In this blog post, Arijit Bhowmick, pursuing M.A. in business law from NUJS, Kolkata, discusses the concept of capital markets and its various entities that fall under the purview of capital markets.
In each financial system, some individuals have surplus funds (traders) even as others have deficits (issuers). Capital market brings the issuers and investors together. It establishes buying and selling of services for different types of securities and ensures proper and equal access to all investors via suitable conversation channels.
Capital Markets work for the construction and trading of economic assets like shares, bonds, hybrid devices, commodities and derivatives. A quantity of participants like brokers, purchasers, funding bankers and fiscal mediators operate in capital markets.
Capital Market is a market for financial investments that are direct or indirect claims of capital. Capital Market comprises the problematic of associations and mechanisms by way of which intermediate time period funds and lengthy dollars are pooled and made on hand to business, government and participants.
F.Livingston defined capital market as “In a developing economy, it is a business of the capital market to facilitate the mainstream of command over capital to the point of highest yield. By doing so it enables control over resources to pass into hands of those who can employ them most effectively thereby increasing productive capacity and spelling the national dividend.”
A capital market provides support of capitalism to the country with a wave of economic reforms.
Need for A Capital Market
- Plays a predominant function in promoting and sustaining the development of an economic state.
- Principal and efficient conduit to channel and mobilise funds to organisations, both confidential and government.
- Effective supply of funding in the economic system.
- Performs relevant function in mobilizing financial savings for investment in productive property.
- Provide a medium for risk management by using enabling the diversification of risk in the economic system.
- Financing of capital-intensive initiatives.
- Capital markets provide a currency for acquisition via share swaps.
- Makes it possible for companies to provide shares to Employees via ESOPs.
- High-quality route for disinvestments.
Representation of Components of Capital Market
- Commodity Market
- Securities Market
- Primary Market
- Secondary Market
- Spot Market
- Derivative Market
Commodities markets are places where the commodities are traded. They may be able regulated both markets and exchanges. Commodities have immense capabilities as economic assets for informed traders.
It is the market where a wide variety of commodities like beneficial metals and crude oil are traded. An active and liquid commodity market helps buyers hedge their commodity risks.
In India, we have the National Commodity and Derivatives Exchange (NCDEX) and the Multi-commodity Exchange of India (MCX).
Commodity trading is a complex investing procedure. In commodity buying and selling, an investor trades on exchanges to get the products they need or to make the most of the fluctuating costs. The benefits of futures commodity trading are:
- bigger flexibility, certainty and transparency in obtaining commodities
- effective fee detection which prevents the seasonal fee variability
- entry to a giant monetary market
It is the largest market and is also known as the new issues market or IPO market and is concerned in issuing new securities to buyers. Many small and medium companies enter this market to elevate money from the public for their firms.
Rights issue, Initial Public Offer (IPO) and preferential hindrance are three procedures via which fairness shares will also be published within the foremost market. Preliminary Public present involves the sale of securities to the common public for the first time. Rights limitation involves the sale of securities to the existing shareholders at a constant cost. Preferential issue, also known as confidential placement is an offer of equity through a listed corporation to a moderately small team of investors (typically banks, insurers or pension money).
Before making an issue within the fundamental market, companies have to fulfil the stipulations of the involved inventory alternate called checklist specifications. There are two forms of lists maintained by way of an inventory exchange: money list and ahead record. The fairness shares listed on the money list are non-cleared securities, and those listed on the forward list are cleared securities. Primary market is of great significance as funds are flown to investors and entrepreneurs through this channel. The fund is utilised by the creation of new products and rendering of services to customers in India and abroad. The primary market creates and offers the merchandise for the secondary market.
The following are some of the important listing requirements (conditions to be fulfilled for the listing of the securities on a stock exchange):
- A Company needs to file a Prospectus with SEBI and get it approved.
- Minimum net tangible assets of ‘ 3 crores.
- Minimum of Rs. 15 crores as average pre- tax operating profit in at least three of the immediately preceding five years.
- Minimum net worth of ‘ 1 crore in each of proceeding 3 full years.
- At least 25% of the equity shares must be owned by the public.
Different Sorts of issues in Primary Securities Market:
- Public Issue: At the point when an issue/offer of shares or convertible securities is made to new financial specialists for turning out to be a piece of shareholders family.
- IPO: When an unlisted organisation makes either a crisp issue of shares or convertible securities or offers its current shares or convertible securities available to be purchased or both interestingly to open market. This clears route for posting and exchanging of issuer’s shares or Convertible Securities on the Stock Exchanges.
- FPO: When an officially listed and recorded organisation makes either a crisp issue of shares or convertible securities to the general population or an offer available to be purchased to people in general, it is known as an FPO.
- Rights issue (RI): When an issue of shares or convertible securities is constrained by an issuer to its current shareholders as on a diverse date set by the issuer, it is called a rights issue. Rights are offered in a particular ratio to the number of shares or convertible securities held as on draw upon date.
- Composite issue: When the issue of shares or convertible securities by a listed issuer on a public cum-rights basis, wherein the apportionment in both public issue and rights issue is considered to be made simultaneously, it is called a composite issue.
- Bonus issue: When an issuer makes an issue of shares to its existing shareholders without any consideration based on the number of shares already associated with them as on a record date it is called a bonus issue. Shares are issued out of companies’ free reserve or share premium account in a particular ratio to the number of securities existing on a record date.
- Private Placement: At the point when an issue is made to a close set of individualism, i.e., not surpassing 49 according to the Companies Act, 2013 it is called a private placement situation. According to the Securities Contracts Regulation Act monies got on utilisation of private situation should be kept in a different financial balance and might not be used for any reason other than—
- For alteration against apportioning of securities; or
- For the reimbursement of monies where the organisation can’t assign securities.
No company offering securities shall extricate complete public advertisements or utilise any media, marketing or breaking channels or agents to publish the public at large approaching such an offer.
Book Building Process- An Analysis
Book building approach a regulation undertaken by which an urge for securities considered to be declared by a body corporate is elicited and build up and price tag for such securities is levied upon for the choice of the quantum of such securities to be declared publicly by manner of a notice, circular, certificate, document or information memorandum or offer document. Applicant’s pursuit for shares quoting the intensity that they would relish to bid at. After the regulation is organised, the cut-off price tag is acknowledged based on the urge of securities. The basis of apportionment is by the time mentioned finalised, and allotment/refund is undertaken. Final prospectus by all of the details including accurate price announce and put size is filed with ROC.
- Cost of Public is minimised
- Results in faster collection of funds
- More realistic price is set
- Investor driven and based on market forces of demand and supply.
Secondary market or after-market is the convenience store where an investor buys a security from another investor and not from the issuing company. Secondary market helps in decrease the financial affair risks and providing liquidity to the investors. An investor is enabled to adjust holding of securities in response to changes in risk and return assessment. Securities are traded, cleared and settled as per prescribed regulatory framework under the supervision of the Exchanges and SEBI.
Types of Secondary Market:
- Spot Market, where securities are traded for immediate delivery and payment
- Future Market refers to the market where securities are traded for future delivery and payment.
Debt market is a significant source of funds especially in a developing economy where investors may be defensive to acquire volatile credit shares. Debt market establishes a tidy environment where budget deficit instruments appreciate mortgages and bonds are traded.
Debt market takes contradictory names based on the types of budget deficit instruments traded. If the market deals mainly mutually municipal and corporate bonds, it is supported by capital outlay market. If mortgages are the main attract of the transaction, the market is experienced as credit market. When budget deficit instruments have brittle rates, the market is met with as fixed revenue market.
Debt supermarket contributes in confinement the scope of risk associated with investment in profitable securities by providing liquidity to the investor. It is a market of all the more buoyant returns, yet significantly lowers than returns from equities. There is a risk in budget deficit market on top of everything, due to interest price tag changes and the possibility of default in repayment. Retail synergy is distinctive in this market. The Indian debt market can be classified as Government Securities market (G-sec market) and Bond Market.
Types of debt instruments
- Debenture – A debenture is a written tool containing an expectation to reimburse principal amount after a definite period and the benefit at a stark worth which is paid actually half-yearly or annual on set dates.
- Bond – A bond is a fixed-income budget deficit instrument declared publicly to the investor by a corporate or legislature entity. The mortgage is subsequently repaid during a continuance of time with a fixed accomplishment rate.
- Government Securities – Debt securities declared by RBI on behalf of the polity of India are called government securities or G-Secs.
- Loan – A loan is a budget deficit instrument mid a consistent investor and the borrowing company. It marks a one-to-one liaison and cannot be traded as it is not negotiable.
- Mortgage – A mortgage is a wealth on residential property secured by its letter of credence deed. If the borrower fails to clear the bond, the venture capitalist can nick the property to axe the outstanding debt. Like a bond, this is furthermore non- transferable.
- Financial Lease – A financial borrow is an acknowledgement between a moderator of a property and tenant. It creates a secured debt.
Debentures and bonds
Debt takes the form of a transferable instrument in debentures and bonds and can be traded freely.
A debenture is a document that creates a budget deficit debt or acknowledges it. A debenture is thus like a certificate of deposit of loan or a stock bond evidencing the picture that the associate is responsible for paying a specified amount with interest. Senior debentures get paid erstwhile subordinate debentures, and there are varying rates of risk and payoff for these categories. Debentures are generally promptly transferable. Debenture-holders have no voting rights in the company’s general meetings of shareholders but can have diverged meetings amid themselves when their rights are affected. The benefit paid to them is an inflict against perk in the company’s profitable statements, unlike equity and prerogative dividends, which are distributions of after-tax profits.
Types of debentures:
- Secured or Mortgage debentures
- Unsecured debentures
- Redeemable debentures
- Convertible Debentures
A bond is a paying out in excess of income investment in which an investor loans money to an entity (corporate or governmental) for a defined continuance of time at a fixed interest rate. Globally identified liquid assets procure a corporate balance, but debentures are not secured by specific assets but aside general credit of the corporation. In India nevertheless, the proviso bond and coupon are used interchangeably. Issuers of bonds include society financial institutions and corporations. Lenders may be bond funds or isolated investors who necessarily buy the bond from the Fund and then thwart in the lesser market. Risk factors engrossed meanwhile investing in bonds
Any financial affair involves risk. A bond’s risk level is reflected in its yield. Understanding capital outlay accord is consequential for an investor. The risks involved in bonds are:
- Interest rate risk – A general materialise in market boom rates reduces the wealth price. Bonds with longer maturities have greater accomplishment risk.
- Reinvestment Risk – Interest return has subsequent reinvested to garner assure returns, and this involves reinvestment risk.
- Inflation risk – Inflation reduces bond investor’s returns on future growth payments and primary amount. Higher inflation further increases interest rates, which depresses bond prices.
- Market risk – The systematic risk that affects the bond market as a whole
- Selection risk – The risk of selecting a non-performing warranty, i.e. default risk
- Timing risk – The risk of investing at the wrong foreshadow leading to increasing the above-mentioned risks
Price determination factors of bonds
Bond price refers to the price an investor would pay for an existing bond. The main factors that influence bond prices are:
- Interest rate or Coupon rates – When interest rates are on the rise, new issues become more attractive and adversely impact existing bond prices.
- Inflation – High inflation erodes the return on the bond.
- The frequency of interest payments or Cash flows – Bond produces cash flows from three bases viz., coupon payments, price appreciation and coupon reinvestment returns.
- Yield – There are three vital yield measures which help decide bond prices.
- Coupon yield – Coupon yield signifies the interest rate determined by the terms of the issue of a bond. The interest rate is determined as a percentage of the face value. Coupon yield will not change for fixed rate bonds.
- Current yield – Current yield evaluates the coupon payment on the prevailing bond price.
- Yield to Maturity – This is the internal rate of return on the bond based on inflows till maturity at current discount rates.
- Total bond returns – It considers the interest income and investment profit/losses while determining the accurate return of the bond. This analysis is performed by financial companies and is known as mark-to- market method.
Government securities market (G – sec market)
Government securities are created and released by the legislature notified in an official publication and in government securities acts. G-Secs cut back are obtained as a substitute from the premier or trivial market. The securities are issued by the RBI on behalf of the Government of India. The features of government securities are as follows:
- Government securities are identified by unwavering coupon value and the year of maturity.
- Government securities are ready to be drawn both in the prime and lesser markets.
- Entities get a charge out of financial institutions, corporate houses and individuals buy them.
- After the tenure is primed, the bonds are redeemed.
Loans, Mortgages and Financial Leases
- Debt arrangements that are personalised and cannot be departed or traded include loans, mortgages and monetary leases. The approaching preeminent forms of such arrangements are bank loans of diverse types.
- Bank loans are sought by businesses as a choice for investment in rigid assets like buildings, plant & machinery, etc. or for working capital. Banks have custom-built products to befit the resolute needs. Thus you can have term loans, overdrafts or non-fund based arrangements.
- All types of thrift credit are permanently secured at variance with prime and contingent property. Thus if the borrower defaults the bank could cash the warranty and vest off the proceeds against the dues. An elaborate accession is skilled and realised by borrowers heretofore any thrift loan can be disbursed.
- A thrift credit agreement usually specifies the actions that can be taken by the bank for recovering the loan and interest dues from the borrower. These include
- Regular follow-up through the bank’s own employees
- Appointing debt recovery agencies which will follow up with the borrower in steadily escalating degrees of toughness
- Approaching the guarantor, in case there is one, and recovery from him/her
- Instituting legal action against the defaulting borrower after giving due notice
- Security repossession i.e. taking possession of properties charged to the bank as prime or collateral security.
- There are strict RBI regulations guarding borrowers against undue harassment by the bank, and scheduled banks have to respect and adhere to these rules.
In India, capital market activities are regulated by SEBI. SEBI governs stock exchanges and through it listed companies. SEBI has separate control measures on listed and unlisted companies, the issue of debt instruments and so on.
Functions of SEBI:
- Protecting the well-being of investors
- Promoting the lifestyle of the securities market
- Regulating the workings of Stock Exchanges
- Registering and regulating the employees of stock brokers, sub-brokers, share transfer agents, depositories, participants and extraneous institutional investors
- Inspection, conducting inquiries and audits of Stock Exchanges and Mutual Funds
- Checking and preventing insider trading
- Monitoring and inquiry of Depositories
- Addressing complaints from investors at variance with mutual funds, securities market, etc.: SEBI has promulgated investor associations which intertwine consciousness about securities markets to investors.
Clause 49 of Listing Agreement
A new clause was confirmed by SEBI for mending corporate governance in 2004 and became responsible from Dec 2005. The clause sets out elaborate approach be taken by listed companies with regard to all the hereafter aspects of governance and venture capitalist relations:
- Board of Directors: Focus is on the aesthetic principle of non-executive and individualistic directors, which should be between 33% and 50%. Tenures of non-executive directors have furthermore been specified.
- Directors’ remuneration: Prior assessment and announcement relating to remuneration of individualistic directors have been constrained stricter.
- Audit committees: Financial and bookkeeping knowledge is imperative for all scrutinies of all advisory group members, as the jury has to investigate the truthfulness of the company’s monetary reporting. For the agnate reason, their interaction with statutory auditors is also typically increased.
- Board & management procedures: Code of control has to be published and adherence to the code confirmed by Board and administration in every yearly report. The new whistleblower procedure gives capacity to a common labourer to verbalise to the audit committee about any malpractices of the management.
- Shareholder interaction: The annual report will permeate out in much greater detail the risk assessment of the trade, and characterise more definitely the impetus for changes if any in accounting practices.
- Reporting and compliance: Statutory compliance is to be issued every quarter to the Board for rethinking and corrective action if required. Report on corporate governance has to be sent to the stock exchange within 15 days of the wrap up of each quarter.
Prohibition on Insider Trading
Insider trading means possession and misuse of unpublished price sensitive information of securities of listed companies by a privileged few for their personal gains before information is published and comes to notice of investors.
Smooth operations of securities market and its healthy growth development depend on large extent on quality and integrity of market. Such markets alone inspire confidence in investors. Insider Trading leads to loss of confidence of investors in securities market as they feel that market is rigged and only few who have inside information get benefit and make profits from their investments. Thus, process of insider trading corrupts the level playing field. Hence the practice of insider trading is intended to be prohibited in order to sustain investors’ confidence in the integrity of the securities market.
The disclosure obligations under the Regulations have been limited to ‘insiders’ and are as follows:
- Initial disclosures of trades to be made by only the promoters, key managerial personnel, directors internally;
- Continual disclosures to be made by every promoter, employee or director in case value of trade exceed monetary threshold of ten lakh rupees over a calendar quarter; company to accordingly notify stock exchanges within 2 trading days;
- Earlier disclosure requirement for persons holding more than 5% shares or voting rights or in the case of any further change in their shareholding or voting rights has been done away with.
The Regulations provide for certain exclusions where the charge of insider trading will not get attracted, namely:-
- In the conduct of due diligences: Communication and procurement of information in connection with transactions involving PIPE, mergers and acquisitions, subject to certain conditions;
- For off-market transactions between promoters who are in possession of the same information, and are making a conscious and informed decision;
- In case of non-individual insiders:–
- Theindividuals who were in possession of such unpublished price sensitive information were different from the individuals taking trading decisions, and such decision-making individuals were not in possession of such unpublished price sensitive information when they took the decision to trade;
- when the trade was executed in the absence of any leakage of information, thereby recognising the concept of ‘Chinese walls’ in large organisations;
- When trades executed in pursuance of trading plans.
No diverge penalties have been ordained under the Regulations. Reference is made nevertheless to the guerdon provisions under the SEBI Act, 1992 which shall apply. As by the Act, insider trading is publishable with a comeuppance of INR 250,000,000 (Rupees Two Hundred Fifty Million Only) or 3 times the gain made out of insider transaction, whichever is higher. SEBI is furthermore empowered to daunt an insider from investing in or dealing in securities, divulge violative transactions as declaring null and void, order return of securities so purchased or sold. Any person contravening or attempting to traduce or abetting the violation of the Act may also be reprehensible to imprisonment for a censure which may equal to ten years or with fine which may arrive at INR 250,000,000 (Rupees Two Hundred Fifty Million Only) or with both.
ADRs and GDRs
A Depository Receipt (DR) is an all-around financial stake released by a depository for purchase the shares of an extraneous publicly listed associate that is traded on a local stock exchange. Two of the roughly common types of DRs are the American Depository Receipt (ADR) and Global Depository Receipt (GDR).
ADR is a financial instrument representing shares of a non-U.S. company and is traded on U.S. stock exchanges. ADRs are issued to hasten investments by US residents in foreign company shares that can be traded on local exchanges. ADRs are listed on NYSE, AMEX or NASDAQ.
Advantages of ADRs:
- Subscribing to ADRs is a simple method of buying shares in foreign companies.
- ADRs stash money by reducing management costs and avoiding inconsequential taxes on the transaction.
GDRs were distended on the essence of ADRs and are listed on stock exchanges beyond the bounds US. GDRs are traded globally instead of the original shares on exchanges. The ordinance of GDR is to entitle investors to merit economic exposure to a company in emerging markets.
Features of GDRs:
- GDR holders do not have voting rights.
- It has less feud risk than a foreign currency loan.
- The investor can concede his indebtedness and merit the inherent shares by instructing the depository.
Idea on Credit Rating
Credit rating is an opinion on the future ability and proper obligation of the issuing associate to reckon promptly payments of its debt security. Various symbols are placed contrasting securities according to drop rate risk involved in that budget deficit security. Default risk is associated with the capacity of a company to make perpetual payment of wealth on entire loan taken by it and timely repayment of the dominant amount. However, nor yet a credit rating authority ensures corroborate of any financial performance of a company, nor it ensures against price risk, interest risk or altercation rate risk. It means if a debt instrument is rated literally good once it does not exhibit that the investor will be suited to gain huge capital merit by procuring the securities of that company. It only facilitates the investors to nick decisions on the essence of ranks resting various debt instruments in constitute of various codes or symbols. The investors can analyse these ratings of debt instruments with his risk and revive perceptions. But no apprehension that rating agencies endorse to comprehend the quality of credit risk involved in debt instruments and the rating of debt instruments is done abaft a sophisticated analysis of various pertinent parameters of performance of a company.
The major credit rating agencies in India are:
- Credit Rating Information Services of India Ltd. (CRISIL)
- Investment and Credit Rating Agency of India Ltd. (ICRA)
- Credit Analysis and Research Ltd. (CARE)
- Onida Individual Credit Rating Agency of India (ONICRA)
- Credit Information Bureau (India) Ltd (CIBIL).
Advantages of Credit Rating
The advantages of credit rating to an Issuer are listed below:
- Helps in raising loan
- Ensures the creditworthiness
- Strengthens the corporate image
- Helpful in listing of new securities
- Helpful in cross-border expansion strategies
- Reduces the cost of capital
- Helpful in all strategic decisions (marketing, domestic/foreign collaborations)
(viii) Ease in accessing new sources of finance
- To build joint ventures
- To build strong relationship with suppliers and counterparties
- To enhance corporate transparency
The advantages of credit rating to Investors are listed below:
- Benefits of expert advise
- Saving of time and effort
- Ensures less credit risk
- Helpful in selecting the securities
- Understanding of investment proposal
The advantages of credit rating to regulators are listed as follows:
- To monitor the performance of various financial products
- Helps in taking necessary actions to remove information asymmetry
Overview of Mutual Funds
A mutual fund is the pool of the money, based on the investment trust which invests the stockpile of some investors who share a commonplace profitable goal, like the credit appreciation and dividend earning. The money thus derive is then invested in capital supermarket instruments such as shares, debenture, and foreign market. Investors invest money and earn the units as by the agency of the unit price which we called as NAV (net assets value). A mutual fund is the virtually suitable investment for the common man as it offers an opportunity to invest in disparate portfolio administration, good research team, professionally managed Indian stock as well as the foreign market. The main yearning of the sponsor moderator is to acquirement the scrip that has under outlay and future will rise, then fund manager sells out the stock. Fund manager concentration on risk – return trade over, where slash the risk and maximise the return through amendment of the portfolio. The approaching common features of the mutual fund unit are muffled cost.
Mutual Fund and Capital Market
Indian Institute of capital market (IICM) aims is to manoeuvre and ensue professionals for the securities deal in India and various economically developing country, other objectives savour to trade on a centre for creating investors awareness over research & turning and to allow specialised consultancy familiar to the securities industry. Capital market play notable role for the accomplishment of Mutual fund in India, capital market divided into the two parts one is the primary market, and another is secondary market, primary market concern with issue management, as via the mutual fund concern the primary called as the NFO New Fund Offer, generally the AMC (Assets Management Company) are issuing all the funds for the most part the way over the NFO, Every NFO came with particularly financial affair objectives, process of investment and allowance of the funds all that art depend on the finance manager behaviour of investment. The other portion of the capital market is the secondary market, as we have a discussion with reference to mutual fund secondary market means when the market bull point the investors sole the units. Opposite when the bear stage the investor bargain or some of the investor time croon for sale.
ADVANTAGES OF MUTUAL FUNDS
Portfolio Diversification: Mutual Funds invest in a well-diversified portfolio of securities which enables an investor to hold a diversified investment portfolio (whether the amount of investment is big or small).
Professional Management: Fund manager undergoes through various research works and has better investment management skills which ensure higher returns to the investor than what he can manage on his own.
Less Risk: Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.
Low Transaction Costs: Due to the economies of scale (benefits of larger volumes), mutual funds pay lesser transaction costs. These benefits are passed on to the investors.
Liquidity: An investor may not be able to sell some of the shares held by him very easily and quickly, whereas units of a mutual fund are far more liquid.
Choice of Schemes: Mutual funds grant investors mutually various schemes with diverse investment objectives. Investors have the opportunity of purchase a scheme having an interconnection between its investment objectives and their own financial goals. These schemes furthermore have divergent plans/options.
India Financial market comprises of money market and equity market. Further, capital market comprises the primary market, secondary market (stock market), FDIs, alternative financial affair options, investment and insurance and the pension sectors, asset management sector as well. With generally told these fundamentals in the Indian Financial market, it happens subsequent one of the oldest across the universe and is absolutely the fastest maturing and marvellous among all the economic markets of the emerging economies.
The Indian equity market has passed through divergent stages and overall the ages it has witnessed several of misfortune scams that gave a let-down to its efficient functioning. Yet the stock markets in India are likewise in force, obligation to the clean lot of investors, brokers as well as companies, who operate in the capital market. The Indian stock market has to be reviewed and insulation is to be provided for its immortality growth. This calls for barge in the valid and institutional structure. The current laws should be legitimate in letter and spirit. India is the favourite country in the world with maximum laws and token enforcement. Whatever tiny attention is taken is comeuppance to impertinent considerations; it has become approximately impossible for an admissible Indian investor to bait justice under the current laws. It is due to the glitch of the current laws or the authorities. The hunger of the hour is to maneuverer the investors not only on the nitty-gritty of investment but further on how to persist legal remedies. The Securities and Exchanges Board of India (SEBI) has been taking en masse efforts to retrieve the investors and streamline the capital market. The investors furthermore should liberate themselves up-to-date of the events that are fashionable in the market.
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 “Net worth means the average of the value of the paid up equity capital and free reserves excluding reserves created out of revaluation, minus the average value of the accumulated losses and deferred expenditure not written off including miscellaneous expenses not written off.—Clause 1.2.1(xixa) of the DIP Guidelines.