We Wish All Our Members A VERY HAPPY NEW YEAR 2010 !
Let all your desires come true in the New Year ! CSoC wish you & your family members a prosperous New Year !
Your CS Students’ Online Club (CSoC) is always with you. We are happy to inform that by this new year we have 1,115 MEMBERS and more than 1,200 topics posted by our members. More than 5,000 professionals & semi-qualified professionals visits the Club.
We are happy to announce that the new club home portal was well received by the visitors and club members, and on the basis of the feedbacks/comments from visitors and club members for the last 15 days, we had finalised this fully loaded portal. In the new year we will be coming out with more innovative features !
Once again we thank all the Club Members for making CSoC India’s largest online network for CS fraternity ! The new year will be dedicated to Nature & Environment Protection on the theme ‘GREEN CSoC – YEAR 201 0 – Share knowledge online’.
At this occasion we like to announce that the CS Students’ Online Club Logo and CSoC Logo is under Trade Marks registration under the Indian Trade Marks Act, 1999. The Club promoters’ application has been duly accepted by the TM Registrar. We hope that our logo will receive TM registration soon.
Best Wishes & Regards
CLUB EXECUTIVE
CS Students’ Online Club
Dear Club Members
At the outset we wish you a ver happy new year. The year 2009 was the birth year of India’s largest online network for CS fraternity !
We are happy to inform that CS Students’ Online Club will dedicate the new year 2010 for NATURE & ENVIRONMENT PROTECTION !
In the New Year starting from 1st January, 2010 the Club will post as much as topics relating to Climate Change, Global Warming & Enviornment Laws. This is our commitment to Nature, and to create awareness among Club Members and Vistitors to the Club !
A theme logo ‘GREEN CSOC – YEAR 2010′ with a tag line ‘Share Knowledge Online’ will be released on 1st January, 2010 to mark this Green Initiative ! We request all the Club members to post topics relating to Climate Change, Global Warming, Enviornment Laws, Environment Audit etc. in the Club Discussion Portal.
Join hands with the Club to create awareness of Climate Change & contribute to a Green World !
With best regards
For CS Students’ Online Club
Founder & Chief Strategist
In India professionals like the Chartered Accountants (CA), Company Secretaries (CS) ,Cost Accountants(CWA) and Advocates are allowed to practice their profession under partnership but they can enter into partnership with their own professional colleagues only. For instance, a CS partnership can have only CS as its partners; moreover they cannot practice their profession under Company form of business organization. The restriction on entering into partnership with professionals of other discipline is one of biggest reason for slow development of the profession and biggest obstacle in realizing the synergies of different professional expertise.
Even in case of partnership, the maximum number of persons, which can be made as partners, is restricted to 20, which severely restricts the scope of business and future expansion plans.
With the notification of Limited Liability Partnership Act, 2008, the Government of India has introduced the concept of Limited Liability Partnership (LLP) in India.
A Limited Liability Partnership is a hybrid of existing partnership firms and full-fledged Companies. A minimum of two partners are required for formation of an LLP. Besides, there is no limit on the maximum number of partners, unlike the current limit of 20 members in a partnership firm.
The concept of LLP offers great opportunity to professionals like CA/CS/CWA/Advocates to develop, as now they can enter into partnerships with professionals of different disciplines for instance, a CS can enter into partnership with CA. A LLP as a business organization for professionals offers following advantages:
No Limit on maximum number of partners, can have partners all round the globe
Can enter into partnership with professionals of other disciplines
Limited Liability except in case of fraud
Not liable for acts of other partners
No exposure to personal assets
LLP will be treated as Body Corporate and shall have perpetual succession
Joining & Cessation of partners, will not lead to dissolution of the firm.
Less compliances
More creditworthiness than partnership
LLP is already a renowned business organization worldwide and most of big professional firms like PWC, E & Y etc. are registered in form of LLP.
In case of Professional LLP, the major issues to be considered is whether these are allowed to render audit and certification services. As in case of partnership, there is no separate identity between the partnership firm and the partner and therefore , for example while signing the audited balance of any company, the partner signing is personally responsible but in case of LLP, since there exist separate identity and partners would be doing all acts on behalf of the LLP, therefore they would not be personally liable for their wrong done and consequently will not be rendering efficient services.
Therefore it would take time, before professionals like CA/CS etc can form and start practicing under multi disciplinary LLP’s as their regulators — Institute of Chartered Accountants of India (ICAI) and Institute of Company Secretaries of India (ICSI) have yet not recognized LLP as form of business and amended their regulations.
The Institute of Cost & work Accountants of India has issued the necessary notifications (subject to approval of Central Government) for the amendment of their regulation , granting permission to Cost & Work Accountants to enter into partnerships with other professionals also.
Source: llponline.in
Is an assessee entitled to relief under the DTAA in respect of salary income received in India for services rendered in Norway for a period of more than 182 days, if such income was not subject to tax in Norway ?
S. Mohan, In re. (2007) 294 ITR 177 (AAR)
The applicant rendered services in Norway for a period of more than 182 days during the relevant previous year, for which he received salary in India in Indian rupees. He filed his return of income without claiming any exemption. Thereafter, he sought the ruling of the AAR on whether such income can be taxed in India in view of the DTAA between India and Norway.
The AAR observed that the fact that the applicant is not disentitled from seeking the ruling of the AAR merely because he had not claimed the exemption in his return of income.
The taxability of salary income has to be determined according to article 16(1) of the DTAA. This article provides that if the employment was exercised outside the usual State of residence, the remuneration derived therefrom “may be taxed” in the State in which the employment was exercised. It was open to the State in which the employment was exercised to subject to tax the remuneration derived by a resident of a Contracting State. This means that though Norway could have taxed the applicant, however, it was not the applicant’s case that he was taxed in Norway nor had the applicant voluntarily or otherwise paid tax to the Government of Norway. No relief was available to the applicant in such a case. The right of taxation in respect of such salary income was available to both the Contracting States in accordance with the relevant domestic laws.
Therefore, the salary income of the applicant had been rightly taxed in India and he was not eligible to get any relief under the DTAA.
Book building refers to the process of generating, capturing and recording investor demand for shares during an IPO (or other securities during their issuance process) in order to support efficient price discovery. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or book runner.
Book building is a common practice in developed countries and has recently been making inroads into emerging markets as well, including India. The whole book building process is done on-line.
During the fixed period of time for which the subscription is open, the book runner collects bids from investors at various prices, between the floor price and the cap price. Bids can be revised by the bidder before the book closes. The process aims at tapping both wholesale and retail investors. The final issue price is not determined until the end of the process when the book has closed. After the close of the book building period, the book runner evaluates the collected bids on the basis of certain evaluation criteria and sets the final issue price.
If demand is high enough, the book can be oversubscribed. In these case the greenshoe option is triggered.
Book building is essentially a process used by companies raising capital through public offerings—both initial public offers (IPOs) or follow-on public offers (FPOs) to aid price and demand discovery. It is a mechanism where, during the period for which the book for the offer is open, the bids are collected from investors at various prices, which are within the price band specified by the issuer. The process is directed towards both the institutional as well as the retail investors. The issue price is determined after the bid closure based on the demand generated in the process. eg: Larsen And Toubro Limited (Indian conglomerate) used book building process to sell its stake (approx: 12%) in Mahindra-Satyam Ltd
A greenshoe (sometimes “green shoe”), also known by its legal title as an “over-allotment option” (the only way it can be referred to in a prospectus), gives underwriters the right to sell additional shares in a registered securities offering if demand for the securities is in excess of the original amount offered. The greenshoe can vary in size up to 15% of the original number of shares offered.
About The greenshoe option:
The greenshoe option is popular because it is the only SEC-permitted means for an underwriter to stabilize the price of a new issue post-pricing. Issuers will sometimes not permit a greenshoe on a transaction when they have a very specific objective for the offering, and do not want the possibility of raising more money than planned. The term comes from a company founded in 1919 as Green Shoe Manufacturing Company, who made Wellington boots, now called Stride Rite Corporation, which was the first company to permit underwriters to use this practice in its offering.
The mechanism by which the greenshoe option works to provide stability and liquidity to a public offering is described in the following example:
A company intends to sell 1 million shares of its stock in a public offering through an investment banking firm (or group of firms which are known as the syndicate) whom the company has chosen to be the offering’s underwriter(s). When the stock offering constitutes the first time that the stock will be available for trading in a public market, it is called an IPO (initial public offering). When there is already an established market for the shares and the company or its owners are simply selling more of their non-publicly traded stock, it is called a follow-on offering.
The underwriters function as the broker of these shares and find willing buyers among their clients. A price for the shares is determined by agreement between the sellers (the company’s owners and directors) and the buyers (the underwriters and their clients). A part of the responsibility of the lead underwriter in running a successful offering is to help ensure that once the shares begin to publicly trade, they do not trade below the offering price.
When a public offering trades below its offering price, the offering is said to have “broke issue” or “broke syndicate bid”. This creates the perception of an unstable or undesirable offering, which can lead to further selling and hesitant buying of the shares. To manage this possible situation, the underwriter initially oversells (“shorts”) to their clients the offering by an additional 15% of the offering size. In this example then, the underwriter would sell 1.15 million shares of stock to their clients. Now when the offering is priced and those 1.15 million shares are “effective” (become eligible for public trading), the underwriter is able to support and stabilize the offering price bid (which is also known as the “syndicate bid”) by buying back the extra 15% of shares (150,000 shares in this example) in the market at or below the offer price). They are able to do this without having to assume the market risk of being “long” this extra 15% of shares in their own account, as they are simply “covering” (closing out) their 15% oversell short.
So far this example has described a portion of the dynamics of a public offering where there is a need to stabilize the offering by supporting the bid at the offering price to ensure that it does not trade below or “break the offer”. The circumstance of utilizing the greenshoe is as follows:
If the offering is successful and is in strong demand such that the price of the stock immediately goes up and stays above the offering price, then the underwriter is left in the circumstance of having oversold the offering by 15% and is now technically short those shares. If they were to go into the open market to buy back that 15% of shares, the company would be buying back those shares at a higher price than it sold them at, and would incur a loss on the transaction.
This is where the over-allotment (greenshoe) option comes into play: the company grants the underwriters the option to take from the company up to 15% of additional shares than the original offering size at the offering price. Now, if the underwriters were able to buy back all of its oversold shares at the offering price in support of the deal, they would not need to exercise any of the greenshoe. But if they were only able to buy back some of the shares before the stock went higher, then they would exercise a partial greenshoe for the rest of the shares. And, if they were not able to buy back any of the oversold 15% of shares at the offering price (“syndicate bid”) because the stock immediately went and stayed up, then they would be able to completely cover their 15% short position by exercising the full greenshoe.
Source: WIKIPEDIA
Article Authored & Contributed by: Lakshmi.S, CS Finalist, National University Of Advanced Legal Studies, Kochi
CARBON TRADING LAWS – A NEED OF THE HOUR
CARBON TRADING – INDIAN PERSPECTIVE
Save the world from pollution — and earn money. This is the keyword for the active carbon credits commodity sector. As Climate Change threatens humanity with dire consequences like Global Warming and haphazard rainfall patterns, world policy makers at the United Nations adopted a remedial approach that the common man would honor: monetary gain. The Kyoto Protocol, an amendment to the United Nations Framework Convention on Climate Change, aims at trimming Greenhouse Gas Emissions to sub-1990 levels in signatory nations over the period of 2008-2012. Companies in countries with present emission levels below their limitations may trade the difference to those in nations exceeding theirs in return for monetary benefits.
Indian economic growth is based mainly on energy from fossil fuels, and there is considerable potential for reducing greenhouse gases and for Clean Development Mechanism (CDM) projects. Indian companies, including Hindustan Lever Ltd and Tata Steel, are ready with clean technologies to bring down the emission levels of greenhouse gases and sell certified emission reductions (CERs) to developed countries. According to World Bank estimates, India is expected to rake in $100 million annually by trading in carbon credits and Indian companies are expected to corner at least 10 per cent of the global market in the initial years.Of the CDM projects registered with the United Nations Framework Convention on Climate Change (UNFCCC), substantial number of projects are in India. Listed Indian companies are already reaping sizeable profits through Certified Emission Reduction (CER) deals. By 2012, these projects are expected to yield around 400 million CERs.
Carbon credits are generated by companies in the developing world by using cleaner technologies and, thereby, saving on energy consumption. This consequently reduces their greenhouse gas emissions. With each reduced tonne of carbon dioxide emission, an organization receives a carbon emission certificate, which it can sell, either immediately or through a futures market, just like any other commodity. Carbon trading is carried out under the United Nations Framework Convention on Climate Change (UNFCCC).
In the developed world futures contract of CERs are traded on Nordpool, European Climate Exchange, European Energy Exchange and the New York Mercantile Exchange’s Green Exchange.
According to industry estimates, Indian companies are expected to generate at least $8.5 billion at the going rate of $10 per tonne of CER. Tata Sponge Iron Ltd got a CDM certificate from the UN for its waste heat recovery project in Orissa. Reliance Energy already has energy efficiency and process development CDM projects. There is substantial potential in India to achieve emissions reduction. The only factor that has impeded the setting up of a carbon trading exchange in India is the lack of a regulator to monitor the trade.
The Multi-commodity Exchange of India, or MCX, started futures trading in carbon credits by launching five contracts in January, 2008. Government of India identified ‘Carbon Credits’ as a commodity on 4th January 2008. The National Commodity and Derivative Exchange NCDEX, enabled by the notification and with due approval from the regulator Forward Market Commission (FMC), launched UNFCCC issued Carbon Credit (CER) Futures contract – ‘CERNCDEX’ DEC08, on April 10th 2008 Carbon credit futures is a development product. It would provide transparency to markets and help producers earn remunerative returns out of environmentally clean projects.
At present, the exchange trade in Carbon Credits is not very active in India, specifically due to larger issues of participation by foreign entities. However, NCDEX is aggressively pursuing product design and capacity building of market participants with target to help develop an active Carbon Market in the region. In such circumstances, development of an active regional exchange becomes necessary to help participants realize trading and hedging benefits from this new asset class.
The National Commodity and Derivatives Exchange Limited (NCDEX) has asked the Centre to put in place a proper policy framework for allowing trading of certified emission reductions (CERs), carbon credit, in the market.
The commodity bourse, which launched trading in carbon credit futures last year, is pinning hopes of the necessary changes to allow wider participation in carbon trading futures. The country at present has sellers, but Indian law will not permit buyers, based in European markets, to enter the markets. The industry is awaiting early passage of the Forward Contracts (Regulation) Amendment Bill by Parliament as it would widen scope for the market besides defining non-tangibles like carbon credit.
The benefits of Carbon trading are not restricted to the corporate world. Manufacturers of Solar Powered Appliances may use income from Emission Reduction to subsidize the cost of their products and research. End consumers, in turn, benefit from Price subsidy as well as in their reduced electricity consumption. Anthyodaya, a Kerala-based NGO has involved 20,000 rural households in using biogas for cooking, converting Methane to less harmful CarbonDioxide, thereby earning credits, the profits of which it passes on to the farmers in the form of an annual income of Rs.1000/-
REGULATION ON CARBON TRADING-KYOTO EFFECT
The enforcement of the rules is one of the most crucial elements of a trading system. Under the supervision of the Environmental Protection Agency, a very complex system for verification, tracking of allowances and enforcement has been put in place. Unfortunately, under the conditions of today’s international politics and law, such a foolproof regime is not a realistic option. This does not, however, dispense with the necessity to establish a rigorous regime for the international trading of carbon dioxide. Procedures and institutions to monitor, verify, assess compliance and enforce the rules in cases of non-compliance must have top priority in the establishment of the trading regime. Such a compliance system demands several components: first, monitoring and reporting procedures must be in place. The Kyoto Protocol, in Articles 5 and 7, contains the basis for such procedures that need to be adapted to the needs of a trading regime.
CARBON TRADING LAWS- LEGAL DILEMMA IN INDIA
The forest statutes of India are silent on the issue and cannot facilitate “carbon trading” in the country. A ‘special statute’ may be enacted in near future to this effect. Indian Contract Act is also unable to take care of these complicated contractual issues. At present it is not clear whether the Proceeds from the sale of a carbon credits is “Income” or “Capital” under Income Tax Act.
At present there is no specific entry (except residuary powers) to empower Union or State Governments to legislate on ‘carbon trading’ or specifically ‘carbon sequestration rights’. Inserting a new entry in Concurrent List, List-III, Seventh Schedule of the Constitution of India to facilitate legislation, governance and administration of these matters has thus become a need of the hour.
Article Authored & Contributed by: Lakshmi.S, CS Finalist, National University Of Advanced Legal Studies, Kochi Protection of investors is one of the primary themes of the companies Act, 1956. The Act provides the shareholders a forum of self-protection and then leaves them to a large extent to take care of themselves. The forum is the general meeting of shareholders. Apart from this, having regard to the [Read More...]
A NOTE ON MANAGING DIRECTOR A managing director, as defined in Section 2(26), means a director who is encrusted with substantial powers of management which would not otherwise be exercisable by him. A managing director occupies the dual capacity of being a director as well as employee of the company. The apex Court in Employees State Insurance Corpn. v. Apex [Read More...]
Maruti Suzuki India Ltd. and NTPC Ltd., the two best governed companies, were presented the “ICSI National Award For Excellence in Corporate Governance 2009” at Mumbai today by Shri Vilasrao Deshmukh, Union Minister for Heavy Industries & Public Enterprises, in the presence of Justice R.C. Lahoti, Former Chief Justice of India and Chairman of the Jury for the Award. The [Read More...]
Dear Club Members I am happy to inform you that your CS Students’ Online Club (CsoC) today is Six Months Old (18th Dec 2009). We launched the Club on 18th June, 2009 and as of today we have 1,045 Members (Registered Users), and 1,139 topic posts by our members. The Club was visited by more than 25,000 visitors from all [Read More...]
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