Business Regulations

Unit 1 Introduction to Business Laws {Book}
Introduction, Nature of Law, Meaning and Definition of Business Laws VIEW
Scope and Sources of Business Laws VIEW
Types of Business Law VIEW
Difference between Law and ethics VIEW
Case precedent: Meaning of plaintiff, Defendant, Petitioner, respondents, Public prosecutors, Advocate General, Solicitor general of India, Judicial Magistrate of First class, Civil Judge, Sessions (criminal court judge), Metropolitan magistrate, Economic offences. VIEW
Constitutional provisional relating to business affairs VIEW VIEW
Difference between Civil cases and Criminal cases VIEW
Adalaths

 

Unit 2 Contract Laws {Book}
Indian Contract Act, 1872 VIEW
Essentials of a valid contract VIEW
Classification of contracts VIEW
Remedies for breach of contract. VIEW VIEW
Termination and Discharge of Contract VIEW
Indemnity VIEW
Guarantee VIEW
Bailment and Pledge VIEW
Law of Agency VIEW
Indian Sale of Goods Act, 1930 VIEW
Essentials of contract of sale VIEW
Conditions and Warrantees VIEW VIEW
Rights and Duties of buyer VIEW
Rights of an unpaid Seller VIEW

 

Unit 3 Consumer Protection Act, (COPRA) 2019 {Book}
Consumer Protection Act, (COPRA) 2019, Objective of the Act VIEW
Important terms: Complaint, Consumer, Consumer dispute, consumer rights, defect, Deficiency, direct selling, E-commerce, Electronics Service providers, HARM, injury, Misleading advertisement, product liability
Restrictive trade practice, Service unfair trade practice (UTP) VIEW
Consumer dispute redressal forums District forum, State commission and National commission. Jurisdiction offences and penalties under the ACT VIEW

Extra Topic

 
The Competition Act, 2002 VIEW
Objectives, Features of Competition Act, 2002 VIEW
Offences and Penalties under the Act Competition Act, 2002 VIEW
Competition Commission of India VIEW
Consumer Protection Act, 1986 VIEW
Consumer VIEW
Consumer dispute VIEW
Defect, deficiency, unfair trade practices and services under the Protection Act, 1986 VIEW
Rights of the consumer under the Protection Act, 1986 VIEW
Consumer Redressal Agencies: District Forum, State Commission, National Commission VIEW

 

Unit 4 Insolvency and Bankruptcy Code (IBC) 2016 {Book}
Insolvency and Bankruptcy Code (IBC) 2016 Introduction, Rationale and Objectives VIEW
Need for Insolvency and Bankruptcy Code: Social, Legal, Economic and Financial Perspectives VIEW
Authorities and Enforcement Mechanism in IBC 2016 VIEW
Role of Adjudicating Authorities, Appellate Authorities VIEW
Insolvency of Individuals and Partnership firms VIEW

 

Unit 5 {Book}
Intellectual Property Right:
Introduction and the need for intellectual property right (IPR) VIEW
Kinds of Intellectual Property Rights:
Patent VIEW
Copyright VIEW
Trade Mark, Design VIEW
Geographical Indication VIEW
Plant Varieties and Layout Design VIEW
IPR in India VIEW
IPR in abroad VIEW
Major International Instruments concerning Intellectual Property Rights VIEW
Information Technology Act, 2000:
Information Technology Act, 2000: Objective of the Act VIEW
Meaning of Cyber Law VIEW
Cyberspace, Digital Signature VIEW
Private key, Public key VIEW
Encryption VIEW
Digital Signature certificate VIEW
Cyber Crimes: Meaning and Types, VIEW
Cyber Crimes Offences and Penalties VIEW
Information Technology (Amendment 2018) special provisions relating to online gaming, provision of adequate safeguards against dangerous gaming resources and online material that disturbs the cultural values and ethos. VIEW

 

E-Business & Computerized Accounting

Unit 1 E-Business {Book}
Introduction, e-Commerce Definition VIEW
History of e-commerce VIEW
Difference between e-Commerce and e-Business VIEW
e-Commerce v/s Traditional Commerce VIEW
Strengths, Weakness, Opportunities of e-Commerce VIEW
Challenges of e-Commerce VIEW
E-Commerce Business models; B2G, C2G VIEW
B2C VIEW
B2B VIEW
C2B VIEW
C2C VIEW
Types of e-commerce Business Revenue Models VIEW

 

Unit 2 e-Payments Mechanisms {Book}
e-Payment requirements, Meaning, and Importance VIEW
App based e-payment systems VIEW
M-Wallet Payments VIEW
Card based payment Credit card, Debit card and Different types of cards VIEW VIEW
Net Banking VIEW
M-Banking VIEW
NEFT and RTGS VIEW
Cheque Truncation System (CTS) VIEW
Payment through BiT-Coin (Not accepted in INDIA)
Cybercrimes in e-payments VIEW
Risks and Protection in e-payments VIEW
cyber laws and cyber police stations VIEW
Digital signature usage and Legal provisions VIEW
E-payment in Paperless society, Significance VIEW VIEW

 

Unit 3 Introduction of Tally and SAP {Book}
Meaning of Tally software, Features, Advantages VIEW
Required Hardware of Tally software VIEW
Introduction to SAP Meaning, features, configuration advantages and limitations VIEW
SAP in finance, SAP in Marketing, SAP in HR

 

Unit 4 Gateway of Tally {Book}

 

Unit 5 Reports in Tally {Book}

 

Costing Methods

Unit 1 Job and Batch Costing {Book}

Job Costing: Meaning, prerequisites, Job costing procedures, Features, objectives, applications, advantages and disadvantages of Job costing VIEW
Batch Costing Meaning, Advantages, Disadvantages VIEW
Determination of economic Batch Quantity VIEW
Comparison between Job and Batch Costing VIEW

 

Unit 2 Process costing {Book}
Introduction, meaning and definition, Features of Process Costing VIEW
Comparison between Job costing and Process Costing VIEW
Applications, Advantages and Disadvantages of Process Costing VIEW
Treatment of normal loss, Abnormal loss and Abnormal gain VIEW
Rejects and Rectification – Joint and by-products costing problems under reverse cost method VIEW

 

Unit 3 Contract Costing {Book}
Meaning, Features, Applications of Contract costing VIEW
Similarities and Dissimilarities between Job and Contract costing VIEW
Procedure of Contract costing VIEW
Profit on incomplete contracts VIEW

 

Unit 4 Operating Costing {Book}
Introduction, Meaning and application of Operating Costing VIEW
Power house costing or Boiler house costing VIEW
Canteen or Hotel costing VIEW
Hospital costing and Transport Costing, Problems VIEW

 

Unit 5 Output Costing {Book}
One Operation (Unit or Output) Costing VIEW
Collection of Costs VIEW
Tenders or Quotations VIEW
Treatment of Scrap VIEW
Production Account VIEW
Difference between a Production Account and a Cost Sheet VIEW

Advanced Corporate Accounting

Unit 1 Holding Company Accounts {Book}
Introduction Meaning of Holding Company VIEW
Introduction Meaning of Subsidiary Company VIEW
Steps, Pre-Acquisition Profits, Post Acquisition Profits VIEW
Minority Interest VIEW
Cost of Control or Capital Reserve VIEW VIEW
Unrealized Profit, Mutual Indebtedness VIEW
Preparation of Consolidated Balance Sheet (As per AS21) under vertical format VIEW

 

Unit 2 Mergers and Acquisition of Companies {Book}
Meaning of Amalgamation and Acquisition VIEW
Types of Amalgamation, Amalgamation in the Nature of Merger & Purchase VIEW
Methods of Purchase Consideration VIEW
Calculation of Purchase Consideration (Ind AS 103) VIEW
Net Asset Method VIEW
Net Payment Method VIEW
Accounting for Amalgamation VIEW
Entries and Ledger Accounts in the Books of Transferor Company and Transferee Company VIEW
Preparation of new Balance sheet. (Vertical Format) (Excluding External Reconstruction) VIEW

 

Unit 3 Internal Reconstruction {Book}
Internal Reconstruction Meaning, Objective, Procedure VIEW
Form of Reduction VIEW
Passing of Journal Entries for Internal Reconstruction VIEW
Preparation of Reconstruction accounts VIEW
Preparation of Balance Sheet after Reconstruction (Vertical Format) VIEW

 

Unit 4 Liquidation of Companies {Book}
Liquidation of Companies Meaning, Types of Liquidation VIEW VIEW VIEW
Order of Payment VIEW
Calculation of Liquidator’s Remuneration VIEW
Preparation of Liquidators Final Statement of Account VIEW

 

Unit 5 Recent Developments in Accounting & Accounting Standard’s {Book}
Meaning, Definitions, Characteristics, Functions and Importance of Human Resource Accounting VIEW
Meaning, Definitions, Characteristics, Functions and Importance of Environmental Accounting VIEW
Meaning, Definitions, Characteristics, Functions and Importance of Sustainability accounting VIEW
Meaning, Definitions, Characteristics, Functions and Importance of Forensic accounting VIEW
Meaning, Definitions, Characteristics, Functions and Importance of Public expenditure accounting VIEW
Meaning, Definitions, Characteristics, Functions and Importance of Social Responsibility Accounting VIEW

 

Corporate Accounting

Unit 1 Underwriting of Shares {Book}
Underwriting of Shares Meaning VIEW
Underwriting Commission VIEW
Underwriter functions VIEW
Advantages of Underwriting VIEW
Types of Underwriting VIEW
Marked and Unmarked Applications VIEW
Underwriting Process VIEW

 

Unit 2 Redemption of Debentures {Book}
Meaning of Debentures, Types of Debentures VIEW
Distinction between Shares and Debentures VIEW
Issue of Debentures, Over Subscription VIEW
Issue of Debentures for Consideration other than Cash VIEW
Issue of Debentures as a Collateral Security VIEW
Terms of Issue of Debentures VIEW
Interest on Debentures VIEW
Writing off Discount/Loss on Issue of Debentures VIEW
Redemption of Debentures VIEW
Redemption by Payment in Lump Sum, Open Market, Conversion VIEW
Sinking Fund Method VIEW

 

Unit 3 Valuation of Goodwill {Book}
Meaning, Circumstances, Factors of Valuation of Goodwill VIEW
Methods of Valuation of Goodwill:
Average Profit Method of Valuation of Goodwill VIEW
Super Profit Method of Valuation of Goodwill VIEW
Capitalization of Super Profit average Profit Method of Valuation of Goodwill VIEW
Annuity Method of Valuation of Goodwill VIEW
Capitalization of Profit Method VIEW

 

Unit 4 Valuation of Shares {Book}
Meaning, Need for Valuation of Shares VIEW
Factors Affecting Valuation of Shares VIEW
Methods of Valuation:
Intrinsic Value Method of Shares VIEW
Yield Method of Shares VIEW
Earning Capacity Method of Shares VIEW
Fair Value of shares VIEW
Rights Issue VIEW
Valuation of Rights Issue VIEW

 

Unit 5 Company Final Accounts {Book}
Statutory Provisions regarding preparation of Company Final Accounts VIEW
Treatment of Special Items VIEW
Tax deducted at source VIEW
Advance payment of Tax VIEW
Provision for Tax VIEW
Depreciation VIEW
Interest on debentures VIEW
Dividends VIEW
Rules regarding payment of dividends VIEW
Transfer to Reserves VIEW
Preparation of Profit and Loss Account and Balance Sheet in vertical form VIEW

 

Quantitative Analysis for Business Decision

Unit 1 Introduction to Statistics {Book}
Statistics: Meaning and Definition, Functions, Scope, Limitations VIEW
Important terminologies in Statistics: Data, Raw Data, Primary Data, Secondary Data, Population, Census, Survey, Sample Survey, Sampling, Parameter, Unit, Variable, Attribute, Frequency VIEW
Seriation: Individual, discrete and continuous VIEW
Classification of Data VIEW
Perquisites of Good Classification of Data VIEW
Types of Classification Quantitative and Qualitative Classification of Data VIEW

 

Unit 2 Classification and Tabulation of Data {Book}
Types of Presentation of Data Textual Presentation, VIEW
Tabular Presentation VIEW
One-way Table, Two-way Table VIEW
Important terminologies Variable, Quantitative Variable, Qualitative Variable, Discrete Variable, Continuous Variable, Dependent Variable, Independent Variable, Frequency, Class Interval, Tally Bar VIEW
Diagrammatic and Graphical Presentation, Rules for Construction of Diagrams and Graphs VIEW
Types of Diagrams One Dimensional-Simple Bar Diagram, Sub-divided Bar Diagram, Multiple Bar Diagram, Percentage Bar Diagram VIEW
Two Dimensional Diagram Pie Chart VIEW
Graphs Histogram VIEW
Frequency Polygon VIEW
Ogives curve VIEW

 

Unit 3 Measures of Central Tendency {Book}
Meaning and Definition VIEW
Types of Averages:
Arithmetic Mean (Simple and Weighted) VIEW
Median VIEW
Mode VIEW
Graphical representation of median and mode, Ogive curve VIEW
Smoothed frequency curve VIEW

 

Unit 4 Measures of Dispersion and Skewness {Book}
Meaning and Objectives of Measures of Dispersion VIEW
Requisites of Good Measure of Dispersion VIEW
Types of Measures of Dispersion VIEW
Range VIEW
Quartile Deviation VIEW
Mean Deviation & Co-efficient of Variation VIEW
Standard Deviation & Co-efficient of Variation VIEW
Skewness: Meaning, Uses, Co-efficient of Skewness VIEW
Karl Pearson’s VIEW
Bowley’s Coefficient of Skewness VIEW

 

Unit 5 Correlation, Regression & Time Series Analysis {Book}
Meaning and Types of Correlation VIEW VIEW VIEW
Karl Pearson’s Coefficient of Correlation VIEW
Spearman’s Rank Correlation Coefficient VIEW
Correlation Coefficient through Regression Coefficient VIEW
Meaning of Regression VIEW VIEW
Regression Lines, Regression Coefficients, Regression Equations VIEW
Meaning and Components of Time Series VIEW VIEW
Analysis of time series by Moving Average VIEW
Analysis of time series by Least Squares Method VIEW

Read More: https://indiafreenotes.com/umbms-business-statistics/

Marketing & Event Management

Unit 1 Marketing Management and Environment {Book}
Marketing Management: Meaning, Definitions VIEW VIEW
Features of Market VIEW
Features of Marketer VIEW
Marketing Concepts: Selling Concept, Marketing Concept and Societal Marketing Concept VIEW
Marketing versus Selling VIEW
E-marketing VIEW
Digital or Internet marketing VIEW
Marketing Environment VIEW
Micro Environment: Suppliers, Competitors, Intermediaries, Customers and Public VIEW VIEW
Macro Environment Demographic, Economic, Natural, Technological, Political and Cultural Factors VIEW

 

Unit 2 {Book}
Marketing mix: Meaning, components VIEW
**Product VIEW
**Product Mix VIEW
**Product Line VIEW
**Product lifecycle VIEW
**Product Planning VIEW
**New Product Development VIEW
4ps for goods marketing VIEW
7ps for services marketing VIEW
Distinction between goods marketing and service marketing VIEW
MIS VIEW VIEW VIEW
Marketing research VIEW VIEW VIEW
Marketing intelligence VIEW
Market Segmentation Definition, Objectives, Advantages, Limitations VIEW
Bases of Market Segmentation VIEW

 

Unit 3 Consumer Behaviour {Book}
Meaning, Definitions, Features and Importance of Consumer Behaviour VIEW VIEW
Customer versus Consumer VIEW
Buyer versus User VIEW
Buyer versus Decision Maker VIEW
Factors influencing Consumer Behaviour Cultural, Social, Personal and Psychological Factors VIEW
Consumers Buying Roles Initiator, Influencer, Decider, Buyer and User VIEW
Buying Behaviour: Complex Buying Behaviour, Dissonance Reducing Buying Behaviour, Habitual Buying Behaviour, Variety Seeking Buying Behaviour VIEW
Steps in Buying Process Need Recognition, Information Search, Evaluation of Alternatives, Purchase Decision and Post Purchase Behaviour VIEW

 

Unit 4 Event management {Book}
Event: Meaning, Definition, Characteristics, Types, Advantages VIEW
5C’s of event VIEW
Types of Customers for Events VIEW
Event management Meaning, Definitions, Essentials, Key Drivers VIEW
Stages and Decision Makers in Event Management VIEW
Event Management Staff VIEW
Establishing Policies and Procedures of an Event VIEW
Role of Event Manager and the people involved in conducting the event VIEW
Developing Record Keeping System in Event Management VIEW

No Update of Unit 5

Unit 5 Conduct of an Event & Procedure {Book}
Planning Schedule VIEW
Steps to Organize an Event VIEW
Assignment of Responsibilities: VIEW
Communication in Events VIEW
Multichannel used for communication, VIEW
Operational Communication Tools for Events VIEW
Event Marketing and Communications Planning Process VIEW
Budget of an Event Basic Event Budgeting Rules, Typical Event Expenditure VIEW
Budget of an Event VIEW
Fundamentals of Creating an Event Budget VIEW
Predicting the Financial Outcome of an Event VIEW
Importance of Financial Control of an Event VIEW
Continual adjustment of the Event Budget VIEW
Computer Aided Event Management VIEW
Use of Computer and Technology from the start to End of Event VIEW
Event Planning Software VIEW
Roles and responsibilities of Event manager for different Events VIEW
Checklist of an Event, Emergency plan checklist for an Event VIEW
Sample event planning checklist VIEW
Event Proposal VIEW
Events Licenses and Permissions, permits and license for events VIEW
Government Environment for Event VIEW

 

Read More: https://indiafreenotes.com/umbms-principles-of-marketing/

Read More: https://indiafreenotes.com/umbms-consumer-behaviour/

 

 

Depositories in Stock Market

In India, a Depository Participant (DP) is described as an Agent of the depository. They are the intermediaries between the depository and the investors. The relationship between the DPs and the depository is governed by an agreement made between the two under the Depositories Act. In a strictly legal sense, a DP is an entity who is registered as such with SEBI under the sub section 1A of Section 12 of the SEBI Act. As per the provisions of this Act, a DP can offer depository-related services only after obtaining a certificate of registration from SEBI. As of 2012, there were 288 DPs of NSDL and 563 DPs of CDSL registered with SEBI.

SEBI (D&P) Regulations, 1996 prescribe a minimum net worth of Rs. 50 lakh for stockbrokers, R&T agents and non-banking finance companies (NBFC), for granting them a certificate of registration to act as DPs. If a stockbroker seeks to act as a DP in more than one depository, he should comply with the specified net worth criterion separately for each such depository. No minimum net worth criterion has been prescribed for other categories of DPs; however, depositories can fix a higher net worth criterion for their DPs.

Basics of Depository

Depository is an institution or a kind of organization which holds securities with it in De-Mat form, in which trading is done among shares, debentures, mutual funds, derivatives, F&O and commodities. The intermediaries perform their actions in variety of securities at Depository on behalf of their clients. These intermediaries are known as Depositories Participants (DPs). Fundamentally, there are two sorts of depositories in India. One is the National Securities Depository Limited (NSDL) and the other is the Central Depository Service (India) Limited (CDSL). Every Depository Participant (DP) needs to be registered under this Depository before it begins its operation or trade in the market.

Demat Account Opening

A demat account is opened on the same lines as that of a Bank Account. Prescribed Account opening forms are available with the DP, needs to be filled in. Standard Agreements are to be signed by the Client and the DP, which details the rights and obligations of both parties. Along with the form the client requires to attach Photographs of Account holder, attested copies of proof of residence and proof of identity needs to be submitted along with the account opening form.

In case of Corporate clients, additional attachments required are true copy of the resolution for Demat a/c opening along with signatories to operate the account and true copy of the Memorandum and Articles of Association is to be attached.

Services provided by Depository

  • Dematerialisation (usually known as demat) is converting physical certificates of Securities to electronic form
  • Rematerialisation, known as remat, is reverse of demat, i.e. getting physical certificates from the electronic securities
  • Transfer of securities, change of beneficial ownership
  • Settlement of trades done on exchange connected to the Depository
  • Pledging and Unpledging of Securities for loan against shares
  • Corporate action benefits directly transfer to the Demat and Bank account of customer

No. of Depository in the country

Currently there are two depositories operational in India.

  • National Securities Depository Ltd. – NSDL – Having 2 crores Demat A/c as on 30-06-2020
  • Central Depository Services Ltd. – CDSL – Having 2.3 crores Demat A/c as on 30-06-2020

Depositories Act 1996

The definition of depositories under the Depositories Act, 1996 is that a “depository” is a company registered under the Companies Act, 1956. It would be granted a certificate of registration under Section 12 subsection (1A) of Securities and Exchange Board of India Act (SEBI), 1992. Hence the Depository becomes an organization like a central bank.  The main role of Depositories is to dematerialize the securities which mean converting the securities from physical form to electronic form and enabling transactions in electronic form. The depository needs to obtain a certificate of commencement of business from SEBI. At present two Depositories are functioning in India:

  • National Securities Depository Limited (NSDL)
  • Central Depository Services (India) Limited (CDSL)

Depository Participant (DP)

The Depository Participant is the link between the owner of the securities and the depositors. He is deemed to be an agent of the depository. Accordingly, he is authorized to offer depository services to investors. As per SEBI regulations and Depository Act, a depository cannot interact directly with beneficial owners. He has to deal with its agents called Depository Participant. Neither can the investors directly approach the depository for any services. They have to interact through the DP.

Services provided by a depository

The following services are provided by a depositor through a DP:

  1. Opening a Demat Account

The first step is to open a Demat Account. Demat Account is the short form for Dematerialisation Account. It is the process of holding investments like mutual funds, shares, bonds, government securities, etc. It does away with the hassles of maintenance of physical documents.

  1. Dematerialization

This process is the conversion of physical shares to electronic shares. When a shareholder uses this facility, the Company takes back the physical shares through the depository system and equal numbers of shares are credited into the shareholder’s account.

  1. Rematerialization

This is the exact opposite of Dematerialization. Here physical securities are issued in place of securities in electronic form. 

  1. Other services

Pledging Dematerialized shares

Dematerialized shares can be pledged. After the loan is repaid a request can be made through one’s DP to close the pledge through a standard format.

Initial Public Offerings

Public offer credits can be directly received into the Demat account.

Receipt of cash/non-cash benefits

When rights or bonus or dividend is announced by any corporate event for a particular security, the depository will give the details of all the clients having electronic holdings to the registrar as on that date. The registrar will then calculate the benefits due to all the shareholders.

Stock lending and borrowing

Securities in the Demat form can be easily lent/ borrowed. Instructions are to be given to DP through a standard format (which is available with DP).

Transmission of securities

In case there is a need for transmission of securities due to death, lunacy, bankruptcy, insolvency, or by any other lawful means, it is possible through the depository system. The claimant will have to fill in a transmission request form supported by valid documents.

Freezing Account with DP

If at any time one wishes that no transaction should be effected in one’s account, one may advise one’s DP accordingly. DP will freeze the account of the investor until further instructions.

Dematerialization process

  1. Appointing DP

The investor chooses a DP of his choice and opens an account with him.  The process will be just like opening an account with a bank. The Investor gets an identification number called Client ID. This is just like the bank account number. This no is the reference point for all transactions with DP. Every investor with the help of a DP has to agree with a depository to get his holding dematerialized. This step is necessary whether an investor already has securities or securities are yet to be issued in a fresh issue.

  1. “Demat” Request

The investor makes an application to DP’s in a form called Dematerialisation Request Form is known as DRF.  This form is provided by the DP, the investor hands over his share certificates after cancelling them in writing. The certificates are then surrendered to get dematerialized for Demat. The DP will accept certificates registered only in the investor’s name.

  1. Verification and confirmation by Registrar

The depository electronically intimates the issuer or its Registrar of the dematerialization request. The issuer or the Registrar has to verify the security certificates. He also has to verify that the DRF has been made by the person recorded as a member in its Register of Members. Once the Registrar is satisfied, it dematerializes the scrip and updates its record. The Registrar then authorizes electronic credit for that security in the investor’s favour and informs the depository of the same.

  1. Crediting the Client’s Account

The investor’s account is credited by DP with the number of shares dematerialized. After this, the investor holds the securities in electronic form. The investor gets the information in the form of a statement.  However, in case, there is a rejection then such credit is not given.

Features of the Depository System in India

  1. Securities in dematerialized form

The depository model is more or less similar to holding funds in bank accounts. Transfer of ownership of securities is done through simple account transfer. This method is simpler and avoids cumbersome paperwork.

  1. Fungibility

Fungibility means an asset can be interchanged with another asset of a similar type. The dematerialized securities are not identified by share certificate numbers. Hence all securities which are in the same class can be interchanged.

  1. Registered and beneficial owner

There are two types of ownership of securities. One is a registered owner and the other is a beneficial owner. For all the dematerialized securities, NSDL is the registered owner but ownership rights, duties and liabilities are with beneficial owners.

  1. Easy transferability of shares

The transfer takes place freely through the electronic system and dispenses the procedural formalities related to paperwork.

  1. No stamp duty

For the transfer of physical shares, then the stamp duty of 0.5% is payable on the market value of the shares. However, there is no such duty on the electronic form.

  1. No risk

Physical certificates have issues like loss in transit, theft, bad deliveries, etc. There is hardly any risk involved in the electronic system as compared to physical certificates.

Private placements of Shares

Private placement, the issue is placed directly with a few selected small number of investors. This is also known as non-public offering. Typical investors include large banks, mutual funds, insurance companies and pension funds. The private placement does not have to be registered with the Securities and Exchange Commission.

Private placements are much cheaper than IPOs. However, this method cannot be used for large issues because a small group of investors will have limited risk appetite. Also, these issues are not traded in the secondary market, as opposed to IPO securities, which once listed are traded in the secondary market. This makes it difficult for investors to liquidate these securities.

The term private placement refers to the sale of securities to a small number of private investors to raise capital. These private investors include mutual fund investors, banks, insurance companies and etc. Private placements are different from public issue since in the latter one the shares are sold in the open market to anyone willing to buy them whereas in private placements of shares the shares are sold to specific investors.

Private placement is a method of raising capital in which securities are sold directly to a selected group of investors rather than through a public offering. This targeted approach allows companies to raise funds from a specific set of investors, often institutions or high-net-worth individuals, without the need for public registration. Private placements are regulated by securities laws, and the process involves meticulous planning, compliance, and negotiations between issuers and investors.

Private placement is a valuable tool for companies seeking to raise capital efficiently while maintaining a degree of confidentiality. It provides flexibility in structuring deals, selecting investors, and tailoring terms to meet specific needs. While private placements may not be suitable for all companies, they offer a strategic avenue for raising capital, attracting strategic partners, and fueling growth in a controlled and efficient manner. Companies considering private placements should carefully assess their capital needs, regulatory obligations, and strategic goals before engaging in this form of capital raising.

Features of Private Placement:

  1. Limited Investor Pool:

Private placements involve a restricted number of investors. This targeted approach allows issuers to negotiate terms with a select group, often chosen based on their strategic alignment with the company’s goals.

  1. Exemption from Public Registration:

Unlike public offerings, private placements are exempt from the rigorous public registration process. This exemption is provided under various securities regulations, such as Regulation D in the United States or the SEBI (Securities and Exchange Board of India) guidelines in India.

  1. Negotiable Terms:

Issuers and investors have more flexibility in negotiating the terms of the private placement. This includes aspects such as pricing, the structure of securities, and any covenants or conditions attached to the investment.

  1. Diverse Securities:

Private placements can involve a variety of securities, including equity, debt, convertible securities, or preferred shares. The choice of security depends on the company’s capital needs and the preferences of investors.

  1. Customized Agreements:

The terms and conditions of private placement agreements are often customized to suit the specific needs of both parties. This flexibility allows for tailoring the investment structure to align with the company’s strategy.

  1. Confidentiality:

Private placements offer a level of confidentiality that is not present in public offerings. Companies can raise capital without disclosing sensitive information to competitors or the broader market.

Regulatory Framework for Private Placement:

While private placements offer flexibility, they are subject to regulatory oversight to protect the interests of investors. The regulatory framework varies by jurisdiction, but common elements:

  1. Accredited Investors:

Many jurisdictions restrict private placements to accredited investors, who are deemed to have the financial sophistication to understand and assess the risks associated with these investments.

  1. Exemptions from Registration:

Private placements are exempt from the full registration requirements that public offerings must undergo. However, issuers must comply with specific regulations governing private placements.

  1. Disclosure Requirements:

While private placements provide confidentiality, issuers are still required to provide certain disclosures to investors. These disclosures may include financial statements, risk factors, and other relevant information.

  1. Limited Marketing and Solicitation:

The solicitation of investors in a private placement is limited compared to public offerings. Issuers must be cautious in their approach to avoid violating regulations related to marketing and advertising.

  1. Resale Restrictions:

Investors in private placements may face restrictions on selling their securities in the secondary market. These restrictions help maintain the private nature of the placement.

Advantages of Private Placement:

  1. Efficiency and Speed:

Private placements are generally faster and more cost-effective than public offerings. The absence of extensive regulatory reviews and public registration processes accelerates the capital-raising timeline.

  1. Selective Investor Engagement:

Issuers can choose investors strategically, targeting those with industry expertise, strategic alignment, or specific financial capabilities.

  1. Flexibility in Terms:

The negotiated nature of private placements allows issuers to tailor terms and conditions to meet the specific needs and goals of both the company and investors.

  1. Confidentiality:

Private placements offer a level of confidentiality, allowing companies to raise capital without divulging sensitive information to the public.

  1. Strategic Alignment:

By selectively choosing investors, companies can attract strategic partners who bring not just capital but also industry knowledge, networks, and expertise.

  1. Lower Costs:

The costs associated with private placements are generally lower than those of public offerings due to reduced regulatory requirements and marketing expenses.

Challenges and Considerations:

  1. Limited Capital:

Private placements may not be suitable for companies seeking significant amounts of capital, as the investor pool is restricted.

  1. illiquidity for Investors:

Investors in private placements may face challenges in selling their securities, as these transactions are often subject to restrictions.

  1. Regulatory Compliance:

Companies must navigate complex regulatory requirements to ensure compliance with securities laws. Failure to comply can result in legal consequences.

  1. Market Perception:

Companies choosing private placements may miss out on the visibility and market perception that comes with a public offering.

  1. Negotiation Complexity:

Negotiating terms with a select group of investors can be complex, requiring skilled negotiation and legal expertise to strike a mutually beneficial deal.

Provisions as per Companies Act

(1) A company may, subject to the provisions of this section, make a private placement of securities.

(2)  A private placement shall be made only to a select group of persons who have been identified by the Board (herein referred to as “identified persons”), whose number shall not exceed fifty or such higher number as may be prescribed [excluding the qualified institutional buyers and employees of the company being offered securities under a scheme of employees stock option in terms of provisions of clause (b) of sub-section (1) of section 62], in a financial year subject to such conditions as may be prescribed.

(3) A company making private placement shall issue private placement offer and application in such form and manner as may be prescribed to identified persons, whose names and addresses are recorded by the company in such manner as may be prescribed.

Statutory Provisions for Private Placement of Securities:

Private Placement of Securities is covered under Section 42 of the Companies Act, 2013 and Companies (Prospectus and Allotment of Securities) Rules, 2014Private Placement is defined as any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through Private Placement Offer-cum-Application.

To whom can a Private Placement offer be made:

Private Placement Offer can be made to a prospective investor or any person who intends to invest a specific amount of funds in the Company against issue of securities. Offer to subscribe for the securities of a Company under Private Placement cannot be made to more than 200 persons in a Financial Year. If a company, listed or unlisted, makes an offer to allot or invites subscription, or allots, or enters into an agreement to allot, securities to more than the prescribed number of persons, same shall be deemed to be an offer to the public.

Advertisement:

No advertisements, media marketing or distribution channels or agents to be used by the company to inform the public at large about such an issue.

Procedure:

Following procedure should be followed by the Company intending to issue securities under Private Placement:

  • Calling for the meeting of the Board of Directors of the Company to offer securities on Private Placement Basis.
  • Passing of Board Resolution for issue of shares under Private Placement to specified persons and calling for Extra-Ordinary General Meeting of the Company to take members approval.
  • Filing form MGT-14- Board Resolution for issue of shares under Private Placement.
  • Issuing notices to the shareholders for Extra-Ordinary General Meeting of the Company as per timelines or with shorter consents.
  • Passing Special Resolution in the Shareholders meeting for issue and allotment of shares under Private Placement.
  • Sending Offer cum Application Letters in form PAS-4 to identified persons within 30 days of recording the names of the identified persons. Such Offer cum Application Letters can be sent in electronic mode (emails) or by post.
  • Receiving allotment amount in a separate bank account within the offer period as mentioned in the Offer cum Application Letter.
  • The Company shall allot shares to the applicants who has subscribed for the same through application letter and deposited the subscription amount within the offer period.
  • After Closure of Offer Period call a Board Meeting and pass Resolution for Allotment of Securities to the entitled subscribers.
  • Filing of return of allotment in Form PAS-3 within 15 days from the date of the allotment i.e. After passing Board Resolution for allotment
  • Make sure the securities are allotted within 60 days of the receipt of Application amount by the Company.
  • Stamp Duty on allotment shall be paid @ 0.10% through channels as available in respective states. e.g. In Mumbai it can be paid to ESBTR or GRASS MAHAKOSH site
  • The Company will be allowed to utilize the money raised through Private Placement only after Return of Allotment in Form PAS-3 is filed with the Registrar of Companies.
  • Record of Private Placement should be maintained by the Company in prescribed Form PAS-5.
  • The Company should update its Registrar of Members in a proper manner upon completion of allotment.

Difference between Salary and Wages

Salary

Salary is a fixed regular payment, typically paid on a monthly basis, for the performance of work or services. Unlike wages, which are often calculated on an hourly or weekly basis, salaries provide employees with a consistent and predetermined amount of compensation, regardless of the number of hours worked.

Components:

  1. Base Salary:

The core, fixed amount of money paid to an employee on a regular basis, forming the foundation of the overall salary. Reflects the employee’s role, responsibilities, and experience.

  1. Bonuses:

Additional monetary rewards provided to employees, often based on performance, company profits, or specific achievements. Motivates employees and aligns their efforts with organizational goals.

  1. Allowances:

Supplementary payments intended to cover specific expenses or costs related to the job, such as housing, transportation, or meals. Addresses the financial impact of job-related requirements.

  1. Benefits:

Non-monetary compensation, including healthcare, retirement plans, and other perks, provided to enhance employees’ overall well-being. Contributes to employee satisfaction and work-life balance.

  1. Overtime Pay:

Additional compensation for hours worked beyond the standard workweek, often calculated at a higher rate than the regular hourly pay. Compensates employees for extra effort and time invested in work.

  1. PerformanceBased Incentives:

Variable payments linked to individual or team performance, encouraging employees to achieve specific goals or targets. Aligns compensation with results and fosters a performance-driven culture.

  1. Profit Sharing:

Sharing company profits with employees, providing them with a stake in the organization’s financial success. Aligns the interests of employees with the overall success of the business.

  1. Commissions:

Payments based on sales or revenue generated by an employee, common in roles with direct sales responsibilities. Rewards employees for their contribution to revenue generation.

  1. Retirement Benefits:

Contributions made by the employer to retirement plans, such as 401(k) or pension schemes. Supports employees in building financial security for their post-work years.

  • Stock Options:

The right to purchase company stock at a predetermined price, offering employees a share in the company’s ownership. Aligns employees’ interests with the company’s long-term success.

  • Education and Training Support:

Financial assistance provided by the employer for the education and skill development of employees. Promotes continuous learning and professional growth.

  • Health and Wellness Programs:

Initiatives and benefits aimed at promoting employees’ physical and mental well-being. Enhances employee health, productivity, and job satisfaction.

  • Vacation and Leave Benefits:

Paid time off from work, including vacation days, holidays, and other types of leave. Supports work-life balance and employee well-being.

  • Severance Pay:

Compensation provided to employees upon termination of employment, often based on factors like length of service. Offers financial support during transitions and provides a safety net for employees.

  • Other Perquisites (Perks):

Additional benefits or privileges provided to employees, such as company cars, memberships, or flexible work arrangements. Enhances the overall employment experience and contributes to employee satisfaction.

Wages

Wages refer to the compensation paid to an employee for the hours worked or services rendered, often calculated on an hourly, daily, or weekly basis. Unlike salaries, which provide a fixed amount irrespective of hours worked, wages are directly tied to the time spent on the job.

Components:

  1. Hourly Rate:

The amount paid for each hour worked by an employee. Forms the basic unit for calculating wages based on time.

  1. Overtime Pay:

Additional compensation provided for hours worked beyond the standard workweek or regular working hours. Compensates employees for extra effort and time beyond the standard working hours.

  1. Piece-Rate Pay:

Compensation based on the number of units produced or tasks completed. Directly links pay to productivity and output.

  1. Commission:

A percentage of sales or revenue earned by an employee, common in sales roles. Rewards employees based on their contribution to generating business.

  1. Tips and Gratuities:

Additional payments received by employees, often in service industries, as a form of appreciation from customers. Augments income and is often based on customer satisfaction.

  1. Holiday Pay:

Compensation for hours worked on recognized holidays. Encourages employees to work during holiday periods and compensates for the disruption to personal time.

  1. Shift Differentials:

Additional pay for working shifts that fall outside regular daytime hours. Compensates for inconveniences associated with non-standard working hours.

  1. Bonuses (Variable):

Additional payments beyond regular wages, often tied to performance, project completion, or other achievements. Acts as an incentive and recognition for exceptional contributions.

  1. Piecework Bonuses:

Additional payments for meeting or exceeding production targets in piecework arrangements.  Motivates employees to achieve or surpass production goals.

  • Travel Allowances:

Compensation for work-related travel expenses, such as mileage or transportation costs. Addresses additional costs incurred while traveling for work.

  • Uniform or Tool Allowances:

Payments provided to cover the cost of uniforms, tools, or equipment required for the job. Supports employees in meeting job-specific requirements.

  • Incentive Pay:

Additional compensation tied to achieving specific targets, often related to productivity or efficiency. Encourages employees to meet or exceed performance expectations.

  • Danger Pay:

Additional compensation for employees working in hazardous conditions or environments. Recognizes the risks associated with certain jobs.

  • Call-out Pay:

Compensation for employees called in to work outside their regular schedule, often applicable to on-call positions. Compensates for the inconvenience of being available on short notice.

  • Benefits (Limited):

Some wage-related benefits, such as health insurance or retirement contributions, may be provided, but to a lesser extent compared to salary packages. Enhances the overall compensation package, albeit on a more limited scale compared to salaried positions.

Difference between Salary and Wages

Basis of Comparison

Salary

Wages

Payment Frequency Monthly Hourly or Weekly
Consistency Fixed, stable Variable, fluctuates
Calculation Basis Annual rate / 12 Hourly rate x Hours worked
Overtime Compensation Typically included Paid separately
Employment Level Often for salaried employees Common for hourly workers
Work Hours Impact Irrelevant to pay Directly affects earnings
Benefits Often includes benefits Limited or no benefits
Professional Positions Common for white-collar jobs Common for blue-collar jobs
Skill-Based Reflects skills and qualifications Often skill-independent
Administrative Work Common for managerial roles Common for administrative roles
Unionization Less common for unionized jobs Common in unionized settings
Job Complexity Reflects job responsibilities May not directly reflect complexity
Job Stability Generally perceived as stable Can be influenced by job market
Performance Impact Less direct impact on pay Directly impacts pay through hours
Perception in Society Often associated with higher status May not carry the same status

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