Tuesday, February 21, 2012

What Is the procedure for winding up of foreign company?


A foreign company is a company which is incorporated outside India, and having a place of business in India.

Winding up of foreign companies is only limited to the extent of it's assets in India. In respect of assets and business carried outside India, Indian courts have no jurisdiction.

Winding up of a foreign company can only be made through court.

Even if the company had been dissolved or ceased to exist in the country of its incorporation, winding up order in this country can be made.

Even if a foreign company has been wound up according to foreign law, the courts in India still protect the Indian Creditors. The surplus assets, after paying the creditors, should be distributed among the share holders equally in the same proportion, as the assets ---- to the total issued and paid up capital.

Pendency of a foreign liquidation does not affect the jurisdiction to make winding up order. The Assets can be of any nature and do not take to be in the ownership of the company and can come from any Source.

 As, for persons claiming to be creditors, their presence, itself is sufficient. It is not required to be shown, that company carried on business operations from any place of business in India.

Difference between the Sweat equity shares and ESOP or ESOS ?

1> Sweat Equity is grant of shares at discount or without monetary considerations whereas Employee Stock  Option Plan (ESOP) / Employee Stock Option Scheme Scheme (ESOS) is grant of option to purchase share at predetermined price given to employees.


2> Sweat Equity can be issued to the promoters of the Company whereas ESOS/ESOP cannot be issued to the promoters or promoter group.


3> Minimum lock in period of 3 years for Sweat Equity whereas no such lock in period for ESOP and lock in period of 1 year for Employee stock purchase scheme (ESPS).

what is participatory note ?

It is an instrument which the overseas investors can purchase from FII's.The underlying assets are indian listed shares.
The SEBI disclosure requirements can be avoided by purchasing participatory note.
This is also called as Pnote.

Saturday, February 18, 2012

Can a Private Company issue bonus shares? if so what is the procedure?


Yes Private Company can issue bonus shares by capitalizing the current year profits and accumulated reserves.

Below is the procedure for Bonus issue of shares by Private Company:

1> check the Articles of Association( AOA) of company whether it has clause for capitalization of profits, if AOA does not have alter it by passing special resolution.
2> pass ordinary resolution to issue the bonus shares and specify the no. of shares issues and pro ratio, price at which shares are issued. Resolution should be register with ROC in form-23.
3> conduct board meeting to issue the shares.
4> file return on allotment Form-2 and issue the share certificates with effect to the allotment.

Relevant Sections: Regulation No.96 of TABLE A, 75(2),192,31