In this article, Anusha and Nitika Arora[1] of RMLNLU discusses Confidentiality in Arbitration vis-à-vis Arbitration and Conciliation (Amendment) Bill, 2018.

Introduction

The increasing popularity of Arbitration over litigation as a method of effective and efficient dispute resolution can be attributed to many reasons, one of the main being the privacy and confidentiality the method entails.

Though many a times used interchangeably, both the words denote distinct concepts. While privacy connotes to the privilege of the arbitrating parties to hold the arbitration without intrusion of uninvited externals, confidentiality places an obligation on the parties, their representatives, the arbitrator and the people associated with the process to not disclose any information gained from the proceedings, or the award.

The concept of private arbitration is derived from the fact that the parties had agreed to submit any dispute arising only between them to arbitration. While it is generally accepted that privacy is an implicit part of the arbitration process, there exists a divergence of opinion regarding confidentiality in the arbitration proceeding, and specifically, of the award. On one hand, some authorities regard confidentiality as an essential aspect of the arbitration process, increasing the efficiency of dispute resolution, on the other it is deemed as hindering transparency, delivery of justice and establishment of judicial precedent and thus considered an inessential part of the process.

International Stand

Many of the major arbitral institutions recognise the arbitral proceedings to be private. For instance, Article.19.4 of London Court of International Arbitration (LCIA) Rules 2014, Article 26(3) of ICC Rules of Arbitration 2017, Article 28.3 of UNCITRAL Arbitration Rules 2010 all provide for private arbitration proceedings unless otherwise agreed by the parties or ordered by the court. However, most of these rules do not specifically deal with the issue of confidentiality with the exception of Art.30 of LCIA Rules which states that the parties undertake the general principle to keep the award and orders as well as all other material submitted during the proceedings confidential except when disclosure is required as a legal duty, exercise of a legal right or for the award’s enforcement.

In absence of any domestic provision, the English position regarding duty of confidentiality was laid down in Hassneh Insurance Co. of Israel v Mew[2] distinguishing between the duty existing with respect to the documents (transcripts, witness statements, pleadings and documents disclosed in the arbitration) and the reasoned award. The court held that the disclosure of reasoned award is an exception to the duty of confidentiality because it contains the arbitrator’s reasons determining the rights of the parties and may establish a binding precedent. However, the parties still have a duty to keep the other documents confidential despite there not being an express term to that effect in the contract.

Another English case of Ali Shipping v Shipyard Trogir while recognising the implied confidentiality also acknowledged that this duty was not absolute and thus listed four exceptions to it:

• Consent of the parties to disclosure;
• Court’s order or leave for disclosure of documents or evidence;
• When it is reasonably necessary to protect the legitimate interests of the party to the arbitration; and
• Where the interest of justice requires disclosure.

On the other hand, the Australian High Court in Esso Australia Resources Ltd v Plowman held confidentiality to not be an essential characteristic of a private arbitration. The court said that the private nature of arbitral proceeding brought about confidentiality as strangers were not in a position to publish the proceedings or any part of them as they were not present to witness them. Thus, confidentiality cannot be an implied part of the arbitral proceedings in absence of an express provision. The court went on to say that the witnesses in the proceedings were at liberty to disclose the proceedings they had witnessed. The Australian court followed the United States’ lead in United States v. Panhandle Eastern Corp, where the court held that there is no implied confidentiality until and unless the parties agree to it.  Sweden also does not recognise implied confidentiality in arbitral proceedings.[3]

Though many countries do not have any provision regarding confidentiality in their national arbitration legislation, New Zealand and Spain come across as exceptions. S.14 of the New Zealand Arbitration Act 1996 provides for the award, documents and information relating to the proceedings to be confidential unless otherwise agreed by the parties. Art.24(2) of the Spanish Arbitration Act 2003 imposes obligation to maintain confidentiality of information acquired relating to and in course of arbitral proceedings.

Indian Stand

India has now sought to join the number of these few countries who address the issue of confidentiality in their domestic arbitration legislation by proposing the Arbitration and Conciliation (Amendment) Bill 2018. The bill was introduced in the Lok Sabha on July 18, 2018 and passed on August 10, 2018, and is now under consideration in the Rajya Sabha.

The Bill is premised on the recommendations of a High-Level Committee chaired by Justice (Retd.) B. N. Srikrishna. The mandate of the Committee was, primarily, to examine measures to strengthen arbitral institutions and suggest ways to improve the efficiency of the arbitral framework in India. Thus, to keep pace with the international arbitration practices and improving value and trust in India’s arbitration procedure, certain amendments are proposed in the said Bill.

The existing legislative framework i.e. the Arbitration & Conciliation Act, 1996 is silent on confidentiality in arbitration, although it contains an express provision governing confidentiality in conciliation proceedings via S.75. Additionally, there has been no case law finding an implied duty of confidentiality, although the Supreme Court of India seems to suggest an implied duty in mediation proceedings.[4] There is no national consensus on the duty of confidentiality or its exceptions. However, but for this amendment bill, the Indian courts would have ideally followed the common law position on the issue.

The Act provides for confidentiality in Conciliation via S.75 which opens with a non-obstante clause. The explanation to S.34(2)(b)(ii) provides that an arbitral award may be set aside by the court, if it finds that the award is in conflict with the public policy of India. An award is in conflict with the public policy of India if it is violative of the requirement of confidentiality as contained in S.75 of the Act. This, by reference, could incorporate the requirement of confidentiality with respect to the ‘arbitral proceedings’ as well, as with respect to the arbitral award, into S.34(2)(b)(ii) mutatis mutandis.[5]

Nevertheless, in an attempt to clear the prevailing sense of confusion around the nature and scope of any implied duty of confidentiality, the Bill proposes introduction of a non-derogable provision, S.42A for maintaining confidentiality of arbitral proceedings. It mandates that the arbitrator, arbitral institution and the parties shall keep confidentiality of all arbitration proceedings. However, this provision instead of bringing coherence on the issue, creates potential for uncertainty.

The Committee had put forth the inclusion of the following exceptions to the duty of confidentiality:

• Disclosure required by a legal duty;
• Disclosure to protect or enforce a legal right;
• To enforce or challenge an award before court or judicial authority.

However, the Bill explicitly, only includes the third aspect as an exception to the provision, i.e. where the disclosure is required for implementation and enforcement of the award. The phrase ‘implementation and enforcement’ of the award includes limited situations. There are multiple other situations where a party may be required to disclose the award or details of the proceedings which are not covered under the exception which has been laid down. For instance, while appointment of arbitrators by court, seeking interim reliefs from court, an application to the court to set aside the award under S.34, appealing against an interim order of the arbitrator etc. Further, there may be statutory mandates requiring a party to disclose details pertaining to the arbitration proceeding such as under the regulations framed by SEBI, under financial reports etc. These are more straight-forward circumstances where it may be argued that the disclosure is permitted, since these are rights of parties expressly granted under law, which the confidentiality provision did not intend to take away.

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However, the answer may not be so effortless in other circumstances such as when disclosure is reasonably necessary to protect a legal right as against a third party, for eg when a party may need to disclose the award in order to substantiate a plea of res judicata. Other countries which have express provisions on confidentiality usually provide for broader exceptions such as, where a party is obliged to make a disclosure under law or where the disclosure is made to a professional or other advisors to the party (see, S.2D of the Hong Kong Arbitration Ordinance; S.14C of the New Zealand Arbitration Act 1996).

Conclusion

The 2018 amendment binds the parties to an arbitration agreement to very broad confidentiality obligations with a single exception. Exceptions to the principle such as consent, order of the Court, leave of the court, disclosure when (and to what extent) is necessary for the protection of the legitimate interests of an arbitrating party are not covered in the text. Questions of public interest, eg, where one of the parties is the government, or interests of fair disposal of disputes may also justify waiver of confidentiality obligations.

Since arbitration is a private proceeding, the parties may ventilate their grievances, and discuss their proprietary know-how, their financial circumstances and so forth, without exposure to the public scrutiny and reporting of the media. This makes this amendment very crucial. However, the prospective ambivalence needs to be taken care of before it transpires. Thus, the authors suggest that to address the ambiguities, the said provision ought to be amended to include exceptions to confidentiality obligation ensuring that it is not too widely-termed. The possibility of inclusion of consequences of the breach of such confidentiality may also be considered. Further, it is suggested that such provision of confidentiality should be made derogable i.e. parties should have the ability to define their own limits of confidentiality.

[1] The authors are 4^th year B.A.LL.B.(Hons.) students at Dr. Ram Manohar Lohiya National Law University, Lucknow.

[2] [1993] 2 Lloyd’s Rep. 243 (Q.B.).

[3] Bulgarian Foreign Trade Bank v. AI Trade Finance Inc, Case No. T 1881-99 (Swedish Sup. Ct. 27 Oct, 2000).

[4] Michael Hwang S.C, & Jia-Lin Hoe, ‘Confidentiality in Arbitration’ (Vol 2, Issue 1, LCIA India Newsletter 2013).

[5] Indu Malhotra, OP Malhotra’s The Law & Practice of Arbitration & Conciliation, (3^rd ed., Thomson Reuters 2014) 1880.

This article is written by Utkarsh Nigam of New Law College, Bharti Vidyapeeth University, Pune. The author through this article brings out the best practices for doing business in India through Liaison Office. This article was written by the author while pursuing M.A in Business laws from NUJS.

Introduction

• A liaison office is an office or basically an intermediary which acts as a channel of communication between the head office, located in a different country and parties in India. A liaison office cannot earn any income in India or no income can be accrued in India in the name of a liaison office.
• Therefore the work of liaison offices is limited to only collecting information about the Indian market opportunities and also to impart information about the company and its products to the prospective Indian customers.
• The expenses of such establishments are to be met by the RBI guidelines which tell that expenses of such offices are to be met entirely through inward remittances of foreign exchange from the Head Office outside India. Therefore there are no tax implications on the entity as no income is generated in the country.
• But it is to be seen that there no permanent status should be gained by the liaison office as by doing this it will be subjected to tax liability which is high as 44 percent as of now. This is done when a direct business connection is established between the parent company and the liaison office.
• This implies that Related Party transactions must be handled with utmost care and if there is a possibility of this situation then either the company or the office should be ready to prove its dependent nature.

Procedure for Establishment

Firstly a good practice for establishing a liaison office starts from a body corporate which is established outside India, seeking the right channel to establish a Liaison office in India. The applications submitted are approved under following conditions-

1. Where the principal business of the foreign entity comes under the bracket of sector where 100 per cent Foreign Direct Investment is allowed under the automatic route. Applications from foreign companies for establishing liaison office in India shall be considered by the Authorized Dealer category bank-1 as per the guidelines provided by the Reserve Bank under delegated powers.
2. An application from a person resident outside India shall require prior approval of the Reserve Bank for opening a liaison office if-

• The applicant for the office is a citizen or is registered in Pakistan
• The applicant for the office is a citizen or is registered in Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau and the application is for opening a liaison office in Jammu and Kashmir, North East region and Andaman and Nicobar Islands.
• The principal business of the applicant falls in the four sectors which are Defence, Telecom, Private Security and Information and Broadcasting.
• The application is from a Non-Government Organisation of a foreign government or department of a foreign government. Such applications may be forwarded by the Authorized Dealer category-1 bank to the Reserve Bank who shall process the application in consultation with the Government.

The Reserve Bank also checks the profit making track record of the entity applying for liaison office’s establishment during the immediately preceding three financial years in the home country. The Net worth (total of paid up capital and free reserves less intangible assets as per the latest Audited Balance Sheet or Account Statement by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name ) should not be less than USD 50,000. The application for the establishment of a liaison office in India should be forwarded through an Authorized Dealer Category-1 bank, by the forward entity to the general Manager, Foreign Exchange Department along with relevant documents which includes the English version of the Certificate of Incorporation or Memorandum and Articles of Association attested by the Indian Embassy in the country of registration, and latest audited balance sheet of the entity which is making the application. The Authorized dealer category-1 bank plays a vital role and a responsibility is thus pushed on these intermediaries to exercise due diligence in checking the details of the applicant entity, its background, the details of its promoters, nature of its business, sources of funds etc. and also it is the duty of the AD-1 category bank to ensure the compliance of KYC norms before the application is submitted to the Reserve Bank.

A liaison office at first is given a license to operate in the country for an initial period of three years but this period can be extended for a period of three years from the date of expiry of the original approval granted by the Reserve Bank by the designated Authorized Dealer category-1 bank. Such extension has to be granted within one month from the receipt of the request. The extension application for the liaison offices of banks and insurance companies are to be submitted directly to the respective concerned departments that are Department of Banking Regulations and Insurance Regulatory and Development Authority. For this purpose the applicant office should comply with the following conditions in order-

1. The Liaison office should have submitted the Annual Activity Certificates for the previous years and
2. The account of the Liaison office maintained with the designated Authorized Dealer Category-1 bank is being operated according to the terms and conditions stipulated in the approval.

Also, no extension will be provided to the Liaison office of Non-Banking Financial Companies and entities engaged in construction and development sectors (excluding infrastructure development companies). After the completion of the validity period of three years these entities have the option to close down the business or get converted into a Joint Venture business or to a wholly owned subsidiary in confirmation with the Foreign Direct Investment Policy.

Also after the case of Bar Council of India vs AK Balaji and Ors. The Hon’ble Supreme court directed the Reserve Bank not to grant any permission to a foreign law firm to open any liaison office in India till further orders in this regard. However, the court mentioned that the law firms which have been granted permission before the date of judgement for opening liaison offices may be allowed till the permission is valid. No new permissions can be granted as of now to any law firm for opening a liaison office.

Permissible Activities

The most important thing for ensuring the best practise of doing business through liaison office is abiding by the activities to which a liaison office is limited to and thereby complying with the norms formed by the Reserve Bank in regards to this area.

A Liaison Office can undertake the following activities in India

1. Representing in India the parent company / group companies.

The liaison office can undertake the operation of representing the foreign entity in India but cannot take order or supply any order as this will be deemed to a business and any income accrued through business will be taxable.

2. Promoting export / import from / to India.

A liaison office can also be started for promoting export import services in the country. Also vide RBI/2015-16/185 A.P. (DIR Series) Circular No.16 foreign entities who want to operate as Online Payment Gateway Service Providers are required to open a liaison office in the country with the prior approval of Reserve Bank before operationalizing the arrangement with any AD category-1 bank.

3. Promoting technical/financial collaborations between parent/group companies and companies in India.
4. Acting as a communication channel between the parent company and Indian companies.

Formalities to be Undertaken

The liaison office, after it has been established with the approval of Reserve Bank will also be allotted a Unique Identification Number. The liaison office as a method of best practise are also required to obtain a Permanent Account Number from the Income Tax Department on setting up the office in the country. The liaison office is required to register itself with the Registrar of Companies (ROC) within thirty days of its establishment by filing Form-44 through the Ministry of Corporate Affair’s online portal (MCA website). The following documents are required to be submitted while filing the form too-

1. A copy of the liaison office charter or Memorandum & Articles of Association in English;

1. Full address for the enterprise’s principal place of operation outside of India;
2. Name and address of the liaison office in India;
3. List of directors;
4. Name and address of the company’s official representative based in India (e.g. the person authorized to accept delivery of notices and documents served to the company).

If a foreign insurance company wants to establish a liaison office in India, firstly it has to obtain a special permission from the Insurance Regulatory and Development Authority (IRDA) and then after getting the necessary permission it will follow all the above mentioned steps. Similarly foreign banks are required to obtain permission under Banking Regulation Act for operating a liaison office in India.

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A liaison office may approach a designated Authorized Dealer category-1 bank in India to open an account to receive remittances from its Head Office. Also the liaison office is not permitted to maintain more than one bank account without the prior approval of the Reserve Bank. The following transactions which are allowed are-

1. Funds received from Head office for meeting the regular expenses through normal banking channels.
2. Refund of Security Deposits paid by liaison office or the head office
3. Refund of taxes, duties etc. paid from office’s account
4. Sale of proceeds of assets of the Liaison office.
5. The debits should include the needs for meeting local expenses

A liaison office on its own, in case of a sole liaison office or a nodal office situated in India in case of multiple liaison offices have to submit an Annual Activity Certificate (AAC) at the end of the financial year along with the required documents to the designated Authorized Dealer category-1 bank as well as to the Director General of Income Tax (International Taxation). This certificate needs to be submitted to the above mentioned authorities so that the Authorized Dealer bank can scrutinize or check that the activities undertaken by the liaison office are in accordance with the terms and conditions of the approval given and in case of any unfavourable findings the same should be reported to the General Manager, Reserve Bank of India.

Further in ensuring good practise, applications coming from the countries of from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, Macau or Pakistan shall also have to register their offices with the state police authorities for necessary records.

If the foreign entity is desirous of opening additional liaison offices in the country it shall submit its application to the Authorized dealer category-1 bank in a fresh FNC form. The limit of four offices (one each in every zone north, south, west, east) if is exceeded it shall only be done with the prior approval of Reserve Bank and the applicant is required to identify one of the offices as a nodal office which shall coordinate the activities and relations between all the offices operating in the country. The liaison office has to intimate and get a prior approval of the Authorized dealer category-1 bank if it shifts its office from one city to another.

However no prior approval is required in case the address is shifted within the city limits only, in this case intimation clause is only to be complied with. In case if the liaison office is desirous of undertaking additional activities the request for the same should be submitted to the Reserve Bank justifying the need for the same in the prescribed manner as specified by the Reserve Bank. Authorized Dealer Category-1 bank may, based on their business prudence, Board approved policy and compliance to extant rules/regulations stipulated by DBR, RBI extend fund/non-fund based facilities to Branch and Project Offices only and not to liaison offices. Every liaison office are required to transact only through one Authorized Dealer Category-1 bank who shall be responsible for all the due diligence work and KYC formalities done for establishing the liaison office. Liaison offices which are present at multiple locations are required to transact through their designated Authorized Dealer category-1 banks but the reporting work should be done by the Authorized dealer of the nodal office in this case. A liaison office is allowed to change their Authorized Dealer category-1 bank if both the original bank and the new bank give their consent in writing regarding the transfer and the original bank confirms the submission of all the Annual Activity Certificates (AACs) and absence of any adverse point in conducting the account by the liaison office.

If the liaison office is permitted to be upgraded to a branch office then the bank accounts and the Permanent Account Number can be retained and continued.

The liaison office is also required to file an annual receipt and a payment statement, a statement which contains the details of assets and liabilities duly audited by a practising Chartered Accountant registered in India and also a Consolidated Financial Statement of the parent company of whose liaison office is registered in India, which should be duly notarized by the Indian Embassy that has a jurisdiction over the foreign company to the Registrar of Companies (ROC). The documents submitted have to be in English Language and if this is not the case then firstly they have to be translated before notarization and then only they can be submitted. The filing should also mention the places of business along with the copy of approvals if it has obtained in any case. This filing is mandatory in nature and should be done before 6 months from the date of closure of books of accounts of the liaison office.

In cases of transfer of assets the request may be considered by the Authorized Dealer category-1 bank only from the offices who are regularly complying to the norms set by the institutional authorities like filing AAC, obtaining PAN, getting registered under the Companies Act, 2013 with the Registrar. In case of transfer of assets by the way of sale to Joint Venture or Wholly owned subsidiary the Authorized Dealer category-1 bank should allow the following only when the non-resident entity intends to close the liaison office in India. For this purpose a certificate is to be submitted by the statutory auditor furnishing details of the assets to be transferred which would indicate the details regarding acquisition, original price, depreciation till date , present book value or Written down Value and sale consideration to be obtained. It should be noted that the sale consideration cannot be more than the book value in any case. The assets should have been acquired by the liaison office from inward remittances and no intangible assets such as good will, pre-operative expenses should be included in this. The Authorized Dealer category-1 bank should ensure and has the responsibility of making the office pay all the applicable taxes on the transaction while permitting the transfer of assets. The credit in the bank account of the liaison office is treated as a permissible credit in the account of the liaison office. Donations made to other entities which are not for profit or non governmental organisations by the liaison office of old infrastructure can be allowed by the Authorized Dealer category-1 bank after satisfying with the bona fide of the transaction.

Winding-up Procedures and Formalities

For the closure of the liaison office and allowing of the remittances of the winding up proceeds, a request has to be submitted to the designated Authorized dealer category-1 bank by the liaison office or the nodal office representing the offices in the country. The application request has to be submitted with the following documents-

1. Copy of the approval by the Reserve Bank or the Authorized Dealer category-1 bank for the establishment of the liaison office.
2. Auditors certificate which should indicate-
   • The manner in which the remitted amount has come to the country and a statement regarding the assets and liabilities and also the manner of disposal of these assets.
   • That the liabilities in the country including arrears of gratuity and other benefits to employees etc. of the office has been paid
   • That no income from source outside India has remained un-repatriated to India.

3. A confirmation from the foreign entity who has established the liaison office in the country that no legal proceedings against the office are pending in the Indian courts and there is no legal hindrance to the remittances.
4. A report from the Registrar of Companies regarding the compliance of the provisions of Companies Act,2013 in case of winding up of the liaison office, wherever applicable. For this report to be given, a board resolution has to be passed by the parent company for closing the liaison office in India which should also mention the date of closure of liaison activities by the office. The employment contracts have to be terminated timely with full and final settlements and at last a board resolution of the liaison office is required which will empower the authorized persons to file an application in an e-form with the Registrar of Companies and take its approval.
5. The Annual Activity Certificates has to be filed for the closure which should be ensured by the Authorized Dealer category-1 bank.
6. The Designated Authorized Dealer category-1 banks may allow the remittance of the winding up proceeds in case of banks and insurance companies after the approval for the same has been given by the individual sectoral regulators.

The liaison office above all the mentioned steps has to comply with the Goods and Services Tax obligation under reverse tax mechanism for availing certain services like legal services.

The above-discussed points and the compliances are some of the best practises which should be followed by an entity established outside the country if it has to conduct its business through liaison offices. In case of liaison office the entity should comply with the Reserve Bank’s guidelines every time along with the provisions of Foreign Exchange Management Act. It is important to note the significance and importance of designated authorized dealer category-1 banks as they are the most important intermediary through which the liaison office is created and the business is carried out. Following the procedural norms of these entities thus becomes important if a business has to be conducted through the way of liaison office.[1][2][3][4]

[1] Referred https://rbi.org.in/scripts/BS_ViewMasDirections.aspx

[2] Referred https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx

[3] Referred https://www.maiervidorno.com/set-liaison-office-india

[4] Referred http://www.pkpconsult.com/liasion-office.html

In this article, Varun Sharma of 2nd Year, Campus Law Center, discusses the various forms that are required for the Incorporation of an LLP.

Introduction

Limited Liability Partnership (LLP) form of business structure is growing rapidly and is looked as one of the most favourable form of business structures for entrepreneurs with not so deep pockets. One of the reasons for its growing popularity is that it provides security to the entrepreneur from unnecessary financial exposure. The other important reason to choose an LLP form of business structure is the easement with which it can be registered. The time taken for registering an LLP and the procedure to be followed for the same are quite straightforward. In this article, we’ll discuss the various forms that are required to be filled in order to register an LLP.

Steps for Registering a Limited Liability Partnership

STEP:1 Acquiring Designated Partner Identification Number

The first step towards registering an LLP firm is acquiring a Designated Partner Identification Number or DPIN. It is mandatory for anyone who wants to be a Designated Partner (DP) in a new or existing LLP. DPIN functions as an Identity Card for the person acting as a DP in an LLP. A DPIN needs to be issued only once as it is person specific and its validity is for life.

Form required for acquiring a DPIN

In order to acquire a DPIN, a Designated Partner of an LLP is required to fill Form-7 (Form can be found on page 100 of the LLP Rules). This is the only form that is not available on the MCA website. In order to submit the form after completely finishing it, you will be required to pay a registration fee of INR 100 on the website. Once the form is submitted after paying the fee, a provisional DPIN will be generated.

Once the online process is finished, you’ll need to take a printout of the application form. You will need to get this application form attested after affixing the photographs on it. This attested form, along with other documents such as identity proof and residence proof, are required to be sent to the Office of Registrar at Ministry of Corporate Affair by registered post.

STEP: 2 Acquiring Director’s Digital Signature Certificate (DSC)

This is the second step towards registering your LLP. In order to fill-up the e-forms required for the registration of an LLP, digital signature are required to be uploaded by each partner who will be Designated PArtner for that LLP. The Information Technology Act, 2000 requires the use of DSC on any documents submitted electronically so that the authenticity of the documents can be ensured. All the filing done by an LLP are required to have a DSC without which such filing will not be possible.

Form required for obtaining a DSC

There is no specific form that is required to be filled for obtaining a DSC as it is not issued by the MCA itself. A DSC is obtained by applying to a Certifying or Certification Agencies (CA). These CAs are appointed by the Controller of Certification Agencies (CCA) under the Information Technology Act, 2000. Till date, there are 8 Certification Agencies authorised to issue DSC. The list can be found below.

It is important to note here that the process for acquiring a DSC for a Director is different from that of a Practising Professional or a CEO/CFO/Manager.

The cost of acquiring a DSC depends on the CA you are applying to. Different CAs have different prices for issuing a DSC. There is generally a cost of medium, cost of issuance and a renewal cost that is required to be paid for acquiring a DSC. The cost of renewal is payable only after the DSC is expired. A DSC is valid for a period of 1 to 2 year.

STEP: 3 Reservation of Name for the LLP

Reserving the name of an LLP is the first concrete step towards registering your LLP. Section 16 of the Limited Liability PArtner Act, 2008 talks about the requirement of reserving a name for an LLP. Completion of this step will be the first tangible step towards the formation of your LLP. Once you’ve decided on a name for your LLP, you should use free name search tool provided by the MCA on their website to check if a company by that name already exists and the areas they carry their business in. Up to six options of the desired name are needed to be mentioned in the name reservation form.

Form required for Reservation of name for an LLP

The name of an LLP can be reserved by filling up the form-1. This form can be used for reserving the name of a new LLP or for changing the name of an existing LLP. In order to submit the form, any one of the Designated Partners, after appending his digital signature (DSC) and entering the details of his DPIN, can submit the said form on the MCA website.

It is important to note here that although only one Designated Partner is required to submit the form, details of at least two Designated Partners is required to be filled in this form.

An LLP, which is registering its name under section 16 of the LLP Act, 2008, is required to pay INR 200 at the time of submitting the form. This is different in case of a foreign LLP, which wants to reserve its existing name by which it is registered in the country of its incorporation. In such cases, Rule 18(3) of the Limited Liability Partnership Rules, 2009 applies. The fee payable in such cases is INR 10,000.

STEP:4 Incorporation of Limited Liability Partnership

For incorporating an LLP, it is required that at least two Designated Partners, who will be responsible for carrying on the business of the Partnership, shall subscribe their names to an incorporation document. This document shall, along with prescribed fees, be filed with the Registrar of the state in which the LLP is to be incorporated.

Form required for Incorporation of LLP

Form-2 or “Incorporation document and subscriber’s statement” is required to be filled for the incorporation of the LLP. Once filled, this form is required to be submitted to the Registrar of the state in which the registered office of the LLP is situated or is to be situated. The fees involved in registering an LLP depends upon the capital contribution of the Partners. It is as follows:

A document, specifying that all the requirements of the LLP Act, 2008 as well as rules regarding the incorporation of the LLP have been complied with, shall be submitted along with the incorporation document. Such document can be made either by a CA/CS/Lawyer who is engaged in the incorporation of the LLP along with anyone who has subscribed his name to the incorporation document. If such requirements are complied with, the Registrar shall, within the period of 14 days, register the incorporation document and give the certificate of incorporation to the person whose name has been specified therein.

It is important that the incorporation document shall be in the prescribed form. It must mention the name of the LLP as well the purpose for which the LLP is being registered i.e. the area of business it will function in. It shall also include the registered office address as well as the name and address of all the partners of the LLP. The Partners who will be Designated Partners in the firm are also required to mention their name and address along with any such information that concerns the LLP.

STEP 5: Filing of the LLP Agreement

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An LLP agreement has been defined in section 2(o) of the LLP Act, 2008. It is this agreement that determines the rights and duties that each partner in an LLP has towards each other as well as their rights and duties in relation to the LLP itself. An LLP agreement is required to be submitted within 30 days of the incorporation of the LLP.

Form required for filing the LLP Agreement

Form-3 is required for the registration of the LLP agreement. It is mandatory under the LLP Act, 2008 to get the LLP agreement registered after filing the same. Section 23 of the act mandates that the LLP agreement be registered. It is important to get the agreement registered because, in the absence of such registered agreement, the mutual rights and duties of the partners towards each other as well as towards the LLP will be governed by the provisions of the First Schedule. To exclude some or all of the provision mentioned in the first Schedule, it is important to get the LLP agreement registered and exclude all those provisions of the First Schedule that the partners do not want to apply to their LLP.

The cost involved in registering an LLP agreement is as follows:

Other Important Limited liability partnership (LLP) forms

Apart from the above-mentioned forms, there are a number of other forms that will be required once the LLP is Incorporated. These forms range from filing addendum for rectification to application for compounding of an offence under the Act. A list of all such forms are compiled below:

Conclusion

It is quite evident that the steps involved in registering an LLP are simple. In fact, the registration of LLP form of business structure is one of the simplest in India. Most of the forms required are made available in one place to further simplify the process.

Recently, I was assigned some work on real estate laws. But being a media lawyer, I did not have much idea of how to approach the topic. Then I reached out to a friend of a friend who worked in real estate laws. He helped me tremendously on my article Real Estate Lawyers: The What & How of The Job! Two days later, I had another article to write and I was at a loss yet again!

So, I spoke to a few real estate lawyers for my articles. I needed to know more about the domain before I began writing about it. I just had some theoretical knowledge from back in the days. I have drafted some lease and license agreements, rent agreement, dealt with advising on tenancy laws, etc.  But in my present article, I needed some specific insights from the people in the know.

What agreements do real estate lawyers deal on a day to day basis? This question led to many interesting responses. As lawyers we know that contract drafting is an essential skill set for all lawyers. But we gain expertise in the ones we deal with regularly. So for a real estate lawyer, it is important to not only know contract drafting, but also which agreements to draft. Then there is need for knowledge of real estate laws. For this one may do a real estate law course to gain practical knowledge along with theoretical knowledge, to have an extra edge over others.

Click here to know more about real estate law course!

Therefore, we asked many real estate lawyers for their inputs and insights. According to Advocate Mrinal Agrawal, “Agreements pertaining to sale deed, lease deed, tripartite agreement are the most common ones.”

Manisha Paranjape, Associate Partner at Dhaval Vussonji & Associates, said that there are a wide range of documents really as property transactions are of various types. “The agreements to sell/ MoUs, conveyance deeds, leases, leave and license agreements, development agreements, joint development agreements, development management agreements, gift deeds, release deeds, powers of attorney, agreements for permanent alternate accommodation are some of the usual ones.”

Based on the above inputs and from other sources, we have come up with a list of agreements that you must know as a real estate lawyer, detailed below:

# Agreement to Sell

This is the initial document between the buyer and the seller which details the terms and conditions of sale of a property. The terms and conditions include the description of the property, amount of payment, the future date of payment, mode of payment, etc. is included in it. An agreement of sale forms the basis of the execution of a sale deed.

You can download a sample of agreement to sell from here.

# Sale Deed

The sale deed acts as the main document for sale and transfer of ownership of a property. It is executed after the terms and conditions detailed in the agreement of sale have been complied with. This document helps the buyer to acquire the ownership of the property. It is also referred to as the conveyance deed.

You can download a sample sale deed here.

# Lease Deed

This deed is used to transfer a right to enjoy property for a certain time or in perpetuity in consideration of a price paid or promised or of money, or any other thing of value to be rendered periodically or on specific occasion to the Lessor by the Lessee who accepts the transfer on such terms. You can read more about it here.

You can download a sample lease deed here.

# Leave and License Agreement

A leave and license agreement is an agreement whereby licensor allows the licensee to temporarily occupy and use portion of an immovable property for business and residential purposes. The license is for a minimum period of 11 months in lieu of a fixed payment of fees. It has to be compulsorily registered before the Sub-Registrar of Assurances in the place where the property is situated.

You can download a sample from here.

# Joint Development Agreement

In case of a joint development agreement, the owner provides the land to the developer for an arrangement with the developer. Usually the arrangement is that the developer will create and construct a real estate project and bear the costs. Various permissions and approvals from authorities are required for this. The owner of the land may get a lump sum amount or a percentage of sales revenue, based on the terms and conditions.

You can download a joint development agreement sample here.

# Gift Deed

As per Section 122 of the Transfer of Property Act, 1882, you can transfer immovable property through a gift deed. Gift “is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by the donor to the donee, and accepted by or on behalf of the donee, in the lifetime of the donor.” For a gift deed to be valid, the registration of a gift deed with the sub-registrar is mandatory as per Section 17 of the Registration Act, 1908, and as per Section 123 of the Transfer of Property Act. The mutation of the property can be done only upon due registration of the gift deed.

You can download a sample gift deed here.

This is certainly not an exhaustive list of agreements. There are a variety of different documents involved in the process of acquiring or transferring partial or complete property ownership. Real estate lawyers need to do a lot more before and after drafting these agreements.

Like Srija Choudhury, Advocate, Jharkhand High Court pointed out that the lineage of the property or line of transfer has to be borne in mind. Then the mode of each transfer from the records, i.e., the line of transfer by succession, sale, gift, etc. has to be looked into. Things like mutation certificate, rent receipts, holding tax receipts,etc. have to be retained for examination or presentation of the current right, title, interest and possession.

The real estate lawyers need to have specialised knowledge pertaining to the field. They need practical knowledge to be able to apply their theoretical knowledge. If you want to learn more about real estate laws, you can check out this real estate law course.

Till then keep learning!

In this article, Shivam Gupta and Mayank Ratnaparkhe, both pursuing B.A.LL.B (4th Year) from Rajiv Gandhi National University of Law discusses the Compliance Requirement under Companies (Significant Beneficial Owners) Rules, 2018.

This article is written by Team LegalWiz.

A trademark helps in distinguishing different goods and services, by creating an identity that makes the brand stand out in the market. If it is not secured, it would lose its distinct feature and it won’t be able to create a reputation in the market. Trademark opposition is a stage where a third party can stop an individual or a company from obtaining registration of a trademark that is not distinct or is already being used in the market. This is to avoid any confusion among the consumers or users regarding the brand or the company, they are availing services or good form. It prevents dilution of the brand value of already existing trademarks or well-known marks and also secures their exclusivity. Trademark opposition and trademark objection are two different stages and there is always confusion among masses about them. This article would bring some clarity between the two and would explain the concept of trademark opposition in brief.

Objection vs. Opposition

TM Objection

A trademark before getting registered goes through many stages that check its registrability. One of the initial stages of refusal is trademark objection, which is instituted by the Trademark Examiner from the Registry. An objection in the most cases can be overcome by proper representation before the registrar.

Some common grounds for objection are:

1. Lack of distinctiveness (Section 9),
2. Similarity with pending or registered marks (Section 11),
3. Usage of geographical names,
4. International proprietary names,
5. Offensive or obscene words as a part of or as a trademark

TM Opposition

Trademark Opposition is instituted by a third party after the application is accepted by the Trademark Registry. This is a very important and critical stage in the trademark registration procedure. After the trademark fulfils all the initial requirements i.e. the distinctiveness factor and has got an approval from the registry regarding its registrability, it is finally advertised in the Trademarks journal for inviting any third-party opposition. The main reason behind this is to give an opportunity to the common public to raise an opposition against the registration if they believe the trademark to be deceptively or phonetically similar to their owner other existing marks.

Who can file an opposition?

Any person may give a Notice of Opposition irrespective of the fact of his commercial or personal interest. The person need not be an owner of a prior registered trademark. He can be a customer, a purchaser or member of the public likely to use the goods. The question of bona fides of the opponent does not arise in case of filing an opposition. People are permitted to oppose the TM within a period of three months from the date of its publication in Trademark journal, which can then be extended to a maximum one more month.

What are the Grounds of Opposition?

A pending trademark application may be opposed on the following grounds:

• The mark is a generic term for the associated wares or services (in any language);
• The mark is primarily merely a surname;
• The mark is confusing with another trademark, official mark, an Olympic mark or a geographical indication registered in India;
• The trademark is prohibited under the Emblem and Names Act, 1950;
• The mark is scandalous, obscene or immoral;
• The mark is customary in the current language or in the established practices of business;
• The mark is contrary to the law or is prevented by law;
• The mark contains matters that are likely to hurt the religious feelings of any class or section of people;
• Another party had prior use of the mark or a confusingly similar mark in India;
• The applicant used the mark only as a licensee of another party;
• The mark is devoid of distinctive character;
• The mark is descriptive in nature;
• Application for the trademark is made with bad faith;
• The trademark is likely to deceive the public or cause confusion.

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Essentials for filing an Opposition

The trademark opposition is filed through form TM-O. The concerned party that files the

opposition needs to submit required documents along with information of the application being opposed.

The required details and documents differ based on the ground of opposition. Let’s have a look over the ground of opposition and associated details.

Prior Registration

If the opposition is based on the previously registered trademark, the opponent needs to mention the details of such TM with its status, application number and priority date.

Well-Known Marks

If the opposition is based on already existing well-known marks or a mark having a reputation in the market, any document that can act as an evidence of such a mark and an indication of the country or countries in which the earlier mark is recognized to be well known should be mentioned. Alternatively, the proof that the mark is registered or applied for can be presented.

Licensee

In situations where the opposition is filed by a licensee not being a registered user, the name of the licensee and his address and an indication that he has been authorized to enter the opposition may be given.

Foreigner

In situations where the opposing party is a foreigner, having no place of business in India, the name of the opponents and his address for service in India is required.

Conclusion

Creating and maintaining a brand is a big responsibility and huge funds may be invested. Hence, an application must pass through multiple checks and scrutiny before registration to prove their distinctiveness and validity.

Hence, Trademark opposition is the essential and critical stage in the registration process. It is one of the most effective remedies to protect your trademark and secure your brand. As the limitation period play a significant role in awarding the remedy. The registered proprietors/ prior users are required to be vigilant in securing their marks by initiating an appropriate proceeding at the right time.

About LegalWiz.in

LegalWiz.in is leading online legal service provider committed for offering simplified and hassle-free solutions to businesses and corporates at across India. From company registration to trademark protection, we make managing and protecting the business simpler. LegalWiz.in is one step solution for all businesses.

LegalWiz.in can help you with filing Trademark Opposition in India online at an affordable cost. If you are seeking assistance from experts to register your mark or have any other concerns regarding intellectual property protection feel free to get in touch with our expert at [email protected].

This article is written by Anirudh Singh.

Section 10 of “Insolvency and Bankruptcy Code, 2016” (Hereinafter referred as “IBC”) gives power to a corporate applicant to file a suo moto application for commencing corporate insolvency resolution process with the Adjudicating Authority. Prior to 6^th June 2018, no provisions under the IBC or Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 made it compulsory for the Corporate Debtor to have the validation of shareholders before initiating the application process for Insolvency.

However, Form-6, which is the requisite form for application by Corporate Applicant for commencing insolvency, contains instructions of the attachments to be made along with the form and Annexure-VII. These instructions mandate the attachment of a document which records the authority of the Corporate Applicant to make such application. As per Annexure VII,

“A copy of:

(a) relevant  extract  of  any  constitutional  document  or shareholders’  agreement  that  records  the authority of the corporate applicant to make this application, where the corporate applicant is a member or partner of the corporate debtor; or

(b) relevant extract of an employment agreement, constitutional document or fillings made to the Registrar  of  Companies  confirming  the  authority  of the  corporate  applicant  to  make  this application,  where  the  corporate  applicant  is  an  individual  in  charge  of  managing  the operations  and  resources  of  the  corporate  debtor  or  has  control  and  supervision  over  the financial affairs of the corporate debtor.”

Although the instructions given in Form-6 stipulates the attachment of document which records the Authority of the Corporate Debtor to make such application, there was no manifest requirement of taking the authorization of the shareholders before initiating the process of Insolvency, and therefore, in some cases it seemed that such applications were filed on behalf of Corporate Debtor without shareholder’s authorization.

Relevant Provisions under Companies Act, 2013

Under Companies Act, 2013, the approval of shareholders was obtained through special resolution passed for major decisions of company, before the commencement of IBC. For example-

1. The provision of winding up of the Company as per Section 271(1)(a) of Companies Act, 2013.
2. The amalgamation procedure of a sick company with any other company, under Section 262(2).
3. The approval of arrangement by liquidator, as per Section 319.

Owing to the enactment of the IBC such rights of the shareholders have taken a back seat. Though it is evident that the beginning of CIRP process may lead to amalgamation, merger or liquidation of the Company, the shareholders who were given rights of validating or invalidating major decisions of the Company before the introduction of IBC, have been dispossessed of their powers after the enactment of IBC, which is a contentious issue.

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The “Report of the Insolvency Law Committee”

The Insolvency Law Committee, which was set up on 16^th November 2016, observed that a need for approval by shareholders of the Corporate Debtor may be important as CIRP is a momentous event for a Corporate Debtor which may also lead to its liquidation.

The Committee noted that “in order to prevent misuse of section 10 of the Code, which permits initiation of CIRP by Corporate Applicant, it has been recommended to provide for the requirement of special resolution passed by the shareholders of the Corporate debtor or resolution passed by at least three-fourth of the total number of partners of the corporate debtor as the case may be….”

The Committee further recommended that “The Committee felt that the shareholders or partners, as the case may be, must be given the power to approve initiation of CIRP by a corporate applicant and a provision mandating approval by them may be inserted. Since commencement of CIRP is a major decision for the corporate debtor and may have a huge impact on its functioning or even lead to its liquidation, a special resolution or a resolution passed by at least three-fourth of the total number of partners of the corporate debtor, as the case may be, may be provided in this regard. Thus, the Committee recommended that section 10 of the Code may be suitably amended to provide for the requirement to obtain an approval of shareholders by special resolution or an approval of at least three-fourth of the total number of partners, as the case may be, as a precondition for filing for CIRP.”

The Ordinance of 6 June 2018

On the advice of “Insolvency Law Committee”, an amendment was bought in Section 10 of the Code. Now Corporate Debtor would compulsorily necessitate a special resolution from the shareholders of the company to initiate insolvency resolution under the Code.

The amended Section 10(3) is as follows:

(3) “The corporate applicant shall, along with the application, furnish—

(a) the information relating to its books of account and such other documents for such period as may be specified;

(b) the information relating to the resolution professional proposed to be appointed as an interim resolution professional; and

(c) the special resolution passed by shareholders of the corporate debtor or the resolution passed by at least three-fourth of the total number of partners of the corporate debtor, as the case may be, approving filing of the application.”

Approval of Resolution plans under Section 30 & 31 of the IBC: Clarification by the Ministry of Corporate Affairs (MCA)

The Ministry of Corporate Affairs (MCA), via the General Circular Number IBC/01/2017 on 25^th October had clarified that once the resolution plan is sanctioned by the Adjudicating Authority, no further approval of the resolution plan is needed from the members of Corporate Debtor.

There was a clarification needed as to what the resolution plan may consist of which necessitates the approval of shareholders under the Companies Act, 2013 (For example, in case of the reduction of share capital or further issue of shares- The consent of shareholders needs to be taken). Even if the consent of members is required, it is pertinent to mention that on which the stage such consent needs to be taken. It was clarified by the MCA that approval of members is not needed either before authorization of the resolution plan by COC/NCLT or thereafter, i.e, while its implementation.

Before the commencement of IBC, 2016, Companies Act needed the consent of shareholders in major decisions of the company. However, the enactment of the Code tinkered away the legal requirements under the previous Act and no power was given to the shareholders to protect their interests or consent in the instance of initiation of insolvency proceedings of the company. In the case of listed companies which comprises of thousands of shareholders, significant investments have been made by the said shareholders, implying the substantial role they play in the decision making of the company. All of a sudden, the inherent rights of these members are taken away and they cannot stage their opinion in such a major decision of the company. Rights of large number of people are affected and no provision was made for fulfilling the interest of such large group.

Final Position

Owing to the recommendation made by the Insolvency Law Committee, an amendment is made in IBC which means that the approval of shareholders is mandatory for initiating CIRP process by corporate debtor. After the ordinance dated 6 June 2018, the shareholders of the companies will have the power to decide that whether the company should go for insolvency or not. However, such power cannot be availed by the shareholders of the company which initiated insolvency process before the date of ordinance.

In this article, Shreya Mohanty pursuing BBA LLB discusses how to Manage risks in outsourcing of financial services by banks.

Introduction

Recently a new trend has emerged in the operation of banks all over the world. Banks are using the outsourcing method to third parties who may be unrelated or member of the group. The main reasons for outsourcing are:

• Reduces cost
• Access to specialist expertise
• Achieve strategic objectives of the banks

Outsourcing along with these advantages also brings many risks such as:

1. Strategic Risk: The outsourcing providers or the third parties may not know the overall strategic goals of the entity for which it is working.
2. Reputation Risk: If the third party commits any mistakes or perform poorly then the reputation of the regulated entity will be at risk.
3. Compliance Risk: If the service provider do not comply with the privacy law or consumer and prudential laws.
4. Operational Risk: This means there may be technology failure on the part of the service provider or they may create any fraud or error which may cause loss to the customers and bank both.
5. Strategy Risk: If the bank is relying upon only one company or there is a loss of relevant and important skills within the firms and companies, then this may lead to strategic risk.

Some other risks are counterparty risks, access risks, contractual risks, etc.

What are Outsourcing Activities?

Outsourcing may be defined as a bank’s use of third party (either an affiliated entity within a corporate group or an entity that is external to the corporate group or an entity that is external to the corporate group) to perform activities on a continuing basis that would normally be undertaken by the bank itself, now or in the future.

In simple language, outsourcing is a process in which a company or any bank delegates its powers to a third company or party which manages entire business process of the parent company like finance, accounts, customer support, etc.

Examples of Outsourcing Activities

Tata Business Support Service (TBSS) is a service provider or a third party to the Tata Telecommunications i.e. TATA DOCOMO. Tata Docomo has outsourced its customer support service to TBSS.

P&G has outsourced some Research and Development (R&D) activities which helped the parent company P&G in boosting its innovation productivity by 60% and generated its revenue more than $10 billion. Today more than ½ of the P&G products comes from outsourcing and external collaboration with other companies and firms.

Hindustan Unilever Ltd. In 2005 when planning to merge all his company’s unit into one unit, asked an external/ third party to develop a ERP system as Unilever was not expert in IT solutions.

ACER Company outsourced everything it had like manufacturing.

Recently State Bank of India has published a notification asking for companies for outsourcing its Audit and Accounts. This explains that banking companies have also entered the outsourcing business.

Legal Framework for Outsourcing Activities by Banks

Since many banks have entered into outsourcing, the Reserve Bank of India have released a notification dated November 3, 2006 (https://rbi.org.in/scripts/NotificationUser.aspx?Id=3148&Mode=0)  which states various guidelines that has to be followed by banks:  

1. 1. The core management functions like corporate planning, management and control and decision making functions like sanction of loans, compliance with KYC forms, etc. cannot be outsourced by banks.
   2. RBI will review and check the implementation of these guidelines by the banks and insurance companies.
   3. Bank Obligations: RBI has made a point that bank shall be liable for any outsourced activities and its Board and Senior Management will be responsible for the outsourced activity. Banks will also be liable for the actions of the external party to whom the bank has outsourced (i.e. the service provider). Banks has the ultimate control on the outsourced activities.
   4. It is essential for the bank to work for the bank to work within all relevant laws, guidelines, regulations and conditions of approval, licensing or registration.
   5. Customer Rights: The rights of the customer should not be affected by outsourcing arrangements. Banks have the duty to reveal the third party agreements to the customers and they should also reveal the role of the third party service providers and what are their obligations towards the customers.
   6. The third parties, whether located in India or outside India, should not interfere in the bank’s management of its activities and RBI’s duty to check over the bank’s functions.
   7. RBI has also asked the banks, in these guidelines, to create and start a robust grievance redressal mechanism and it should not be compromised in any manner.
   8. After compliance of these guidelines, banks have to notify the RBI if there is any outsourcing activities or if they are planning to start outsourcing activities.
   9. If the outsourcing is outside India, then prior permission has to be taken from the RBI.
   10. Any bank which is planning to outsource its activities should first make an outsourcing policy and then it should be approved by the bank’s Board and Senior Management.

Role of the Board and Senior Management

1. They should check whether there is any risk in the outsourcing and they can add any obligations which they think fit for the benefit of the bank.They should review the outsourcing strategies.
2. They have right and duty to select the area of function of the bank which has to be outsourced.
3. The banks have to create a Redressal of Grievance Machinery where the customers can directly contact the bank if they have any grievances or complaints. The bank, after the creation of the Redressal, has to make publicity of the same through social platforms.

Difference between Outsourcing by Banks and Outsourcing by NBFCs

What is an NBFC?

A Non-Banking Financial Company (NBFC) is a company registered with the Companies Act, 1965/2013 of India, engaged in the business of loans and advances, acquisition of shares, stock, bond sire-purchase, insurance business, or chit business. It does not include any institution whose principal business is that includes agricultural or industrial activity; or the sale, purchase or construction of immovable property.

Difference between a Bank and an NBFC

There are in total 3 differences between a bank and a NBFC. They are: –

1. An NBFC does not have the right to accept a demand deposit but a bank can accept the same.
2. An NBFC cannot issue cheques to the customers, its main duty is to provide loans to the customers, but a bank can issue cheques.
3. Customers of NBFCs do not get the deposit insurance facility of DICGC, but this not the situation in case of banks.

Outsourcing by NBFCs: How is it different from that of the banks?

RBI on November 9, 2017 (https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=11160) had issued few Directions for control of Outsourcing of financial services by NBFCs.

The object of RBI issuing such notification is:

• protection of interests of the customers of NBFC
• The RBI is trying to ensure that the service provider provides such quality of work as a NBFC would give.

The directions and guidelines by RBI are:

1. As bank is not allowed to outsource core management, similar is in the case of NBFC but the difference is that NBFC is not allowed to outsource the Internal Audits.
2. Outsourcing by NBFCs should be of financial services and not of technology related issues and issues not related to financial services.
3. RBI has issued some guidelines regarding the duty of the service provider. They are: –
   • The service provider should not interfere in the management of the NBFC.
   • The service provider shall carry due diligence of its employees.
   • The service provider should not mix the documents of different NBFCs and should not disclose it to any other person.
   • If the service provider makes any breach of the contract or agreement they have to inform about the same to the NBFC.
   • When the outsourcing agreement comes to an end it is the responsibility of the service provider to inform the public that it is no more a service provider to the NBFC.
4. NBFC has the duty to give training to the service provider.
5. The outsourcing agreement between the NBFC and the third party must be flexible at the option of the NBFC so that NBFC can control on the outsourced activities and it can intervene with appropriate measures for legal and regulatory work.
6. The service provider must take prior consent from the NBFC if it wishes to subcontract the outsourced activities.
7. The service provider cannot be a party who is related to the parent company. For example a company who is owned by any one of the director or employee of the NBFC.

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Conclusion

The Outsourcing of activities of financial service by the banks and the NBFCs is almost similar. RBI has given similar guidelines for both but there are few changes for the NBFCs. While outsourcing, banks and NBFCs must follow these guidelines and directions. RBI has also decided to keep a check on these outsourcing activities so that the customers don’t get affected and their confidentiality is properly maintained.

Seeking a Second Chance

For some who struggle to keep up with medical bills, declaring bankruptcy can provide relief — and the process is fairly simple.

By Rilind Elezaj

Did you ever need a do-over?

If you’re experiencing a financial collapse and need to start over — as is the case for many who are grappling with cancer — declaring bankruptcy could be the answer.

Bankruptcy is a court proceeding in which the judge and other trustees study your assets and liabilities to assess whether you are able to pay your bills. The goal is to determine whether you should be allowed to let go of your debt. Bankruptcy laws were created to give people a second chance when they are experiencing hard financial times due to bad luck. The good news is that most people who file for bankruptcy end up getting it.

Who Can Declare Bankruptcy?

In general, people eligible to declare bankruptcy carry debts that can never be cleared with the money they possess now or expect to earn in the near future. This can include individuals having trouble settling their medical bills, such as patients with cancer who require immediate treatment that ends up continuing for a prolonged period — possibly a lifetime. These patients are typically paying for medical treatment while also trying to fulfill the financial obligations they had before they got sick: mortgages, student or auto loans and credit card debt.

A 2013 study found that people with cancer are 2 ½ times more likely than those without cancer to declare bankruptcy.

Types of Bankruptcy

Patients and owners can consider declaring either one of two types of bankruptcy: Chapter 7 or chapter 13.

In chapter 7 bankruptcy, patients sell certain property such as any equity they have in their homes and vehicle, as well as clothing, household appliances, and wedding jewellery and use it to pay all or part of their debt, which is then considered satisfied.

However, a lot of property is exempt and can be kept by those who are filing. A business owned by a debtor may not be touched by creditors, even if it was used as collateral because bankruptcy law is about helping debtors with their debt and putting them back on their feet. Bankruptcy law recognizes that not everything should be taken from them because it doesn’t benefit any side. Non-exempt property generally covers items outside of the necessities for living and working. So it’s reasonable for the creditor to let you keep the business in order to pay off your debts using the income you earn. In a chapter 13 bankruptcy, you propose a repayment plan where you repay part or all of the debt over three to five years. In addition, necessities including a patient’s car, home, clothing, furniture, work equipment, appliances, wages and retirement savings tend to be exempt.

The Pros and Cons

Bankruptcy can provide patients with peace of mind. Their bills will be considered settled, and lenders will no longer contact them to request payment. In fact, creditors are required to stop contacting debtors the minute they petition the court for bankruptcy relief.

Other benefits are that there is no minimum amount of debt needed in order to file; one spouse can file alone if the other doesn’t want or need to; and the process is fairly anonymous — odds are, no one will realize that you’ve filed unless you tell them.

In addition to the fact that filing for bankruptcy takes some work — hiring and meeting with an attorney, filling out paperwork and going to court — another drawback is that some assets may be lost. Too, the spending and borrowing power of people who have filed for bankruptcy may be restricted, with evidence of their bankruptcy showing up on their credit reports for 10 years. Still, these folks will retain the ability to secure and use new credit cards.

Important to note is that people with ongoing medical problems may accumulate new debt after successfully filing for bankruptcy. Another filing will not be allowed for years, but patients who are protected under chapter 13 bankruptcy may petition the court to add some of their new debt to their existing plans, protecting them against having to pay. A legal remedy of a bankruptcy for medical bills is debt discharge. Most people who file for Chapter 7 will have the right to discharge most or all of their debts. The amount of medical debt which can be discharged in Chapter 7 bankruptcy is not specified.

This issue is not only stressful for the bankrupt’s but also for hospitals and physicians who are dealing with these cases and they might cause a medical malpractice stress.

How to File for Bankruptcy

Those who want to file for bankruptcy will first need to come up with a complete financial record that includes their expenses, income, debts, and assets. They will also need to consult with a credit counseling agent who has been approved to guide them. The court requires people considering bankruptcy to do this within 180 days of filing to help determine whether they have exhausted all their financial resources.

To find a credit counseling agency approved by the U.S Trustee’s office in your area, visit justice.gov/ust, click “Consumer Information” and then click “Credit Counseling & Debtor Education.”

It’s possible, though, that you can avoid that step and achieve one-stop shopping by selecting your bankruptcy attorney before you do anything else. Your attorney can most likely give you financial record forms that will spell out what you need to include, and may also be able to recommend a credit counseling agency.

The good news is that, wherever you are, you should always be able to find a qualified lawyer in this niche who can simplify the filing process for you.

For patients with cancer, there may be opportunities to get this legal help at a discount or for free.

One resource for finding that help is the National Cancer Legal Services Network, at nclsn.org. In addition, Know Cancer, an online community that provides social and professional support to people affected by the disease, offers information about free or discounted legal help online at knowcancer.com/cancer-lawyers. Your local bar association may offer you a short, discounted discussion with a lawyer, and many communities or countries have legal aid societies that can offer help to those without a lot of financial resources. Lawhelp.org also may direct you to free or discounted legal advice.

In many cases, private local law firms will also be willing to offer you their services at a discounted rate — or even for free.

Legal Aid Legal aid provides people who can’t afford a legal representation and give them permission to access the court system. Private companies of lawyers also provide legal aid for individuals. Patients can approach a Law Centre if one exists in their area or contact their local Citizens Advice Centre. There are also a lot of organizations and firms that provide them with necessary information about Legal Aid.

Having a solid policy and process in place for regular debt collection will keep bankruptcy filings from having a major impact on your practice. However, when bankruptcy does occur and you receive notice of filing, all collection attempts on bills prior to the filing date must stop. Informing your collection agency of the notice is the next step for patients already in collections.

It’s important for you to rebuild your credit score after bankruptcy, of course, it’s never a good idea to make a hasty decision to file for business bankruptcy—it will stay on your credit history for 7-10 years. Be sure to explore all your options before settling on what to do with your business in the near future. Best thing to do after dealing with bankruptcy is to rebuild your credit score. One of the best ways to do this is with a secured credit card. This is where you go to a local bank or credit union and give it some amount of money to hold.

About the Author

Rilind Elezaj is an experienced a Digital Marketing Specialist with a demonstrated history of working in the marketing and advertising industry. Rilind possesses a strong entrepreneurial mindset and has devoted his career to enhancing the sphere of digital marketing. In his methodological approach, Rilind integrates web development and other digital marketing solutions to create hybrid strategies that bring the best results.

“I’m beautiful in my way, cuz God makes no mistakes. I’m on the right track, baby cuz I was born this way.”

It is totally correct when we say that films are a reflection of our society. This is truly depicted when we see movies like ‘I am Sam’, ‘Bill on his Own’, ‘Bonds of Love’, ‘I Never Promised You A Rose Garden’, ‘The Kid from Nowhere’, ‘Tare Zameen Par’, ‘Margarita with a Straw’.

Many believe that persons with intellectual and developmental challenges cannot function in society and are unable to meet the physical or emotional demands of normal life. People believe that they cannot handle the challenges of daily life and are not able to contribute as ‘normal’ people do. These misconceptions have built a stereotype which has taken a strong hold on minds. However modern day cinema, otherwise used as a tool for entertainment, has tried to change these misconceptions, showing the true reality of the lives of people with challenges. By destroying the false impressions that so many have, they have shone a light on the possibilities that those with challenges can actualize. With only small efforts from us, they show that persons with challenges can be not at all different from us, in fact, they are just the same.

THE KID FROM NOWHERE is a TV movie, which came out in 1982. It portrays a story of a single mother who is overprotective of her intellectually challenged son, denying him a normal social life, which makes him angry and difficult. The movie illustrates the struggles that a family must go through every day. However, things start to change when the boy began to train for Special Olympics, gaining self-esteem in the process and his mother learning finally, to let go. The story travelled beautifully from the mother fearing what the society says, to becoming proud of her son. The film received a hugely positive reaction from the audience.

BILL ON HIS OWN, “Why do you want to learn?” when the teacher asked Bill (60 years old) he simply said “Because if I learn, then I’ll be a regular good man.” The classic Hollywood comedy ‘Bill on his Own’ (1983) is a story about Bill, who is an intellectually challenged man who wishes to live freely in the society just like everyone. After many years living in an institution, Bill is mesmerized by how beautiful the outside world is. With the desire to learn and live independently, Bill starts his journey of many challenges and new friends. And along this journey, he meets people who really care and love him. The movie met positive reviews as its simple story-line was capable to grab the attention of many viewers, helping to change the perceptions they had earlier held.

I AM SAM is an American film released in 2001. It showcases the story of Sam, a single father with intellectual disability, who wants to raise his daughter alone after the mother of the child abandoned them. With emotions as the prime tool taken by the director, the movie goes through the different phases of the lives of Sam (father) and Lucy (daughter). When Lucy is sent to a foster home, Sam fights for her custody in court. Despite the serious intellectual challenges Sam faces, he proves that he can take care of Lucy independently, and can be a caring father. At the end of several twists and turns, Sam wins custody of his daughter. The movie shows that how, despite the considerable challenges that he had, Sam won the hearts of all and proved that he can also be a part of the society as normally as others. The movie went to win many awards and opened the eyes of many people.

TAARE ZAMEEN PAR is a 2007 Indian drama, revolves around Ishaan, an 8 year old child with dyslexia. Although excellent in arts, young Ishaan is unable to get good grades in academics. With the school making repeated complaints about Ishaan’s distraction, the frustrated father sends him off to a boarding school. Ishaan’s arts teacher at the new school, the role played by Aamir Khan, suspects that Ishaan has dyslexia and he helps him to deal with his challenges. The story generates a slew of emotions as it travels through Ishaan’s life, from when he is misunderstood by his parents, to being accepting of his true self. The movie got universal praise from the critics and went on being one of the top movies of 2007. The movie made a huge impact on people’s assumptions on dyslexia and changed their thinking about it.

MARGARITA WITH A STRAW is a 2014 Bollywood movie which centres on the life of Laila who has Cerebral Palsy. Each step, each turn brings difficulties in her life, and the movie shows how she overcomes them through her positive attitude. It depicts the struggle as well as the power that individuals have to meet each challenge. It describes how every person’s desires and needs are the same as everybody else, despite being ‘normal’ or challenged. The movie received critical appraisal all over the globe and won many awards. The colourful story of Laila decodes the struggles faced by people with Cerebral Palsy but also shows how people can be happy despite all the difficulties.

With these movies, we are only seeing the tip of the iceberg. Ina time in which people are joining hands to come together for equality, movies like these take giant steps towards equity for people with challenges. Each movie mentioned above shows the different struggles and difficulties that persons with challenges go through, every day of their lives. It shows how we, as members of society, create their nightmares for them. These movies represent the fight that these warriors must fight every day to get adjusted and accepted within their own communities. Playing to the emotions as a primary strategy to win the hearts of people and open the window of their mind, cinema has been an amazing medium of change. What non-governmental organizations, the medical profession and support groups could not do, Hollywood and Bollywood have done. Film is a medium so strong, it leaves an impression on humdrum lives forever. With the right direction, it hits its target and moves onwards, ending misconception and making the lives of PwC just a little easier.

So let us take a pledge and move to end the typecast preconceptions about persons with challenges which has inhabited the minds of members of society – us – for a lifetime. Let us extend a hand of support to persons with challenges and walk with them towards equality, so that they can also have a chance to live life fully and freely. Remember even though persons with challenges are not same as others, they are not different from others.

“Don’t hide yourself in regret, just love yourself and you’re set on the right on the right way, cuz you were born to be brave and you are born this way.”

About the author: Karan Yadav is a trainee journalist from India Today Media Institute, currently pursuing Post Graduate Diploma and was working as an intern at Amrit Foundation of India.

(This article was originally published by the Amrit Foundation of India. To know more about the organization please click here!)