This article is written by Komal Shah, Content Head, LawSikho.
Drugs pump you up. They excite you. Hence you see athletes consuming steroids to get power and perform in top gear. But here I’m going to tell you about something that can make you feel the same way – minus the drugs of course.
Think of one situation in your life when you struggled – as fiercely as a butterfly struggles to break a cocoon, really grappling your way through the situation. What were your adrenaline levels at? And what was your frame of mind after you came out of the situation? I’ll tell you – it was an “I’m the king of the world” feeling, wasn’t it? Would you define this whole experience as ‘excitement’?
Why company law, or any law for that matter, feels boring, is probably because you have never faced a personal struggle situation with it. Let me share a few situations where I grappled, and pushed against the walls of company law and corporate governance, and found my way through. And that’s where it began to feel exciting.
Office or place of profit
I was working for a multinational company which had a subsidiary in India. At that time I was working outside India and the records of all subsidiaries were centralised outside India. The Indian subsidiary was being audited by a decently well known chartered accountants firm. The Country Head for India was appointed a Director on the board of the company, as a part of the responsibilities of his employment. There was to be no change in his remuneration on this account. When I received the Balance Sheet, I saw that his remuneration had been indicated as Directors’ Remuneration. Factually, this was incorrect because he was being paid based on his employment agreement as the Country Head and there had been no resolution passed by the board of directors approving his remuneration as a director. The statutory auditors had raised no issues on this and were ok with it being stated as directors remuneration.
I discussed this with the Country Head himself, and told him it needed to be included in the employee salaries section and not within the Directors’ remuneration, since there had not been any resolution approving his remuneration as a director. This would constitute an appointment to an office or place of profit. He was an out and out operations guy, and he just went back with my comment to the auditors. In the erstwhile Companies Act, 1956, there was a section 314(1B), which mandated the approval of Central Government for certain appointments to the office or place of profit.
The auditors asked the Country Head to get me on a con call with them and told me “Do you know you would need a Central Government approval if you change this?” By this time, they had probably told the Country Head I had no clue about the Indian law sitting outside India. I had read Section 314 twice even before I spoke to the Country Head. I was ready. And excited. I told them I was “very sure that 314(1B) did not apply to a director per se” and therefore, a special resolution was sufficient to approve the appointment to an office or place of profit. I was clear about the logic behind this too. If you made a directors’ appointment to an office or place of profit subject to Central Government approval, all companies will simply categorise all remuneration as directors’ remuneration because in a private limited company such as our subsidiary, there were no limits to what could be paid as directors’ remuneration.
They went back and changed the accounts. No points for guessing what this call did about my image in the eyes of the Country Head.
Listed Capital vs. Issued Capital
In one of my employing companies, right after I joined, I came to know that they had stock options issued to multiple employees across the world. This was a listed company, listed on the Alternative Investment Market (AIM) of the London Stock Exchange. When you issue stock options to employees and the options vest, the employees can actually exercise their options and be allotted the shares of the company. It will add to your issued, subscribed and paid up capital. But what about the listed capital? No one was able to confirm to me what the listed capital of the company was, and for a while, I was paranoid about the fact that if the exercise of stock options increased the paid up capital and this capital wasn’t listed, we would be in deep trouble. I couldn’t find anything clearly indicating the listed capital, more so because I was completely new to how AIM operated.
I informed my fears to my boss, and told her that the shares to be issued as a part of the employee stock options MUST have been block-listed before being issued. Block listing is a process by which shares to be issued are listed in advance. If this wasn’t the case, it was a big problem. I knew that in India, there was a heavy penalty if a company had unlisted shares floating in the market, with the listed shares. Conceptually, the same concern would apply to other countries / exchanges too. However, I couldn’t find anything confirming the block listing.
AIM Companies are required to have nominated advisers or NomAds. So we called up our NomAd and he seemed to agree that the listed capital was required to be confirmed, and that we would indeed, have a problem if the exercise of stock options wasn’t configured into the listed capital. He told us he would look into his records. I watched my boss describe me – someone who had little more than two months working exposure to the law of that country, as a ‘seasoned’ professional to the NomAd (in fact, I liked the word so much, it still adorns my LinkedIn profile).
Fortunately, the NomAd did come back with an old announcement announcing more than sufficient block listing – which meant it had been applied for. And granted. But until that happened, it was like we were dangling in mid air. Thrilling. Exciting. Dangerous. Adventurous.
A late night party with the stock exchanges
Among all thrills and drills, I would give the top rank to the day before one of my employer companies got listed. As the officer responsible to get all the formalities completed for the listing, I was running around from BSE to NSE. I was providing last minute explanations to the NSE, securing last minute confirmations from people, having to grapple with a dead battery in my phone (trust me, the charger is the last thing you would think of, in such situations). I recall leaving for home somewhere close to midnight, after ensuring the International Securities Identification Number (ISIN) was up. I can still hear the friendly guy in the BSE listing department calling me up and asking me “How was it?” while I was still hanging in a Mumbai local, too excited, thrilled and completely drained from all that happened.
Do you want to feel the excitement in the law? Put yourself out there – get in the middle of a problem. We know the adrenaline levels we feel when you have to deal with something you haven’t dealt with before. This is exactly how we teach law!
Here is what you will learn from the set of problems and exercises that you face in the Diploma in Companies Act, Corporate Governance and SEBI Regulations course:
- Learn how to comprehensively analyse different business structures and advise clients on which is the best structure for their businesses
- Learn how to draft the Memorandum and Articles of Association of a Company in stages where the company is going for an investment transaction / conversion / initial public offering
- Learn what are the pitfalls or redflags you should take care of, while incorporating different types of companies, so to avoid delay and costs.
- Learn how to advise a client on what is the best non profit structure for him and how to use a Section 8 company to the maximum advantage
- Learn how to start a company law practice and draft opinions
- Learn how to advise a foreign client on the incorporation of subsidiary company in India
- Learn how to advise the board of directors of large sized companies about installing corporate governance mechanisms in the company
- Learn how to efficiently manage the processes before, during and after a board meeting and be able to advise the management during the board meeting.
- Learn how to advise the Chairman on managing the proceedings at Annual General Meetings and how to ensure minimal disruptions by shareholders
- Learn how to frame internal company policies and set up reporting and escalation mechanisms at group and individual entity levels including where the group is multinational
- Learn how to implement contract management and litigation management systems in a company which will help in minimising legal risk to a significant extent
- Learn how to develop induction processes for directors and advise them on their liabilities and responsibilities
- Learn how to draft CXO employment agreements including severance payments and clawback provisions
- Learn how to draft comprehensive employee stock option plans and letters of grant
- Learn how to handle and manage rights issues and private placements in unlisted entities
- Learn how to strategize, plan and carry out buybacks in unlisted entities
- Learn how to draft share subscription agreements, share purchase agreements and shareholders agreements as a lawyer to the founders and lawyer to the investors
- Learn how to plan and manage debenture issues and draft debenture trust deeds
- Learn how to handle an external commercial borrowings transaction for a client and what compliance is required for this purpose
- Learn how to advise clients on the perfect acquisition transaction for their business, whether a slump sale, asset sale or share acquisition
- Learn how to draft business transfer agreements, asset sale agreements and joint venture agreements
- Learn how to draft schemes of arrangement for amalgamations, mergers and demerger transactions
- Learn how to structure related party transactions and inter corporate loans and investment transactions within large groups to achieve desired objectives while acting within the restrictions of the Companies Act, 2013
- Learn how to structure transactions between holding and subsidiary companies and draft comprehensive subsidiary governance manuals
- Learn how to advise management on requirements applicable to accounts and accounting systems in the company and how to manage the relationship with auditors
- Learn how to verify the information received about listed and unlisted entities during due diligence by using the website of the MCA and stock exchanges
- Learn how to draft petitions for mergers, demergers, oppression and mismanagement, reduction of capital, rectification of register of members and how to file these with the National Company Law Tribunal
- Learn how to represent your clients in hearings before the National Company Law Tribunal
- Learn how to carry out a voluntary strike off for a company and advise a client on when this process should be undertaken
- Learn how to voluntarily wind up a company and what to do in case and what to do in case a petition for winding up a company is filed by creditors
- Learn how and when you can list your company, what is the performance criteria for listing a company, all about issue size, minimum public shareholding, pricing, securities that can be issued and treatment of outstanding convertibles and warrants before issue.
- Learn which agreements you would be required to enter into at the time of listing and what to review in these agreements
- Learn how to advise directors on compliance with the Listing Obligations and Disclosure Requirements (LODR) Regulations
- Learn how to advise management on acquisition transactions under the takeover code and to draft the public announcement, detailed public statement and letter of offer for a takeover transaction
- Learn how to advise the management in case someone launches a hostile bid for your company and how to manage competitive offers
- Learn how to take a company private by delisting offers and how to manage the delisting process
- Learn how to reply to show cause notices received from Securities and Exchange Board of India (SEBI)
- Learn how to draft the perfect Insider Trading Code for your client
- Learn how to advise your client on dealing with a whistleblower complaint on insider trading
- Learn how to deal with complaints under the Prohibition of Fraudulent and Unfair Trading Practices (PFUTP) regulations
- Learn when, where and how to file an appeal before the Securities Appellate Tribunal
- Learn how to represent your client in hearings before the Securities Appellate Tribunal
- Learn how to move the Supreme Court under Article 136 against the orders of the National Company Law Tribunal and Securities Appellate Tribunal
With these learning objectives in the Diploma in Companies Act, Corporate Governance and SEBI Regulations we put you in a problem. You will struggle, attempt to solve issues you have never faced before, research the hell out of applicability of laws and draft your heart (or rather your commercially active head) out. And you will feel the high of coming out of that experience. So we are like the drug dealers.
This is about making your learning real and personal, and addictive, with one difference.
Unlike real life, you won’t be stranded alone. Our course faculty (you will see me take a lot of your classes), evaluators who give you feedback and the awesome study materials will be a tremendous guiding force for you.
You will learn to swim by going in the deep, with no fear of drowning or death, but with the possibility of an incredible victory.
Are you ready to bring the excitement in?
Hurry up! Enrollments closing in 8 days! To sign up for the course, click here
