Thursday, December 16, 2010

COMPLAINT UNDER SECTION 18 OF THE RIGHT TO INFORMATION ACT, 2005

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COMPLAINT UNDER SECTION 18 OF THE RIGHT TO INFORMATION ACT, 2005
In order to promote transparency and accountability in administration, the Indian Parliament enacted the Right to Information Act, which came into force on 12th October 2005. The basic objective of the Act is to empower the citizens, promote transparency and accountability in the working of the Government, contain corruption, and make our democracy work for the people in real sense.
A citizen has a right to seek such information from a public authority which is held by the public authority or which is held under its control. This right includes inspection of work, documents and records; taking notes, extracts or certified copies of documents or records; and taking certified samples of material held by the public authority or held under the control of the public authority. It is important to note that only such information can be supplied under the Act which already exists and is held by the public authority or held under the control of the public authority.

COMPLAINT UNDER SECTION 18
Section 18 of the act empowers Central Information Commission [CIC] and also State Information Commissions [SICs] to enquire into complaints against Public Authority, Public Information Officer [PIO] and First Appellate Authority [FAA]. The section has provided for enquiring and taking corrective steps by the respective commissions in respect of majority of problems that the applicant/appellant may face in getting information to which he is entitled to under this act.
GROUNDS FOR COMPLAINT
•           No PIO or APIO or FAA is appointed by public authority.
•           PIO/APIO/FAA has refused to receive application/appeal.
•           No reply is received from PIO & FAA within time limit fixed by the act.
•           Reply received from PIO is unsatisfactory, irrelevant, unreadable, misleading, unclear, false, incomplete etc.
•           Information has been wrongly and unjustifiably refused.
•           When applicant is required to pay fee/charges in excess of those prescribed in RTI rules applicable.
•           PIO/APIO is not accessible in person or by post and his whereabouts are not easily available/prominently exhibited.
•           Proactive disclosure under section 4 [1] has not been made or it is not made publicly available/accessible.
•           PIO/FAA has wrongly refused inspection of records of public authority or reasonable cooperation is not extended during inspection.
•           PIO, FAA or any other person directly/indirectly intimidates or ill-treats or pressurizes the applicant/appellant or restraints him from exercising his right under the act.
•           PIO/FAA disobeys orders of CIC/SIC.
•           Any other situation where the citizen has been wrongly restrained/refused access to information to which he is entitled under the act.
•           Any other violation of provisions of the act by public authority, PIO or FAA.
CIVIL COURT POWERS CONFERRED UPON THE INFORMATION COMMISSION
The RTI Act confers Information Commission with powers of a civil court only while dealing with complaints under Section 18(3). The powers include:
•           Initiating an “enquiry”, which has much wider scope than a “hearing”
•           Summoning witnesses ie. persons other than PIO and FAA. For example, the colleagues of the PIO and FAA, or other RTI applicants and appellants who are not complainants in this case may be called to depose before CIC/SIC.
•           Compelling witnesses and others to makes statements on oath and to file affidavits
•           Calling for any public record to be placed before it (not only the information requested in the Appellant’s RTI application).
•           Any other power as may be prescribed.
TIME LIMIT
There is no time-limit for filing a complaint. One may file a complaint immediately after PIO or Public Authority’s failure to comply with a requirement of the RTI Act, without filing a First Appeal. One may also file a complaint very late (say 18 months later) and Information Commissioner cannot dismiss it on the grounds of being late.
PROCEDURE TO LODGE COMPLAINT
1.         Complaints relating to information of central government public authorities are to be lodged with Central Information Commission [CIC], August Kranti Bhavan, Bhikaji Kama Place, NEW DELHI 110066. [www.cic.gov.in].In cases of information of public authorities of State Govts, complaints have to be lodged with respective State Information Commissions [SICs]. Details are available on official websites of State Govts. /State Information Commissions. Please refer to www.cic.gov.in and visit icon- CICs of States.
2.         CIC and some of SICs have prescribed minimum information or papers that must be submitted with the complaint. Some SICs have prescribed format for complaint. For CIC and those SICs, which have not prescribed format, complainants can use guidelines and format as available at http://www.rtiindia.org/guide/how-to-use-your-right-to-information-4/how... with minor changes.
3.         CIC does not charge any fee for complaints. Some SICs charge fees for this purpose.
4.         There is no time limit for lodging complaint, but it is advisable to lodge the same within reasonable time of happening of cause for complaint.
5.         Send copy of complaint to PIO/FAA simultaneous with CIC/SIC. At times PIO/FAA solves your problem before hearing at CIC/SIC.
6.         Ask for punishment to PIO/FAA under the act and also claim compensation for not getting the information in time.
7.         Information Commissions are vested with powers of Civil Courts in respect of summoning, enforcing attendance, giving evidence on oath, producing records, etc.
8.         Complaint is in addition to Second/final Appeal available to applicants.
9.         It is advisable to simultaneously approach head of the organization or govt. dept at capital-level [secretary/chief secretary] for his intervention. This may help get information.
10.       After lodging complaint, please check from concerned website if the same is registered and registration number and status.
11.       In case of information pertaining to life and liberty, the complaint should be conspicuously branded as “Life & Liberty-Urgent” so that priority is accorded for its disposal before it is too late. Follow-up through email is recommended if available with SIC.
12.       CIC/SICs are flooded with appeals/complaints and there is huge pendency. Thus it may take 12 to 36 months before complaint is heard.
13.       It is advisable to take free help from experienced RTI activists/NGO if locally available so that matter can be effectively and properly represented through complaint.
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TAXATION OF DEMERGERS


TAXATION OF DEMERGERS

The Income-tax Act, 1961 provides the tax reliefs to the demerged company, the shareholders of the demerged company, who are issued and allotted shares in the resulting company in the exchange for the shares held by them in the demerged company and the resulting company which emerges as a result of a demerger.

TAX BENEFITS TO DEMERGED COMPANY:

1.    Capital Gain Tax not attracted: As per section 47 (vib) of the Income Tax Act, the transfer of any capital asset by the demerged company to the resulting company will not be regarded as transfer for the purpose of capital gain.

Saturday, September 25, 2010

Venture Capital in India

Historical valuation on the secondary marketImage via Wikipedia

A number of technocrats are seeking to set up shop on their own and capitalize on opportunities. In the highly dynamic economic climate that surrounds us today, few ‘traditional’ business models may survive. Countries across the globe are realizing that it is not the conglomerates and the gigantic corporations that fuel economic growth any more. The essence of any economy, today is the small and medium enterprises. For example, in the US, 50% of the exports, are created by companies with less than 20 employees and only 7% are created by companies with 500 or more employees.

The concept of venture capital is not new. Venture capitalists often relate the story of Christopher Columbus. In the fifteenth century, he sought to travel westwards instead of eastwards from Europe and so planned to reach India. His far-fetched idea did not find favor with the King of Portugal, who refused to finance him. Finally, Queen Isabella of Spain, decided to fund him and the voyages of Christopher Columbus are now empanelled in history.

In the modern times Angel investors, public venture capital, and other funding sources have had a significant impact on the U.S. economy during the 1980s. Venture capital fund organizations are specifically designed to provide risk capital to entrepreneurs.


Venture Capital- is the capital which funds the early, seed or initial stages of potentially high risk business ideas. The investment is usually in the form of shares (stock) or an instrument, which can be converted into shares at a future date. Venture capitalists (VC’s) expect high annual returns (generally varying between 25% and 75%) on their investment. Investment is generally in the range of Rs.10 mn. to Rs.500 mn. in a single proposal.

What Is Venture Capital?

Venture capital is money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors. Venture capital is an important source of equity for start-up companies.

Professionally managed venture capital firms generally are private partnerships or closely-held corporations funded by private and public pension funds, endowment funds, foundations, corporations, wealthy individuals, foreign investors, and the venture capitalists themselves.

Venture capitalists generally:

-    Finance new and rapidly growing companies
-    Purchase equity securities
-    Assist in the development of new products or services
-    Add value to the company through active participation
-    Take higher risks with the expectation of higher rewards
-    Have a long-term orientation

REAL ESTATE MUTUAL FUND

Mutual fundImage via Wikipedia

Real Estate Mutual Fund
Application for registration

Ø  An application for registration of a mutual fund shall be made to the Board in Form A by the sponsor.
Ø  A Draft for non-refundable application fee as specified in the Second Schedule.

Eligibility criteria

Ø  The sponsor should have a sound track record and general reputation of fairness and integrity in all his business transactions.
Explanation: For the purposes of this clause “sound track record” shall mean the sponsor should,—
(i)                 be carrying on business in financial services for a period of not less than five years; and
(ii)               the net worth is positive in all the immediately preceding five years; and
(iii)             the net worth in the immediately preceding year is more than the capital contribution of the sponsor in the asset management company; and
(iv)             the sponsor has profits after providing for depreciation, interest and tax in three out of the immediately preceding five years, including the fifth year;
Ø  the applicant is a fit and proper person
Ø  in the case of an existing mutual fund, such fund is in the form of a trust and the trust deed has been approved by the Board;
Ø  the sponsor has contributed or contributes at least 40% to the net worth of the asset management company:
Provided that any person who holds 40% or more of the net worth of an asset management company shall be deemed to be a sponsor and will be required to fulfill the eligibility criteria specified in the regulations;

Ø  the sponsor or any of its directors or the principal officer to be employed by the mutual fund should not have been guilty of fraud or has not been convicted of an offence involving moral turpitude or has not been found guilty of any economic offence;
Ø  appointment of trustees to act as trustees for the mutual fund
Ø  appointment of asset management company to manage the mutual fund and operate the scheme of such funds
Ø  Appointment of custodian in order to keep custody of the securities or gold and gold related instrument or other assets of the mutual fund held in terms of these regulations, and provide such other custodial services as may be authorised by the trustees.
Grant of Certificate of Registration
The Board may register the mutual fund and grant a certificate in Form B on the applicant paying the registration fee as specified in Second Schedule.
CONSTITUTION AND MANAGEMENT OF MUTUAL FUND AND OPERATION OF TRUSTEES, ETC

Trust deed to be registered under the Registration Act
A mutual fund shall be constituted in the form of a trust and the instrument of trust shall be in the form of a deed, duly registered under the provisions of the Indian Registration Act, 1908 (16 of 1908), executed by the sponsor in favour of the trustees named in such an instrument.
Disqualification from being appointed as trustees
Ø  No person shall be eligible to be appointed as a trustee unless— (a) he is a person of ability, integrity and standing; and
Ø  has not been found guilty of moral turpitude; and
Ø  has not been convicted of any economic offence or violation of any securities laws; and
Ø  Have furnished particulars as specified in Form C.
Ø  No asset management company and no director (including independent director), officer or employee of an asset management company shall be eligible to be appointed as a trustee of any mutual fund
Ø  No person who is appointed as a trustee of a mutual fund shall be eligible to be appointed as a trustee of any other mutual fund
Ø  Two-thirds of the trustees shall be independent persons and shall not be associated with the sponsors or be associated with them in any manner whatsoever.
Ø  In case a company is appointed as a trustee then its directors can act as trustees of any other trust provided that the object of the trust is not in conflict with the object of the mutual fund.
Approval of the Board for appointment of trustee
Ø  No trustee shall initially or any time thereafter be appointed without prior approval of the Board.
Ø  The existing trustees of any mutual fund may form a trustee company to act as a trustee with the prior approval of the Board.
REAL ESTATE MUTUAL FUND SCHEMES
Additional eligibility criteria for Real Estate Mutual Fund Schemes
Ø  has been carrying on business in real estate for a period of not less than five years;
Ø  A real estate mutual fund scheme of a mutual fund registered under sub regulation (1) shall not invest in the securities mentioned in sub-clauses (ii) to (iii) of clause (a) or in clause (b) of sub-regulation (2) of regulation 49E unless it has key personnel having adequate professional experience in finance and financial services related field.
Ø  An existing mutual fund may launch a real estate mutual fund scheme if it has an adequate number of key personnel and directors having adequate experience in real estate.
Other conditions for real estate mutual fund schemes
Ø  Every real estate mutual fund scheme shall be close-ended and its units shall be listed on a recognized stock exchange provided that the redemption of a real estate mutual fund scheme may be done in a staggered manner.
Ø  The units issued by a real estate mutual fund scheme shall not confer any right on the unit holders to use the real estate assets held by the scheme and any provision to the contrary in the trust deed or in the terms of issue shall be void.
Ø  The title deeds pertaining to real estate assets held by a real estate mutual fund scheme shall be kept in safe custody with the custodian of the mutual fund.
Ø  A real estate mutual fund scheme shall not undertake lending or housing finance activities.
Ø  All financial transactions of a real estate mutual fund scheme shall be routed through banking channels and they shall not be cash or unaccounted transactions.

Permissible investments
Ø  Every real state mutual fund scheme shall invest at least thirty five percent of the net assets of the scheme directly in real estate assets.
Ø  Every real estate mutual fund scheme shall invest-
(a)        At least seventy five per cent. of the net assets of the scheme in-
(i)         Real estate assets;
(ii)        Mortgage backed securities (but not directly in mortgages);
(iii)       equity shares or debentures of companies engaged in dealing in real estate assets or in undertaking real estate development projects, whether listed on a recognized stock exchange in India or not;
(b)        The balance in other securities;
Ø  Unless otherwise disclosed in the offer document, no mutual fund shall, under all its real estate mutual fund schemes, invest more than thirty per cent. of its net assets in a single city.
Ø  No mutual fund shall, under all its real estate mutual fund schemes, invest more than fifteen per cent of its net assets in the real estate assets of any single real estate project.
Explanation: For the purposes of this regulation, “single real estate project” means a project by a builder in a single location within a city.
Ø  No mutual fund shall, under all its real estate mutual fund schemes, invest more than twenty five per cent. of the total issued capital of any unlisted company.
Ø  No mutual fund shall invest more than fifteen per cent of the net assets of any of its real estate mutual fund schemes in the equity shares or debentures of any unlisted company.
Ø  No real estate mutual fund scheme shall invest in –
(a)        any unlisted security of the sponsor or its associate or group company;
(b)        any listed security issued by way of preferential allotment by the sponsor   or its associate or group company;
(c)        any listed security of the sponsor or its associate or group company, in excess of twenty five per cent of the net assets of the scheme.
Ø  No mutual fund shall transfer real estate assets amongst its schemes.
Ø  No mutual fund shall invest in any real estate asset which was owned by the sponsor or the asset management company or any of its associates during the period of last five years or in which the sponsor or the asset management company or any of its associates hold tenancy or lease rights.
Valuation of real estates assets and declaration of net asset value
Ø  The real estate assets held by a real estate mutual fund scheme shall be valued –
(a)  at cost price on the date of acquisition; and
(b)  at fair price on every ninetieth day from the day of its purchase in accordance with the norms specified in Schedule IXB.
(c)  The asset management company, its directors, the trustees and the real estate valuer shall ensure that the valuation of assets held by a real estate mutual fund scheme are done in good faith, in accordance with the norms specified in Schedule IX B and that the accounts of the scheme are prepared in accordance with accounting principles specified in Schedule XI.
(d) The net asset value of every real estate mutual fund scheme shall be calculated and declared at the close of each business day on the basis of the most current valuation of the real estate assets held by the scheme and accrued income thereon, if any.
Duties of asset Management Company

Ø  The asset management company of a mutual fund having real estate mutual fund schemes shall appoint suitable number of qualified key personnel with relevant experience, before undertaking investment management of real estate assets of a real estate mutual fund scheme.
Ø  The asset management company may appoint advisors to advise it on acquisitions or proposed acquisitions of real estate assets.
Ø  The asset management company shall exercise due care while appointing real estate valuers for valuing the real estate assets held by the real estate mutual fund scheme and shall ensure that there is no conflict of interest.
Ø  The asset management company shall lay down an adequate system of internal controls and risk management.
Ø  The asset management company shall put in place systems to ensure that all financial transactions are done through banking channels and exclude transactions in cash or unaccounted transactions.
Ø  The asset management company shall exercise due diligence in maintenance of the assets of a real estate mutual fund scheme and shall ensure that there is no avoidable deterioration in their value.
Ø  The asset management company shall ensure that the real estate assets held by a real estate mutual fund scheme are adequately insured against impair, damage or destruction.
Ø  The asset management company shall ensure that the cost of maintenance and insurance of real estate assets is within reasonable limits and that no funds of the scheme are utilized towards development of such assets.
Ø  The asset management company shall ensure that a real estate valuer
Ø  The asset management company shall ensure that no real estate valuer continues with valuation of particular real estate asset for more than two years and that no such valuer values the same asset for a period of at least three years thereafter.
Ø  The asset management company shall record in writing, the details of its decision making process in buying or selling real estate assets together with the justifications for such decisions and forward the same periodically to trustees.
Ø  The asset management company shall ensure that investment of funds of the real estate mutual fund scheme is not made contrary to provisions of the trust deed.
Ø  The asset management company shall obtain, wherever required under these regulations, prior in-principle approval from the recognized stock exchange(s) where units are proposed to be listed.
Usage of real estate assets of a real estate mutual fund scheme
Ø  The asset management company may let out or lease out the real estate assets held by the real estate mutual fund scheme if the term of such lease or letting does not extend beyond the period of maturity of the scheme.
Ø  Where real estate assets are let out or leased out, the asset management company shall diligently collect the rents or other income in a timely manner.
Ø  Real estate assets held by a real estate mutual fund scheme may be let out to the sponsor, asset management company or any of their associates, at market price or otherwise on commercial terms: Provided that not more than 25% of the total rental income of the scheme shall be derived from assets so let out.
Disclosures in offer document and other disclosures

49J. (1) The offer documents of real estate mutual fund schemes shall contain disclosures which are adequate for investors to make informed investment decisions and such further disclosures as may be specified by the Board.
(2)        The portfolio disclosures and financial results in respect of a real estate mutual fund scheme shall contain such further disclosures as are specified by the Board.

(3)        Advertisements in respect of real estate mutual fund schemes shall conform to such guidelines as may be specified by the Board.

Transactions by employees etc.

49K. (1) All transactions done by the trustees or the employees or directors of the asset management company or the trustee company in real estate assets shall be disclosed by them to the compliance officer within one month of the transaction.

(2)        The compliance officer shall make a report thereon from the view point of possible conflict of interest and shall submit it to the trustees with his recommendations, if any.

(3)        The persons covered in sub-regulation (1) may obtain the views of the trustees before entering into the transaction in real estate assets, by making a suitable request to them.]
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Tuesday, September 7, 2010

Board Meeting Provisions


Board Meetings Procedures

Periodicity of the Board Meetings and time-interval

The section 285 of the Companies Act, deals with the provisions and procedures of the meetings of the Board of the Company. It promulgates that every company whether public or private, registered under this Act, must hold at least one meeting of the Board members in every three months. So, there must be at least four Board meetings in every year. 


Thursday, August 19, 2010

Procedure of Chit Fund Registration


Procedure of Chit Fund Registration
Chit fund Companies operating in Delhi as a practice, first obtain a certificate of incorporation from the Registrar of Companies. The office of the Registrar of Companies (Delhi & Haryana) is at IFCI Tower, Nehru Place, New Delhi.
(A) Requirements for registration of New Co. with Registrar of Chit Fund, New Delhi.
After getting this certificate, you can apply for registration of the company with Chit Fund Department., Govt. of N.C.T. of Delhi, 13th floor, Vyapaar Bhawan, I.P. Estate, New Delhi 110 002 (Tel. No. 331 8992) alongwith undermentined documents:

Monday, August 16, 2010

INTELLECTUAL PROPERTY RIGHTS

                                               INTELLECTUAL PROPERTY RIGHTS
The importance of intellectual property in India is well established at all levels- statutory, administrative and judicial. India ratified the agreement establishing the World Trade Organisation (WTO). This Agreement, inter-alia, contains an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which came into force from 1st January 1995. It lays down minimum standards for protection and enforcement of intellectual property rights in member countries which are required to promote effective and adequate protection of intellectual property rights with a view to reducing distortions and impediments to international trade. The obligations under the TRIPS Agreement relate to provision of minimum standard of protection within the member countries legal systems and practices.

Wednesday, August 11, 2010

Establishment of Liasion Office in India


Establishment of Liasion Office in India
Liaison office acts as a channel of communication between the principal place of business or head office and entities in India.  Liaison office can not undertake any commercial activity directly or indirectly and cannot, therefore, earn any income in India.  Its role is limited to collecting information about possible market opportunities and providing information about the company and its products to prospective Indian customers.  It can promote export/import from/to India and also facilitate technical/financial collaboration between parent company and companies in India.
Permissible Activities for a Liaison Office

Tuesday, August 10, 2010

DISCLOSURE, AUDIT AND FILING REQUIREMENTS OF LLPs


DISCLOSURE, AUDIT AND FILING REQUIREMENTS OF LLPs
The followings are the requirements of LLP
Maintenance of Accounts
An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A “Statement of Accounts and Solvency” in prescribed form shall be filed by every LLP with the Registrar every year.

Friday, August 6, 2010

Provisions Related to Abuse of Dominance in Competition Act 2002


Provisions Related to Abuse of Dominance in Competition Act 2002
The Competition Act, 2002 as amended by the Competition (Amendment) Act, 2007, (the Act) follows the philosophy of modern competition laws and aims at fostering competition and at protecting Indian markets against anti-competitive practices by enterprises. The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises, and regulates entering into combinations (consisting of mergers, amalgamations and acquisitions) with a view to ensure that there is no adverse effect on competition in India. This competition advocacy and awareness booklet addresses the applicability of Section 4 of the Competition Act, 2002 relating to abuse of dominant position (dominance) by enterprises. Competition laws all over the world are primarily concerned with the acquisition and/or exercise of market power and its abuse. The term “market power” is variously known as “dominant position”, “monopoly power” and “substantial market power”.
WHAT IS DOMINANCE?