Enterprising India - Company Secretary as the backbone of the Company

Introduction

Enterprising means good at thinking of and doing new and difficult things, especially things that will make money.

The definition of enterprising is a person who is full of energy and ambition showing initiative and willingness to undertake new projects.

SIX Attributes of Great Entrepreneurs

1. Great entrepreneurs blend vision with execution.
2. They have an ability to find backdoors.
3. They're willing to work the long hours.
4. They can either sell or build.
5. They can reduce complicated data into something manageable and actionable.
6. They are very effective with people.

THREE Entrepreneurial Skills Inmates Perfect

Meanwhile, having done this work over the years, I've been struck time and time again that starting a business is a great option for people who have been incarcerated, not only because their job options are limited, but because some former inmates offer hard-to-come-by traits that can help tremendously when starting a business. I've outlined them below.

1. Fear of failure is much less of an issue.
2. They are no strangers to risk.
3. The stakes are high.

ENTERPRISING INDIA

The three Ds of disruption - Demographics, Deregulation and Digitisation - are perfectly aligned in India, which is thereby poised for an entrepreneurial leap. Demographics and the statistics behind demographics, including the income power being generated by demographics, is a very important D. Deregulation referred to the rapid pace at which the government has been removing speed breakers and helping improve ease of doing business. All the good ideas of federal government should cascade into the states, underscoring the spirit of cooperative federalism as espoused by the Modi government. The third element, which has been gradual in India, is digitisation, he said. The government's initiative on this front means India is ready for another quantum jump. "We have been ready to embrace digital in the past few months."

There still is "the fear of the missing out" or the unknown in the system. Another factor that holds sway is SMAC, or social, mobility, analytics and cloud.

Permanent transformational changes that are happening are basis frugal technologies (even in banking) in terms of diversity which is important. Machine learning, the unified payment interface (UPI), the government's Bharat Interface for Money (BHIM) app will all work toward creating frugality in payments that will help India make this leap, similar to that in mobile telephony.

India built the best mobile system in the world. It works most of the time and this SMAC really needs to emerge and the sigma of that is India's quantum leap in digital transformation. YES Bank along with IBM and another tech partner announced the first fully digitised vendor financing platform in January. Mobility, analytics and the cloud are making for a powerful combination.

The key to success is a mixture of competition and collaboration.

ENERGISE FOR ENTERPRENEURSHIP: ALIGNS TOWARDS VISION NEW INDIA

Recently when the prime minister of India announced his Startup Action Plan called Startup India, we lit up with excitement! The Indian government has made some really cool promises to give their startup industry a boost, and here are our top 5 picks:

• Registering your start-up in a day. Long were the days when someone who had to start up their company had to get more than 20 certificates. Now everything will be done through a mobile app by the means of filling up a small form.
• Many times getting a patent in India was a tedious task. Now there will be a fast track mechanism to get a patent for startups as well as 80% money back on the patent application just for startups!
• Many times startups were worried about paying their income taxes but from now on startups won't have to pay any income taxes for a period of three years.
• Exemptions on capital gains will be given to funds and individuals who fund startups. This means there will be more funding opportunities for startups.
• A fund of about 1.5 billion US Dollars is created to fund startups over a period of 4 years.

SURVIVAL OF THE FITTTEST IN NEW AGE REFORMS: Professional opportunities for C.S

The Company Secretary

is a vital link between the company and its Board of Directors, shareholders, government and regulatory authorities. He ensures that Board procedures are both followed and regularly reviewed and provides guidance to Chairman and the Directors on their responsibilities under various laws. He commands high position in the value chain and acts as conscience seeker of the company.

A Company Secretary being multidisciplinary professional renders services in following areas:

CORPORATE GOVERNANCE AND SECRETARIAL SERVICES

Corporate Governance Services

• Advising on good governance practices and compliance of Corporate Governance norms as prescribed under various Corporate, Securities and Other Business Laws and regulations and guidelines made thereunder.

Corporate Secretarial Services

• Promotion, formation and incorporation of companies and matters related therewith.
• Filing, registering any document including forms, returns and applications by and on behalf of the company as an authorized representative.
• Maintenance of secretarial records, statutory books and registers.
• Arranging board/general meetings and preparing minutes thereof.
• All work relating to shares and their transfer and transmission.

CORPORATE LAWS ADVISORY AND REPRESENTATION SERVICES

CORPORATE LAWS ADVISORY SERVICES

Advising companies on Compliance of legal and procedural aspects, particularly under –

• SEBI Act, SCRA and rules and regulations made thereunder.
• Foreign Exchange Management Act.
• Consumer Protection Act.
• Depositories Act.
• Environment and Pollution Control Laws.
• Labour and Industrial Laws.
• Co-operative Societies Act.
• Mergers and Amalgamations and Strategic Alliances.
• Foreign Collaborations and Joint Ventures.
• Setting up subsidiaries abroad.
• Competition Policy and Anti Competitive Practices.
• IPR Protection, Management, Valuation and Audit.
• Drafting of Legal documents.

Representation Services

Representing on behalf of a company and other persons before-

• Company Law Board
• National Company Law Tribunal
• Competition Commission of India
• Securities Appellate Tribunal
• Registrar of Companies
• Consumer Forums
• Telecom Disputes Settlement and Appellate Tribunal
• Tax Authorities
• Other quasi-judicial bodies and Tribunals

Arbitration and Conciliation Services

• Advising on arbitration, negotiation and conciliation in commercial disputes between the parties.
• Acting as arbitration/conciliator in domestic and international commercial disputes.
• Drafting Arbitration/Conciliation Agreement/Clause.

FINANCIAL MARKETS SERVICES

Public Issue, Listing and Securities Management

• Advisor/consultant in issue of shares and other securities.
• Preparation of Projects Reports and Feasibility Studies.
• Syndication of Loans from banks & financial institutions.
• Drafting of prospectus/offer for sale/letter of offer/other documents related to issue of securities. and obtaining various approvals in association with lead managers.
• Loan Documentation, registration of charges, status and search reports.
• Listing of securities/delisting of securities with recognized stock exchange.
• Private placement of shares and other securities.
• Buy-back of shares and other securities.
• Raising of funds from international markets – ADR/GDR/ECB.

Takeover Code and Insider Trading

• Ensuring compliance of the Takeover Regulations and any other laws or rules as may be applicable in this regard.
• Acting as Compliance Officer and ensuring compliance with SEBI (Prohibition of insider Trading) Regulations, 1992 including maintenance of various documents.

Securities Compliance and Certification Services

Compliance with rules and regulations in the securities market particularly

• Internal Audit of Depository Participants.
• Certification under SEBI (DIP) Guidelines.
• Audit in relation to Reconciliation of shares.
• Certificate in respect of compliance of Private Limited and Unlisted Public Company (Buy Back Securities) Rules.

FINANCE AND ACCOUNTING SERVICES

• Internal Audit
• Secretary to Audit Committee
• Working capital and liquidity management
• Determination of an appropriate capital structure
• Analysis of capital investment proposals
• Business valuations prior to mergers and/or acquisitions
• Loan syndication
• Budgetary controls
• Accounting and compilation of financial statements

TAXATION SERVICES

• Advisory services to companies on tax management and tax planning under Income Tax, Excise and Customs Laws.
• Preparing/reviewing various returns and reports required for compliance with a the tax laws and regulations.
• Representing companies and other persons before the tax authorities and tribunals.

INTERNATIONAL TRADE AND WTO SERVICES

• Advising on all matters related to IPRs and TRIPs Agreement of WTO.
• Advising on matters relating to antidumping, subsidies and countervailing duties.
• International Commercial Arbitration.
• Advising on and issuing certificates on Exim Policy and Procedures.
• Advising on Intellectual Property licensing and drafting of Agreement.
• Acting as registered Trade Mark Agent.

MANAGEMENT SERVICES

General/Strategic Management

• Advising on Legal Structure of the organization
• Business policy strategy and planning
• Formulation of the organizational structure
• Acting as management representative to obtain ISO Certification

Corporate Communications and Public Relations

• Communication with shareholders, stakeholders, Government and Regulators, Authorities, etc.
• Advisory services for Brand equity and image building.

Human Resources Management

• Manpower planning and development
• Audit of the HR function
• Performance appraisal
• Motivation and remuneration strategies
• Industrial relations
• Office management, work studies and performance standards
• Advising on industrial and labour laws

Information Technology

• Compliance with cyber laws.
• Conducting Board Meetings through video-conferencing and teleconferencing.
• Advising on software copyright and licensing.
• Development of management reports and controls.
• Maintenance of statutory records in electronic form.
• Sending notices to shareholders by electronic mode.
• Filing of forms/documents in electronic form with Registrar of Companies and other statutory authorities .

OPPORTUNITIES FOR CS IN THE LATEST ACTS DECLARED BY THE GOVERNMENT OF INDIA

(A) IN GST REGIME

The famous American author and novelist Mark Twain once remarked "I was seldom able to see an opportunity until it had ceased to be one." These words are often encountered by professionals when a new opportunity surfaces but one is not able to entirely capitalize on it. However, here's an opportunity for the tax professionals to foresee an opportunity, get acclimatized and be well equipped at the right time. This opportunity manifests in the form of Goods and Service Tax (GST), which has been touted as the 'single most important tax reform after 1947'by the Late Hon'ble Finance Minister, Mr. Arun Jaitley.

The introduction of GST had a magnanimous impact as each and every business get affected. The entire framework of indirect taxation changed ranging from the nature of levy, rate of taxes and administration of the taxes. Introduction of GST rationalized the tax content in product price, enhance the ability of business entities to compete globally, and possibly trickle down to benefit the ultimate consumer. GST is a crippling effect on the prices of all the goods and services in India. Amid this huge impact, lies an enormous opportunity for the tax professionals.

Mapping existing scenario and GST impact assessment

The first and foremost step in climbing the GST ladder would be mapping the 'as is' scenario of the Company. Modern business structures entail decentralized functions such as separate teams for procurement, distribution, marketing, accounting, taxation and so on. Therefore, it is essential to map the entire supply chain pattern of the Company and various taxes paid at each leg thereof.

The implementation of GST resulted in widening of tax bases, differing rates for taxing goods and services and an extended set off mechanism, which has the potential to change the price of goods and services in India.

Not only tax professionals like Chartered Accountants but also Company Secretaries can practice in the field of GST. The GST assessment also highlight key impact points of GST on various functions of the Company such as procurement, distribution, marketing, accounting and taxation functions.

Advocacy

The mapping of 'as is' scenario and GST impact assessment brought to light critical areas which is of a concern to the Company in the new regime vis-à-vis the old regime. The illustrative examples in this connection are outlined below:

• Rate under GST regime vis-à-vis concessional rate / exemption enjoyed in the erstwhile regime
• Impact of IGST on interstate movement of goods
• Continuation of tax incentives (Excise, VAT) under the new regime
• Inverted duty structure
• Transitional issues to ensure complete availability of balance credit for offset in the new regime.

Professional's services are vital to help the Company to identify such issues, devise strategies to mitigate exposures and, if required, represent the concerns before the appropriate authority.

Re-modelling Business Structures

With the introduction of GST, the indirect tax rate structure is overhauled. GST is levied on supply vis-à-vis sale / manufacture. Given this, Companies have to necessarily evaluate their supply pattern (and frequency thereof) such as supply to warehouse, job work premises, return of goods etc. as the same come under the purview of GST. Supply chains therefore see a radical change.

Sourcing, distribution and warehousing decisions which were used to plan based on state level tax rationalization mechanisms instead of operational efficiencies are reorganized to leverage efficiencies of scale, location and other factors relevant to the business. Location of the warehouse are more driven by the market forces of demand and supply.

The above is only an illustrative area wherein business re-modelling can get effected. Therefore, all the existing models are require to be re-looked into, to fashion the most efficient business model. Professionals can assist in evaluation and streamlining logistics supply chain, largely from a tax perspective.

Accounting and IT infrastructure

Today's businesses involve rampant use of software (ERP, SAP, Tally) both by the industry and service providing tax professionals. With the advent of GST, drastic revamping of IT infrastructure would be required. With the knowledge of GST, tax professionals would be best suited to aid technicians in designing the software modules.

Tax planning

With a new law, comes a new set of tax / procedural issues and hence the professionals also need to evolve and devise new tax planning strategies. A great professional would be the one who foe sees the problems before the industry faces them and accordingly carve out strategies to avoid the bottlenecks. Any planning which mitigates tax cost would be most appreciated by clients.

Under the GST regime, taxes are levied on destination base as compared origin base. Also, a new credit mechanism has been implemented. The business require to relook the existing transactional methodology to minimise taxation and hence require the services of professionals for the same.

Advisory services

The businesses would require regular services in areas such as determining place of supply,

determining what is 'goods' and what is 'services', availability of credits and maintenance of records. Advisory services will also be required in dealing with unique issues such as inter-state supply of services (such a concept will be in play for the first time for service providers), inter-state supply of intangibles and valuation of branch transfers.

There would be numerous transitional issues going into the new law such as treatment of existing

stock and credit issues. Services will also be required in preparing Standard Operating Process ('SOP') for businesses under the new regime. All the aforesaid are unchartered territories and hence the industry will require professional advice in dealing with such vexed issues.

Registration and procedural compliances

The new industries will immediately require assistance in terms of registration under the new law, details and mechanics of records to be maintained. Needless to say regular services such as payment of taxes, filing of returns and audit-related services would continue. Though these services are generic in nature, clear understanding of the law / procedures would aid the professionals in providing effective and timely services to the clients.

Litigation support

As the new regime kicked in, litigation support will increasingly be required by the industry. Be it appearance before the Departmental officers, drafting (Replies, Appeals, Petitions) or appearance before higher forums, there is tremendous scope for tax professionals in the litigation space.

(B) In INSOLVENCY PROFESSIONALS AND INSOLVENCY PROFESSIONAL AGENCIES

INTRODUCTION

The Insolvency and Bankruptcy Code, 2016 (IBC) is a welcome overhaul of the existing framework for resolving corporate and individual insolvencies and bankruptcies. After a public consultation process and recommendations from a joint committee of Parliament, both houses of Parliament passed the IBC in May 2016. Subsequently, a four-member Insolvency and Bankruptcy Board of India (IBBI) was constituted in October 2016 led by Dr. M.S. Sahoo as Chairman. The main activity of IBBI is to regulate the functioning of insolvency professionals, insolvency professional agencies and information utilities under the IBC. Post the passing of the bill, the Ministry of Corporate Affairs (MCA) has been notifying portions of the IBC selectively. The speed with which the government has moved on the implementation of IBC is creditworthy and unprecedented. The adjudicating authority is one of the key pillars on which the success of the IBC depends.

Professional Opportunities for Management Professionals/ Chartered Accountants/ Company Secretaries/ Cost Accountants and Advocates under the Code

Having perused the Code, I believe that the role of Management Professionals, Chartered Accountants, Company Secretaries, Cost Accountants and Advocates (collectively referred as "Professionals") has expanded significantly under the regime of the Code. Some of the professional avenues that have opened for the above enlisted Professionals under the Code are enlisted as under:-

Insolvency Professionals Concept of Insolvency Professionals : Professionals can elect to become Insolvency Professionals (IP's). IP's are those licensed professionals that are authorised by Insolvency Professional Agencies (IPA's) which take up the roles of Interim Resolution Professional/ Resolution Professional/Liquidator/Bankruptcy Trustee in the insolvency resolution process of different entities as have been envisaged under the Code. Insolvency Professional Agencies (IPA's) are those specialized bodies that are statutorily authorised to execute the task of registration and governance of Insolvency Professionals.

Eligibility Criteria for enrolling as an IP, Process of Registration and Concept of Registration for a Limited Period

In order to be eligible for registration as an Insolvency Professional according to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 ("Regulations") , a Professional has to fulfill the following criteria:-

• Register with an IPA.
• Appear for and clear the Limited Insolvency Examination ("LIE") or the National Insolvency Examination ("NIE").
• Have a work experience of fifteen years as a management professional after having received a bachelor's degree from a university established or recognized by law.
• Have a work experience of ten years post enrollment as Professionals.

It is important note that Professionals that appears for and clears the LIE needs to have 10 years of work experience post enrollment (or 15 years post qualification work experience in case of management professionals).

In other words, the work experience requirement has been prescribed is only for the LIE and not the NIE. The Regulations do not prescribe any work experience requirement with respect to the NIE.

ROLE OF THE INSOLVENCY PROFESSIONAL

1. INTERIM RESOLUTION PROFESSIONAL

• Collect information
• Collate claims of creditors
• Monitor assets and operations
• Control and keep custody of all assets
• Manage firm as a going concern
• Constitute a Committee of Creditors

2. RESOLUTION PROFESSIONAL

• Conduct of the committee of creditors
• Determines vote share in meetings
• Protect and preserve assets
• Act on behalf of the debtor in any legal proceedings
• Raise interim finance
• Prepare the information memorandum
• Application for avoidance transactions

3. LIQUIDATOR

• Consolidates, verifies, admits or rejects and values claims
• Protects and preserves assets
• Acts on behalf of the debtor
• Power to settle/institute legal proceedings
• Investigates into undervalued/preferential/extortionate transactions
• Fiduciary trustee of the liquidation trust

(C) In National Company Law Tribunal (NCLT)

The Ministry of Corporate Affairs (MCA) had notified the much-awaited sections in the Companies Act (CA), 2013 dealing with amalgamation, compromise, arrangement, liquidation and winding up w.e.f 15th December, 2016. Going forward, the National Company Law Tribunal (NCLT) is having jurisdiction over these matters now, which were within the jurisdiction of the High Court (HC) before. NCLT has been setup as a specialized body to deal with Company Law matters.

The National Company Law Tribunal (NCLT) was constituted on June 1, 2016 under Section 408 of the Company's Act, 2013. IBC proclaims NCLT to be the single adjudicating authority for all corporate default cases. This leaves NCLT with the challenging task of resolving approximately 10,000 pending corporate cases.

POWER OF NCLT

The National Company Law Tribunal has the power under the Companies Act to adjudicate proceedings:

1. Initiated before the Company Law Boardunder the previous act (the Companies Act 1956);
2. Pending before the Board for Industrial and Financial Reconstruction, including those pending under the Sick Industrial Companies (Special Provisions) Act, 1985;
3. Pending before the Appellate Authority for Industrial and Financial Reconstruction; and
4. Pertaining to claims of oppression and mismanagement of a company, winding up of companies and all other powers prescribed under the Companies Act.

RECOMMENDATIONS

Even though most of the respondents have had several undesirable and unsatisfactory experiences with the Indian judicial system in the past, all are acutely aware of the importance of the IBC and NCLT and its success. Highlighted below are some of the key recommendations based on our discussions with the respondents:

• Staff legal and administrative personnel (U.S. Trustee or U.K. HMCTS-like structure)
• Stakeholder awareness
• Restrict case load at NCLT
• Ensure adequate bench strength
• Build expertise over time
• Consistent procedures with maximum digitization
• Framework for Infrastructure Maintenance
• Ensure continuous monitoring

(D) In Real Estate (Regulation and Development) Act, 2016 (RERA)

The Real Estate (Regulation and Development) Act, 2016 ("Act") was passed by the Rajya Sabha on 10th March 2016 and by the Lok Sabha on 15th March 2016. The Act came into force on 1st May 2016 with 59 of 92 sections notified. Remaining provisions came into force on 1st May 2017. It extends to the whole of India except the State of Jammu and Kashmir. The Central and state governments are liable to notify the Rules under the Act within a statutory period of six months w.e.f May, 2016.

REGISTRATION

The Real Estate Act makes it mandatory for all commercial and residential real estate projects where the land is over 500 square metres, or eight apartments, to register with the Real Estate Regulatory Authority (RERA) for launching a project, in order to provide greater transparency in project-marketing and execution. For ongoing projects which have not received completion certificate on the date of commencement of the Act, will have to seek registration within 3 months. Application for registration must be either approved or rejected within a period of 30 days from the date of application by the RERA. On successful registration, the promoter of the project will be provided with a registration number, a login id, and password for the applicants to fill up essential details on the website of the RERA. For failure to register, a penalty of up to 10 percent of the project cost or three years' imprisonment may be imposed. Real estate agents who facilitate selling or purchase of properties must take prior registration. Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by the agent in every sale facilitated by him.

PROTECTION OF BUYERS

The Act prohibits unaccounted money from being pumped into the sector and as of now 70 per cent of the money has to be deposited in bank accounts through cheques is now compulsory. A major benefit for consumers included in the Act is that builders will have to quote prices based on carpet area not super built-up area, while carpet area has been clearly defined in the Act to include usable spaces like kitchen and toilets. Under RERA, its mandatory for the builders to disclose the carpet area.

REAL ESTATE REGULATORY AUTHORITY AND APPELLATE TRIBUNAL

It will help to establish state-level Real Estate Regulatory Authorities (RERAs) to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover. Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days and Regulatory Authorities to dispose of complaints in 60 days while no time-frame was indicated in earlier Bill.

Scrutinizing the Act, the Act as has been projected seems like angel legislation aimed at consumer protection and at bettering the flow of finances through Indian financial institutions and vide FDI, by regulation of the real estate sector by establishing a governing body.

CONCLUSION

With the new laws, comes a new set of issues and in comes newer opportunities. However, it is rightly said that opportunity dances with those who are ready on the dance floor. So the key to seizing the opportunities would largely depend on being well prepared before the advent. This can be best understood from the words of Abraham Lincoln – "Give me six hours to chop down a tree and I will spend the first four sharpening the axe".