Suspense Escrow Demat Account

 

Pursuant to SEBI Circular No. SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2022/6 dated January 25, 2022. Followed by SEBI Letter No. SEBI/HO/MIRSD/POD-1/OW/P/2022/64923 dated December 30, 2022, Listed Entity are required to Open Suspense Escrow Demat Account.

Those companies who have still not opened “Suspense Escrow Demat Account” and are currently using “Demat Suspense Account / Unclaimed Suspense Account” as provided under Schedule VI of SEBI (LODR) Regulations, 2015 for the purpose of Letter of Confirmation (“LOC”) cases, shall move securities pertaining to Letter of Confirmation cases to newly opened “Suspense Escrow Demat Account” latest by January 31, 2023.

 As per Circular dated January 25, 2022 The listed entity shall issue the securities in dematerialized form only while processing the following request:

1.       Issue of duplicate share certificate.
2.       Claim from unclaimed suspense certificate.
3.       Renewal /exchange of securities certificates/folios.
4.       Transmission.
5.       Transposition.
6.       Endorsement.
7.       Sub- division / splitting of the securities certificate.
8.       Consolidation of securities certificates/ folios.

 Process of claiming:

• The claimant shall submit duly filled up Form ISR- 4.
• In case of item no. 3 to 8 the RTA/ issuer company shall obtain the original securities certificate to processing the service requests.
• The RTA/ Issuer Company shall verify the request and issue a Letter of Confirmation to the claimant, within 30 days of its receipt of such request after removing objections, if any.
• The LOC shall be valid for 120 days from the date of its issuance, within which the claimant shall make a request to DP for dematerializing the said securities.
• The RTA / Issuer Company shall issue a reminder after the end of 45 days and 90 days from the date of issuance of LOC, in case of no such request has been received by the RTA / Issuer Company.
• In case the claimant fails to submit the demat request within aforesaid period, The RTA / Issuer company shall credit the securities to the Suspense Escrow Demat Account.

Guideline For Dematerialization Of Securities Received For Processing Investor Service Request

• After verifying and processing the request, the RTA / issuer company shall intimate the claimant about its execution / issuance of certificate as may be applicable, by way of issuing LOC in lieu of share certificate provided by the claimant.
• The letter shall inter- alia contain details of folio and demat account number (If available) of the claimant.
• Then letter shall be sent by the RTA through registered/ speed post to claimant, additionally the RTA / issuer company may send such letter by e- mail.
• Within 120 days claimant shall submit the demat request, with the original letter or a copy of  email with e- sign and/or digital signature  to the DP
• The RTA / Issuer Company shall issue a reminder after the end of 45 days and 90 days from the date of issuance of LOC, in case of no such request has been received by the RTA / Issuer Company.
• In case of the securities which are required to be locked in, The RTA / issuing company while approving the demat request shall intimate the depository about the lock- in and its period.
• In case the claimant fails to submit the demat request within aforesaid period, The RTA / Issuer company shall credit the securities to the Suspense Escrow Demat Account.
• The RTA shall retain the physical securities  and deface the certificate with  “LOC” stamp on the face / reverse of the securities , subsequent to  processing of service request.

·        Steps for Suspense Escrow Demat Account

• Open a separate demat account with name of Suspense Escrow Demat Account.
• Companies using demat suspense account/ unclaimed suspense account for the purpose of moving letter of confirmation cases require to open suspense Escrow demat account by January 31, 2023.
• In case where the security holder/ claimant fails to submit the demat request to the DPs within the period of 120 days from the date of issuance of letter of confirmation.
•  RTA shall move the said securities to a physical folio suspense Escrow demat account and issue a consolidated letter of confirmation to the company for the said securities on a monthly basis.
• The listed entity shall dematerialized these securities in suspense Escrow demat account with one of the DPs within 7 days of receipt of such letter of confirmation from RTA.
• The listed entity shall maintain details of security holder whose securities are credited to such suspense Escrow demat account.
• Suspense account shall be held by the company purely on behalf of the security holder.

On receipt of following document RTA shall re-issue:

• Duly filled in and signed Form ISR- 4.
• Client master list of the demat account for crediting the securities to the security holder account
• Provided the details of CML should match with the details recorded with RTA / Issuer Company.

Disclaimer: The content of this blog is for informational and educational purposes only and does not constitute legal advice or opinion.

Issue of Debentures under Companies Act, 2013

 

General Compliance for Private Placement of Debenture

Section 42(2), (3) and (5) and Rule 14(2) of the Prospectus Rules

No fresh offer or invitation should be made unless the allotments with respect to any previous offer or invitation have been completed or that offer or invitation has been withdrawn or abandoned by the Company.

A company may make multiple issues in a financial year, subject to overall limit of 200 persons (excluding qualified institutional buyers and employees subscribing and ESOPs) for all such issues, in a financial year.

Section 42(7)

The Company must not release any public advertisements or utilise any media, marketing or distribution channels or agents for informing the public at large about the NCD Issue.

Section 42(2) and 179(3)(c)

Pass a board resolution authorising the issue of the NCDs. The board resolution should specify the class of investors who will be subscribing to the NCDs.

Section 42, and Rule 14(1) and 14(2), Prospectus Rules

Pass a special resolution of the shareholders approving the offer of debentures for subscription by way of private placement, as required under the Prospectus Rules.

Section 179, 180, 186, 188, CA 2013

Pass a special resolution of the shareholders approving the creation of security and providing guarantee.

Pass a board resolution for:

(a) Approving creation of security and providing guarantee; and

(b) Approving related party transactions

Sections 42(4) and 42(6) and Rule 14(5), Prospectus Rules

Investors make payment. All monies payable towards subscription of debentures shall be paid through cheque or demand draft or other banking channels but not by cash. The company shall not utilize the money until allotment is completed and the return of allotment has been filed with the relevant Registrar of Companies. Further, monies received on application under this section shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than—

(a) for adjustment against allotment of securities; or

(b) for the repayment of monies where the company is unable to allot securities.

Section 42(6)

Allot the NCDs by passing a board resolution and pay the relevant stamp duty amount on the debentures to the depository

Rule 14(4), Prospectus Rules

The Company should maintain a complete record of private placement offers in Form PAS-5 and the Placement Memorandum with itself.

Section 42(8) and (9) and Rule 12 and Rule 14(6), Prospectus Rules

The Company should file return of allotment in Form PAS-3, along with the fee as specified in the Fees Rules within 15 days of allotment of NCDs     

 

Pursuant to Section 71 of Companies Act, 2013

1.       debentures issued shall not carrying any voting rights

2.       Debenture redemption reserve account shall be created out of the profit of company

3.       Appointment of Debenture Trustee is mandatory if invitation is made to more than 500 Persons.

4.       Debenture Trust deed shall not contain any provision exempting a trustee thereof from, or indemnifying him against, any liability for breach of trust.

5.       Exemption can be provided to Debenture Trustee if approved by Majority of Debenture holder not less than 3/4^th in Value in Meeting held for the purpose.

6.       Payment of Interest and Redemption of debenture shall be in terms and condition of their issue.

7.       If Debenture Trustee conclude that assets of company are insufficient or become insufficient to discharge the principal when become due, then he may file petition before tribunal for imposing restriction on incurring of any further liabilities by the company.

8.       If company fails to pay interest or Principal amount when become due, then debenture holder or debenture trustee may file petition to tribunal. Tribunal may, after hearing both parties, order to redeem the debenture.

9.       A contract with the company to take up and pay for any debentures of the company may be enforced by a decree for specific performance.

 

CONDITION FOR ISSUING SECURED DEBENTURE

Redemption of Debenture

1.       In general date of redemption shall not exceed 10 Years from the date of issue.

2.       Date redemption can exceed ten years but not exceeding thirty years in following companies:

i.      Companies engaged in setting up of infrastructure projects

ii.      Infrastructure Finance Companies

iii.      Infrastructure Debt Fund Non-Banking Financial Companies

iv.      Companies permitted by a Ministry or Department of the Central Government oi by Reserve Bank of India or by the National Housing Bank or by any other statutory authority to issue debentures for a period exceeding ten years

Security of Debenture:

1.       Issue of Debenture shall be secured by creation of Charge on properties or assets of the company or its subsidiaries or its holding company or its associates companies, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon.

2.       Security shall be created:

   v.       in favor of Debenture Trustee by way of charge     

 vi.      On any specific movable property of the company or its holding company or subsidiaries or associate companies or otherwise and in case of a non-banking financial company, the charge or mortgage under may be created on any movable property

vii.      On any specific immovable property wherever situate, or any interest therein.

viii.      in case of any loan taken by a subsidiary company from any bank or financial institution the charge or mortgage may also be created on the properties or assets of the holding company

Appointment of Debenture Trustee

1.       Appointment shall be appointed before issue of Prospectus or Letter of offer.

2.       Within 60 Days from the date of allotment of Debenture Trust deed shall be executed.

3.       As per rule 5, a trust deed shall be executed in form SH-12 within 3 Months of closure of offer or issue.

 

Condition for Appointment of Debenture Trustee:

1.       the names of the debenture trustees shall be stated in letter of offer inviting subscription for debentures and also in all the subsequent notices or other communications sent to the debenture holders

2.       before the appointment of debenture trustee or trustees, a written consent shall be obtained from such debenture trustee and a statement shall be made in Letter of offer.

3.       Disqualification of Debenture Trustee

i.      beneficially holds shares in the company;

ii.       is a promoter, director or key managerial personnel or any other officer or an employee of the company or its holding, subsidiary or associate company;

iii.      is beneficially entitled to moneys which are to be paid by the company otherwise than as remuneration payable to the debenture trustee;

iv.      is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding company;

v.      has furnished any guarantee in respect of the principal debts secured by the debentures or interest thereon;

vi.      has any pecuniary relationship with the company amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

vii.      is relative of any promoter or any person who is in the employment of the company as a director or key managerial personnel

4.       any casual vacancy of Trustee/Trustees may be filled by Board

5.       Casual Vacancy by resignation of Trustee shall be filled with the consent of majority of Debenture Holder.

6.       Debenture trustee can be removed in the meeting of debenture holder with approval of debenture holder holding 3/4^th in Value

Disclaimer: The content of this blog is for informational and educational purposes only and does not constitute legal advice or opinion.

Compliance of Structured Digital Database

 

Compliance of Structured Digital Database

Pursuant to Regulation 3(5) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that a structured digital database is maintained containing the following:

ØNature of unpublished price sensitive information;
Ø  Names of such persons who have shared the information;
Ø  Names of such persons with whom information is shared;
Ø  Permanent Account Number or any other identifier of such persons;
Ø  Database shall not be outsourced;
Ø  Maintained internally with adequate internal controls and checks; and
Ø  Time stamping and audit trails to ensure non-tampering to maintained.

Pursuant to Regulation 3(6) structured digital database is required to be preserved for a period of not less than eight years after completion of the relevant transactions and in the event of receipt of any information from the SEBI regarding any investigation or enforcement proceedings, the relevant information in the structured digital database shall be preserved till the completion of such proceedings.

How to Start a Public Limited Company

 

A Public Limited Company is a type of business structure that allows for public ownership through the sale of shares. Registration of a Public Limited Company in India is governed by the Companies Act, 2013 and requires adherence to various legal formalities. Here's a step-by-step guide to the process of registering a Public Limited Company in India:

1. Obtain Digital Signature Certificate (DSC): The first step is to obtain a DSC, which is an electronic signature issued by the certifying authorities. The DSC is used to sign the various forms and documents required for registration.
2. Choose a Company Name: The next step is to choose a unique name for the company, which should not be similar to any existing company names. A company name can be proposed through the MCA portal or through a professional company secretary.
3. Draft Memorandum of Association (MOA) and Articles of Association (AOA): The MOA outlines the main objectives of the company, while the AOA specifies the rules and regulations governing the company's operations. These documents must be drafted and signed by all subscribers to the company's share capital.
4. File an Application for Company Registration: Once the above documents are ready, an application for registration can be filed through the Spice+ form, which is an integrated web form for company incorporation, name reservation, and several other applications. The form requires details such as the company's registered office address, directors' details, share capital, and subscribers' details, among others.
5. Payment of Fees: The applicable fees for registration must be paid online through the MCA portal. The fees vary based on the company's authorized capital and other factors.
6. Certificate of Incorporation: After the MCA reviews the application and all documents, and if everything is in order, a Certificate of Incorporation (COI) will be issued. The COI confirms that the company has been incorporated and is eligible to conduct business. Along with COI, PAN and TAN is also generated the MCA.

Pre-requisites of Law:

• Minimum Directors and Shareholders: A Public Limited Company should have at least three directors and seven shareholders. At least one of the directors should be an Indian resident.
• Registered Office Address: The company should have a registered office address in India. It can be a commercial or residential property, and the company should provide proof of ownership or a lease agreement.
• Object Clause: The company should specify its main objects in the Memorandum of Association (MOA). The MOA should include the company's name, objectives, registered office, and details of the subscribers.
• Authorized Capital: The authorized capital is the maximum amount of capital that the company can raise through the issuance of shares. The company should specify the authorized capital in the MOA.

In conclusion, registering a Public Limited Company in India is a complex process that requires compliance with various legal formalities. It is advisable to consult with a legal professional or a company secretary to ensure that all the prerequisites and requirements are met before initiating the registration process.

Disclaimer: The content of this blog is for informational and educational purposes only and does not constitute legal advice or opinion.

How to Start a Private Limited Company

Starting a private limited company is an exciting and challenging process. However, before you can start operating your business, you must complete the registration process. In this blog, we will discuss the process of registering a private limited company in India.

What is a Private Limited Company?

A private limited company is a type of business entity that has a separate legal identity from its shareholders. It is a popular form of business structure among entrepreneurs and investors because it offers limited liability protection to its shareholders. This means that the shareholders are only liable for the amount of money they have invested in the company and not for any losses incurred by the company.

Step-by-Step Guide for Registering a Private Limited Company

Choose a Unique Name for Your Company

The first step in registering a private limited company is to choose a unique name for your company. The name should not be identical or similar to any existing company names registered with the Ministry of Corporate Affairs.

Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN)

The next step is to obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for all the proposed directors of the company. The DSC is an electronic signature that is used to sign electronic documents, while the DIN is a unique identification number that is assigned to each director. At present Din is allotted by MCA to director who is not having DIN at the time of Incorporation of Company.

Prepare the Memorandum of Association (MOA) and Articles of Association (AOA)

The MOA and AOA are two important documents that outline the objectives, powers, and rules of your company. The MOA defines the scope and purpose of your business, while the AOA defines the internal rules and regulations of the company.

File an Application for Incorporation

Once you have obtained the DSC and prepared the MOA and AOA, you can file an application for incorporation with the Ministry of Corporate Affairs. The application should include details such as the name of the company, the registered office address, the authorized capital, the number of directors, etc.

Obtain Certificate of Incorporation

Once your application for incorporation is processed and approved, you will receive a Certificate of Incorporation from the Ministry of Corporate Affairs. This certificate serves as proof of the existence of your company and includes details such as the name of the company, the date of incorporation, and the Corporate Identification Number (CIN). Along with COI, PAN and TAN of Company will be generated.

Obtain Necessary Registrations and Licenses

After obtaining the Certificate of Incorporation, you will need to obtain necessary registrations and licenses such as GST registration, professional tax registration, Shop and Establishment Act registration, etc.

Open a Bank Account

You will need to open a bank account in the name of your company to keep your personal and business finances separate.

Conclusion

Registering a private limited company in India requires compliance with several legal formalities. However, with the help of a qualified professional such as a Company Secretary, chartered accountant or a lawyer, the process can be made much easier. Registering your private limited company is the first step towards turning your entrepreneurial dreams into reality.

Disclaimer: The content of this blog is for informational and educational purposes only and does not constitute legal advice or opinion

 

 

How Starting a partnership business in India

 

How Starting a partnership business in India

Starting a partnership business in India is a straightforward process. Here are the steps to follow:

1. Choose a business name: Choose a name that is unique, easy to remember, and represents your business.
2. Draft a partnership agreement: A partnership agreement is a legal document that outlines the terms and conditions of the partnership. It should include details such as the name of the partnership, the capital contribution of each partner, profit-sharing ratio, responsibilities of each partner, etc.
3. Obtain a PAN card: Apply for a Permanent Account Number (PAN) card, which is necessary for paying taxes in India.
4. Open a bank account: Open a separate bank account for your business to keep your personal and business finances separate.
5. Obtain necessary permits and licenses: Depending on your business, you may need to obtain permits and licenses from your local government or regulatory body. You can check the requirements on the website of the Ministry of Micro, Small and Medium Enterprises.
6. Register your partnership firm: Register your partnership firm with the Registrar of Firms. You will need to submit the application along with your partnership agreement, PAN card, address proof, and identity proof.
7. Get GST registration: If your business has an annual turnover of over Rs. 20 lakhs, you will need to register for the Goods and Services Tax (GST).
8. Obtain any other necessary registrations: Depending on your business, you may need to obtain other registrations such as professional tax registration, Shop and Establishment Act registration, etc.
9. Obtain insurance: Protect your business by obtaining necessary insurance such as liability insurance, property insurance, and worker’s compensation insurance.

It's advisable to consult a chartered accountant or a lawyer to ensure that you complete all the necessary legal formalities for your partnership business in India.

Disclaimer: The content of this blog is for informational and educational purposes only and does not constitute legal advice or opinion

How to Start a proprietorship business in India

 

Starting a proprietorship business in India is a straightforward process. Here are the steps to follow:

1.  Choose a business name: Choose a name that is unique, easy to remember, and represents your business.
2.  Obtain a PAN card: Apply for a Permanent Account Number (PAN) card, which is necessary for paying taxes in India.
3. Open a bank account: Open a separate bank account for your business to keep your personal and business finances separate.
4. Obtain necessary permits and licenses: Depending on your business, you may need to obtain permits and licenses from your local government or regulatory body. You can check the requirements on the website of the Ministry of Micro, Small and Medium Enterprises.
5. Register your business: Register your proprietorship business with the Registrar of Firms. You will need to submit the application along with your PAN card, address proof, and identity proof.
6. Get GST registration: If your business has an annual turnover of over Rs. 20 lakhs, you will need to register for the Goods and Services Tax (GST).
7. Obtain any other necessary registrations: Depending on your business, you may need to obtain other registrations such as professional tax registration, Shop and Establishment Act registration, etc.
8. Obtain insurance: Protect your business by obtaining necessary insurance such as liability insurance, property insurance, and worker’s compensation insurance.

It's advisable to consult a chartered accountant or a lawyer to ensure that you complete all the necessary legal formalities for your proprietorship business in India.

 Disclaimer: The content of this blog is for informational and educational purposes only and does not constitute legal advice or opinion.

 

How to Start a Business in India

Starting a business in India involves several legal and procedural formalities. Here are some general steps that you can follow to start a business in India:

1. Choose a business structure: The first step is to decide on the type of business structure you want to establish, such as sole proprietorship, partnership, limited liability partnership (LLP), private limited company, or public limited company. Each structure has its own legal and taxation implications, so it is important to choose the one that suits your business needs.
2. Register your business: You need to register your business with the Registrar of Companies (ROC) or Registrar of Firms depending on the type of business structure. You will need to provide the necessary documents, such as the memorandum of association, articles of association, partnership deed, etc.
3. Obtain necessary licenses and permits: Depending on the nature of your business, you may need to obtain various licenses and permits from government authorities. For example, if you are starting a food business, you need to obtain a food license from the Food Safety and Standards Authority of India (FSSAI).
4. Obtain PAN and TAN: You need to obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
5. Open a bank account: You need to open a bank account in the name of your business and obtain a Goods and Services Tax (GST) identification number if you are involved in the supply of goods or services.
6. Register for other taxes: Depending on your business activities, you may need to register for other taxes such as Professional Tax, State Excise, etc.
7. Hire employees: If you plan to hire employees, you need to comply with various labor laws and obtain necessary registrations such as Employee Provident Fund (EPF), Employee State Insurance (ESI), etc.

These are some of the basic steps that you need to follow to start a business in India. It is recommended that you consult a professional or a legal advisor to understand the specific requirements and procedures for your particular business.

Disclaimer: The content of this blog is for informational and educational purposes only and does not constitute legal advice or opinion.