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Showing posts from 2014

Convertible Note- Ease of Raising Funds By Startup

Today, we are in the golden age of startups, where people are ready to take risks for their dreams and passion. It takes more than just a great idea to run a successful business. Entrepreneurs and existing business owners need capital to pursue their dreams. New business ventures often have difficulty obtaining capital (whether for starting up, or for expanding operations). Today during economic downturns where standards for commercial investment are becoming water tight, a number of investors often seek non-traditional investment opportunities to enhance their portfolios. A convertible note (“Note”) provides such an opportunity to serve the needs of both the startup business needing capital and the investor seeking an opportunity. With the latest RBI Notification dated Nov.07, 2017, FDI is also permissible by means of Convertible Note ‘Convertible Note’ is an instrument issued by a startup company evidencing receipt of money initially as debt, which is repayable at the option of the ho…

SEBI VS PACL: Trouble in Paradise

In its biggest-ever crackdown on a large-scale money pooling scheme estimated at nearly Rs. 50,000 crore (twice the amount to be recover from SAHARA group), regulator SEBI has ordered  Pearls Agrotech Corporation Limited (“PACL”) to refund investors within three months and wind up operations. SEBI had found PACL violating Collective Investment Scheme Regulations by mobilizing the money without being registered with the regulator, SEBI. Besides, closure of PACL operations, SEBI  is initiating further proceedings against PACL and its nine promoters and directors for fraudulent and unfair trade practices, as also for violation of SEBI's CIS Regulations, among others, as per a direction from the Supreme Court. At present, it is being estimated that PACL has more than 58.5 million customers, more than twice the 22 million demat accounts in the entire country and has paid commission of
Rs 7,893.8 crore up to March 2012  to more than its 8 lakh agents who works as network of chain system fo…

REITs- A new KICK for Real Estate

On August 10, 2014, real estate sector received a KICK to boost up the cash strapped industry a new route to tap capital with the approval of setting up of Real Estate Investment Trusts(REITs) by SEBI, market regulator. What is REIT? RE- Real Estate To construct homes, offices, townships I- Investment All investors are welcome T-Trust Operated by professional managers (similar to mutual fund managers)
REIT is an investment pool, which finds alternative means of financing real estate through an initial public offering (IPO), which is then used to buy, develop, manage and sell assets in real estate. This pool of real estate generates income through renting, leasing and selling of property and distributes it directly to the REIT holder on a regular basis. REITs can be viewed as mutual funds that invest in real estate properties and/or mortgages instead of securities such as bonds and shares. REITs are financial intermediaries specializing in real estate investments and channel funds fro…

Nidhi Companies Rules 2014- An analysis w.r.t. Nidhi Company Registration

“Nidhi is a company formed with the exclusive object of cultivating the habit of thrift, savings and functioning for the mutual benefit of members by receiving deposits only from individuals enrolled as members and by lending only to individuals, also enrolled as members” -Section 406, Companies Act, 2013 & Companies Rules 2014
Nidhi Company are registered or formed only for the benefit for its members only, an outsider i.e. who is not the member of the Nidhi Company is not allowed to deposit any money or doing any kind of business with the concerned Nidhi Company. In this article we will analyze the impact of Nidhi Companies Rules 2014 on the registration of Nidhi Company Incorporation of Nidhi Company i)A Nidhi Company to be incorporated under the Companies Act, 2013 (“Act”) shall be a public company and with a minimum paid up equity share capital of five lakh rupees; ii)On and after the commencement of Companies Act, 2013, no Nidhi Company shall issue preference shares; iii)Except as…

Small & Payment Banks: Future of Local Banking

The Reserve Bank of India has proposed major reforms in banking sector with issue of draft guidelines for setting up “Small and Payment Banks” which will cater to marginalized sections of the Society, including migrant laborers, for collecting deposits and remitting funds. These banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation. The payments banks will offer a limited range of products such as acceptance of demand deposits and remittances of funds. They will have a widespread network of access points particularly in remote areas, either through their own branch network or through Business Correspondents (BCs)/agents or through networks provided by others. ØThe existing non-bank pre-payment instrument issuers, non-banking finance companies (NBFCs), corporate BCs, mobile telephone companies, super-market chains, companies, real sector cooperatives and public sector entities may apply to set up a payments ba…

35 AC Registration: Don’t just donate, donate right…..

In India, where doing welfare of people is one of the core principle of society, there are about one charitable organisation for every 1000 people and we all get phone calls and door-knocks soliciting donations. As a human nature, everyone wants to help or to give for charitable cause, however, have we ever cross check or investigate the money which we have given is been use for the same cause or not? Many of us may argue that- who is going to monitor them or how can they monitor their small contribution towards the larger good of the society or the cause. With enforcement of Corporate Social Responsibility under Companies Act, 2013, many self claimed social organizations have grown up like mushrooms in every corner of the city has caused much confusion in the mind of reasonable donors. This situation has also created problems for genuine charitable organizations, who are actually working for the upliftment and development of society, as people start distrusting them also. One way to find…

35 AC Registration- Fund raising by Social Enterprises/Non-Governmental Organizations (NGOs)

Section 35 AC of the Income Tax Act, 1961, is one of the key provision which is relevant for raising funds and resources for NGO’s if understood and used effectively. The objective of Section 35 AC is to encourage business organizations to contribute more in social and economic welfare and upliftment of general public. With the increased emphasis on the corporate social responsibility in the corporate sector and ostentatious display of charity by people like Bill Gates and Warren Buffet, the contribution in the monetary term by the corporate sector in India towards socially relevant project cannot be undermined. NGO’s involved in eligible projects notified by the Central Government for promoting the social and economic welfare can raise resources for eligible project from corporate sector and fulfil their objective of development. Corporates simultaneously can fulfil their corporate social responsibility aspect of the business by contributing towards the eligible projects and gain by av…