most cases, Limited Partners only invest and share profits. They are not interested in participating in management or decision making. This non-involvement means that they do not have the right to compensate for the loss of Partnership from the income tax return.

Limited Liability Partnership

In a limited liability Partnership (LLP), all partners have limited liability. Each partner is protected from the legal and financial mistakes of the other partners. Limited liability Partnerships are similar to limited liability companies (LLCs), but not limited liability Partnerships or Partnerships.

Voluntary Partnership

A voluntary Partnership can be defined as if the expiration of the Partnership company is not mentioned. Under Section 7 of the Indian Partnership Act of 1932, the two conditions that a company must meet in order to become a voluntary Partnership are:

Partnership agreements must not have a fixed expiration date.

No special Partnership decisions should be mentioned.

Therefore, if the term and decision are stated in the contract, it is not a voluntary Partnership. Also, if the expiration date of the company is initially set, but the operation of the company continues beyond the above date. It is free to be considered a Partnership.

Indian Partnership Act,1932

Since most businesses in India employ partnership businesses, the India Partnership Act was enacted on October 1, 1932 to monitor and manage such partnerships. Under this partnership law, an agreement is reached between two or more people who agree to operate the business. Together, they share the profits they earn from this business.

Partnership Benefits:

Easy Formation-The contract can be made verbally or printed as a contract to enter as a partner and set up a company.

Large Resources – Unlike sole proprietors, where all donations are made by one person, partnerships allow company partners to donate more capital and other resources as needed.

Flexibility – Partners can start making changes when they think they need to achieve the desired result or change the situation.

Risk sharing – All losses incurred by the company are evenly distributed among each partner.

Different Skill Combinations – Partnerships have the benefits of different partners' knowledge, skills, experience and talent.

Partnership Example:

Below are some examples of brand Partnerships.

Red Bull and GoPro

Spotify and Uber

Levies and Pinterest

Maruti Suzuki

Hindustan Oil

Key takeaways:

At least two people must have a common goal in order to articulate the Partnership

A Partnership is made up of two or more owners who run the business.

In other words, the definition of a Partnership can be described as a Partnership in which rights and responsibilities are equally shared in terms of management and decision making.

The General Partner has unlimited liability and manages the business and other limited liability partners.

A voluntary Partnership can be defined as if the expiration of the Partnership company is not mentioned.

The contract can be made verbally or printed as a contract to enter as a partner and set up a company.

5.3 Companies: The Company’s Act: Introduction, Formation of a Company, Memorandum of Association, Articles of Association, Prospectus, Shares, Directors, General Meetings and Proceedings, Auditor, Winding up.

Introduction

Our corporate law consulting services are specially designed to help the board of directors and key stakeholders in the company address concerns about increasing complexity.

The 2013 Companies Act, which came into force on April 1, 2014, has brought about a fundamental change in the field of corporate governance. It introduced a stricter regime for unlisted companies and had serious consequences for non-compliance. The Ministry of Corporate Affairs (MCA) issues various amendments and clarifications on the law and the corresponding rules to eliminate the practical challenges companies face in implementing certain provisions of the law.

EY's Corporate Law Consulting Services are specially designed to help the board and key stakeholders of the company address concerns about increasing complexity. This provides a robust corporate governance framework and enables continuous modification.

This is a solution that helps enterprises identify key areas of exposure and allows them to build an implementation roadmap to address the changes they need.

Formation of company

Important Stages in the formation of a company

The whole process of company formation can be divided into four stages as given below.

Promotion of a Company

Registration of a Company

Certificate of Incorporation; and

Commencement of the Business.

1. Company promotion:

A company cannot be established by itself. It is the result of the efforts of individuals or groups of people or institutions. That is, it must be promoted by some people. The process of promoting a business begins with the idea of an idea and ends when the idea is put into action. That is, the establishment of a company and the start of a business.

Who is the promoter of the company?

Successful promoters are wealth creators and economic prophets. People who are involved in the promotion of a company are called promoters. He came up with the idea of starting a business and took all the steps necessary to make a company a reality.

For example, Dhirubhai Ambani is the promoter of Reliance Industries.

Promoters find ways to raise money, research business ideas, arrange funding, raise resources, and establish a going concern.

The Companies Act does not give promoters legal status. He is in the position of a trustee.

Promoter type

There are various types of promoters, including professional promoters, temporary promoters, promoter companies, financial promoters, entrepreneurs, lawyers and engineers.

2. Company registration

It is registration that gives birth to a company. A company is only properly formed if it is officially registered under the Companies Act.

Registration procedure

The important documents that you need to submit to the company registrar to register your company are:

a. Basic Articles of Incorporation: A minimum of 7 people must sign a public company and 2 people must sign a public company. Must be stamped properly.

b. Articles of Incorporation: This document is signed by everyone who has signed the Articles of Association.

c. List of Directors: Make a list of directors' names, addresses and occupations and submit them to the company's registration body.

d. Written Consent of Directors: Written consent of a Director who has agreed to act as a Director must be submitted to the Registrar with a written commitment to acquire and pay qualified shares.

e. Notification of registered office address: It is also customary to submit a notification of the address of the company's registered office when the company is established. It will be issued within 30 days from the date of establishment.

Legal Declaration: Legal Declaration by

Defender of the Supreme Court or high court or

A lawyer or counsel qualified to appear in the High Court

Practicing a certified accountant in India, engaged in the establishment of a company, or

It is mentioned that the legal requirements and the rules below are being observed by the person listed in the article as a director, managing director, secretary or manager of the company. This must be submitted to the company's registration authority.

Once the required documents have been submitted to the registrar with a prescribed fee, the registrar will scrutinize the documents. When the registrar is filled, the name of the company is entered in the register. The registrar then issues a certificate called the Certificate of Incorporation.

3. Establishment certificate

Upon registration of the Articles of Incorporation, Articles of Incorporation and other documents, the registrar issues a certificate called the "Certificate of Establishment". Issuing a certificate is proof of the fact that the company has been established and is in compliance with the requirements of the Companies Act.

4. Business start certificate

Private companies can start their business as soon as they obtain a proof of establishment. A public company can only start a business after obtaining a "business start certificate". After the company obtains the certificate of establishment, the public company issues a prospectus to invite the general public to join its equity capital. Modify the minimum subscription. Next, you need to sell the minimum number of shares listed in the prospectus.

Once the required number of shares have been sold, a proof of receipt of all the money will be sent to the registrar along with a letter from the bank.

The registrar then scrutinizes the document. If he is happy, he will issue a certificate known as a "business start certificate". This is the definitive proof of starting a business.

Memorandum of Association

Definition: MOA (Memorandum of Association) is a legal document that must be submitted to the company's registration body when the company is established. This is often referred to as a memorandum and consists of the basic conditions under which a company operates.

The Association Memorandum of Understanding is the most important document that needs to be prepared with the utmost care. A document that defines the relationship between the company and the outside world. The Articles of Association serve as the company's constitution, which defines all the rules and regulations that all companies must comply with. All companies wishing to register as a limited liability company are required to prepare the basic articles of incorporation.

Once the document is created, the company cannot do anything beyond the limits set forth in the Articles of Association. Therefore, it is considered the best document and consists of the following important terms:

Name clause: The name of the company that must end with the term "finite". You also need to make sure that the name chosen for the company is not similar to the name of an existing company.

Registered Office Clause: This clause requires the address of the company's registered office.

Purpose clause: The purpose clause must clearly state the purpose behind the establishment of the company, that is, the purpose for which the company is established.

Liability Clause: This clause should mention the extent to which shareholders are obliged to repay their debt if the company dissolves.

Capital clause: The authorized capital of the company and the nominal value of all types of shares must be disclosed here. The company must also list its assets here.

Association Clause: In accordance with this clause, shareholders' willingness to partner with the company is required. In the case of a public limited company, a minimum of 7 members must sign the memorandum, but in the case of a limited company, a minimum of 2 members must do the same.

Note: This document must be published and presented to shareholders, creditors, and others associated with the company so that everyone knows the policies that the company operates.

Purpose of registering an association memorandum or MOA

A company's MOA contains the objects from which the company is formed. It identifies the range of its operation and determines the boundaries that it cannot cross.

This is a public document under Article 399 of the Companies Act 2013. Therefore, those who sign a contract with the company are expected to have knowledge of MOA.

Contains details about company authority and rights.

Under no circumstances will the company deviate from the provisions specified in the Memorandum of Understanding. If so, it empowers the company and invalidates it.

Memorandum of Association Understanding (MOA) format

According to Section 4 of the Companies Act 2013, companies are required to create MOAs in the format shown in Tables A through E of Schedule I of the Act. The details of the form are as follows:

Table A: Form of the basic articles of incorporation of a private limited liability company.

Table B: Form of the basic articles of incorporation of a company that is a limited liability company and does not have equity capital.

Table C: Form of basic articles of incorporation for guaranteed limited liability companies and companies with equity capital.

Table D: Unlimited Company Association Memorandum Form.

Table E: Memorandum form of association with unlimited company and equity capital.

Articles of Association

Every company needs a set of rules and regulations to manage its internal operations. There are two important business documents of the company: the Basic Articles of Incorporation (MOA) and the Articles of Association (AOA). AOA specifies the company's internal rules. In this post, we'll take a closer look at the Articles of Incorporation (AOA).

The AOA contains the company's articles of incorporation. Therefore, directors and other members must perform functions related to company management, their accounts, and audits in accordance with AOA.

Articles of Incorporation (AOA) Content and Model

According to Section 5 of the Companies Act 2013, AOA requires the following components:

Rules

The AOA must include regulations regarding the management of the company.

b. Problem inclusion

Articles must specify everything according to the rules. In addition, the company can include additional items that it may need to operate.

c. Trench rules

Trench means fortress or protection.

AOA can include trench provisions for specific provisions. Trench provisions can only guarantee that the specified provisions will change if certain conditions or procedures are met or adhered to. These conditions are usually more restrictive than the conditions that apply to special resolutions.

It is possible to include trench rules:

On the formation of company

Also, by modifying the article with the approval of all members of the company. In addition, in the case of public limited companies, there is a special resolution.

The company must notify its Registrar whether trench provisions are added to the formation or after amendment.

AOA format

Schedule I of the Companies Act 2013 provides AOA forms for tables F, G, H, I, and J of different types of companies. In addition, the articles must be in their respective format.

Model article

Companies can adopt all or any of the regulations specified in the model article.

Companies registered after the enforcement of the law

IF… Registration articles for such companies do not exclude or modify the rules contained in the model articles that apply to such companies

Then ... these rules are the rules of the company, as if they were included in the officially registered article of the company.

Companies that need to submit articles of incorporation

The following entities are required to submit their own articles of incorporation.

1. Unlimited company

The document must include the number of employees and the amount of equity capital, if any.

2. Guarantee limited liability company

The document should specify the number of members the company will be registered with.

3. Private limited by shares

The document must include a clause limiting the transfer of shares, a limit of 50 members, and a ban on public invitation to buy shares in the form of shares or bonds.

Limitations Regarding Alteration of Articles

The alteration cannot be made so as to increase the liability of any member without his written consent.

However, the articles may impose on company conditions stricter than those provided under the law.

The articles must not be inconsistent with the conditions contained in the memorandum.

The alteration must not be inconsistent with the alteration ordered by the company law board.

Permission of company law board is required to make alterations to articles of association.

Approval of Central Government is also required in certain cases

Conversion of public company into a private company.

Appointment or re-appointment of a director.

Increase in remuneration of a director.

The alteration must not deprive any person of his rights under a contract.

The alteration must not constitute a fraud on the minority.

The alteration must be a bona fide for the benefit of the company as a whole.

Prospectus

What is a prospectus?

A prospectus is a legal disclosure document that provides public information about investment offerings and must be submitted to the Securities and Exchange Commission (SEC) or local regulators. The prospectus contains information about the company, its management, recent financial performance, and other relevant information that investors want to know.

Prospectus for issuing shares or bonds

When a company issues shares or bonds, it issues a prospectus to provide investors with all the information they need to make informed decisions. The issuer provides both a preliminary prospectus and a final prospectus. A preliminary prospectus is an initial public offering document that provides details about the proposed transaction. The final prospectus will be provided when the offering is complete and generally available for subscription.

The information in the final prospectus includes the number of shares issued, the offer price, the company's financial data, risk factors, the use of earnings, dividend policy, and other relevant information. This information helps investors make informed decisions about whether to invest in a company.

Prospectus of investment trust

An investment trust prospectus is a legal disclosure document that requires the SEC to submit an investment trust and make it available to interested investors. Documented details include fund objectives, risks, performance, distribution policies, management, investment strategies, and more.

A trustee may provide a summary of the prospectus, which is several pages long and contains important information that the investor needs. We may also issue a long, highly detailed statutory prospectus to provide the information investors need to make a purchase decision. An investment trust is required to provide documents to investors after the purchase of shares. Investors can also access information on the fund's website.

Components of the prospectus

The components of the prospectus are:

1. Company profile and history

The prospectus contains an overview of the company since its inception. It provides a timeline of events that have occurred over the years, such as events that helped the company grow. It also contains information about the founder, company registration, and initial service delivery. This section may also include an overview of the company's strategy and what management believes to be its competitive advantage or "proprietary sales offer" (USP).

2 Services / products provided by the company

The Services / Products section lists the major economic activities that the company is carrying out. The company provides information on the services and products offered to its customers and their addition to the business over the years.

3 Management profile

The prospectus also contains information about the company's management team. It outlines the management team's experience and educational qualifications that make them fit well into the company. Investors want a guarantee that company executives have what they need to protect their investments.

4 Desirable trading structure

If the issuer is an existing company that has previously issued securities, it may provide an overview of the current capital structure and how the new issuance will affect the structure. For example, when selling a bond, an investor may be interested in knowing the debt level of the company and its solvency. Equity investors will want to see the current equity ownership structure and how investments affect the structure and expected rate of return.

5 Use of revenue

Companies often offer the issuance of securities when they are unable to raise funds internally to fund a large investment. For example, a company can expand its business to other geographic locations, acquire its own technology, buy large machines, fund the production of new product lines, or carry out M & As. can do.

6 Security Offering Details

The prospectus also provides information on the number of securities available to the public and the price of each security. You also need to state the expected rate of return on the investor's funds. This section also provides information on the subscription period during which interested investors can purchase securities.

7 Financial information

The prospectus should provide investors with information about the company's past financial performance. Information may include EBIT, net income, stock performance, and more. Security performance can be compared to known benchmarks such as the S & P500 and the Dow Jones Industrial Average.

8 Related risks

The prospectus must disclose the risks that investors face when investing in a trust. For example, an international mutual fund may contain disclosures detailing the currency risks that investors face when investing in the fund.

Purpose and importance of the prospectus

If you are considering investing in a company's stock, you need to fully understand the details of the company and the security itself. Going through it serves this purpose.

Below are some points that explain the purpose and importance of the prospectus.

Company details:

An important part of that is the details of the issuing company. It gives the big picture of the company. For example, financial information, its operations, goals, objectives, business plans, proceedings, etc. All of this information will help you better understand the company you are investing in.

b. Security / Offer Details:

It also provides security details. If the company issues shares or bonds, it provides details of the issued shares, asking price, risk factors, dividend policy, and other relevant information.

When a company issues it for a mutual fund, it involves all the fund's objectives, distribution policies, investment strategies, risks, instructions on how to buy and sell the funds' shares, and other important details.

Familiarity with investment offerings will resolve all queries and give you a clearer view of the offering.

c. Investment-related risks:

Before subscribing to a company's stock, you need to be aware of the risks that may arise after your investment. The prospectus also solves this problem by providing details of the risks associated with the offer. Therefore, you need to go through it to gain insight into these potential risks.

Types of prospectuses

Now that we've looked at the entire prospectus, let's look at the types.

There are four types of prospectuses. They are:

Shelf Prospectus

According to Article 31 of the Companies Act, a public company may issue a shelf outlook if the security is issued in multiple issuances. Issued on the first offer of company securities. The company will provide this prospectus with an expiration date of no more than one year. During this period, the Shelf Prospectus is valid for this new offer, so there is no need to issue a new Offering Prospectus. The Memorandum of Information will be submitted by the company along with the submission of the shelf outlook prior to the issuance of subsequent securities offerings. The Memorandum of Information shall include new changes and changes in the financial position of the Company made during the initial issuance of securities and subsequent issuance of securities.

b. Red herring prospectus

Red Herring Prospectus does not contain information about the amount of shares issued and / or the price of the shares. This prospectus was issued prior to the issuance of the main prospectus and is intended to declare the offer at least three days before the start of the offer. At the end of the offer, the prospectus will include the total capital raised, the closing price of the securities, and other information, and will not be included in the Red Herring prospectus.

c. Summary prospectus

A summary prospectus is a compact or summarized form of prospectus that contains all the information about the prospectus, making it quick and easy for investors to understand. A company may not issue a share application unless a summary prospectus is attached. However, it is not required for underwriting contracts or securities that are not disclosed. If the company does not attach it to the application, Rs will be legally charged. 50,000 per default.

d. Deemed prospectus

A major company can hire an issuer or other company to issue its securities to the market. The issuing / hiring company submits a document called a prospectus on behalf of the company. A document is considered a prospectus if:

The offer to buy or sell will be made within 6 months from the contract with the Company.

When the company does not receive compensation by issuing a housing / employment company to the general public.

Contents:

The following important matters are included in the prospectus.

The prospectus includes the main purpose of the company, the names and addresses of the signatories of the Articles of Association, and the number of shares they hold.

Names, addresses and occupations of directors and managing directors.

Number and type of shares and bonds issued.

Director qualification share and directors' interests in promoting the company.

The number, description, and documentation of shares or bonds that have been agreed to be issued non-cash within the last two years.

The name and address of the real estate vendor acquired by the company, and the amount paid or will be paid.

Details about directors, secretaries, treasures and their compensation.

Minimum subscription amount.

If the company is in business, the duration of such business.

Estimated amount of contingency.

The names and addresses of company auditors, bankers and lawyers.

When and where you can inspect a copy of your balance sheet, income statement and audit report.

The audit report so submitted must process the company's profit and loss for each of the five fiscal years immediately prior to the issuance of the prospectus.

If profits or reserves are capitalized, details of such capitalization will be provided in the prospectus.

Purpose of the prospectus:

There are four targets for issuing prospectuses.

To inform the public that a new company has been established.

Persuade those who are saving to invest in the company's authenticity and future prospects.

To maintain a certified record of the conditions under which the capital was raised.

To ensure that the company's instructions accept liability for the prospectus statement.

What are shares?

Shares are a unit of ownership of a company that exists as a financial asset and, in the form of dividends, distribute residual profits, if any, evenly. As the value of the company increases, shareholders can also enjoy capital gains.

Stocks represent company stocks, and the two main types of stocks are common stock and preferred stock. As a result, "stock" and "stock" are commonly used interchangeably.

Understand shares

When setting up a company, the owner can choose to issue common or preferred stock to investors. A company issues shares to investors in exchange for the capital used to grow and operate the company.

Unlike debt capital obtained through the issuance of loans and bonds, equity has no legal obligation to repay investors, and stocks can pay dividends as a share of profits, but not interest. Almost every company, from small partnerships and LLCs to multinationals, issues some kind of stock.

Shares of a private company or partnership are owned by the founder or partner. As SMEs grow, their shares are sold to outside investors in the primary market. These may include friends and family, as well as angel and venture (VC) investors. If the company continues to grow, it may seek to raise additional equity by selling its shares to the public on the secondary market through an initial public offering (IPO). After the IPO, the company's stock is said to be listed and listed on the stock exchange.

Most companies issue common stock. They provide shareholders with a residual claim on the company and its profits and provide potential investment growth through both capital gains and dividends. Common stock also has voting rights, giving shareholders more control over their business. These rights allow registered shareholders of the company to vote on specific corporate actions, elect members to the board of directors, and approve the issuance of new securities or the payment of dividends. In addition, certain common stocks have pre-emptive rights, allowing shareholders to purchase new shares and maintain ownership when a company issues new share.

By comparison, preferred stock is usually less valued in the market for corporate value and voting rights. However, this type of stock usually has a payment standard. This is a dividend paid on a regular basis and is less risky than common stock. If the business files for bankruptcy and is forced to repay by the lender, the preferred stock will take precedence over the common stock, so the preferred stock will receive payment before the common stock but after the bondholder. Preferred stock is less risky than common stock because it prioritizes repayment in the event of bankruptcy.

Paper stock certificates have been replaced by electronic records of stock. The issuance and distribution of shares in the public and private markets is overseen by the Securities and Exchange Commission (SEC), and the transactions of shares in the secondary market are overseen by the SEC and FINRA.

Types of shares

According to Article 43 of the Companies Act 2013, stocks can be broadly classified into two types.

Equity stock

Preferred stock

Both of these types of shares differ in terms of profitability, voting rights, and sharing of capital settlements when the company is liquidated or liquidated.

Equity shares: Meaning and type of stock

Equity shares or stock is the most common type of stock issued by a public company to raise capital. Generally, common stock holders enjoy voting rights, are able to attend the company's general and annual meetings, and are also entitled to the company's surplus.

With respect to voting rights, one share usually means one vote and may be related to company policy or the appointment of directors. However, companies can fine-tune the relationship between the number of shares and the number of votes.

For example, Tata Motors issued a special category in 2008 called "A" shares. By policy, 10 "A" shares are equivalent to 1 vote. However, they received 5% more dividends than regular stocks.

Ordinary shareholders also participate in the loss suffered by the company only by investing in the company. These qualifications are granted to shareholder in order to hold ownership of the company and represent its shares.

However, shareholders will receive dividends when the company meets all other qualifications it is obliged to pay from profits. Therefore, such stakeholders do not receive a fixed amount of dividends or even a guarantee of receipt of dividends.

As a result, dividends are usually not the main source of income from stocks, but their prices change. Because stocks are transferable, investors can make a financial profit by selling at a premium and buying at a discount on different types of stock markets.

When it comes to stock types, common stock includes two comprehensible classifications. One is definition-based and the other is feature-based.

Defined types of stocks –

Approved stock capital

This indicates the total amount of capital that a company can raise by issuing shares, as described in the Memorandum of Association (MOA).

For example, if a company's MoA indicates an approved share capital of Rs 5 billion, the law does not allow such a company to issue shares whose issued value exceeds that amount.

However, this does not mean that the entity cannot later change MoA's approved share capital. But to do so, organizations must, among other things, follow a series of procedures.

b. Issued stock capital

As the name implies, issued equity capital is the amount of capital that a company raises by issuing shares.

However, keep in mind that issued equity capital represents only the nominal value of all common stock issued by the company.

For example, if the nominal value of a company's stock is Rs. 10 And it issued 500,000 rupees of shares in the market, and its issued capital stands at rupees. 5 rolls.

c. Joined capital and paid-in capital

This is the percentage of outstanding capital subscribed to by the investor. Investors may not buy all the shares issued by the company.

On the other hand, paid-in capital is the amount actually paid by the investor to the stock. Therefore, it is directly related to the amount of capital the company raises by issuing shares.

The types of feature-based sharing are –

Voting and non-voting shares

As the name implies, the entity holding these voting shares has the right to vote on matters relating to company policy or the appointment of directors. Most common stock is usually voting stock.

For non-voting shares, there may be a difference in voting rights or no voting rights at all. Examples of different voting rights are given above, with Tata Motors issuing "A" shares in 2008.

Sweat stock

Companies can typically issue shares to employees and directors as a means of compensation when they perform well. Sweat Equity shares allow businesses to retain efficient employees by giving them ownership.

Right stock

Of the many types of shares, the company issues this variant to existing shareholders. In a more rigorous sense, companies give existing stakeholders the right to purchase such shares before they begin trading with external investors.

Bonus share

Companies issue bonus shares instead of dividends. Therefore, existing shareholders are entitled to receive only bonus shares. Organizations can also issue bonus shares to convert a portion of their retained earnings into shares.

Preferred Shares: Meaning and Type of Shares

Preferred shares provide special rights or incentives, especially with respect to the receipt of dividends and the repayment of capital when the organization is liquidated. In other words, preferred stockholders receive dividends first, and companies return capital before liquidation at the time of liquidation.

Preferred stockholders also enjoy a fixed dividend guarantee that ordinary shareholders do not have. Therefore, investors looking for low-risk investment options can choose to buy preferred stock in the company.

However, preferred stock is generally not allowed to participate in the interests of the organization beyond its fixed qualifications. Therefore, if a company raises its dividend rate in proportion to its net profit, preferred shareholders will not enjoy the increase, only ordinary shareholders.

In addition, preferred stocks usually do not have voting rights. For these reasons, preferred stocks are usually not a popular option among investors.

Nevertheless, the type of stock under the preferred stock is –

Redeemable and non-redeemable preferred stock

In the case of redeemable class of shares, the issuing company and such shareholders may allow the company to redeem or repurchase those shares in a later period, either after a certain period of time or at a future date. I accept. Redeemable shares depend on who can exercise the repurchase clause (shareholder or organization). Therefore, non-redeemable stock is the exact opposite of redeemable stock.

2. Preferred stock of convertible and non-convertible bonds

Alternatively, stock types can be categorized based on whether there are conversion provisions. To that effect, holders of convertible preferred stock may convert their shares into shares if certain conditions are met. Conversely, holders of non-convertible preferred stock are not entitled to that provision.

3. Participatory and non-participating preferred stock

Holders of participating preferred stock have the right to participate in the interests of the company once the company allocates dividends to common shareholders. Therefore, if a company's net profit is significantly higher, such shareholders are in a position to receive a portion of such profit. On the other hand, holders of non-participating shares are only entitled to fixed dividend payments. The latter is a more common variant.

4. Cumulative and non-cumulative preferred stock

If the company does not pay dividends on preferred stock in a particular year, such dividend eligibility will be carried over to the next year if it is cumulative stock. Conversely, for non-cumulative preferred stock, the dividend will not be carried forward unless the organization pays a dividend in a particular year.

Directors

The term director is the position given to senior management in a company or other large organization.

The term is commonly used in two different senses, and its choice is influenced by the size and global scope of the organization and its historical and geographical context. In addition to this, the term is used with reference to various technical (legal) definitions specific to the corporate governance laws of individual countries.

Therefore, the director can be one of the following:

A person appointed as Chief Executive Officer of the company itself (Managing Director) or key functions (Finance Director, Operations Director, etc.). In this case, the job title resembles and replaces "executive". The title, which can be considered the British English meaning of the word.

A person in a group of managers who lead or oversee a particular area of the company [1]. This may be considered the meaning of an American English word.

A person who serves as a "director" in the legal sense and has certain legal obligations and responsibilities for the management of a company appointed by the board of directors.

Within a company that uses this term in the latter sense (American English), directors are typically dispersed across different business functions or roles (e.g., Human Resources Manager). [2] In such cases, directors typically report directly to the Vice President or CEO to inform them of the progress of the organization. Larger organizations may also have "assistant" or "deputy" directors. In this context, director usually refers to the lowest level executive in an organization, but many large companies use the title of Associate Director more often.

When used by a company that uses a title director in the British English sense, being called an "executive director" generally means that the owner is appointed to the board of directors in a legal sense and has significant liability. I will. Financial interests in the business. In contrast, in the American English context, an "executive director" is roughly equivalent to a vice president or senior director in some businesses.

Such companies may have "Regions" and / or "Area Directors", and the positions of Regional Directors tend to be organized by location and used by companies with departments underneath. Shows almost full responsibility for the work of a particular country.

Who can be a director?

Managing your business is not an easy task. Therefore, there are qualification criteria for a person to become a director.

Only individuals can be directors of the Company. Non-individuals are not eligible to become directors.

In addition, minors cannot be directors of the company because they are not eligible to obtain a DIN and cannot provide valid consent as a director.

At least one director of the company must be a resident of India.

In addition, the person acting as a director would be:-

Of a healthy spirit

Can make a contract

I'm not a bankrupt person.

Qualifications of directors:

This law does not stipulate the qualifications of directors for their studies or shareholding. There is a widespread misconception that directors must always be shareholders of the company. However, if this is not the case, the directors do not have to be shareholders of the company unless otherwise provided in the company's provisions. However, articles usually provide directors with a specific qualification share.

1. Eligible stocks:

If the company article provides so, follow the seconds. 270, Directors are required to acquire qualified shares as follows:

(I) Directors must acquire eligible shares within two months of their appointment, unless they already hold shares.

(II) When the provisions of the provision requiring that the qualified shares be held or acquired within two months before assuming the post of director become invalid.

(III) The nominal value of one Eligible Share must not exceed Rs. 5,000.

(IV) Bearer stock warrants are not counted for the purpose of eligible stock.

(V) Directors will automatically cease to be Directors if they do not acquire eligible shares within two months of their appointment, or if they do not own such shares at any time thereafter.

(VI) Directors must not acquire shares as a gift from the promoter. He has to pay for his qualified shares.

(VII) The director is obliged to hold eligible shares in his own rights. Also, if you are not listed as a trustee in the membership register, it is sufficient to retain it as a trustee.

(VIII) Unless otherwise specified in the article, joint holding is sufficient to qualify shares.

(IX) A person who serves as a director of a company without holding qualified shares after the expiration of the two-month period from the date of appointment retires from the director and Rs. 50 people every day from the expiration date of 2 months to the day of continuing to be a director. [Seconds. 272]

(X) The above provisions regarding eligible shares do not apply to privately held companies that are not subsidiaries. 273]

2. Written consent:

Any person proposed as a candidate for a director must, if appointed, sign and submit to the company an agreement to act as a director (Article 264).

However, the following persons do not need to submit such consent.

(I) Persons who retire as directors due to rotation or other reasons.

(II) A person who has notified a candidate for a director at the company's registration office pursuant to paragraph 2. 257.

However, newly appointed Directors shall not act as Directors unless they sign within 30 days of their appointment and agree to the Registrar to act as such Directors.

You do not need to submit such consent for the following persons:

(I) Directors were reappointed after retiring due to rotation or shortly after their term of office expired.

(II) Additional or alternative directors, or persons who fill temporary vacancies in the duties of directors under Article 262, or who have been appointed as directors, or who have been reappointed as additional or alternative directors shortly after the expiration of their term of office. Person.

(III) A person appointed as a director based on the first registered articles of incorporation.

Only those who wish to become new directors must agree to act in that way. Those who are already directors and will retire at the Annual General Meeting of Shareholders but seek immediate reappointment are exempt from submitting consent.

The provisions of this section do not apply to independent private sectors.

3. Individuals only: Can be a director:

No company, association, or company can appoint a director of a company. Only individuals can be appointed as directors.

Disqualification of director:

The situations in which no one can be appointed to the board of directors of a company are listed in Section 274. According to this section, no person can be appointed to the board of directors of the company in the following cases:

(I) The court of jurisdiction has found that he has an unhealthy spirit, and the finding is valid.

(Ii) He is an unpaid bankrupt.

(Iii) He has filed for a bankruptcy ruling and the application is pending.

(Iv) He has been convicted of morally disruptive crimes and sentenced to more than six months in prison, less than five years after his sentence expired.

(V) He did not call for shares in the company he holds for six months from the last day the payment was confirmed.

(Vi) He was disqualified by a court order under paragraph 2. Crime related to promotion, formation or management of the company, or fraud or fraud related to the company 203.

The central government may remove the disqualifications listed in (iv) and (v) above by notification in the official bulletin. [Sec.274 (2)]

In addition to the above disqualification, there is another disqualification. That is, "must not be a minor or elderly person with a disability", but must be a person capable of contracting.

Private companies that are not subsidiaries of public companies may provide additional reasons for disqualification in their provisions.

Authority and obligations of directors

The Companies Act 2013 defines the powers and obligations that directors should be aware of when acting on behalf of the company. Articles 179 and 166 of the Companies Act 2013 provide for the authority and obligations of company directors, respectively.

Authority of directors

According to the Companies Act 2013, the board of directors of a company has the following authority in the company:

Ability to call stocks for unpaid money

Invoke a conference based on suomoto.

Issue shares, bonds, or other products about us.

Borrow and invest for the company

Approve financial statements and board reports

Approve bonuses to employees

Declare dividends at the company

Authority to grant a loan or give a guarantee on a loan

Approve the repurchase of securities

Approve merger / merger / acquisition

Diversify the company's business

Duties of directors

As a visitor to the Companies House website, you may have assumed the role of new director of the company. Congrats! However, whether your entity is large or small, you now have many important legal obligations associated with being a director.

These seven legal definitions are the obligations of each director to the company, and being a director of the company forms the basis of everything.

Your company's constitution

The first of these obligations is that the directors must act within their authority under the constitution of the company. The most important part of the company's constitution is the articles of incorporation. These are a set of rules that are important to your company and your board of directors.

You may have used a model article available to a private or public company when you registered your company. Alternatively, you may have created your own tailored article, usually with the help of a legal counsel.

As a director, it is important to be familiar with the Articles of Incorporation, as the Articles of Incorporation can constrain decision-making in certain ways. If you go beyond your power, the relevant decisions may be revoked and you may even have to compensate the company for the resulting financial loss.

ii. Promote the success of the company

The second primary duty of the directors of a company is to promote the success of the company. This is probably the best known of the seven obligations.

Starting in early 2019, the new reporting requirements mean that large companies (more than 250 employees) need to explain in their annual reports how they have fulfilled this obligation.

The obligation states that the directors must act in good faith in a manner that they consider most likely to promote the success of the company for the benefit of all members (shareholders). When making decisions, directors also need to consider the possible consequences for a variety of stakeholders, including employees, suppliers, customers, and communities. We also need to consider the environmental impact, the company's reputation, the long-term success of the company, and all shareholders (including minority shareholders).

The obligation to promote a company's success may seem like an obvious task for directors. However, this has many implications.

Board decisions can only be justified in the best interests of the company, not on the basis of what works best for anyone else, such as a particular executive, shareholder, or other entity. However, directors need to be broad-minded in how they value their interests, taking into account other stakeholders, rather than adopting a narrow financial perspective.

iii. Independent judgment

The third major obligation requires directors to exercise independent judgment. Directors aim to develop their own informed views on the activities of the company.

Directors must not simply be representatives of executing the orders of other parties (such as major shareholders). In addition, we should not avoid the responsibility of making independent decisions that rely on the knowledge and judgment of other directors and experts.

Directors need to develop their own views, which can require some effort. This is especially true if you are not yet familiar with the important aspects of your company's activities.

iv. Exercise reasonable attention, skill, and diligence

There was a time when directors could be appointed purely for their name and reputation, without expecting them to actually work as directors. That was over because the directors are obliged to exercise reasonable skills, attention and diligence in their role.

Benchmarks are moderately hard-working people with the general knowledge, skills, and experience that you can reasonably expect from those who perform the director's duties. Also, directors with specific specialized training or skills (such as lawyers and accountants) are kept at a higher level of related issues than unqualified colleagues.

v. Conflicts of interest and personal interests

The remaining three legal obligations relate to the need for directors to avoid or manage conflicts of interest that could affect objectivity.

In the event of a situation that imposes multiple claims on the attention and loyalty of a director, it is imperative to disclose them to other board members. It is then up to the other non-competitive board members (or, in some cases, shareholders) to decide how to manage or approve the competition and maintain the integrity of the board's decision-making process.

Examples of conflicts of interest include situations where a director has a business or personal relationship with an individual or group that is affected by the activities of the company. It may also be related to situations where directors may be considering personally using the property, information, or opportunities that belong to the company.

Gifts and benefits from third parties are also potential threats to the director's objectivity. Most importantly, the Board of Directors has a legal obligation to disclose direct or indirect interests in any proposed or existing transaction or arrangement with the company.

vi. Keep a record

How can directors prove that they have fulfilled these legal obligations? One of the key purposes of board minutes is to provide a record of the board's decision-making process.

By law, these minutes must be kept for 10 years. A few years later, it can be difficult to remember whether you have fulfilled your board's obligations with respect to important decisions. Minutes can provide important evidence of what you have done – something that might cause you to be grateful.

vii. About the Management Association

Dr. Roger Barker is Head of Corporate Governance at the Management Association (IoD) and Managing Director of Barker & Associates, a corporate governance advisory firm.

Founded in 1903, IoD was awarded a letter of patent in 1906 to support, represent and set standards for business leaders across the country. Their purpose is to ensure that the views of business leaders are taken into account when the government is considering policies and laws, or seeking the views of the broader business community.

IoD is made up of over 30,000 entrepreneurs, CEOs, directors and decision makers in all UK sectors and regions.

Legal status / status of directors:

This law does not define the status / status of directors, and it is difficult to define the exact legal status of directors of a company.

Directors have been called trustees or management partners of a company, but they are not really anyone. Directors may be considered agents, trustees, or management partners for specific moments and specific purposes.

Bowen, L.J. Said: However, each of these expressions is not used to cover their powers and responsibilities, but to indicate useful perspectives that they may be considered for now and for a particular purpose. ..

The legal position of a director can be better explained in the following ways:

1. Position of director as trustee:

(I) Legally, directors are not trustees.

Legally speaking, directors are not fiduciaries of the company. In the case of Smith vs. Anderson, James LJ said: He stands in a trustee relationship. The title of director is the title of a paid employee of the company. A director never makes a contract for himself, but he makes a contract for himself, the company he is a director of or in which he operates. "

From this point of view, directors are not the trustees of the company because they are not the legal owners of the company's property.

(Ii) Directors as fiduciaries of company property and money:

Directors, to be precise, are not trustees, but are trustees of the company's money and property and are obliged to treat the capital under their control as a trust. They must act in good faith and use their power for the benefit and benefit of the company.

(Iii) Directors as trustees of delegated authority:

Directors are trustees of delegated authority. They must use these forces honestly and for the benefit of the company as a whole.

Examples of such forces are:

(A) The ability to use company funds.

(B) Authority to declare dividends at the General Assembly.

(D) Authority to confiscate shares.

(E) Ability to receive telephone payments in advance.

(F) Authority to approve the transfer of shares.

(G) Ability to accept abandonment of shares.

(H) Authority to issue and allocate unissued shares of the company.

(Iv) Directors who are not trustees of shareholders:

It should be noted that directors occupy a trustee relationship only with the company, not with the individual shareholders. They are not trustees of any particular shareholder.

In the case of Percival vs Wright, "The directors bought shares from shareholders while negotiations were underway to sell the company at a very high price. They did not disclose this fact to shareholders. Was unable to deny the contract for that reason. "

(V) Directors who are not trustees of outsiders:

Directors are not trustees of others who enter into contracts with the Company.

The position of a director as a trustee can be simply stated as follows.

(I) Not a trustee in the legal sense.

(Ii) They occupy a trustee position with respect to the company and are considered trustees with respect to the company's property and money.

(Iii) They are also trustees with respect to the authority delegated to them. They must exercise these powers honestly for the benefit of the company, and if any, they are responsible for the secret interests created by them.

(Iv) There is no trust from individual shareholders.

2. Positioning of directors as agents:

A company that is an artificial person cannot manage its own business, but the management of the company is entrusted to a human institution called a director. They are the elected representatives of shareholders. They run businesses on behalf of shareholders and are sometimes referred to as company agents.

In the case of Forger son vs. Wilson, Cairns L.J. described the position of the board as follows: The company itself cannot act on its own because there are no people. You can act "only through the directors". For these directors, whenever the agent is liable, it is just the usual case of the person and the agent. Directors are responsible. If the liability is attached only to the principal and the principal, that liability is the responsibility of the company. "

At Great Eastern Railway vs. Turner, the directors were supposed to represent transactions on behalf of the company.

Directors must act in the name of the company and within their authority. If a director enters into a contract that exceeds that authority but is within the authority of the company, the company can approve it like any other principal.

If a director enters into a contract that infringes the authority of the company, the company cannot approve it and neither the company nor the director is liable for it. However, directors may be held liable for breach of the implied warranties of authority.

"But" it is incorrect to say that a director is an agent for a company. The agent is not elected but is appointed. Second, the agent does not have independent authority, and the directors have independent authority over certain matters.

3. Positioning of directors as managing partners:

Directors are called managing partners because they are responsible for managing and managing the business of the company, but are usually important shareholders of the company.

However, a director is not a partner in the sense of ordinary partnership law as long as the liability of the partner is unlimited, but the liability of the director as a member is limited to the value of the shares he holds (unlimited company). Except for the case of)). Moreover, unlike partners, directors do not have the authority to bind other directors or shareholders.

4. Position of directors as officers:

Under Sec. Under Article 2 (30) of the Companies Act, directors are officers of the company. As officers, they may be held liable if the provisions of the Companies Act are not fully complied with.

5. Positioning of directors as employees:

Directors may be considered employees of the company because they work under a special service contract with the company and are paid accordingly.

6. Positioning of directors as an institution of the company:

Directors have also been treated in judicial decisions as the institution of the company for which the company should be responsible for the actions of his limbs, just as a natural person is responsible for the actions of his limbs.

At Bath vs. Standard land, Neville J. said, "The board of directors is the brain, the only brain of the company, and the company can and acts only through them."

In light of the above discussion, Gessel states:

According to LJ Bowen, "Directors are sometimes described as agents, trustees, and management partners, but each of these terms is not an authority or irresponsibility, but a perspective that may be useful at this time. It is used as an indicator and is considered for a specific purpose. "

Therefore, from the above discussion, directors are not agents, trustees, management partners, officers, or employees of the company, but they are in the position of trustee to the company regarding their power and company property. It's clear.

Resignation by director:

The Companies Act does not provide for the resignation of directors. If the company's Articles of Incorporation provide for the right to resign at any time, the Director may resign in the manner provided for in the Articles of Incorporation. If the text does not provide, directors may submit a resignation by sending a reasonable notice.

If the article does not provide for resignation, it is fully resolved that a resignation once made will take effect immediately when the intention to resign is revealed (T. Murari vs. State 1976).

The resignation may be verbal.

After a director resigns, he / she cannot resign without the consent of the director or the company.

It should be noted that the resignation of a director does not release him from any responsibilities and obligations he may have incurred during his tenure.

General meetings and Proceedings

Annual meeting

The Annual General Meeting of Shareholders (AGM) is the annual meeting of shareholders or shareholders, members of a company, company or organization. The annual meeting is held annually and is mandatory for everyone. Described in AGM features such as company account reviews, audited account approvals, elections, and accounting records for the past year. Discuss in more detail the requirements and issues discussed at the Annual Meeting.

Annual meeting

In accordance with the Companies Act, the annual general meeting of shareholders must be held once a year by all companies. There should be no more than 15 months gap between the two AGMs.

However, the company's first annual shareholders meeting may be held on any date within 18 months of the company's date of establishment. The annual meeting helps members understand the growth rate and potential for improvement of the company.

AGM provides insight into which steps made the company more successful and which steps caused the losses. This helps members and the board decide on future course of action. AGM must be held on business days.

If the government declares a holiday on the day of the meeting, it will be considered a business day by the members attending the meeting. The annual general meeting of shareholders can be held at the company's registered office.

Legal requirements for holding an annual meeting

Legally, a 21-day notice period must be given to all members prior to the meeting. However, there are exceptions to this rule. If all voting members agree, the meeting may be held earlier. In addition, the following documents will be sent together with the notification. The Articles of Incorporation, the Articles of Incorporation of the company, and the jurisdiction specify the rules governing the annual meeting.

A copy of the company's annual accounting

Report of directors regarding the position of the company in a particular year.

Report by the annual accounting auditor.

Members can use proxies when they are away. The agent does not have to be a member of the company. However, the proxy form must be submitted to the company at least 48 hours before the meeting.

Quorum of the annual meeting

Unless otherwise stated in the company's text, the quorum for the Annual General Meeting of Shareholders is as follows:

Public Company – Must be attended by at least 5 members.

Other companies – At least two members must be present within 30 minutes of the start of the meeting.

Challenges at the annual meeting

The functions of a business that takes place at a typical annual meeting are:

Declaration of dividends between shareholders

Review of annual accounting

Discussion of directors' reports and auditors' reports

Appointment and determination of remuneration for Audit & Supervisory Board Members

Appoint a successor director in place of the existing retired director

To address issues other than the five above, special notices regarding this issue will be provided to members prior to the meeting. This is sent with a notification to call the meeting.

Meeting types

There are two types of general meetings: annual general meetings of shareholders and extraordinary general meetings of shareholders.

Annual meeting

Private sectors do not have to own AGM, but some company articles drafted when there was a statutory requirement to own AGM stipulate that they will continue to own AGM. In such cases, the company must continue to comply with the article until they are corrected. There is nothing to stop a company from holding an annual shareholders meeting, even if it is not required.

AGM's normal business is to receive annual accounting and directors' reports, and in some companies it is to elect directors and / or auditors. Even if there is no annual shareholders meeting to discuss the account, it must be distributed to shareholders.

Extraordinary general meeting

The Extraordinary General Meeting (EGM) is a meeting other than the Annual General Meeting (AGM). Directors may convene a general meeting as needed (CA 2006, sec302) and must convene a meeting of members who hold one-tenth of the voting rights or one-tenth of the voting rights (sec303). -sec304). If the director does not call the meeting when needed, the member can call the meeting himself (sec305). If everything else fails, the court can call the meeting (sec306).

Procedure

These vary from company to company and are determined by the interaction of company law and articles.

There is a statutory rule that manages the duration of notifications that must be given for a meeting (sec307-sec313). The minimum retention period for all types of meetings is currently 14 days (sec307), but company articles may require longer periods, with a majority (90 or 95%, member articles).

This law is the right of members to distribute statements (sec314-sec317), quorum (sec318), chair (sec319-sec20), voting procedures (sec321-sec322), corporate representatives (sec323), agents (sec324-sec331). It stipulates the rules regarding.), Postponement (sec332) and electronic communication (sec333). The statutory provisions should be read along with the company article. Company articles are often based on either model articles or Table A, depending on whether they were created before or after January 10, 2009.

Attendance and speech at the General Assembly

(1) During the General Assembly, a person may exercise his right to speak at the General Assembly if he is in a position to convey any information or opinions he has about the business to all who attend the meeting. meetings.

(2) At the general meeting, voting rights may be exercised in the following cases.

(A) The person may vote for a resolution to vote at the meeting during the meeting,

(B) That person's vote can be taken into account in deciding whether such a resolution will be passed at the same time as the votes of all others attending the meeting.

(3) Directors may make any arrangements deemed appropriate so that those attending the General Meeting may exercise their right to speak or vote at the General Meeting.

(4) When deciding to attend the General Assembly, it is not important that two or more members attending are in the same place as each other.

(5) If two or more people who are not in the same place as each other have (or should have) the right to speak and vote at the meeting, and in such circumstances, attend the General Assembly. I will. be) You can exercise them.

Adjournment

(1) If a person attending the General Assembly does not make up the quorum within 30 minutes of the scheduled start time of the General Assembly, or if the quorum no longer exists during the meeting, the Chairman of the Meeting must postpone it.

(2) The chair of the meeting may postpone the general meeting where a quorum exists in the following cases.

(A) The meeting agrees to postpone or

(B) The chair of the meeting may need to postpone it to protect the safety of those attending the meeting or to ensure that the work of the meeting is carried out in an orderly manner.

(3) The chairman of the general meeting shall postpone the general meeting when instructed by the general meeting.

(4) When closing the General Assembly, the Chairman of the Conference must-

(A) Specify a time and place to be postponed, or state that it will continue at a time and place determined by the Director.

(B) Consider the instructions given by the meeting regarding the time and place of deferral.

(5) If the deferred meeting continues for more than 14 days after being postponed, the company must give at least 7 days of explicit notice (that is, the date of the postponed meeting and that date). except). Notification will be made)-

(A) To the same person who needs notification of the company's general meeting, and

(B) Include the same information that needs to be included in such notifications.

(6) If the adjournment is not held, it is prohibited to trade at the adjournment general meeting, which could not be properly traded at the meeting.

Minutes of the general meeting. 21.1 No commercial transactions shall be conducted at any General Assembly unless a quorum exists. Member (if such member is an individual, exists directly or by an agent, or if such member is a legal entity or other non-natural person, its officially authorized representative or agent Depending on), the meeting will be quorum. 21.2 people can attend the General Assembly using conference calls or other communications equipment. This allows everyone in the meeting to communicate with each other. Participation in a general meeting in this way is treated as direct attendance at that meeting. 21.3 You have the right to receive, attend and vote for the General Assembly. For the time being, a written resolution (special resolution) signed by or on behalf of all members (on one or more counterparts). (Including) (or a company) or any other non-natural person signed by a formal authorized representative) is valid as if a resolution was passed at a formal convened and held general meeting of the company. And shall be valid. 21.4 If a quorum does not exist within 30 minutes of the time specified for the start of the meeting, or if the quorum does not exist during such a meeting, the meeting shall be postponed to the same day of the following week at the same time. , And in a postponed meeting, if the quorum does not exist within 30 minutes of the time specified for the start of the meeting, the existing member shall be the quorum. 21.5 Directors may appoint a person to chair a general meeting of the company at any time prior to the time specified for the start of the meeting. If the director does not make such an appointment, a chairman may be appointed. The board of directors shall chair such a general meeting. If there is no such chair, or if he does not attend within 15 minutes of the start of the meeting, or is not willing to act, the attending director appoints one of those numbers to chair the meeting. Shall be. 21.6 If there are no directors willing to chair the meeting, or if there are no directors within 15 minutes of the time specified to start the meeting, the attending members shall choose one of the numbers to chair the meeting. I will. 21.7 The chair may save sample 1 sample 2 copies if instructed to do so with the consent of the meeting where the quorum exists.

Minutes of the general meeting. 10.1 Special business. All businesses at the General Meeting shall be deemed to be special businesses, except for the review of financial statements and reporting of directors and auditors, the appointment of directors, the appointment of auditors and many other businesses under this section. Traded in a business under consideration at the Annual General Meeting of Shareholders or reported by a Director. 10.2 Quorum. Except as provided in Article 10.4, the quorum of the General Assembly shall be attended by two individual members, an agent representing the members, or individuals, and aggregate at least 10% of the issued shares of the company. Must be a formal approved representative of a corporate member representing the shares to be held. You have the right to vote at that meeting. 10.3 Quorum requirements. No work other than the election of the chair and the postponement or termination of the meeting shall be traded at any General Assembly unless there is a quorum at the beginning of the meeting, but the quorum does not have to be present throughout the meeting. 10.4 Lack of quorum. If no quorum exists within 30 minutes of the time specified for the meeting, then the meeting looks like this:

Minutes of the general meeting.: The majority of the Finance Councillors present shall appoint an individual to chair at the Membership Assembly. 3.2 Moving and Seconding Resolutions: Each resolution proposed at the General Assembly of Members shall be presented or read by the moving, seconded, and if officially moved and seconded, placed before the meeting by the Chair and then General Assembly. 3.3 Withdrawal and Amendment of Resolution: After the proposed resolution is submitted by the Chair before the General Assembly, it is considered to be owned by the attending members, but withdrawn or amended by the resolution passed by the attending members. be able to. The withdrawn motion will not be defeated or executed. Voting in favor of a resolution that amends a proposed resolution shall have no effect on passing the amended proposed resolution, and the amended proposed resolution shall be open for consideration. 3.4 Call for Voting: The Chair may call for a vote on the resolution after a reasonable review period of the resolution submitted prior to the General Assembly. 3.5 Voting for Resolution:

Auditor

Definition: The auditor is the organization that organizes the audit process. He is the person who prepares the audit report after careful consideration of the company's accounting records and reports that form the impressions / assumptions about the fairness and reliability of the financial statements.

Auditor qualification

The law does not recommend specific qualifications for auditors if there are ownership concerns, but companies require the following qualifications:

According to the Companies Act 2013, Chartered Accountants with a certificate of practice from the Institute of Chartered Accountants of India can be qualified auditors of the company.

A person holding a certificate showing that he or she is designated to act as an auditor in accordance with "Part B" of the 1953 state law.

Auditor qualities

Some relevant qualities that an auditor should have are:

Sovereignty: Auditors should not make decisions based on the will of clients or others, but should be free from alleged sympathy and prepare management financial statements in a fair manner.

Honesty: Auditors must maintain integrity at all times while performing their duties.

Conversational skills: In the process of managing the audit process, the auditor needs to work with a large number of executives and stakeholders. Therefore, he must have good conversation skills.

Maintaining Confidentiality: Auditors must maintain the privacy of their books unless approved by a client or enforced by law.

Expertise: Auditors need to be aware of the client's business and current financial situation, as well as legal awareness such as tax, corporate and partnership laws.

Sensitivity: Auditors need to deal with different people while performing their duties. He has to deal with various clients as well as his subordinates. Therefore, he must have the intelligence to handle them in any situation.

Consistent skills: Auditors need to be able to analyse and explain problems so that they can handle them appropriately when faced with them.

Auditor responsibility

The auditor's responsibilities are as follows:

Examination: A mutual examination of the company's accounting system and internal control system is required to protect the adequacy of the records.

Book Checks: The books should be thoroughly checked by the auditor to ensure their arithmetic accuracy.

Documentation: Proper documentation of the record should be maintained by the auditor after investigating the documented portion of the evidence. It helps him gather the right information about business transactions.

Fully built-in: The auditor must properly analyse whether all entries are recorded in the books during the preparation of the financial statements.

Customary: Check that the books or financial statements must not contain fraudulent or incorrect entries.

Asset and Liability Certification: Asset and Liability Verification to Confirm the Existence, Valuation, Integrity, and Financial Statement Disclosure of Assets and Liability.

Legal Consent: For general insurer and bank audits, the auditor ensures that the financial statements comply with compatible legislation.

Disclosure: The auditor examines whether the financial statement data is properly approved. He will disclose his views through his audit report after the audit process is complete.

Facts and Integrity: The auditor guarantees the entire financial statement and provides an accurate and fair view of the company's profit and loss, assets and liabilities in an appropriate format.

Auditor's obligations

In addition to the responsibilities that the auditor must fulfil certain obligations, they are:

1. Obligation to prepare an audit report

a. Explanation to Members: Auditors need to generate statements for members, but they are not forced to send reports to all members.

b. Audit Report Review: The report produced by the auditor will be read at the company's general meeting. The report shall be open to all members for viewing.

c. Audit Report Capabilities: The audit report must reveal the accounts maintained by the auditor, namely the income statement, the company's balance sheet, and the records attached to these accounts.

2. Obligation to make competent disclosures in audit reports

Report on Appropriate and Fair Opinion: The auditor states in his impression and, to the best of his knowledge, whether to give to the explanation given to him, the balance sheet and income statement give: Suppose.

Legal instructions; and

A genuine and fair view of the company's situation.

b. Report on Key Allegations: The audit report should state that:

Whether he has collected all the material and justification.

Appropriate books are kept, whether from his point of view or not.

All accounting standards, whether in his view or not, are gathered together.

Whether the director has lost the qualification to become a director.

c. Report on CARO: The auditor must address all the factors specified in CARO.

d. Report on the exact Inquisition: This report explains:

Whether the loans and advance payments that the company has built to aid security are fully acquired, and the circumstances in which they are formed, are not biased towards the concerns of the company or its members.

Indicates whether the entry book is at a disadvantage to the company's interests.

The report for a particular inquiry should state whether the retail price of shares, bonds, and other guarantees held by the company is below the purchase price.

3. Obligation to give a sense of accomplishment

The performance aspects of an audit report must be unquestionable to the general public. Qualifications should provide a complete explanation, not just the basis for the impression of an inquiry.

Whenever possible, the auditor should evaluate the development of financial statement capacity when it is important.

It indicates whether he cannot achieve accurate quantification of the outcome of the qualifications that may use the authorities' estimates, or whether he cannot show the meaning of not assessing the effectiveness of the requirement.

4. Obligation to approve audit report

Audit reports or other records that are required to be signed or verified by the auditor may be approved by:

The person selected as the company auditor.

A company selected as an auditor or by a partner of a company exercising in India.

Winding up/Liquidation

Liquidation is the process of liquidating a company's operations in order to dissolve the company and end the company's survival. During the liquidation process, the company's assets and property are managed for the benefit of the company's members and creditors. An administrator, called a liquidator, realizes assets, pays debts, and ultimately distributes surpluses among members / creditors, in accordance with the rights set out in the company's articles.

In other words, liquidation is a legal process for dissolving a company's business. The terms "clearing" and "clearing" are used interchangeably. However, there are various methods of liquidation, such as voluntary liquidation of members, liquidation of creditors, and liquidation by courts.

This article has dealt with practical aspects related to the voluntary clearing of members.

Steps of winding up

If your company is liquidated, follow these steps:

The administrator is commonly referred to as the liquidator and is appointed in the context of the liquidation or dissolution of the company.

The liquidator controls the company, collects assets, pays the company's liabilities, and finally distributes the surplus to the members according to their rights and liabilities.

The company has no assets or liabilities at the end of liquidation or liquidation.

The dissolution of a company occurs when the company's assets and liabilities are completely resolved.

In the context of liquidation, the company's name is removed from the list of companies and its identity as another legal entity is lost.

If the company is unable to pay its debt, or if the debt it has assumed is more valuable than the assets it owns and there is no agreement with the creditor, the company is considered bankrupt and is subject to liquidation or liquidation.

If a bankrupt is obliged to pay a natural person, he can ask the court to issue a compulsory liquidation order to the company.

Upon issuance of the order, the court will notify the official recipient, who will eventually become the liquidator.

The official recipient will notify the creditor and conduct an interview with the company's directors regarding the status of the liquidation.

If the official recipient believes that the company has sufficient assets to pay the creditor, the official recipient seeks the appointment of a bankruptcy practitioner as a liquidator.

The appointment of a liquidator is made by the creditor calling a creditors' meeting to elect a liquidator by voting or by requesting the Secretary of State to nominate him.

If there are no assets left, the official beneficiary will be the liquidator.

You must be liable for a minimum of 750 Indian Rupees without dispute before requesting liquidation.

Other operating companies and individuals may request a liquidation order for the company.

Bankruptcy Services, a government agent, is an investigative agency investigating the liquidation of a company.

The Insolvency Service investigates financial failures and misconduct of individuals and businesses.

Official recipients work for bankruptcy services.

Official recipients investigate when and why an individual went bankrupt and find the main cause behind the company's liquidation.

The clearing process depends on the company's registration status, that is, whether the company is registered or unregistered.

When a company's liquidation is processed in court, the liquidator is called the official liquidator.

Official liquidators act through a reporting system approved under the supervision of a court.

The power of the liquidator

The administrator is commonly referred to as the liquidator and is appointed in the context of the liquidation or dissolution of the company. The liquidator controls the company, collects assets, pays the company's liabilities, and finally distributes the surplus to the members according to their rights and liabilities.

Below are the general powers of liquidators-

Explain or defend a proceeding, litigation, prosecution, or proceedings on behalf of the company.

Carry out the business of the company as long as it is beneficial to the company.

Payment to creditors.

Compromises and arrangements with creditors.

May endanger all calls, debt, and debt and bring additional debt to the company.

By conducting public or private contracts, you have the authority to sell all of your company's mobile and immovable assets and transfer them to a single person or to different people in a parcel.

Use your company's seal and name to perform all actions and actions necessary to settle receipts and documents.

Create, approve, create, and approve bills of exchange or promissory notes on behalf of the company in the name of the company.

Increase the security of your company's assets and money

Compulsory winding up

When a creditor of a bankrupt company requests a liquidation from the court, a forced liquidation will take place. If the company goes into liquidation, the court will appoint a liquidator for the liquidation.

The liquidator's main purpose is to raise as much money as it needs to pay the creditors.

The company then dissolves and its name is removed from the list of companies in the registrar's office.

The surplus will be distributed to the shareholders of the company.

This legal process ends with the company's name removed from the list of companies in the registrar's office.

After the name is deleted, the company no longer exists.

Clearing includes:

All contracts of the company, including individual contracts, are completed, transferred, or terminated. The company can no longer do business.

All open legal disputes will be resolved.

All assets of the company will be sold.

The money to pay to the company, if any, will be collected.

The collected funds will be distributed to the creditors.

Surplus funds remaining after all transactions have been distributed to shareholders.

Consequences of winding up

The most important results of a company liquidation are:

Regarding the company itself

Liquidation does not completely eliminate the existence of the company.

The company will continue to be a legal entity until it is dissolved.

All ongoing businesses of the company are managed by the liquidator during the liquidation phase.

To our shareholders

Contributors-New legal liability arises.

All transactions of liquefied shares made without the approval of the liquidator are called invalid.

Regarding creditors

Creditors cannot file a proceeding against the company without the consent of the court.

If the creditors already have a decree, they cannot proceed with enforcement.

They need to explain their claim and justify their claim to the liquidator.

Regarding management

The appointment of a liquidator tends to suspend all authority of directors, chief executive officers and other officers.

Members are only entitled to notify the resolution upon dissolution of the company and to appoint a liquidator.

Regarding the disposal of company assets

If the disposition is not approved by the court or liquidator, all dispositions of the company's assets will be void.

Situations where the company may be liquidated

Circumstances in which a Company May Be Wound Up

The company may be liquidated by the court in which the petition was filed under the following circumstances-

A special resolution has been passed by the company that the company will be liquidated by the court.

The company did not report a statutory report at the registrar's office.

The company must not start its business within one year of its establishment.

The number of members is less than 7 for public companies and 2 for private companies.

The company's debt cannot be paid by the company.

The referee is just fair to dissolve the company.

The company is unable to file a balance sheet or annual revenue for five consecutive fiscal years.

The company acted against the integrity and sovereignty of the country.

Application of liquidation

The application for liquidation must be submitted together with the request for liquidation by the following entities.

The company

Company creditor or creditor

One of the contributing companies

Person authorized by the central government

State or central government

The court will proceed upon receipt of the petition by following the procedures described in Section 439-481 of the Companies Act.

Liquidation of the company by the court

If the company's liquidation resolution is passed internally, the court may order the voluntary liquidation to continue.

However, the court continues to oversee the liquidation.

The freedom and freedom of creditors, contributors or others applying to the court at such times is restricted by the court.

A petition for liquidation must be filed with the court for court oversight of the liquidation.

Liquidation of a company by court order is also considered compulsory liquidation.

Article 305 of the Ordinance justifies the following situations in which the court may liquidate a company based on a petition filed with the court.

If the company decides to liquidate the company to court by a special resolution.

If the company is found to be in default in submitting a statutory report, holding a statutory meeting, or holding two annual meetings for the second consecutive year at the registrar's office.

If the company does not start its business for one year after its establishment, or if it suspends its business for one year.

When the number of members is less than 2, 3 and 7 for private, public and listed companies, respectively.

When the company is unable to pay its debt.

If the company is-

Performing or complying with illegal and fraudulent activities

Conducting business activities not permitted by the memorandum of association

Perform oppressive business for members involved in company promotion

It is by default in running and maintaining a proper account, or is managed by someone involved in fraudulent and fraudulent activity.

It is governed by those who did not work in sync with the company's basic articles of incorporation or who did not comply with the registrar and court.

g. If a company that is a publicly traded company does not emphasize such behavior.

h. If the court's opinion is to liquidate the company, or

A complete deadlock in the management of the company

Failure of the company's main purpose

Ordinary loss

Repressive or aggressive policies of the majority of shareholders

Establishing a company intended for fraudulent or illegal purposes

Public interest

i. If the company loses membership.

Liquidation procedure of the company

A special resolution must be passed by the company in the context of liquidation, and the consent of 3/4 of its members is required for the liquidation to be carried out by the court.

You need to make a list of your total assets to make sure your company is no longer able to repay its debt.

You need to make a list of creditors.

In the context of default payments, the creditors of the company must make a decision in court to file a petition.

Supporters must be engaged in preparing and submitting the petition.

Voluntary liquidation

The company may be liquidated voluntarily if:

Ordinary resolutions are passed at the company's general meeting in the context of liquidation-

When the period stipulated in the company's articles of incorporation has expired.

For events under the company's articles of incorporation, the company must be dissolved.

b. When a special resolution is passed by a member of the company for the voluntary liquidation of the company.

c. A minimum of 21 days of clear notice is required to convene the General Assembly.

d. However, with the consent of the member, the general meeting can be convened with a shorter notice.

e. Voluntary liquidation will begin shortly after the above resolution is passed.

f. Notification of the start of dissolution of the company must be given in the official official bulletin, that is, by applying to the company's registration authority within 14 days of the start of liquidation.

g. Again, the notice of liquidation of the company must be published in the newspaper where the company's registered office is located.

h. After the start of liquidation, we will no longer be able to conduct a for-profit business.

i. However, you can do business for the benefit of the company's liquidation process, such as paying debt to the company's creditors.

j. The state of the company and its strength will continue to exist until the company is finally dissolved.

k. In addition, there are two types of voluntary clearing-

Voluntary liquidation of members

Voluntary liquidation of creditors

l. The rules for both types of clearing are the same.

m. However, the Companies Act provides for some specific criteria for these two types of liquidation.

Voluntary liquidation of members

This type of liquidation is performed when the company is able to pay the debt in full. The key aspects of member voluntary clearing are:

Declaration of solvency

Liquidation of a company requires a meeting in which a majority of the directors make a full evaluation of the company and a declaration approved by Affidavit that the company can pay the full amount. Debt within 3 years of liquidation of the company.

Such a declaration must be made at least five weeks before the resolution takes effect.

You must always send it to your registrar's office.

Appointment and rewards of liquidators

The company must do the following at the General Assembly & minsu;

Appointment of liquidators for the purpose of liquidation at the time of liquidation of the company and at the time of liquidation of the company and distribution of assets of the company

Modify the appropriate compensation paid to the liquidator. This fixed fee cannot be changed under any circumstances. The liquidator will not be in charge of his office unless the compensation is fixed.

Right to suspend the board of directors

During the liquidation process, all authority of directors and managers will be suspended.

However, the ability to notify and make reservations to the registrar has not stopped.

However, the authority of a director may survive due to sanctions of authority by shareholders or liquidators.

Voluntary liquidation of members

This type of liquidation is performed when the company is able to pay the debt in full. The key aspects of member voluntary clearing are:

Declaration of solvency

Such a declaration must be made at least five weeks before the resolution takes effect.

You must always send it to your registrar's office.

Appointment and rewards of liquidators

The company must do the following at the General Assembly & minsu;

Appointment of liquidators for the purpose of liquidation at the time of liquidation of the company and at the time of liquidation of the company and distribution of assets of the company

Right to suspend the board of directors

During the liquidation process, all authority of directors and managers will be suspended.

However, the ability to notify and make reservations to the registrar has not stopped.

However, the authority of a director may survive due to sanctions of authority by shareholders or liquidators.

Notification of the appointment of a liquidator will be given to the registrar

Liquidator's authority to accept shares in consideration of the sale of a company's assets-

The liquidator can profit to accept the shares, policies, or consider selling the company's property to another company.

He can do so with the aim of distributing the same number of members of the transferor.

A special resolution has been passed by the company to make this law effective.

He purchases the interests of the dissenting member at an agreed or arbitrarily determined price.

Obligation of liquidators to call creditors' meeting in case of bankruptcy

The liquidator believes that for some reason the company becomes aware that it is in danger of bankruptcy, that is, the company cannot pay its debts and liabilities within the limited time specified in the bankruptcy declaration. If so, a meeting of creditors where all asset and liability statements are placed in front of them.

Liquidator's duty to notify income tax officer

When a liquidator is appointed, the Income Tax Department must be notified of the liquidator's appointment.

This must be done within 30 days of the appointment of the liquidator.

A tax assessment of the company will be carried out.

Obligation of liquidators to convene a general meeting at the end of the year

If the liquidation process takes more than a year, the liquidator must convene a general meeting at the end of each year.

Meetings must be held within three months of the end of each year or as designated by the Central Government of India.

The liquidator should briefly explain his actions, the issues he is dealing with, and the progress of the liquidation at the General Assembly before all other members of the company.

Final meeting and dissolution

When the company is completely out of business, the liquidator must do the following-

Make sure that all of your company's assets have been disposed of and report how the clearing process has progressed.

Hold a general meeting of the company to submit a report before the company and justify the steps he took to successfully liquidate the company.

Send a copy of the report to the registrar's office, meet the registrar and return the report within a week, and report to the court about the implementation of the liquidation to ensure that the liquidation was done in accordance with members of the company's interests. I will. ..

Dissolution of the company

Putting an end to the life of a company is called dissolution.

The dissolved company cannot hold the assets.

The company will not be sued by the court after liquidation.

If the property of the company remains after the dissolution of the company, it will be immediately taken over by the government.

Voluntary liquidation of creditors

Creditor voluntary liquidation chooses to voluntarily terminate the business by having the company's directors appoint a liquidator (must be a licensed bankruptcy practitioner) to liquidate all assets. It is a procedure to do. The important provisions for voluntary liquidation of creditors are as follows.

Creditors' meeting

The creditors' meeting must be convened within two days from the date the creditors' proposed company liquidation resolution is passed.

Notices of the creditors’ meeting along with notices of the company's general meeting must be delivered to all creditors of the company.

A full-scale report on the business of the company, a list of creditors of the company, and an estimated amount of claims made by the creditors should be presented by the directors before the creditors of the company.

Notice of Resolution to be Submitted to Registrar-

If the creditor's proposed liquidation of the company is passed, the notice of the resolution must be sent to the Registrar's office within 10 days of the date the resolution is passed.

Appointment of liquidator

A liquidator for the purpose of liquidating a company may be appointed by the creditors of the company at a creditors meeting.

However, if the persons nominated at the company's general meeting and the creditors' meeting are different, the person nominated by the creditors will be the liquidator of the company.

Appointment of inspection committee

If the creditor wishes, he / she can appoint an inspection committee to monitor the entire liquidation process of the company.

Liquidator's reward

The creditor determines the liquidator's compensation.

If the creditor does not determine the liquidator's compensation, the compensation shall be determined by the referee.

Liquidators are not allowed to participate unless a good reward is set.

Once modified, the reward cannot be changed.

The power of the liquidator

The liquidator enjoys all the powers granted to the directors.

In addition, the liquidator will enjoy all the powers granted to the liquidator if the member voluntarily liquidates in accordance with Article 494 of the Companies Act of 1956.

Obligation of liquidators to convene a general meeting at the end of the year

If the liquidation process takes more than a year, the liquidator must convene a general meeting and a creditors' meeting at the end of the year.

Meetings must be held within three months of the end of each year or as designated by the Central Government of India.

c. The liquidator should briefly explain his actions, the issues he is dealing with, and the progress of the liquidation at the General Assembly before all other members of the company.

Final meeting and dissolution

When the company is completely out of business, the liquidator must do the following-

Make sure that all of your company's assets have been disposed of and report on how the clearing process went.

We will hold a general meeting of the company to submit a report before the company and give some explanation of the legitimacy of the steps he took to successfully liquidate the company.

We will send a copy of the report to the registrar's office, meet the registrar and return the report within a week, and report to the court about the conduct of the liquidation to confirm that the liquidation was carried out according to the members. Company profit.

Dissolution of the company

Putting an end to the life of a company is called dissolution.

The dissolved company cannot hold the assets.

The company will not be sued by the court after liquidation.

If the property of the company remains after the dissolution of the company, it will be immediately taken over by the government.

Key takeaways:

Our corporate law consulting services are specially designed to help the board of directors and key stakeholders in the company address concerns about increasing complexity.

Important Stages in the formation of a company.

Private companies can start their business as soon as they obtain a proof of establishment.

MOA (Memorandum of Association) is a legal document that must be submitted to the company's registration body when the company is established.

A company's MOA contains the objects from which the company is formed. It identifies the range of its operation and determines the boundaries that it cannot cross.

There are two important business documents of the company: the Basic Articles of Incorporation (MOA) and the Articles of Association (AOA).

The AOA contains the company's articles of incorporation. .

The alteration cannot be made so as to increase the liability of any member without his written consent.

A prospectus is a legal disclosure document that provides public information about investment offerings and must be submitted to the Securities and Exchange Commission (SEC) or local regulators.

There are four types of prospectuses

Shares are a unit of ownership of a company that exists as a financial asset and, in the form of dividends, distribute residual profits, if any, evenly.

According to Article 43 of the Companies Act 2013, stocks can be broadly classified into two types.

3. Equity stock

4. Preferred stock

13. Equity shares or stock is the most common type of stock issued by a public company to raise capital.

14. Preferred shares provide special rights or incentives, especially with respect to the receipt of dividends and the repayment of capital when the organization is liquidated.

15. Nevertheless, the type of stock under the preferred stock is –

Redeemable and non-redeemable preferred stock

16. The term director is the position given to senior management in a company or other large organization.

17. The court of jurisdiction has found that he has an unhealthy spirit, and the finding is valid.

18. The Companies Act 2013 defines the powers and obligations that directors should be aware of when acting on behalf of the company.

19. The Annual General Meeting of Shareholders (AGM) is the annual meeting of shareholders or shareholders, members of a company, company or organization.

20. Legal requirements for holding an annual meeting

21. There are two types of general meetings: annual general meetings of shareholders and extraordinary general meetings of shareholders.

22. The chairman of the general meeting shall postpone the general meeting when instructed by the general meeting.

23. The report produced by the auditor will be read at the company's general meeting.

24. Liquidation is the process of liquidating a company's operations in order to dissolve the company and end the company's survival.

25. The administrator is commonly referred to as the liquidator and is appointed in the context of the liquidation or dissolution of the company.

26. Liquidation does not completely eliminate the existence of the company.

27. If the company's liquidation resolution is passed internally, the court may order the voluntary liquidation to continue.

28. A special resolution must be passed by the company in the context of liquidation, and the consent of 3/4 of its members is required for the liquidation to be carried out by the court.

29. If the liquidation process takes more than a year, the liquidator must convene a general meeting at the end of each year.

30. Make sure that all of your company's assets have been disposed of and report on how the clearing process went.

5.4 E-Governance and role of engineers in E- Governance

Electronic governance

Definition: Electronic governance is the integration of information and communication technology (ICT) in all processes with the aim of extending to electronic governance and strengthening the government's ability to meet the needs of the general public. The basic purpose of electronic governance is to simplify the process of everyone, governments, citizens, businesses, etc., at the national, state and local levels.

In short, it is the use of electronic means to promote good governance. This means implementing information technology in government processes and functions to achieve simple, moral, accountable and transparent governance. It involves access to and provision of government services, dissemination of information, and communication in a fast and efficient manner.

Benefits of electronic governance

Reduction of corruption

High transparency

Improved convenience

GDP growth

Direct participation of members

Overall cost reduction.

Expanding the scope of government

The government plans to increase the scope and quality of information and services provided to the general public by using ICT easily, economically and effectively through electronic governance. The process is very complex and requires proper placement of hardware, software, networking, and in fact all processes reengineering, facilitating better service delivery.

Types of interaction in electronic governance

G2G (Government to Government): When the exchange of information and services takes place around the government, it is called G2G interaction. This can be both horizontal (that is, between different government agencies) and vertically (that is, between national, state, and local government entities, and within different levels of entities).

G2C (Government to Citizen): The interaction between the government and the general public is the G2C interaction. Here, an interface is set up between the government and citizens, giving citizens access to a variety of public services. Citizens have the freedom to share their views and dissatisfaction with government policy anytime, anywhere.

G2B (Government to Business): In this case, e-governance helps business class interact seamlessly with the government. It aims to eliminate bureaucracy, save time and money, and establish transparency in the business environment while interacting with the government.

G2E (Government to Employees): Governments in every country are the largest employers, so they do business with their employees on a regular basis, just like any other employer. ICT helps increase satisfaction by providing requirements and additional perks, as well as speeding up and streamlining interactions between governments and employees.

Electronic governance is possible only if the government is ready for it. It's not a day's work, so the government must plan and execute before switching to it. Some measures include investing in telecommunications infrastructure, budgeting resources, ensuring security, monitoring assessments, speeding internet connectivity, promoting public awareness of importance, and support from all government departments. It will be.

Electronic governance plays a major role in improving and supporting all tasks performed by government departments and agencies to simplify tasks on the one hand and improve the quality of work on the other.

Purpose of E Governance

The purpose of electronic governance is:

One of the basic purposes of electronic governance is to make all government information available to everyone for the public good.

One of the goals is to create a cooperative system between the government and the people, seek help and advice from the people, and make the government aware of the problems of the people.

Increase and encourage people's participation in the governance process.

e-Governance improves the country's information and communication technology and electronic media with the aim of strengthening the country's economy by harmonizing governments, people and businesses with the modern world.

One of its main objectives is to establish accountability and transparency in the governance process.

To reduce government spending on information and services.

Characteristics of E Governance

The concept of electronic governance proves that it is a powerful tool for modern public services. Some of its functions can be found by observing the functions of electronic governance.

Bureaucratization: Electronic governance has narrowed the gap between people and governments in all government services and has significantly reduced people's reliance on bureaucracy.

E-service: Its main function is to provide services via the Internet. As a result, you can use services such as G2C, G2B, and G2E. This has already been discussed in the Governance Types section.

International Services: Through electronic governance, all important services can be provided to citizens living abroad for work purposes or for other reasons.

It enhances the right to express to the public. Anyone can share an opinion with the government about a bill, action, or decision made by the government using the means of electronic governance.

Economic Development: With the introduction of electronic governance, various information such as import / export, corporate registration, investment status, etc. will be available via the Internet. The result is time savings, reduced procrastination, and increased economic dynamism.

Reduce inequality: Electronic governance tools allow anyone to gather information and empower themselves. In this globalized world, knowledge is power, and the means of electronic governance empower us by providing relevant information with minimal cost, effort, and time.

Benefits of electronic governance

Speed

Technology makes communication faster. The Internet and smartphones have enabled the immediate transmission of large amounts of data around the world.

b. Cost savings

Much of the government spending goes to the cost of purchasing stationery for public purposes. Letters and written records consume a lot of stationery. However, replacing them with smartphones and the Internet can save enormous costs each year.

c. Transparency

The use of electronic governance helps to make all the functions of the business transparent. All government information can be uploaded to the internet. Citizens can access the information they need, whenever they need it, with the click of a mouse or the touch of a finger.

However, for this to work, the government must ensure that all data is publicly available and uploaded to government information forums on the Internet.

d. Accountability

Transparency is directly linked to accountability. Once government features are available, we can hold them accountable for their actions.

Disadvantages of electronic governance

Loss of interpersonal communication

The main drawback of electronic governance is the loss of interpersonal communication. Interpersonal communication is an aspect of communication that many consider important.

b. High setup cost and technical difficulty

Technology also has its drawbacks. Specifically, the setup cost is very high and the machine needs to be maintained on a regular basis. In many cases, computers and the Internet can also fail, damaging government jobs and services.

c. Illiteracy

Many people in India are illiterate and do not know how to operate computers and smartphones. Electronic governance is very difficult for them to access and understand.

d. Cybercrime / Leakage of personal information

There is always a risk that the personal data of citizens stored in government agencies will be stolen. Cybercrime is a serious problem, and data breaches can cause people to lose confidence in the government's ability to govern its people.

Role of Engineers in E- Governance

Engineers are Indian development architects, the scope of Indian engineers is about 80% of the business sector, and they are excellent engineers to carry out their jobs across transportation, equipment, capital goods and other mechanical equipment. We are all engineering savvy and most of them are engineering or most others are preparing it and many of them are doing it. Everyone knows that India is a developing country. According to the 2011 population calculation, India is the second largest in the world in terms of population. But still, it's not growing, as it should be taken, because no one needs to start. The person who starts the development is just an engineer, who plays an important role in the development of India. Engineers discover new technologies. These technologies are used to make our country better or stronger from a defensive point of view. In India, there are many laboratories that manufacture millions of engineers each year. But most of them want to work abroad just for their lifestyle and salary. We made these engineers, but they work in other countries and they don't want to do anything for their own country. India is the only country where anyone is free to make decisions so that engineers can settle abroad. They settled in another country just for the money they didn't think about his country's obligations. India has seven IITs that manufacture world-class engineers, but these engineers work in other countries solely for payroll purposes. Very few people work in India who cannot afford to go abroad. Taking the United States as an example, mainly Indians are working on higher positions and developing new technologies. Now, when they all come back to our country and start working for us, think about the rate of growth or development of India. In my opinion, our government needs to sign a confirmation every time it faints Engineers have worked for his country for at least 5-6 years and contributed his hand to the development of India Must have, after 5-6 years they can work freely anywhere in the world they want to work. By doing this, you can take a step forward in development. India in development wants good engineers to use this technology to produce the best products at lower prices. So the future of India is so good that no one should be greedy and no one should die for food. When all engineers work in our country, no one sleeps without food. Almost every company in our country needs good engineers to improve quality and bring about new innovations at lower prices. As we expect rapid economic growth, the role of engineers in the growth of our country is essential. In developing countries like India, engineers play an important role.

Key takeaways:

Electronic governance is the integration of information and communication technology (ICT) in all processes with the aim of extending to electronic governance and strengthening the government's ability to meet the needs of the general public.

The government plans to increase the scope and quality of information and services provided to the general public by using ICT easily, economically and effectively through electronic governance.

The interaction between the government and the general public is the G2C interaction.

Electronic governance is possible only if the government is ready for it. It's not a day's work, so the government must plan and execute before switching to it.

Much of the government spending goes to the cost of purchasing stationery for public purposes. Letters and written records consume a lot of stationery.

Technology also has its drawbacks. Specifically, the setup cost is very high and the machine needs to be maintained on a regular basis.

Almost every company in our country needs good engineers to improve quality and bring about new innovations at lower prices.

5.5 Need for reformed engineering serving at the Union and State level Role of I.T. professionals in Judiciary, Problem of Alienation and Secessionism in few states creating hurdles in Industrial development.

Need for reformed engineering serving at the Union and State level

"Reform" is like the elephant of the saying that the seven blind people tried to portray. For some, it means opening this sector or that sector to foreign investment, but for others, it is facilitating land acquisition for building roads, power projects, or factories. Yet others see reform as a reduction in subsidies and large-scale privatization. These are only the trunk, tail, or torso, not elephants. The big elephant in the room is the administrative reform. And there's another elephant, but it's not that small. It is a judicial reform.

It is clear that two of our most important democratic institutions, the government and the judiciary, are in serious dilapidation. However, it is not the case that the legislature is a paragon of good governance. But it's a mirror of voter quality. In addition, voters can change their minds within five years if they don't like what they choose. Not ideal. But it's democracy for you.

Overtaken and overwhelmed

Being part of a permanent establishment, civil servants and the judiciary must be measured by different criteria than the elected representatives. If the quality of input to policymaking is questionable, if the implementation of policies is jeopardized by the ineffectiveness of civil servants, and if justice is inevitably delayed, solving this problem can cause further delays. you cannot. In particular, technology is changing the world faster than ever, and we can't afford to be plagued by long-term bureaucracy.

The government struggle to understand and regulate new economy companies such as online retailers and taxi apps is a good example. From coal to telecommunications, government failure is openly shown and it's not just politicians who are responsible.

At the pinnacle of the bureaucracy is the Indian administrative services, the successor to the imperial civil servants with many traces of the British Indian Empire. See how these "service members" investigated the path to colonial clubs. This does not mean that all officers are corrupt, incompetent, or both. However, it is a fact that there is a serious lack of technical expertise of civil servants. Too many generalists, too little exposure to the real world, and too much pride will revoke most of India's bureaucracy.

As a result, experts such as Aadhaar architect and Infosys co-architect Nandan Nilekani struggled a lot from civil servants who considered him an intruder. That is why his recommendation on drafting outside experts to support the government went nowhere. Civil servants are not very civil servants, and the services they provide can often be of suspicious quality. Nor is it that our leaders are unaware of the seriousness of the problem. Therefore, the so-called Administrative Reform Committee was established by the government. They submitted a huge report, but the real reform is still chimera. Mr Nilekani said India needed a proposal for administrative reform written on two sheets of paper, not a recommendation to fill two large libraries.

For example, there is a clear link between reforms aimed at reducing the budget deficit and administrative reforms. Take, for example, the Electronic Media Monitoring Center (EMMC), which is part of the Ministry of Information and Broadcasting. Most of us may not even be aware of the existence of this animal, but this Orwell entity does exist and employs approximately 250 staff.

Reform yourself

This work at EMMC may sound like a child's fantasy. But that is a serious call for many of our civil servants. Their ostensibly task is to monitor hundreds of television channels to ensure that content is safe for Indian children and adults. If you look carefully, there are several EMMCs in New Delhi and the state capital. Throughout the suspected sector, technology will find it hesitant to enter the corridor of power, and there is plenty of room for cost savings to help close the budget deficit.

So what can we do if real reform is needed? Review the Union Public Service Commission (UPSC) and the State Public Service Commission from selection to retirement without compromising independence or neutrality. Existing systems are assumed to be merit-based. However, continuous training is largely lacking due to the lack of the required number of technical professionals. Civil servants cannot remain ivory towers, and Nilekanis, Raghuram Rajans, and Arvind Subramanians are no rare exceptions. Like the private sector, governments need to adopt technology, scale down, and proactively outsource.

As for the judiciary, the present government was quick to move when it came to the appointment of judges to higher courts. It is not an end in itself, but a good beginning. Speedy dispute resolution is a sine qua non of good governance.

If India wants to join the ranks of developed nations, we need serious, sustained reform that has a progressive civil service at its core. Otherwise, we’ll only be treated to annual Good Governance Day jamborees.

Introduction

It is a great honor for me to be offered this opportunity to work on a very prominent rally on a subject that is very relevant to the courts in this region, which is the most prominent court rally in southern Central Africa and East Africa. It is a privilege. While our region is suffering from a lack of sufficient resources, we strive to serve the communities in which they serve in a world that is undergoing enormous technological changes. Courts are being asked to serve against the backdrop of a declining resource-based case load increase.

Your lords, honors, and attendees, you have an enviable mission to guide the judiciary of the region to a time of both immeasurable challenges and ground breaking opportunities. We hope that this morning we will work with you to explore the opportunities and challenges created by the new and information ages.

Information technology

We are past half of the first decade of the 21st century. We have entered a truly new millennium, successfully. At the same time, the Industrial Revolution, which began about three centuries ago, gave way to the information age for the industrialized world. The birth of the information age is as unwavering as the Industrial Revolution in how we work, transmit, store and retrieve information. Still, it seems that it is still in the early stages. Jean-Francois Rischard states: The plunging costs of communications and computing offer great opportunities for developing and developed countries to do things in the same cheaper and different ways. .. This is a structural change that differs from previous economic breakpoints, as it is at the heart of the information revolution, not about the conversion of energy or matter, but about the manipulation, transportation and preservation of information and knowledge. [2]

Martin Bangemann said:

"Around the world, information and communication technology is creating a new industrial revolution that is as important and widespread as it was in the past. It is a revolution, an expression of human knowledge in itself. With technological advances, distance, time, it is now possible to process, store, retrieve and communicate all forms of information, without being constrained by quantity. This revolution adds enormous new capabilities to human intelligence and the way we work together. And configure resources that will change the way we live together. "[3]

What is involved in this information age? The information age revolves around advances in telecommunications and information technology. They consist of hardware, software, and media for collecting, storing, processing, transmitting, and displaying information. We are talking about communications and computing equipment and programs, including satellites, switches, power lines, computers, modems, operating systems, and applications.

How does this revolution relate to the judicial system? If people's ways of working, living and playing are changing, they will undoubtedly affect the judiciary as they are part of this changing world. The judiciary must take advantage of new developments that may enhance the provision of its own services.

In the information age, the changes that accompany the availability of information to all, or rather the likelihood that information will be available to all, is how part of the population is with courts. It definitely affects what is involved. At the same time, information technology is useful to people, so as crimes and civil disputes take new forms and actions, the problems created by new ways of working, living and playing will become issues to be addressed by those involved in judicial administration. Let's do it. As Natalia Schifflin pointed out.

"But the Internet increases freedom of expression by enabling free and effective unregulated communication, which has also encouraged many crimes, not to mention fraud, gambling, blackmail and cyber stalking. , The spread of child pornography is all rising. Even incitement to murder is happening on the Internet.

It is the duty of the judiciary system to prepare and address these challenges. At the same time, it is the duty of the judiciary to take advantage of the new opportunities offered by information technology to provide professionally superior services to the community. Nothing is expected of us.

However, the disadvantaged side of the digital divide needs attention from the beginning. It means that "information has no society." There, the majority of the community lives outside this information revolution. It's like living on the outskirts of an industrial society. In societies where electricity and telephone penetration is less than 10% of the population, it is clear that there are challenges for the majority of the population who do not have access to such facilities for access to the developments of the Information Age. is. Just as information is divided between countries, information is divided into disadvantaged societies between a very small class of people who have access to the development of the Information Age and the majority who have little hope of access. I am.

Judiciary modernization

The main task of the judiciary is to hear and decide the case fairly and in a timely manner at a reasonable cost. In doing so, there is a process that leads to the conclusion of the proceedings in court. These processes must be efficient, effective and fair.

The process must be efficient in the sense that it provides value for money. Resources that are used in this way must be used in a lean manner, leading to optimal allocation and utilization of those resources. The system cannot abstractly search for truth alone without knowing all other factors such as cost, effectiveness, and fairness. Modern approaches are for the various purposes of the judiciary, given the scarcity of resources and the competing demands for the limited range of resources available, especially in resource-poor societies such as our region. I want to balance.

Second, the process must be effective in the sense that it can achieve what is required. For example, it is a system that can ensure accountability for mistakes made to society. Or is there any relief sought and obtained to compensate for the alleged injury? Going to court is more than just an academic exercise, but in some cases the nature of the problem at hand may be somewhat academic, but it still needs to be addressed.

The process must be fair in that it has access to the judicial system and is accessible to all who should seek access to it. The process must not lock out a section of the community. It must not be discriminatory and must not be fair in some areas of the proceedings' class or subject matter.

Problem of Alienation and Secessionism in few states creating hurdles in Industrial development.

Industrial policy

Industrialization is a very important aspect of any economy. It creates jobs, promotes research and development, leads to modernization, and ultimately makes the economy self-sufficient. In fact, industrialization boosts even other sectors of the economy, such as the agricultural sector (new agricultural technology) and the services sector. It is also closely related to the development of trade.

However, shortly after independence, India's industrial sector was in a very poor condition. It contributed only about 11.8% to GDP. Productivity and productivity were very low. It has also retreated technically. There were only two established industries, cotton and jute. Therefore, it became clear that it is necessary to focus on industrial development and increase the industrial diversity of the industrial sector. And the government shaped our industrial policy accordingly.

State management

One of the biggest hurdles in industrial development was lack of capital. Private businessmen did not have enough capital to build a new industry. And even so, the associated risks were too high. Therefore, in 1948, it was decided that the state would play a major role in promoting the industrial sector. Therefore, the state has complete and complete control over all industries that are essential to the needs of the economy and the people.

Coal, oil, aviation, steel, etc. were all reserved exclusively for the state. The private sector can provide services that complement the services provided by the state. Thus, public enterprises have dominated the market for years to come.

Industrial Policy Resolution 1956

During the second five-year plan, an industrial policy resolution was put into effect. The aim was to introduce more private capital into the industry, but in a systematic way. Therefore, this resolution categorized the industry into three categories, as shown below.

First category: Industry exclusively owned by the country

Second category: Industries where the private sector can provide supplementary services. These industries remain primarily state responsibility. Also, only the state was able to start a new industry.

Third category: Remaining industries classified in the private sector.

Any private sector or individual can start an industry that falls into the third category, but it wasn't that simple. The state still maintained control of these industries through licenses and permits. All new industries required a proper ministry license and many permits. They even needed permits and permits to expand the current industry.

The purpose behind such industrial policy was to keep checking the quality of our products. It was also an important tool for promoting regional equality. That is, to make sure that the industry was developed in an economically underdeveloped area.

Small industry

In 1955, a special committee known as the Calve Committee advised the promotion of small industries for rural development. Small industries were believed to create more jobs because they are labor-intensive. Also, the workforce requirements of small industries were semi-skilled or unskilled and were suitable for the time.

However, these small industries cannot match the large industries. Therefore, there were special products and products reserved by the government. These could only be manufactured by small businesses. Such industries also received financial assistance in the form of loans and tax and tariff deductions.

Strengthening industrial development infrastructure

One of the first requirements for economic development is to improve the national infrastructure. Various other sectors of the economy cannot develop without the support of infrastructure equipment such as transportation, rail and banking.

Therefore, in order to develop these industries, the government has formed appropriate industrial policies. Most developments in these industries have fallen into the public sector. For example, the railroad industry to date remains firmly in the public sector.

Key takeaways:

"Reform" is like the elephant of the saying that the seven blind people tried to portray.

The government struggle to understand and regulate new economy companies such as online retailers and taxi apps is a good example.

We are past half of the first decade of the 21st century. We have entered a truly new millennium, successfully. At the same time, the Industrial Revolution, which

The main task of the judiciary is to hear and decide the case fairly and in a timely manner at a reasonable cost.

The process must be fair in that it has access to the judicial system and is accessible to all who should seek access to it.

Industrialization is a very important aspect of any economy. It creates jobs, promotes research and development, leads to modernization, and ultimately makes the economy self-sufficient.

One of the biggest hurdles in industrial development was lack of capital. Private businessmen did not have enough capital to build a new industry. And even so, the associated risks were too high.

During the second five-year plan, an industrial policy resolution was put into effect.

References:

https://economictimes.indiatimes.com/blogs/et-commentary/india-needs-serious-sustained-reform-with-progressive-civil-service-at-its-core/

https://www.yourarticlelibrary.com/business/sole-trader-definition-characteristics-and-other-details/42036

https://www.businessmanagementideas.com/organisation/types/partnership/partnership-definition-need-and-characteristics/8908

https://byjus.com/free-ias-prep/indian-companies-act/

https://www.educba.com/memorandum-of-association-vs-article-of-association/

https://legalvision.com.au/memorandum-and-articles-of-association/

https://www.investsaver.com/prospectus/

https://www.toppr.com/guides/business-laws/companies-act-2013/types-of-shares/

https://schoolofpoliticalscience.com/what-is-e-governance/

https://www.venice.coe.int/SACJF/2005_02_UGA_Entebbe/Rep_Egonda_Ntende.htm

https://endvawnow.org/en/articles/744-roles-and-responsibilities-of-courts-and-judiciary.html

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