Lessons I Learnt From a Client

Here are a few lessons I took from a client while working for them. I hope these are only a FEW from many many more to come.

1. Started with a Failed Attempt: They started their entrepreneurship journey with a failed attempt, but later changed tracks and reinvented themselves. They struggled initially but later on figured how to make things happen.

Lesson: So Entrepreneurs, it’s okay to have a few "issues" here and there. What matters is the attitude to fight and survive. 

2. "Job" Comfort "Monetary" Comfort is a distant dream:They don't know whats in store for them in the future however their spirit keeps them going. They are out there to create their destiny.Tirelessly working day in and day out to make their dreams come true.....

Lesson: Rings that feeling? This is not really a lesson, but a comfort feeling that yes here are the future leaders of the industry...

3. Passion never ceases:Using your entrepreneurial skills to fulfill your passion towards cricket and football (sports)..?? Heard of this..? You will hear it soon...

Lesson: Do what you love, and love what you do. Have a goal and put all your energies in achieving the same.

4. Persistence: ....

Lesson: One of the most vital qualities needed to succeed in business. 

I can draw the same lessons by looking at Sachin Tendulkar. For startup's these pointers should help... 

The path chosen is correct, way to go guys, all the best from Team Propelis.

One Person Company (OPC)

After the implementation of new Companies Act, 2013, the concept of "One Person Company" has become buzz word. Corporate industry recognizes only one type i.w. "Limited Company:. Nowadays Limited Liability Partnership vehicle is getting best response because its own advantages. I was studying new rules and regulations of OPCs and found interesting stuff in this. Less complex structure, less legal formlities, easy conversion option into Private / Public Limited Company and less Government intervention are the plus points of OPC. Any person who is running business as a proprietor may consider this option. The biggest benefit is it gets "Corporate" status being a legal entity formed under the Companies Act.

While analyzing few provisions of the Act, it is clear that this is a small vehicle like Maruti 800 and not any other hatchback or sedan car. You cannot drive your Maruti 800 on expressways with full speed because of its own limitations. I believe you will understand this example! Let me come straight to the point. OPCs have its own limits, once you gets close to maximum limits, by virtue of law, your OPC will get converted into Private / Public Limited Company. Provisions of the law states that when any OPC crosses a turnover of Rs. 2 crores or paid up capital exceeds Rs. 50 lakhs, you have to switch onto Limited Company without any option. I think for small businessmen or traders can take advantage of this form of vehicle at initial stage at least for 2 years. Because once you form OPC, you cannot apply for conversion before expiry of 2 years from the date of formation. 

I am sure coming days will decide the direction and the good response to One Person Companies, otherwise LLPs have already proven excellent form of an organization.

--Ishan Kulkarni

Key Highlights: Companies Act 2013 Part II

Continued Post...

8. Inter corporate loans / investments

• Loans, guarantee and security made to any person and not just body corporates will attract the 2013 Act compliance requirements. The scope has been widened.
• Rate of interest on loans granted cannot be lower than the prevailing yield of 1 year, 3 year, 5 year or 10 year Government Security closest to the tenure of the loan
• The list of exemptions has been curtailed. Basically the norms have become stricter.

 9. Loan to Directors

• No loans to be extended directly or indirectly. Also no loan can be extended by a book debt. Company cant give guarantee or provide security in connection with such loan to any director / related persons

– Exception to the rule is for MD or a whole time director (WTD) if such loan is in
accordance with the terms of services extended to all employees or is approved by shareholders
by special resolution

• These provisions are applicable to private companies  as well

10. Mergers & Acquisitions

• Restriction on multi-layer investment
• Merger of Indian company with a foreign companyis now possible
• Fast track merger for small companies and between holding company and its wholly owned subsidiary introduced
• Persons holding 90% or more equity shares can purchase the remaining shares from minority shareholders
• Any valuation of shares / assets etc. required under 2013 Act to be performed by a Registered Valuer

11. Measures for investor protection

• Provisions relating class action suits introduced
• Exit options for minority holders on reorganization

12. National Company Law Tribunal (NCLT)

• Replacement of the High Court with NCLT

13. Miscellaneous

• Transfer of profits to reserves for dividend declaration removed
• Inability to pay debts is one of the reason to be considered a sick company
• Provisions of revival and rehabilitation of sick companies to all companies 
• Serious Fraud Investigation Office will be constituted 
• Any person representing the company is made liable for punishment for fraudulently obtaining credit facilities from any bank or financial institutions for making any false, deceptive or misleading statement, promise or forecast 

Key Highlights: Companies Act 2013 Part I

Key Highlights

1. Changes in types of companies

• Maximum number of members in a private company increased from 50 to 200
• Limit of number of members in an association or partnership (without incorporation) to be increased up to 100
• One Person Company (OPC) - a new vehicle for individuals for carrying on business with limited liability

2. Changes in the provisions for Share capital

• Infra projects get a breather, preference shares can be issued for a period exceeding 20 years
• Further issue of capital provisions made applicable to all companies
• No Shares cannot be issued at a discount except for sweat equity shares
• Time gap between 2 buy-backs to be minimum 1 year.

3. Deposits

• Stringent norms provided for acceptance of fresh deposits from members and public.
• Any deposit accepted before the commencement of 2013 Act or any interest due thereon to be repaid within 1 year from the commencement of 2013 Act or from the date on which such payments are due, whichever is earlier.
• Credit rating mandatory for acceptance of public deposits

4. Corporate Social Responsibility (CSR)

• 2% of average net profits of last 3 years to be mandatorily spent on CSR by companies having

– net worth of ` 5 billion or more; or
– turnover of ` 10 billion or more; or
– net profit of ` 50 million or more

5. Audit and Accounting

• To align with the provisions of the Income tax Act, companies to have a uniform financial year - ending on 31 March each year
• Consolidation of financials
• National Financial Reporting Authority (NFRA) to be constituted
• Mandatory audit rotation
• Restriction placed on non-audit services
• Mandatory internal audit

6. Management, administration and corporate governance

• At least 1 director of a company shall be a person who has stayed in India for 182 days or more in the previous calendar year. Existing companies to comply with this provision within 1 year from the date of commencement of the 2013 Act.
• Listed and prescribed class of companies to have at least 1 woman director. Existing companies to comply with this provision within 1 year from the date of commencement of the 2013 Act.
• Prescribed class of companies to have whole-time Key Managerial Personnel (KMP)

– Chief Finance Officer to be a whole time KMP for prescribed classes of companies

– Whole time Director included in definition of KMP

• Electronic voting for Board and shareholders meetings introduced
• Following committees of the Board made mandatory for listed and prescribed classes of companies:

– Audit committee
– Stakeholder relationship committee
– Nomination and Remuneration committee
– Corporate Social Responsibility committee

• Director to vacate office on remaining absent from all the meetings of the Board of Directors held during 12 months with or without obtaining leave of absence
• Contents of Directors’ Report elaborated. Directors to annually report on the existence and effective operations of systems on compliance with all applicable laws
• Secretarial audit mandatory for listed and prescribed classes of companies
• Approval of Central Government required for certain managerial remuneration 

7. Related Party Transactions

• Requirement of obtaining Central Government approval removed
• Approval by Board of Directors made mandatory
• Related party transactions to also require prior shareholder’s approval by special resolution for
  companies having prescribed paid up capital or transactions exceeding prescribed amounts.
• Related party transactions to be disclosed in the Director’s Report along with justification thereof

To be continued in my next post......

Background To The New Companies Act, 2013

My concentration generally has been Startups, Entrepreneurship Funding etc however I was recently reminded by my Partner that we (Team Propelis) has to start studying the new Companies Act, 2013 as the new legislation is now a law (pending implementation)..

The Series of blogs will be posted on the Subject 'Companies Act, 2013" based on the discussion/training sessions conducted/held at our Propelis Offices. These posts are for reference purposes only and should not be used for forming legal opinions or legal actions. We welcome different opinions and would love to hear yours too. 

The Background: 

Companies Act, 2013 (2013 Act) is set to be implemented from 1st April 2014 and the buzz around is that all the sections will be notified from this date in a phased manner. So why so much importance for this act? We pondered.... 

The 2013 Act lays down far more enhanced self-regulation rules coupled with higher emphasis on corporate democracy and provides for amongst others, business friendly corporate regulation (atleast on paper)/ pro-business initiatives, e-governance initiatives, good corporate governance requirements, Corporate Social Responsibility (CSR) requirements, enhanced disclosure norms, enhanced accountability of management (tighter rules), stricter enforcement, audit accountability, protection for minority shareholders, investor protection and activism and better framework for insolvency regulation and institutional structure.

The next post shall be regarding the Key Highlights and from there Team Propelis shall update a separate blog for each section/or a set of sections... Keep reading and commenting...

Stress Management: How to Manage Stress

When I started my consulting firm, I was the only one working. No colleagues, no assistants. Nobody. It was just me and my work. Ok wait I had no work too. 

Honestly I did not have any money too. I did not have any infrastructure too. I had no clients. I was a nobody. I did not want to take up any job. I had only one thing with me. I had the willingness to stretch my limits and achieve my goals....

But the path is always difficult and I often found myself under tremendous pressure. Slowly when work started flowing I realised I had other pressures too now, generate work, do it, print docs, scan stuff, go out for meetings, courier stuff etc etc. I used to be dead buried under expectations both at professional and personal front.

So what did I do?

1. I started setting SMART goals.

2. I started congratulating myself for small achievements

3. I started discovering my limits.

4. Stopped worrying about things.

5. Walks. Yes long walks.

6. Gave importance to "work/life" balance

I can't say I have managed to control my stress completely but yes I am surely on the right path. 

Stress management's importance need not be stressed further.

Remember these lines from the Bhagvad Gita:

Dear Lord:

Give me the strength to change/achieve the things I can,

Accept the things I can't,

And

Wisdom to know the difference!

So take a chill pill guys!

Which Five Things Hold you Back From Becoming Successful

Here is a list of five things which I feel hold you back from becoming "successful"

1. Not believing in yourself.

2. Not taking that one extra step to reach your goals

3. No planning

4. Trying to go solo

5. Not understanding your weaknesses

Remember: those who can, do! 

So go out and chase your goals.