NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Business Law

Internal Assignment Applicable for June 2022 Examination

1. Please explain the different types of instruments under which a company under
Companies Act, 2013 can raise capital.

Answer: - Gathering pledges by organizations has gotten pace over the most recent couple of
years by virtue of ascend in fire up culture and business in India. While beginning - up one's
undertaking faces various difficulties, the essential obstacle looked by each new business is
capital raising.

Organizations consolidated under the Companies Act, 2013 ("Act") have the choice of giving
different instruments to its financial backers and meet their capital prerequisites now and again.
The specialized term for instruments gave by organizations to financial backers is 'protections'.
While the issue of protections addresses a financial backer's revenue in the organization, they
are basically a heap of privileges and commitments gathering to the financial backer either at
the hour of its issue or on the event of explicit occasions or ending up of the organization. When
the protections are given to financial backers, they might modify the capital table of the
organization. The capital table is a construction portraying the all-out capital implanted in an
organization sub-separated into the level of shareholding held by every investor.
Instruments issued by companies under the Act
The instruments normally gave by organizations at the hour of asset - raising are value-based
instruments, obligation-based instruments or crossover instruments (containing a mix of
highlights of both value and obligation-based instruments). The idea of instrument to be given
by an organization depends generally on the valuation of the organization got through various
systems. A typical issue looked by beginning phase start - ups is valuation of the organization.
That being said, for each advertiser gathering of a beginning - up, the issue of a security having
least gamble factors is for the most part the guideline.

The essential distinction between the issue of value and obligation-based instruments is the
weakening of shareholding of the current investors of the organization. While the issue of
simply value based instruments bring about the quick weakening of existing shareholding the
issue of obligation instruments (if convertible in nature) will bring about weakening of
shareholding at a later stage in the time span of usability of the organization. Basically,
weakening of shareholding is the decrease in aggregate sum of shareholding level of existing
investors brought about by the issue/portion of new value offers to another financial backer.
The sorts of protections regularly gave in a raise money (under the Act) are expounded beneath
Equity Instruments / Equity Shares

Nature Types of Equity Shares

❖ Equity Shares with voting rights – shares
which allow each holder to participate and
vote in all meetings of the company and
thus, run the operations of the company.

❖ Equity Shares with Differential Voting

❖ Shares of a company which represent
ownership to the investor up to the
fraction of shares held by such person
and permit a right to vote in decisions
pertaining to the company.
Rights (“DVRs”) – shares carrying
superior voting rights (i.e., multiple votes
on an equity share), inferior voting rights
(i.e., a fraction of the voting right on a
value offer or offers with differential
freedoms as to profit.)
❖ Employee Stock Options (“ESOPs”) –
ESOPs are benefits given to employees of
a company to purchase, or to subscribe
for, the shares of the company at a future
date at a pre-determined price.

❖ Sweat Equity Shares – equity shares

which are issued by a company as a
reward to its employees for providing
their know-how or making available
rights in the nature of intellectual property
rights or value additions, by whatever
name called for consideration other than
cash.

Preference Shares
Nature Types of Preference Shares

❖ Shares which qualify the holder for a special ❖ Participating and non - partaking
right to get fixed profit during the existence of inclination shares - right to a proper
the organization along with a particular right special profit and an option to take part
to get the sum paid on such offers during the in excess benefits.
ending up of the organization. On such shares ❖ Combined and non - total inclination
during the winding up of the company. shares - right to guarantee profit fixed
❖ Doesn't present democratic privileges in at a total or rate for the past and current
conventional circumstances year out of future benefits; and
 ❖ Redeemable inclination shares -
commitment on the organization to
reclaim the offers after a predefined
limit.

Debentures
Nature Types of Debentures

❖ Security confirming obligation because of ❖ Redeemable debentures - debentures

the holder of debenture by the organization which upon issue will be reimbursed to the
repayable in chief sum with interest. holder upon a particular time limit;

❖ The debenture could conceivably be gotten ❖ Convertible debentures - debentures which

by the resources of the organization.
might be changed over into value shares
upon a particular time limit or upon the
event of explicit occasions. Necessarily
convertible debentures or CCDs should be
changed over completely to value shares
inside a time of a long time from the date
of its issue any other way a similar will be
treated as "store" under the Act.

Hybrid Instruments
Nature Types of Hybrid Securities
❖ Protections which have components of ❖ Half breed protections regularly gave by
both obligation protections and value organizations incorporate alternatively
protections convertible debentures (completely or
mostly), mandatorily convertible
debentures, necessarily convertible
inclination shares and alternatively
convertible inclination shares (completely
or incompletely) which are all convertible
into value portions of the organization at
determined occasions.

Conclusion
Capital raising is one of the essential necessities of beginning and supporting an effective new
company. While the thought as well as the advancement proposed is a seed that might be
planted at first by bootstrapping, proceeded with activity of the thought requires steady
watering to develop and create from a plant to a completely established tree. The ceaseless
watering process is completed via a consistent in-progression of financing which thus is
executed through the issue of capital instruments made sense of above.

The issue of instruments thus, qualifies the financial backer for specific privileges and
commitments by righteousness of satisfying the capital necessities of the organization. Each
instrument has various subtleties encompassing their issue and its resultant effect on the tasks
of the organization. Winnowing out and conclusion of instruments during raising support is
likewise generally reliant upon elements such area, organization's strategy and the idea of
financial backer to give some examples. For example, the land area depends on long haul
advancement and thus, the essential decision would be the issue of alternatively convertible
debentures or alternatively convertible inclination shares. Though, administration/information-
based organizations like to give necessarily convertible debentures, mandatorily convertible
inclination offers or value partakes considering momentary achievements chalked out by such
organizations. In conclusion, organizing of an asset raiser contrasts as per the idea of the
financial backer moved toward by the organization. While 'loved ones' adjusts involve
necessarily convertible inclination shares course inferable from the adaptability of financial
backers to a weakening under future adjusts, a few different financial backers, for example,
unfamiliar portfolio financial backers, investment reserves, heavenly messenger reserves and
so on have their own pre - decided systems to accomplish high development on their
speculation.

2. Please give two (2) real life instances where Indian employee related laws have ensured
protection of welfare of employees.

Answer: - The Labour regulation is the area of regulation that manages the connection between
the business and the representative. A business could be government offices or confidential
elements, organizations, associations, industry. It likewise intervenes the connection between
worker's organizations, utilizing elements.
The two real life instances where Indian employee related laws have ensured protection of
welfare of employees are mentioned below: -

A. Mandatory Communication of Annual Performance Appraisal Reports to Public

Servants
In Pankaj Prakash v. United India Insurance Company Limited and Another [Civil Appeal No.
5340-5341 of 2019, decided on 10 July 2019], the SC held that all public servants are entitled
to know their grades in an annual performance appraisal report (APAR).
The Appellant was wronged by the way that the passages in his APAR for a considerable length
of time were not unveiled, because of which he couldn't present a portrayal for advancement at
the specific time. The Appellant filled a writ request under the steady gaze of the High Court
of Allahabad against such activity of the business i.e., Respondent. The High Court of
Allahabad held that without any an unfriendly section or a passage beneath the benchmark, the
inability to impart the grade in an APAR didn't bring about a significant complaint. The
Appellant favoured an allure against this judgment of the High Court of Allahabad.
The SC held that as per the decisions of the SC in Dev Dutt v. Union of India [(2008) 8 SCC
725] and Sukhdev Singh v. Union of India [(2013) 9 SCC 566], it is compulsory that each
passage in the APAR of a community worker should be conveyed to him/her inside a sensible
period. Aside from guaranteeing straightforwardness in the framework, such revelations
likewise guarantee that a local official is offered sensible chance to make portrayals against the
gradings if he/she is disappointed with the outcomes. Further, the Union of India had
additionally given Office Memoranda on 14 May 2009 and 13 April 2010 looking for
consistence by all services and divisions. Besides, on 19 October 2012, a particular
correspondence was likewise addressed to public area insurance agency.
Consequently, the SC couldn't help contradicting the thinking given by the High Court of
Allahabad and held that non-correspondence of the passages in an APAR, whether fortunate or
unfortunate grades, is a matter in regard of which a genuine complaint can be made by the
Appellant. In like manner, the SC guided the Appellant to impart the subtleties of the APAR
to the Respondent inside a time of one month from the date of receipt of this request.
Comment: While execution examinations are fundamental for each association to work
proficiently, various instruments are embraced by people in general and confidential area,
separately. Execution evaluations in the public area are directed by unambiguous systems and
bearings gave by the fitting government and concerned divisions, which are not appropriate to
private area foundations. While there have not been legal points of reference managing
comparable issues in the event of private area businesses, confidential foundations might
embrace execution evaluation systems to guarantee straightforwardness in recording and
conveying the comments connecting with a representative and adjustment to the standards of
regular equity.
B. Equal work is equivalent to equal pay
Randhir Singh v. Union of India, 1982 AIR 879
For this situation, solicitor Randhir Singh was a driver working with the Delhi Police Force.
He guaranteed that his compensation was not according to standard with different drivers
working in the Delhi Administration. It was expressed that the drivers of the Delhi
Administration fill a comparative role as the drivers of the other division.
The peak court while managing the matter said that the Constitution of India does exclude the
arrangements for equivalent compensation, thus it can't be held under the ambit of the basic
right. Nonetheless, Article 39(d) of the Constitution of India gives the arrangement to rise to
pay for equivalent work for both man and lady, and it is incorporated under the Directive
Principles of the State Policy.
The zenith court deciphered Article 14 and Article 16 of the Constitution of India in the
illumination of the Directive Principles of the State Policy as given under Article 39(d) and
understood the standard of equivalent compensation for equivalent work. As per such
translation, the zenith court requested the Delhi Police to fix the compensation of the driver as
per different drivers working under the Delhi Administration.

3. Gavit and Vinayak are partners who started a partnership under the Partnership Act, 1932.
There are differences arisen between them and they have approached you to advise them to
resolve their differences:

a. Please suggest ways how they can resolve their differences without approaching
conventional court of laws.

Answer: - The Indian Partnership Act, 1932 is a demonstration to characterize and change
regulation connecting with organization. The meaning of association is given under segment
4[1] of the Indian Partnership Act, 1932. The segment peruses the meaning of association as
organization is the connection between people who have consented to share the benefits of a
business carried on by all or any of them representing all. Moreover, the segment likewise
peruses as people who have gone into organization with each other are called independently
accomplices and all in all a 'firm, and the name under which their business is continued is
known as the firm name.

Partnership Disputes

A partnership dispute may arise due to following reasons:

Underperformance of a Partner: Each accomplice is relegated with a particular job while

framing an organization. In the event that an accomplice can't complete his/her obligations
well, a dispute might emerge among different accomplices.

Secret profits: Every one of the benefits brought about in the association should be obviously
pronounced before every one of the accomplices. Any mystery benefit taken by any accomplice
without the information on different accomplices might bring a contention up in the
organization.
Conflicting interests: All accomplices inside an organization really must have normal interests
in organizations. In the event that two accomplices have an alternate vision and the other
accomplices don't consent to something very similar, a contention might emerge.

Management/personality conflicts: In this present circumstance the most reasonable strategy

might be to break down the organization by and large. At times, you might have to include the
Courts to guarantee that all last details are tied up so the organization's resources are separated
reasonably.

Partner Disputes Settlement

Having examined what all can be the explanations behind questions in organization debates,
presently comes the settlement of these sorts of questions. A fair and even debate goal process
is fundamental for keeping up with the smooth working of the organization business. The cycle
begins right from picking what sort of resort the gatherings are searching for; or any method
expressly referenced in the Partnership Agreement. In the event that the technique turns for
settling the question is intercession, the meeting with the middle person or the spot of
intercession would be considered as a piece of the debate goal process.

In the event of any disputes arising from a partnership, a person has three most efficacious
options to resolve the disputes which are outlined below:

Arbitration: It includes a judge either named by the gatherings or by a Court. The choices made
by the mediator are legitimately restricting on the gatherings. Being savvy, less difficult and a
quicker approach to settling debates than the Courts is thought of.

Mediation: It is the interaction where a free arbiter is named to determine the debate. The
middle person doesn't choose the question, yet endeavours to make a fair conversation. It is an
exceptionally savvy approach to settling a debate, while giving a choice to the gatherings to
give contributions to goal of issues. The middle person doesn't force a choice. In intercession,
the result is totally inside the control of the gatherings, and not on a third individual like an
appointed authority.

Negotiation: Exchange is viewed as probably the simplest type of question goal process. It is
much of the time seen that the gatherings to the question arrange a goal that is consented to
both without the requirement for formal intervention.
Out of all the three question settlement processes ADR (Alternative Dispute Resolution) is the
best strategy to resolve the debates in association questions. The most incessant choice to
determine association questions is ADR.

b. Please elaborate the advantages of resolving their differences without approaching

conventional court of laws.

Answer: - There are many benefits to ADR, including:

Flexibility of processes and outcomes: It permits the gatherings in debate to take on an

adaptable way while following ADR. The interaction can be changed by the necessities of the
gatherings.

Lower cost: Another of the vital benefits of elective debate goal is that ADR is generally
significantly less expensive than a preliminary. Simply the revelation interaction for going to
preliminary can prompt an over-the-top absolute expense that incorporates court correspondent
charges, lawyer expenses, and the costs related with printing and mailing reports.

Control: Gatherings to a debate might pick the most fitting impartial individual to arrange their
question. They additionally reserve the privilege to pick the time, place, and the date as per
their accommodation.

Faster resolution: The court framework is over-burden. It can't hold a preliminary for each
claim that gets recorded. Subsequently, it can require quite a long while for a legitimate case
to go to preliminary. One of the advantages of ADR is that goal is quick. A settlement or
discretion grant can be given inside half a month or long periods of recording a claim.

Privacy: Generally, court preliminaries are openly available report and can be gotten to by
anybody. Then again, ADR isn't just private yet in addition secret. At the point when an
intervention grant is given, or when the two players come to an agreeable settlement through
intercession, there is no openly available report of what happened during the meeting. How
much the honour or settlement, the assertions made, the rundown of members, and so on, all
stay private.

No bias: An unbiased outsider is chosen to manage all cases that go through ADR. The
impartial outsider ought to have no associations with anybody engaged with the claim and no
interest in the result of the debate. In a court preliminary, the adjudicator isn't chosen to manage.
The appointed authority is allotted. This distinction is basic, as clients can choose an unbiased
outsider with explicit topic mastery to help work with or show up at a very much educated goal.

Less friction: When a court decision is conveyed, it constantly leaves one side frustrated,
steamed, irate, and, surprisingly, harsh. With ADR, the cycle utilizes each an amazing open
door to safeguard the compatibility between the different sides. For instance, in the event that
a kid care case is being introduced, the middle person or referee won't just consider the
government assistance of the youngster, yet additionally the connection between the guardians.
As a matter of fact, ADR can assist with safeguarding an assortment of connections, including
those between colleagues, representatives’ businesses, and, surprisingly, mortgage holders'
affiliation board individuals.