#Tata capital Unlisted shares

[shubhamman2376]

How Investing in Tata Capital Unlisted Shares Can Power Up Your Portfolio

Introduction To Tata Capital

Tata Capital is a renowned financial institution that offers a wide range of financial products and services to individuals and businesses. With a strong focus on customer satisfaction and innovation, Tata Capital has established itself as a trusted name in the finance industry.

Understanding The Potential Of Unlisted Shares In Your Investment Portfolio

Unlisted shares refer to the shares of a company that are not listed on any stock exchange. These shares can be an excellent addition to your investment portfolio, as they offer unique opportunities for growth and diversification. Investing in unlisted shares allows you to invest in companies that are not yet available to the general public, providing you with the potential to earn significant returns.

Benefits of Investing in Tata Capital Unlisted Shares

Investing in Tata Capital unlisted shares can offer several benefits to investors. Firstly, by investing in Tata Capital, you gain exposure to a well-established and reputable financial institution with a strong track record of success. This can provide you with a sense of security and confidence in your investment.

Secondly, investing in Tata Capital unlisted shares allows you to participate in the growth and success of the company. As Tata Capital continues to expand its operations and deliver strong financial performance, the value of its unlisted shares is likely to increase. This can result in capital appreciation and higher returns on your investment.

Furthermore, investing in Tata Capital unlisted shares can provide you with a unique opportunity to diversify your investment portfolio. Adding unlisted shares to your portfolio can reduce the risk associated with investing in traditional listed stocks and bonds. This diversification can help protect your portfolio from market volatility and potentially enhance your overall returns.

Factors to Consider Before Investing in Tata Capital Unlisted Shares

While investing in Tata Capital unlisted shares can be a lucrative opportunity, it is essential to consider certain factors before making an investment decision. Firstly, you should evaluate the financial performance of Tata Capital. This includes analyzing the company's revenue, profitability, and growth prospects. By assessing these factors, you can gain insights into the company's financial health and its potential for future growth.

Additionally, it is crucial to analyze the Tata Capital share price. Understanding the historical performance of the share price can provide you with valuable information about the company's stock performance and market sentiment. By evaluating the share price trends, you can make informed decisions about the timing of your investment in Tata Capital unlisted shares.

Lastly, seeking expert opinions and recommendations on Tata Capital unlisted shares can provide you with valuable insights and guidance. Consulting with financial advisors or investment professionals who have experience in the field can help you navigate the complexities of investing in unlisted shares. Their expertise can assist you in making well-informed investment decisions and optimizing your portfolio.

Evaluating the Financial Performance of Tata Capital

To evaluate the financial performance of Tata Capital, it is essential to analyze key financial indicators such as revenue, profitability, and growth. By examining the company's revenue trends, you can gain insights into its ability to generate income and sustain its operations. Additionally, assessing the profitability of Tata Capital can help you determine its ability to generate returns for its shareholders.

Furthermore, analyzing the growth prospects of Tata Capital is crucial in understanding its potential for future success. Examining factors such as market opportunities, competitive landscape, and strategic initiatives can provide insights into the company's growth trajectory. By evaluating these factors, you can assess the long-term viability and profitability of Tata Capital.

Analyzing the Tata Capital Share Price

Analyzing the Tata Capital share price is an essential step in understanding the investment potential of its unlisted shares. By examining historical share price trends, you can identify patterns and fluctuations in the market. This analysis can help you determine the optimal entry and exit points for your investment in Tata Capital unlisted shares.

Additionally, it is crucial to consider the factors that influence the Tata Capital share price. These factors can include market conditions, industry trends, and company-specific news. By staying informed about these factors, you can make informed decisions about your investment in Tata Capital unlisted shares.

Expert Opinions and Recommendations on Tata Capital Unlisted Shares

Seeking expert opinions and recommendations on Tata Capital unlisted shares can provide valuable insights and guidance for your investment decisions. Financial advisors and investment professionals can offer expert analysis and advice based on their industry knowledge and experience.

It is advisable to consult with multiple experts to gain a holistic understanding of Tata Capital's investment potential. By comparing and contrasting their opinions and recommendations, you can make well-informed investment decisions that align with your financial goals and risk appetite.

Conclusion and Final Thoughts

Investing in Tata Capital unlisted shares can be a powerful addition to your investment portfolio. By understanding the potential of unlisted shares and considering the benefits of investing in Tata Capital, you can make informed investment decisions that have the potential to deliver significant returns.

However, it is crucial to carefully evaluate the financial performance of Tata Capital and analyze the share price trends before investing. Seeking expert opinions and recommendations can further enhance your decision-making process.

In conclusion, investing in Tata Capital unlisted shares can unlock the potential to power up your investment portfolio. By harnessing the growth opportunities offered by Tata Capital and diversifying your portfolio, you can position yourself for long-term financial success.

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Unleashing the Potential of Unlisted Shares: A Comprehensive Guide

Understanding Unlisted Shares

Unlisted shares, also known as unlisted equity or pre-IPO shares, are securities issued by companies that are not traded on public stock exchanges like the BSE or NSE. These shares offer investors the unique opportunity to invest in promising startups and growing businesses before they go public.

Key Characteristics of Unlisted Shares:

Limited Liquidity: Unlisted shares are less liquid than listed shares, meaning they can be harder to buy or sell quickly.

Direct Purchase: You typically buy unlisted shares directly from the company, intermediaries, or specialist brokers.

Potential for High Returns: Early investment in unlisted shares can offer significant returns if the company performs well and eventually goes public.

Benefits of Investing in Unlisted Shares:

Early Access to Growth: Invest in promising companies before their value skyrockets.

Reduced Market Volatility: Avoid the day-to-day fluctuations of listed stocks.

Higher Potential Returns: Capitalize on the growth potential of early-stage companies.

Diversification: Expand your investment portfolio beyond traditional listed stocks.

Promising Unlisted Shares in India:

OYO: A leading hospitality company known for its budget hotels and rental spaces.

India Potash Ltd.: A key player in the agricultural sector, specializing in potash-based fertilizers.

NSDL: A significant institution in the Indian financial market providing depository services.

Bira 91: A popular craft beer brand with a strong presence in India.

Tata Capital: A financial services provider offering loans, investments, and asset management.

How to Start Investing in Unlisted Shares:

Research: Thoroughly investigate companies you're interested in, including their business model, financials, and management team.

Choose a Reliable Intermediary: Work with a reputable broker or platform that specializes in unlisted shares.

Understand Risks: Be aware of the potential risks involved, such as limited liquidity and valuation uncertainty.

Diversify: Spread your investments across multiple unlisted companies to manage risk.

FAQs:

Are unlisted shares the same as unlisted equity? 

Yes, they are synonymous terms.

Is it safe to invest in unlisted shares in India?

 Investing in unlisted shares involves risks, but with proper research and due diligence, it can be a rewarding opportunity.

Is it legal to buy unlisted shares? 

Yes, it is legal to buy unlisted shares in India. However, ensure you're dealing with reputable intermediaries.

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Investing in Tata Capital Unlisted Shares: What You Need to Know About the Price

Understanding the Tata Capital Unlisted Share Price is crucial for anyone considering investing in this company. Unlike listed companies on the stock exchange, Tata Capital's unlisted shares trade through private channels. While this can offer advantages like potentially lower transaction fees, it also means investors need to do their own research to determine a fair Tata Capital Unlisted Share Price.

Factors Affecting the Tata Capital Unlisted Share Price

Several factors influence the Tata Capital Unlisted Share Price. Here's a breakdown of some key considerations:

Company Performance: The company's financial health, profitability, and future growth prospects significantly impact the Tata Capital Unlisted Share Price. Strong financial performance can drive the price up, while negative indicators can lead to a decline.

Market Demand: Supply and demand in the unlisted market determine the Tata Capital Unlisted Share Price. If more investors are interested in buying than selling, the price will likely rise. Conversely, if there are more sellers than buyers, the price may fall.

Overall Market Conditions: The broader economic climate can also affect the Tata Capital Unlisted Share Price. Positive market conditions often lead to increased investor confidence, potentially pushing the price up. On the other hand, economic downturns can cause a decrease in the price.

Company News and Announcements: Any significant news or announcements from Tata Capital, such as mergers, acquisitions, or rights issues, can impact the Tata Capital Unlisted Share Price. Investors will consider these developments when determining a fair price.

Finding the Right Tata Capital Unlisted Share Price

Due to the unlisted nature of the shares, there's no central exchange to provide a set Tata Capital Unlisted Share Price. However, you can find valuable resources to get a good idea of the current price range. Here are some options:

Unlisted Share Brokers: Brokers specializing in unlisted shares can provide quotes and insights on the Tata Capital Unlisted Share Price.

Financial Websites: Certain financial websites track unlisted share prices, including Tata Capital.

Investment Research Reports: Research reports from credible institutions may offer analysis and estimated price ranges for Tata Capital's unlisted shares.

Investing with Confidence Through DelistedStocks

By understanding the factors affecting the Tata Capital Unlisted Share Price and conducting thorough research, you can make informed investment decisions. Here at DelistedStocks, we strive to empower investors with the knowledge and resources they need to navigate the unlisted share market.

Disclaimer: This article provides general information only and is not financial advice. Please consult with a qualified financial advisor before making any investment decisions.

[lunamehta]

Tata Capital Unlisted Share Price, IPO, and Valuation

TATA Capital, a financial powerhouse under the esteemed TATA Group, stands as a symbol of trust and commitment in the financial landscape. From providing flexible and tailored loan solutions to nurturing wealth through innovative investment avenues, TATA Capital seamlessly integrates financial expertise with a deep understanding of the evolving needs of its customers. Whether home loans, personal loans, business loans, or wealth management services, TATA Capital's diverse portfolio reflects its dedication to fostering growth and prosperity. TATA Capital Upcoming IPO is set to be launched in the ongoing FY24.

This allows investors to take the first mover advantage by investing in TATA Capital Pre IPO shares. TATA Capital Share Price is valued at ₹660 only & is available exclusively on the Planify platform. Investors can expect to gain exponential returns by investing in TATA Capital Pre IPO shares.

Before investing, Investors should consider studying the business model of TATA Capital. Through this article, investors can learn about TATA Capital’s Business Model, its Financial Performance in recent years & comparison with industry peers. A world of caution on valuation would also be presented before the investors.

TATA Capital Services can be divided into 5 sectors namely TATA Capital Financial Services Limited (TCFSL), TATA Capital Housing Finance Limited (TCHFL), TATA Cleantech. Capital Limited (TCCL), TATA Securities Limited (TSL) & TATA Capital Private Limited (TCPL). Now let’s try to understand each of these models:

TATA Capital Financial Services (TCFSL): TCFSL’s main area of expertise lies in Retail finance, SME & Commercial Finance. The products offered by TCFSL include Auto loans, Construction Equipment and Commercial Vehicle Loans, Business Loans, Consumer Durable Loans, and loans against Securities and assets.

TATA Capital Housing Finance Limited (TCHFL): TCHFL primarily offers home loans & affordable housing finance loans, loans against property & loans to developers for constructing residential & commercial premises.

TATA Cleantech. Capital Limited (TCCL): TCCL is a Joint Venture between TCL & International Finance Corporation, Washington DC, USA. TCCL is registered with RBI as an Infrastructure Finance Corporation (IFC) & it deals in providing finance & advisory services to cash-flow-based renewable energy projects. 

TATA Securities Limited (TSL): TATA Securities currently operates as an AMFI registered Distributor, engaged in the business of distribution of Mutual Fund units. TATA Securities is also registered as a Depository participant with Central Depository Services (India) Limited & National Securities Depository Limited (NSDL) & is also registered with SEBI as a Research Analyst. 

TATA Capital Pte. Limited, Singapore: TCPL carries out the business of proprietary investments & fund management, either on its own or through subsidiaries.

Beyond financial services, TATA Capital's commitment extends to fostering a sustainable future through initiatives that prioritize environmental and social responsibility. This holistic approach aligns with the TATA Group's ethos of making a positive impact on society while delivering excellence in every financial endeavor.

A good business model is the cornerstone of sustainable success, seamlessly aligning value creation with profitability. It identifies a clear target market, addresses customer needs effectively, and outlines a revenue strategy that stands the test of time. Investors shall also pay attention to the financials of a company. This might help investors in their decision-making & also become a bit cautious about certain ratios where the stock might be over-valued.

Let's begin by assessing TATA Capital's Market Cap in comparison to its industry counterparts. With a robust market cap of Rs. 2.34 Lakh Cr., TATA Capital outshines its closest peer, L&T Finance Holding. The company's strong financial performance is evident in its expanding Operating Profit Margin, reaching an impressive 46.01%, 53.07%, and 71.56% in FY21, FY22, and FY23, respectively. The Net Profit Ratio follows a similar upward trajectory, standing at 42.85% and 55.62% over the last two years.

Additionally, TATA Capital exhibits a positive trend in Returns on Assets (RoA), indicating efficient asset utilization with RoA figures of 1.94 and 2.48 for the corresponding years. Investors will find encouragement in the company's healthy Return on Equity (RoE), recording 15.23% and 19.01% in the same period.

Despite these commendable performances, caution is warranted, especially in considering the Price to Book Value (P/BV) and Price to Earnings (P/E) ratios. TATA Capital's P/BV ratio is notably high at 15.2, approximately 12 times that of its peers, and a staggering 14 times higher than the industry average P/E of 1.5. Similarly, the P/E ratio is reported at 78.0, nearly 4 times higher than its nearest industry peer at 20.9. The industry P/E of 21.0 underscores the perception that the stock may be currently overvalued, urging potential investors to weigh the risks carefully.

All being said & done, as the TATA Capital unlisted share price reflects the strength of investor confidence, anticipation is building for TATA Capital Upcoming IPO. The trajectory of TATA Capital unlisted shares hints at an exciting journey ahead, providing investors with a glimpse into the company's potential growth. The fact that TATA has just launched a spectacular IPO with TATA Tech. , getting listed at a premium of over 162% only solidifies investor’s interest further. Just a quick reminder for the investors as they get a chance to gain exponentially byb investing in TATA Capital Unlisted Shares, exclusively available on the Planify platform. Stay tuned for an opportunity to be part of TATA Capital's next chapter in the financial landscape.

[freddiemark]

Invest in Boat Unlisted Shares | Boat Share Price |

If you are looking to invest in unlisted shares, I will suggest you to invest in Boat share price. Boat is a company based in Delhi, India and specializes in selling its products online.

Boat was incorporated in 2013 and is currently trading at a market capitalization of $70 million with a total value of $1 billion. The company sells its products under the boat, RedGear, TAGG and Misfit brands.

This company has been growing rapidly since it started offering its products on Amazon and other e-commerce sites. You can also get information on their website about the products they sell and how they work.

When considering investing in boat share price, it is important to carefully consider the boat's value, expected usage, and ongoing costs. These factors will impact the potential return on investment. It is also important to carefully consider the terms of the boat share agreement, including ownership rights, usage arrangements, and maintenance responsibilities. By doing so, investors can ensure that they are making an informed investment decision.

Why should you invest in boAt IPO?

Here are the reasons why an individual should subscribe to the boAt IPO :

The company plans to expand into offline markets and Tier 2+ cities and towns in India, leveraging existing distributors and their relationships with local retailers. boAt will also expand its online sales reach by increasing sales volume on other marketplaces and channels, such as the online shopping website Nykaa, the Tata CLiQ store and Myntra.

boAt is a direct-to-customer (D2C) company and holds a high rank in the hearables category and second in the wearables category. Digital channels and marketplaces account for more than 85 per cent of the company’s total sales, and it maintains its position as the leading brand on those marketplaces.

In the interest of improving its products, the company has sought out relationships with component suppliers like Qualcomm (a shareholder in the parent company), Google, Dolby, and Bharat FIH.

The company has remained profitable in the last three fiscal years. The highest component of costs for the company continues to be the electronic goods that it resells.

In FY 21, the company generated Rs. 1.3 billion in revenues with just Rs. 1.7 million invested in plant, property, and equipment. The company leases out offices and warehouses instead of purchasing them so that capital expenditure remains minimal.

The business has developed steadily over the years, with a return on capital employed of more than 15 per cent in the last three fiscal years and 66.8 per cent in the most recent fiscal year.

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Upcoming IPOs in 2023

IPOs are great investment avenues where investors can buy stocks in a growing company at an early stage. It is expected that a company receiving a fresh rush of funds will grow in future, which will increase the value of its shares. 

IPOs can offer both short-term and long-term returns. However, it isn’t easy to track the news of upcoming IPOs as they are not advertised. To solve the problem, we have prepared a list of recent IPOs so you can target them better. 

Releasing IPOs shares is a common way for unlisted companies to seek listing on the stock exchange. A listed company has easy access to investors’ capital to fund its growth. Besides, a stock exchange listing brings prestige and visibility to the business and further helps it secure funding from banks.   

Investors also gain from investing in IPOs. Shares released by a company with a strong growth projection promise good returns for investors in the short and long term. So, there is always excitement surrounding IPO news on the market.  

Upcoming IPOs

Let’s find out the recent IPOs that will be released in 2023.

Northern Arc Capital Ltd. IPO

Northern Arc Capital Ltd. is a non-banking financial institution founded in 1989. They specialise in meeting lending requirements and providing loans to the underbanked population.  

Northern Arc Capital Ltd. has filed DRHP to float an IPO constant of ₹300 crore fresh issues and 36,520,585 equities in an offer for sale (OFS).

Biba IPO

Biba is a popular apparel brand specialising in ethnic women's clothes. Biba IPO offer consists of ₹90 crore from selling fresh issues and 2.7 crore equity shares in an offer for sale from current stakeholders. 

Founded in 1986, Biba is a homegrown brand of women's ethnic clothing. They offer high-quality garments in segments of salwar kameez dupattas, mix-n-match wear, ready-to-stitch wear, kidswear, bottom-wear and accessories. They sell over 154 SKUs.

Snapdeal IPO

Snapdeal is a major e-commerce brand with strong market positioning in different segments of apparel, fashion, household goods, electronics, beauty and personal care. The company primarily focuses on Indian tier-II and III cities.  

They have filed for ₹1,250 crore IPO consisting of ₹1,250 crore in fresh issues and 30,769,600 equity shares in an offer for sale. 

ESDS Software Solutions IPO

ESDS Software Solutions’ IPO combines new share sales of ₹322 crore and an offer for sale (OFS) of 2,15,25,000 equity shares from the existing shareholders.

The company has built a comprehensive cloud platform that manages cloud services and end-to-end cloud requirements of its clients. Due to its diverse product offerings, ESDS Software has become the one-stop solution for all kinds of cloud adoption requirements of its customers.  

Navi Technologies IPO 

Navi Technologies is a technology-driven financial company or a Fintech. They have filed a DRHP seeking ₹3,350 crore through an IPO. The offer doesn't contain any offer for sale equities.

The company provides financial products and services to the middle-class population in India. They offer their services in three business segments - lending, insurance, and asset management. 

Popular Vehicles and Services IPO

Popular Vehicles is one of the top car dealerships, present across the whole automotive retail chain. They are the third-largest commercial vehicle dealership for Tata Motors. Besides, they also have dealerships for Maruti Suzuki, Honda, and Jaguar passenger cars. 

Popular Vehicle and Services has filed a DRHP to release an IPO. The offer contains ₹150 crore in fresh issues and 4,266,666 equity shares in an offer for sale.

Final words 

You must open a Demat account to invest in the above IPOs. Now get one online by submitting the necessary documents on a stockbroker’s website.

[csvistas2020]

MAKE A DEAL LIKE TATA

MAKE A DEAL LIKE TATA

The Mistry-family owned SP Group has proposed a plan of separation from Tata Sons Pvt. Ltd. involving shares of listed Tata Group companies, to end the decades-old partnership between the two. This exclusive relationship got strained over time with issues ranging ouster as Tata Sons chairman in October 2016, Cyrus Mistry and entities owned by his family filed a suit of oppression and mismanagement against Tata Sons and its shareholders. While the National Company Law Tribunal decided against him, the Mistry family won in appeal at the NCLAT. Tata Sons has appealed the case in the Supreme Court where it is currently pending. Further Tata Sons rejected the approach of S.P Group to pledge their stake in order to raise more debt.

This plan follows the SP Group’s announcement in September that a given the four-year long legal battle between the Mistry family and Tata Group the “mutual co-existence of both groups at Tata Sons would be infeasible”.

The SP Group has proposed:

·         A selective reduction of capital at Tata Sons thereby extinguishing shares held by them.

·         In exchange, SP Group be granted shares in listed companies of the group.

·         Also, cash consideration or shares for brand value, unlisted assets etc.

An illustration of the proposed separation plan:

·         72% of Tata Consultancy Services Ltd. is owned by Tata Sons.

·         SP Group’s ownership of 18.37% translates to 13.22% shareholding of TCS.

·         Hence, 13.22% of TCS be transferred to SP Group

Were the SP Group’s separation plan to be implemented, its stakes in listed Tata Group companies where Tata Sons holds a stake, would approximately range from 4% to 13.5 %.

Even thought the plan is very comprehensive and could even solve issues related to Valuation. But It is unlikely Tata Sons would agree to the same as this gives S.P a prolonged stake in the company and even more exposure. Tata Sons is adamant towards buying the stake out for once in all to end this strained tie.

But the buyout isn’t that simple after all. Investment bankers and finance experts say Tata Group’s offer to buy back SP Group’s shares involves various layers of complications. The first issue that will crop up will be the valuation that both parties will agree on. Another issue is that over the next one month, Tata Group will have to work out a financing plan to show how it will fund that acquisition and what will it put as lien for that borrowing.

Except for TCS, not many Tata Group companies are in great shape — especially their steel and auto and power business having huge debt.

 If it chooses any approach like Buyback or Capital reduction they too carry their own complications with laws. On the other hand, if Tata Group plans to bring in some global investors to buy these shares, market participants say such investors would want to know how Tata Sons would provide them an exit 7-10 years later as Tata Sons is an unlisted entity.

 This clearly shows how this deal is complicated but as it is in every case there is always a feasible strategy to solve the issues. All of it lies in the details of the case.

 TASK IN HAND:

You have been appointed to help Tata Sons plan the Stake Buyout. Tata Sons is not interested in the exact plan S.P has proposed. You have the freedom to propose the buyout plan which can be a modification of the S.P Plan or a different approach. In any case you have to take in to considerations the issues that come with different approaches along with the preferences of TATA sons as a priority.

Prepare a detailed report that at least includes the following:

DELIVERABLES:

·         Situational analysis

·         Deal mechanism Proposed:

a)      For SP Stake Takeover

·         Timeline for the deal

·         Plan to resolve/settle other legal issues with S.P

·         Valuation of S.P Stake

·         Funds Break Up

SUBMISSION TIME 12:00 PM TOMORROW (7/11/2020)

ALL THE BEST!

[shubhamman2376]

How Tata Capital Unlisted Shares Can Drive Growth in Your Investment Portfolio

An Overview of Tata Capital

Tata Capital is a renowned financial services company in India. Established in 2007, it is a subsidiary of Tata Sons Limited, the holding company of the Tata Group. Tata Capital offers a wide range of financial products and services, including loans, investments, and insurance.

With a strong reputation and a track record of delivering quality services, Tata Capital has become a trusted name in the financial sector. The company has a robust presence across various domains, including retail finance, commercial finance, wealth management, and infrastructure finance.

The Growth Potential of Tata Capital Unlisted Shares

Investing in unlisted shares of companies like Tata Capital can offer significant growth potential. Unlisted shares are stocks of companies that are not listed on any stock exchange but are traded in the over-the-counter (OTC) market. These shares can provide investors with unique opportunities to generate substantial returns.

Tata Capital, being a part of the esteemed Tata Group, has inherent growth potential. The Tata Group has a diversified presence across sectors such as automobiles, steel, information technology, and consumer goods, which adds to the stability and growth prospects of Tata Capital.

Investing in Tata Capital unlisted shares allows investors to tap into the growth potential of the company before it goes public. As the company expands its business and achieves new milestones, its unlisted shares' value can be appreciated significantly, leading to substantial capital gains for investors.

Analyzing the Tata Capital Share Price

Understanding the share price of Tata Capital is crucial for investors looking to invest in its unlisted shares. The share price reflects the market's perception of the company's value and growth prospects.

While Tata Capital is not publicly listed, the share price can still be estimated based on various factors such as the company's financial performance, industry trends, and market sentiment. Investors can analyze the financial statements, earnings reports, and other relevant information to assess the intrinsic value of Tata Capital shares.

It is important to note that investing in unlisted shares comes with certain risks. The lack of liquidity and transparency associated with unlisted shares can make it challenging to determine the fair value of the shares. Therefore, it is advisable to consult with financial experts or conduct thorough research before making any investment decisions.

Factors to Consider Before Investing in Tata Capital Unlisted Shares

Investing in unlisted shares requires careful consideration of various factors. Here are some key factors to keep in mind before investing in Tata Capital unlisted shares:

Financial Performance: Evaluate Tata Capital's financial performance, including revenue growth, profitability, and debt levels. A company with a strong financial position is more likely to generate higher returns for investors.

Industry Analysis: Analyze the industry in which Tata Capital operates. Consider factors such as market dynamics, competitive landscape, and regulatory environment. A favorable industry outlook can boost the growth prospects of the company and its unlisted shares.

Management Expertise: Assess the management team of Tata Capital. Look for experienced professionals with a proven track record in the financial services industry. A competent management team is crucial for the long-term success of the company.

Risk Assessment: Evaluate the risks associated with investing in Tata Capital unlisted shares. Consider factors such as market volatility, economic conditions, and regulatory changes. Diversifying your investment portfolio can mitigate these risks.

Benefits of Investing in Unlisted Shares

Investing in unlisted shares offers several advantages for investors. Here are some key benefits:

Potential for Higher Returns: Unlisted shares have the potential to generate higher returns compared to traditional investments. As companies grow and achieve milestones, the value of their unlisted shares can be appreciated significantly.

Early Access to Growth Opportunities: Investing in unlisted shares allows investors to access growth opportunities before they become available in the public market. This early access can provide a competitive advantage and potentially result in higher returns.

Diversification: Including unlisted shares in your investment portfolio can enhance diversification. Unlisted shares have a low correlation with traditional asset classes, such as stocks and bonds, which can help reduce overall portfolio risk.

Long-Term Investment: Investing in unlisted shares requires a long-term perspective. These investments are best suited for investors who can withstand short-term volatility and are willing to hold their positions for an extended period.

How to Invest in Tata Capital Unlisted Shares

Investing in Tata Capital unlisted shares can be done through various channels. Here are some common methods:

Private Placement: Tata Capital may offer private placements to select investors. Private placements are offerings of securities that are not registered with the Securities and Exchange Board of India (SEBI). Investors can directly subscribe to these private placements to acquire Tata Capital unlisted shares.

Secondary Market Transactions: Investors can also explore the secondary market for Tata Capital unlisted shares. This involves buying shares from existing shareholders willing to sell their holdings. Platforms like Planify provide a marketplace for such transactions, connecting buyers and sellers of unlisted shares.

Before investing, it is advisable to consult with financial advisors or professionals who specialize in unlisted shares. They can provide guidance on the investment process, assess the risks involved, and help you make informed decisions.

Conclusion

Investing in Tata Capital unlisted shares can be a lucrative opportunity for investors seeking growth in their investment portfolio. With its strong brand reputation and association with the Tata Group, Tata Capital offers a promising avenue for long-term wealth creation.

However, it is essential to conduct thorough research, analyze the company's financial performance, and evaluate the risks before investing in unlisted shares. Seeking professional advice and diversifying your portfolio can further enhance your chances of success.

[lunamehta]

Want to Start Investing in  Bazar India Shares

If you are a beginner and you want to invest in the Bazar India shares then start investing in private equity it will provide you with a good return. Some stock recommendations by Planify in unlisted shares. Planify Unlisted shares Bazar India Shares Metropolitan Stock Exchange Tata Technologies Unlisted shares National Stock Exchange Tamilnad Mercantile Bank Pre IPO Frick India Unlisted Shares Fincare small finance bank Pre IPO To Buy and Sell Contact - +91-706556-0002 Planify Capital Limited

[loyallogic]

Kinds of Company

In this article, Parth Verma, from Symbiosis Law School, a first year student, talks about the plethora of types of companies that exist and certain legal aspects which are there in a company.

Introduction

This article has been written in the context of “The Companies Act, 2013”. Hence this article must be read in the light of The Companies Act, 2013. For downloading the said Act, click here.

According to Sec. 2 (20) of The Companies Act, 2013, a “company” means a company incorporated under The Companies Act, 2013 or under any previous company law.

The Indian Companies Act, 2013 has replaced the Indian Companies Act, 1956. The Companies Act, 2013 makes the provisions to govern all listed and unlisted companies in the country. The Companies Act 2013 implemented many new sections and repealed the relevant corresponding sections of the Companies Act 1956. This is a landmark legislation with far-reaching consequences on all companies incorporated in India.

It is needless to say that we have a multitude of companies of various kinds. From corporate companies to one person company, we have so many kinds of companies. Mainly these companies can be classified on the basis of size of the company, number of members, control, liability and manner of access to capital. This article shall be talking in-depth about all such, and various other kinds of companies too.

Classification of companies:

On the basis of size or number of members in a company:

Private Company:

According to section 2(68) of the Companies Act, 2013 (as amended in 2015), “private company��  is essentially defined as a company having a minimum paid-up share capital as may be prescribed, and which by its articles, restricts the right to transfer its shares. A private company must add the word “Private” in its name. It can have a maximum of 200 members.

Public Company

Section 2(71) of the Companies Act, 2013 (as amended in 2015), defines a “public company”. A public company must have a minimum of seven members and there is no restriction on the maximum number of members. A public company having limited liability must add the word “Limited” at the end of name. The shares of a public company are freely transferable.

One Person Company:

The Companies Act, 2013 also provides for a new type of business entity in the form of a company in which only one person makes the entire company. It is like a one man- army. Under section 2(62), One Person Company (OPC) means a company which has only one person as a member.

On the basis of control, we find the following two main types of companies:

Holding Company:

Such type of company directly or indirectly, via another company, either holds more than half of the equity share capital of another company or controls the composition of the Board of Directors of another company.

A company can become the holding company of another company in any of the following ways: 

by holding more than 50% of the issued equity capital of the company,

by holding more than 50% of the voting rights in the company,

by holding the right to appoint the majority of the directors of the company.

Subsidiary Company:

A company, which operates its business under the control of another (holding) company, is known as a subsidiary company. Examples are Tata Capital, a wholly-owned subsidiary of Tata Sons Limited.

Click Here

On the Basis of Ownership, companies can be divided into two categories:

Government Company:

“Government company”under Section 2(45) of the Companies Act, 2013 is essentially defined as, that company in which equal to or more than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments (more than one state’s government), or partly by the Central Government and partly by one or more State Governments, and includes the company, which is a subsidiary company of such a Government company.

A government company gives its annual reports which have to be tabled in both houses of the Parliament and state legislature, as per the nature of ownership.

Some examples of government company are National Thermal Power Corporation Limited (NTPC), Bharat Heavy Electricals Limited (BHEL), etc.

Non-Government Company:

All other companies, except the Government Companies, are known as Non-Government Companies. They do not possess the features of a government company as stated above.

Associate companies

The provisions of Section 2 (6) of the Companies Act, 2013 and the Rule 2 of Companies (Specification of definitions details) Rules, 2014, essentially explains (defines) “associate company” as;

For companies say X and Y, X in relation to Y, where y has a significant influence over X, but X is not a subsidiary of y and includes joint venture company. Here X is an associate company. Wherein;

The expression, “significant influence” means control of at least twenty percent of total voting power, or control of or participation in business decisions under an agreement.

The expression, “joint venture” means a joint agreement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

When a company under which some other company holds either 20% or more of share capital, then they shall be known as Associate Company.

If in case a company is formed by two separate companies and each such company holds 20% of the shareholding then the new company shall be known as Associate Company or Joint Venture Company. The Companies Act 2013 for the first time had introduced the concept of the Associate Company or Joint Venture Company in India through section 2(6). A company must have a direct shareholding of more than 20% and indirect one is not allowed.

For example, A holds 22% in B and B holds 30% in C. In this case, C company is an associate of B but not of A.

Kinds of Companies from Diganth Raj Sehgal

The Doctrine of Ultra Vires

Background: MoA of any company is the basic charter of that company. It is a binding document that narrates about the scope of that company, about which it’s written.

Ultra vires in literal sense is a Latin phrase, which means “beyond the powers”. In the legal sense, the “Doctrine of Ultra Vires” is a fundamental rule of the Company Law. It states that the affairs of a company has to be in accordance with the clauses mentioned in the Memorandum of Association and can’t contravene its provisions.

Therefore, any act or contract is said to be void and illegal if the company is doing the act, attempts to function beyond its powers, as prescribed by its MoA. So, it can be stated that for any contract or any act to not fall under this criteria, has to work under the MoA.

It is noteworthy that a company can’t be bound by means of an ultra vires contract.

Estoppel, acquiescence, lapse of time, delay, or ratification cannot make it ‘Intra Vires’ (an act done under proper authority, is intra vires).

An act being ultra vires the directors of a company, but intra vires the company itself, can be done if members of the company, pass a resolution to ratify it. Also, an act being ultra vires the AoA of a company, can be ratified by a special resolution at a general meeting.

The Disadvantage to this doctrine

This doctrine stops the company from changing its activities in a direction agreed by all members, which if done would be profitable to the company. This is because clauses of the MoA don’t allow the company to go in that direction.

If any Act done by the directors, on behalf of the company, contravenes the clauses of MoA, the MoA can be amended, by virtue of passing a resolution, pursuant to which the aforesaid Act will become intra vires, vis-a-vis MoA. This defeats the whole purpose of having such a Doctrine, as then any act can be done, no matter what, since the clauses of the MoA can be amended anytime in order to make any action legal.

Advantages of private company

 A private limited company enjoys the following advantages:

Ease of formation:

A private company can be formed merely by two persons. It can start its business just after incorporation and doesn’t have to wait for the certificate of com­mencement of business.

Greater flexibility:

There are comparatively lesser legal formalities which are to be performed by a private company as compared to the public company. It also enjoys special exemptions and privileges under the company law. Thus it can be concluded that there is a greater flexibility of operations in a private company.

Quick decisions:

In a private company, lesser number of people are to be consulted. The core people of the company who are to make decisions have a closer relationship (so to say) and thus a better mutual understanding hence, obtaining consent is usually not a problem therefore it makes the process of making decisions faster.

Secrecy:

A private company is not required to publish its accounts or file several docu­ments. Therefore, it is in a much better position than a public company when it comes to the maintenance of business secrets.

Continuity of policy:

Same core people (having close relations) continue to manage the affairs of a private company. Due to their close relations, the continuity of policy can be maintained, as there is a mutual trust and a low dispute- attitude.

Personal touch:

There is comparatively, a greater personal touch with employees and customers in a private company. There is also a comparatively greater incentive to work hard and for taking initiative in the manage­ment of business.

When private limited company becomes a public limited company

The private limited company is usually preferred by businessmen because of all the special privileges it enjoys. In private limited company, the capital is derived from close friends, relatives and known persons and not from the public. Therefore, the Companies Act, 1956 does not impose stringent rules and regulations on private limited companies when compared to Public limited companies. However, in certain circumstances, a private limited would become a public company.

They are:

Conversion by default

Conversion by operation of law

Conversion by choice or by option

Conversion by default

A private company:

Restricts the right to transfer shares,

Limits the maximum number of members to 50,

Prohibits inviting the public for subscription of shares or debentures.

Upon the violation of any of these terms, a private company would become a public Company by default.

Conversion by operation of law: Deemed Public Company

A private company is converted into a public company (by the operation of law):

When equal to or more than 25% of the paid-up share capital of a private company is held by one or more public companies,

When the average of total turnover of a private company is more than or equal to Rs.25 crores for three consecutive years,

When the private company holds more than 25% of the paid-up share capital of a public company.

When the private company invites, accepts or renews the deposits from the public.

Conversion by Choice or Option

If desired, then out of its own free will, a private company, can get itself converted into a public company. Generally, when private companies want to expand and therefore require more capital resources, the private companies  by themselves can convert themselves into public companies.

By becoming public companies, they (the private companies) can issue shares or debentures to the public and hence can get the amount of capital required. In India, many organizations which have commenced their operations as private companies, got themselves converted into public limited companies in order to expand and diversify.

Any private company which desires to get converted into a public company has to make the necessary changes in its  Articles and follow the below mentioned steps:

It should call for a general meeting and therein pass a special resolution by following proper protocols, hence alter the Articles.

The copy of the resolution along with amended Articles is to be then filed with the registrar within 30 days of passing the special resolution.

The number of members should be increased to 7.

The company has to apply to the registrar, in order to obtain a fresh certificate of incorporation wherein the word ‘Private’ is deleted from its name.

Conversion of public into a private company

Certain pre-requisites for filing an application for conversion from Public to Private Company :

Limit of Shareholders:

Although no limit for maximum strength of Shareholders in a Public Limited Company is there, however, post-conversion into Private Limited Company, it becomes mandatory to ensure that the maximum strength doesn’t cross the threshold of 200 shareholders.

Non-invitation of funds from Public:

Post conversion, no funds/capital should be raised from the  general public, either through the issuance of prospectus or any other means.

Non- listing of Company:

Prior to conversion, it must be assured that the company was never listed on Stock Exchange and if it all it was listed, all necessary procedures were complied for delisting of the shares in accordance with the applicable e- laws, as prescribed by the Securities Exchange Board of India (“SEBI”).

Procedure for conversion of public limited company to private limited company:

Steps for Conversion

Step 1

The first step is to hold a meeting of the Board of Directors (“BOD”) of the Company for the following purposes:

For considering the reason of conversion and suitable alterations in the Memorandum of Association (“MOA”) and Articles of Associations (“AOA”) of the Company reflecting the changes arising due to conversion;

To provide authorization for filing the necessary application for conversion with the adjudicating authority.

Step 2

Next step essentially is to hold a General Meeting of Shareholders of the Company for obtaining their consent to the said conversion and the necessary alterations in the MOA and AOA, by means of passing a special resolution.

Step 3

To fill the  prescribed e-form with Registrar of Companies (“ROC”) within 30 days of the passing of the aforesaid special resolution.

Step 4

To file an application for conversion to the adjudicating authority within 60 days from the date of passing special resolution in the General Meeting of Shareholders. However, before proceeding with filing of the application, the company must at least 21 days before the date of filing application with RD, advertise notice of conversion both English and other regional newspaper widely circulating in the state wherein the Registered office of the Company is situated.

Step 5

The Company must serve individual notice of conversion to each of its Creditors by registered post. Further, the Company must also serve individual notice of the conversion to both; the RD and ROC or any other authority which regulates the Company by registered post.

Step 6

Post the necessary publications and serving of notice of conversion, the company shall within 60 days file the Application for conversion with Regional Directorate (“RD”) in the prescribed e- form, from the date of passing special resolution along with the following documents:

The Draft copy of altered MoA and AoA of the Company and copy of the Minutes of General Meeting of Shareholders wherein the said conversion was approved by the Shareholders;

Copy of board resolution giving the authorization to file such an application with RD;

Prescribed declarations from Directors/KMP (key management personnel) of the Company with respect to restriction of total number of members to 200, non-acceptance of deposits in violation of the law and various other matters as elucidated under the relevant section of the Act;

list of creditors drawn not older than 30 days from the date of filing Application supported by an Affidavit which duly verifies the said list.

Step 7

In case no objections are received, then the RD shall pass an order duly approving the application within 30 days from the date when the application was received.

Step 8

On the receipt of order, the same is to be filed with the ROC in the prescribed e-form within 15 days from the date of order. ROC will then close the former registration and issue a fresh certificate of incorporation, thereby evidencing the conversion from Public Limited Company to Private Limited Company.

Step 9

The Company has to now apply for conversion in the database of all tax authorities i.e. PAN/TAN, and all other registrations. The company has to ensure that the letterheads, invoices, name plate, and/or any other correspondences are amended/altered and undertake the necessary updation of bank records.

Foreign companies

A foreign company, as per The Companies Act, 2013 means a company or a corporate body which is incorporated outside India which either has a place of business in India whether by itself or through an agent, either physically or through an electronic mode and conduct any business activity in India in any other manner.”

Accounts of foreign company

Section 381 of The Companies Act, 2013 states the rules or instructions about how a foreign company’s accounts are to be handled. It states that:

Every foreign company must, in every calendar year;

(a) make a balance sheet and profit and loss account in such a form which contains all such particulars and includes or has annexed or attached thereto such documents as may be prescribed,

(b) must deliver a copy of those documents to the Registrar, provided that the Central Government may, by notification, direct that, in case of any foreign company or class of foreign companies, the requirements of above- pointer “a” wouldn’t apply, or would apply subject to such exceptions and modifications as may be specified in that notification.

If any document as is mentioned in Section 381(1) of The Companies Act, 2013 is not in the English language, there shall be annexed to it, a certified translation thereof in the English language.

Every foreign company shall send to the Registrar along with the documents required to be delivered to him under sub-section (1), a copy of a list in the prescribed form of all places of business established by the company in India as at the date w.r.t. reference to which the balance sheet referred to in sub-section (1) is made out.

 Prospectus of company

Types of Prospectus under the Companies Act, 2013

There are mainly four types of a prospectus, as discussed in The Companies Act, 2013, which are as under:

Abridged Prospectus: Mentioned in Section 2(1) of the Act,

Deemed Prospectus: Mentioned in Section 25(1) of the Act,

Shelf Prospectus: Mentioned in Section 31 of the Act

Red Herring Prospectus: Mentioned in Section 32 of the Act.

Matters which must be stated in a prospectus

We find the matters which must be stated in a company’s prospectus, under the Companies Act, 2013, under which;

Every prospectus which is issued by or on behalf of a company must be dated and that date would, unless the contrary is proved, be regarded as the date of its publication.

It shall state such information and set out such reports on financial information as may be specified by the Securities and Exchange Board of India in consultation with the Central Government.

Every director or proposed director his agent must sign a copy of the prospectus and that copy of prospectus must be delivered to the registrar on or before the date of publication.

It is important that every prospectus that is issued to the public should mention that a copy of the prospectus along with the specified documents have been filed with the registrar.

If the prospectus has a statement which is made by an expert, then that expert must not be engaged, interested in the formation or promotion or in the management of the company. A written consent of the expert should also be obtained before issuing the prospectus with the statement.

It is important to note that a prospectus must not be issued more than 90 days after the date on which a copy of that prospectus is delivered for registration. If a prospectus is issued it will be deemed to be a prospectus whose copy has not been delivered to the registrar.

A prospectus should make a declaration pertaining to the compliance of the provisions of the Act. The declaration should also state that nothing contained in the prospectus is in contravention of the provisions of the Companies Act, Securities Contracts (Regulation) Act, 1956 and Securities Exchange Board of India Act, 1992.

A company can vary the terms of a contract, which are referred to in the prospectus or objects for which the prospectus was issued, provided the approval of an authority which is given by the company in general meeting by way of special resolution is obtained. For further reference, click here.

Offer of Indian Depository Receipts (Section- 390):

The Central government makes the rules for: 

The offer of the Indian Depository Receipt;

The requirement of disclosure in prospectus or letter of offer issued in connection with Indian Depository Receipt;

The manner in which Indian Depository Receipt shall be dealt with in a depository mode and by custodian and underwriters; and

The manner of sale, transfer or transmission of Indian Depository Receipts,

by a company either incorporated, or which is to be incorporated outside India, whether the company has or has not been established or, will or will not establish any place of business in India.

Government Companies

A “Government company” is defined under Section 2(45) of the Companies Act, 2013 as “any company in which not less than 51% of the paid-up share capital is held by the Central Government, or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company”.

Government Company is that company or an organization in which at least 51% of the paid-up share capital is held by the central or state government or partly by both central and state government. Examples for government companies are Steel Authority of India Limited, Bharat Heavy Electricals Limited, etc.

Features of a Government Company

There are several features of a government company which are helpful in increasing the potential and efficiency of the company to a great extent.

Separate legal entity

Perhaps one of the most important features of a government company is that a government company is a separate legal entity, which helps a government company in dealing with many legal aspects. One main legal aspect is the non-dependence on any other body, in legal terms as it is a separate entity in itself, this makes the system more fluent and better efficient.

Incorporation under The Companies Act 1956 & 2013

A government company is incorporated under “The Companies Act, 1956 & 2013”. This gives government company boundaries to work under and hence it profits the end-users of the services, as their are lesser chances of fraud or improper working. Also, the employees get better working conditions and are not exploited, as they have Law as their back- up, to protect them.

Management as per provisions of The Companies Act

Management, in a government company, is governed and regulated by the provisions of The Companies Act. This makes sure that employees are not exploited and overburdened. This further ensures the smooth functioning of the company.

Appointment of employees

The appointment of employees is governed by MoA and AoA (Memorandum of Association and Articles of Association). This ensures a fair appointment on the basis of meritocracy and people don’t misuse their contacts and enter government company.

Fund Raising

A government company gets its funding from the government and other private shareholdings. The company can also raise money from the capital market. Hence, a government company has several fund raising mechanisms, which helps it to be financially less burdened as finances in a government company can be raised with a lot of ways.

Limitations of a Government Company

Government company usually has to face a lot of government interference and has the involvement of too many government officials. Hence, it has to go through lots of checks in order to make a stable decision. Governmental decisions are usually late as they follow an elaborate procedure before actual implementation.

These companies evade all constitutional responsibilities of not answering to the parliament because these companies are financed by the government.

The efficient operations of these companies are hampered, as the board of such companies comprises mainly of politicians and civil servants, who have special emphasis and interest in pleasing their political party’s co-workers or owners and are less concentrated on growth and development of the company. They (politicians and civil servants) essentially are focussed on their promotions which essentially is in the hands of their seniors, hence they keep on pleasing their seniors. In order to please their seniors, they usually make wrong decisions too.

Holding company and subsidiary company

Section 2 (46) of The Companies Act, 2013 defines holding company as, “Holding company, in relation to one or more other companies, means a company of which such companies are subsidiary companies”.

According to Section 2 (87) of The Companies Act, 2013;

“Subsidiary company or subsidiary in with respect to any other company (that is to say the holding company), means a company in which, either the holding company controls the composition of the Board of Directors or exercises/controls more than half of the total share capital either on its own or together with one or more than one of its subsidiary companies:

Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

Further Explanation

The composition of a company‘s Board of Directors would be deemed to be controlled by another company if that other company by the exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors;

The expression “company” includes any body corporate;

”Layer” in relation to a holding company means its subsidiary or subsidiaries”

What Is a Subsidiary company ?

A subsidiary company is that company which is both owned and controlled by another company. The owning company is called a parent company or a holding company.

The parent of a subsidiary company may be the sole owner or one of several owners, of the company. If a parent company or holding company owns the full other company, that company is called a “wholly-owned subsidiary.”

There is a difference between a parent company and a holding company, in terms of operations. A holding company has no operations of its own and it owns a controlling share of stock and holds assets of subsidiary companies.

A parent company is simply a company that runs a business and owns another business — the subsidiary. The parent company has its own operations , and the subsidiary may carry on a related business. For example, the subsidiary might own and manage property assets of the parent company, to separate the liability from those assets. 

Holding company and subsidiary has certain common grounds on which they share relationship, such as;

Consolidated Balance Sheet

It is the accounting relationship between the holding company and the subsidiary company, which shows the combined assets and liabilities of both companies. The consolidated balance sheet shows the financial status of the entire business enterprise, which includes the parent company and all of its subsidiaries.

Management and Control

The autonomy of a subsidiary company may seem to be merely theoretical. Besides the majority stockholding, the holding company also controls important business operations of a subsidiary. For example, the holding company takes the charge of preparing the by-laws which governs the subsidiary, especially for matters pertaining to hiring and appointing the senior management employees.

Responsibility

The subsidiary and holding companies are two separate legal entities; any of them may be sued by other companies or any of these companies may sue others. However, the parent company has the responsibility of acting in the best interest of the subsidiary by making the most favourable decisions which affect the management and finances of the subsidiary company. The holding company may be found guilty in a court, for breach of fiduciary duty, if it does not fulfil its responsibilities. The holding company and the subsidiary company are perceived to be one and the same if the holding company fails to fulfil its fiduciary duties to the subsidiary company.

Investment in holding company

A subsidiary company can’t hold shares in its holding company. Any company can, neither by itself nor through its nominees, hold any shares in its holding company and no holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment or transfer of shares of a holding company to its subsidiary company would be void:

Provided that nothing in this subsection shall apply to a case;

(a) where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; or

(b) where the subsidiary company holds such shares as a trustee; or

(c) where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company:

Illegal associations

Illegal associations are taken care of by section 464 of The Companies Act, 2013. This section states that no company, association or partnership consisting of more than 50 people be formed in order to carry on any business for gain unless it is registered under The Indian Companies Act. It may also be registered under some other Indian law too. For example, a limited liability partnership, which is formed for carrying on business for gain by professionals, registered under the Limited Liability Partnership Act, 2008 is a legal body corporate. There is no limit to the maximum number of members in such a limited liability partnership. The objective of such associations must be to carry on a business for gain. Section 464 doesn’t apply to Non- Profit- Organizations or Charitable Associations because the objective is not earning profit.

Rules for counting the number of people

A person, either natural or artificial (an artificial person is an entity created by law and given certain legal rights and duties of a human being. It can be real or imaginary and for the purpose of legal reasoning, is treated more or less as a human being. For example, corporation, company, etc.), would be treated as one person. Therefore, a company is treated as a single person.

Similarly, a joint Hindu Family managed by Karta is also treated as a single person.

If two or more joint hindu families form an association, all the adult members of the family would be taken into consideration while counting the number of members.

It is also important to note that any partnership firm is not a separate legal entity. All the partners would be treated as different persons.

If two or more persons hold a share jointly, they would be treated as one single person.

Consequences of an Illegal Association;

No Legal Existence:

Any Illegal association cannot enter into binding contracts. Neither the association nor the members can file a suit against a third-party who has contracted with it. One member cannot sue other member in respect of any matter connected with the association. Further, a member cannot file a suit against the association.

Unlimited Personal Liability of the Members:

The liability of the members is unlimited. Every member of such an association is personally liable for all the liabilities incurred in the business. The third party can take action against the members. If the number of members in an illegal association comes within the statutory limit, the illegal association would not become legal merely by virtue of such reduction.

Case Law

In Badri Prasad v. Nagarmal, the Supreme Court held that in the case of an illegal association no relief will be granted to its associates or members as the contractual relationship on which it is founded is illegal (ab – initio), but subscribers will be entitled to sue for recovery of their subscriptions.

Conclusion

We, hence, saw different kinds of companies and their functions. We saw that each one is important and is one of a kind. Every company is important for Global development. We can hereby conclude that The Companies Act, 2013 is extremely important as it gives a boundary to companies because of which their legal scope remains defined. This defined scope, ultimately helps the end-users as the companies have a legal framework under which they are bound to work. Hence, these companies remain under a certain boundary wall and hence they don’t misuse their power. Thus it helps in many ways like the employees get protected in terms of their labour rights, the end-users get good quality products and the society as a whole face comparatively less company-related fraudulent issues because the law has got it all in its hands. The companies Act of 2013, replacing The Company law of 1956, has given wonderful amendments which have improved the “quality of this law” to a great level.

Companies Act is required because it provides for class action suits for shareholders which means that The Companies Act, 2013 narrates concept of class actions suits in order to make shareholders and other stakeholders, more informed and knowledgeable about their rights.

The said Act provides more power to shareholders. It stipulates appointment of at least one woman Director on the Board (for certain class of companies), hence it improves women’s employment in the corporate sector. It stipulates certain class of companies for spending a certain amount of money every year on activities or initiatives which reflects corporate social responsibility. It has introduced the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal in order to replace the company Law Board for industrial and financial reconstruction. Such tribunals relieve the courts of their burden and simultaneously provides specialised justice. It permits cross border mergers, in both ways; a foreign company merging with an Indian Company and vice versa, but with the prior permission of RBI.No independent director shall hold office for more than two consecutive terms of five years.

It states that all the listed companies should have at least one-third of the board as independent directors. Such other class or classes of public companies as prescribed by the central government shall also be required to appoint independent directors.

It states that at least seven days’ notice to call a board meeting must be given. The notice may be sent by electronic means to every director at the address under which he is registered in the company. Another beauty of this The Companies Act, 2013 is that it doesn’t restrict an Indian company from indemnifying (compensate for harm or loss) its directors and officers like The Companies Act, 1956. It also provides for the rotation of auditors and audit firms in case of publicly traded companies. It prohibits auditors from performing non-audit services to the company where they are an auditor to ensure independence and accountability of auditor. It makes the entire process of both rehabilitation and liquidation of the companies in the financial crisis, time-bound.

Bibliography

Types of Companies:

On the basis of size or number of members in a company- 

http://www.economicsdiscussion.net/company/types-of-companies/31784

Associate company-

https://www.caclubindia.com/articles/an-overview-on-associate-company-27387.asp

https://www.setindiabiz.com/learning/associate-company/

Ultra Vires-

https://www.toppr.com/guides/business-laws/companies-act-2013/doctrine-of-ultra-vires/

Circumstances under which a private limited company becomes a public limited company-

https://accountlearning.com/under-what-circumstances-a-pvt-company-be-converted-to-public-company

Conversion by Operation of Law or Private Company to be Deemed Public Company:

https://www.businessmanagementideas.com/organisation/types/conversion-of-a-private-company-into-a-public-company/8936

http://www.mca.gov.in/SearchableActs/Section381.htm

Prospectus of a company- 

https://blog.ipleaders.in/information-prospectus-company/

Government Companies-

https://www.toppr.com/guides/business-studies/private-public-and-global-enterprises/government-company/

http://www.arthapedia.in/index.php?title=Government_Company

Holding company and subsidiary company-

https://smallbusiness.chron.com/relationship-between-holding-subsidiary-company-14683.html

https://blog.ipleaders.in/difference-between-holding-and-subsidiary-company/

Illegal Association-

https://www.owlgen.com/question/write-a-note-on-illegal-association

Salient Features of Indian Company Act, 2013-

https://www.clearias.com/indian-companies-act-2013-salient-features/

Referred books:

Company Law

Author: Avtar Singh

Publication: Easter Book Company

15th Edition

The Companies Act, 2013 (Bare Act)

Publication: Universal Law Publication

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[legalseat]

SEBI Consults on Shares with Differential Voting Rights

Dual class share (DCS) structures are becoming more popular around the world. While they have been existent in several companies in the United States (US) for some decades now, they were accompanied sometimes by a sense of unease among investors and regulators due to the disparity they create between economic rights (level of ownership) of shareholders and their control rights (voting). Since the turn of the century, DCS structures have received further rejuvenation as companies such as Google, Facebook and Alibaba, which made mega listings, used versions of the DCS structure. More recently, jurisdictions such as Hong Kong and Singapore, which were hitherto steadfast in their resistance to the use of DCS, permitted listings with these structures on their stock exchanges.

In India, DCS, commonly referred to as shares with differential voting rights (or DVRs), made their appearance on the scene through the Companies (Amendment) Act, 2000. The legislation also imposed conditions upon which companies may issue DVRs. The broad concept and conditionalities associated with DVRs have also found their place in the Companies Act, 2013. While some companies such as Tata Motors began listing DVRs on the stock exchange, SEBI issued a pronouncement in 2009 that prohibited companies from issuing shares with “superior” rights as to voting or dividend. This effectively acted as a curb against DVR structures, and few companies resorted to this mechanism in the aftermath of SEBI’s decision.

Late last year, however, indications emerged that the Securities and Exchange Board of India (SEBI) was considering a revival of DVRs in the Indian context. This week, SEBI issued a Consultation Paper on Issuance of Shares with Differential Voting Rights, by which it seeks to bring about a reintroduction of DVRs for Indian companies. In this post, I discuss some of the key proposals in the Consultation Paper.[1]

DVR Structures

SEBI’s Consultation Paper begins with an analysis of the evolution of DVRs more broadly and a consideration of a benefits and disadvantages of the structure both for issuers as well as investors. It then scans the legal regime in India governing DVRs, including the Companies Act and various SEBI regulations, which is followed by an comparative overview of the legal regimes in jurisdictions such as the US, Canada, Hong Kong and Singapore. The Consultation Paper also notes that some countries like the United Kingdom and Australia do not permit DVRs.

Upon a consideration of the various issues, SEBI proposes to allow Indian companies to adopt DVR structures subject to certain conditions. Here, two routes are available: first, for companies that are already listed on the stock exchanges and wish to list DVRs (secondary listings) and, second, for companies that are unlisted but wish to list on the stock exchanges with DVR structures (primary listings).

The Consultation Paper reflects an element of uniqueness in the manner in which SEBI propose to design DVRs for India. Universally, these structures operate to create different classes of ordinary shares, each of which may carry different rights regarding voting and dividend. However, SEBI’s foray into the field in 2009 introduced the concept of “superior” rights which, as a corollary, would compel one to contemplate inferior rights. The Consultation Paper develops this concept further. It assumes that the default position or benchmark for consideration of superiority or inferiority, as the case may be, regarding voting rights is the “one-share one-vote” rule that all ordinary shares are subject to. If a shareholder were to receive voting rights which are in excess of one vote per share, that would be a share with superior voting rights (or SR Share). Conversely, if the shareholder were to receive fractional voting rights of less than one vote per ordinary share, then that would be a share with fractional voting rights (or FR Share). This distinction is crucial for the remainder of the analysis because the scheme of the Consultation Paper seeks to make a bifurcation by which FR Shares would be permitted for secondary listings and SR shares for primary ones.

Types of Listings

A company whose shares have been listed on the stock exchange for at least a year may issue FR shares. These shares are typically issued to outside investors who are willing to receive control rights in the company. While the maximum number of shares that can be issued is governed by the Companies Act, SEBI proposes that the voting rights on FR shares cannot exceed 1:10, i.e., one vote for every 10 shares. Of course, the company may decide to pay higher dividend on FR shares, which operates effectively as quid pro quo for lower control rights enjoyed by the investors holding FR shares.

On the other hand, only unlisted companies may issue SR shares and that too only to promoters. This is to ensure that promoters can maintain an additional level of control in excess of their economic rights before the company undertakes an initial public offering (IPO) to list its shares. Once the company it listed, it can no longer issue SR shares.

SR shares are accompanied by other conditions. Given that only promoters can hold them, it prevents them from creating any form of encumbrance over those shares. Similarly, SR shares are permitted to a perpetual lock-in after the IPO. SR shares shall constitute a maximum of 10:1, whereby they cannot exceed 10 votes for every share held by the shareholder.

Understandably, it is not desirable to grant superior rights on SR shares on every matter that is placed for decision before the shareholders. On some matters, all shareholders (including those holding SR shares) must be subject to the default rule of one vote per share. These are crucial matters that are fundamental to the existence and business of the company. In this regard, the Consultation Paper provides for certain “coat-tail provisions” whereby SR shares will be treated on par with other ordinary shares and will have equal voting rights along with ordinary shareholders on matters such as appointment and removal of independent director or auditor, change of control, entering into a contract with a person holding SR shares, alteration to the constitution documents, voluntary winding up of the company and a few others.

Interestingly, SR shares are subject to a sunset clause whereby they would automatically convert into ordinary shares at the end of five years from the date of listing where their voting rights become on par with other ordinary shares. However, the life of the SR shares may be extended by a further five years if the same is approved by way of a special resolution whereby all shareholders vote on a one-share one-vote basis. Promoters, of course, can accelerate the conversion to ordinary shares at their option. Such sunset provisions are a recognition that DVRs are required only at the initial stages in the lifecycle of a company where they perform the role of enabling the promoters to assume business risks without ceding control. Once that purpose runs its life, there is no longer a continued rationale for DVRs, and hence they must come to an end. This is also important from a corporate governance perspective as it prevents the promoters from exercising control by merely holding relatively small number of shares, and that too for an indefinite period of time.

Finally, SEBI’s Consultation Paper suggests amendments to the Companies Act and various SEBI Regulations such as those relating to capital issuances, continuous listing requirements, buyback and takeovers, which reflect the impact of DVRs on these legislative and regulatory provisions.

Conclusion

Overall, SEBI’s approach towards operationalizing DVRs is a welcome one. This is consistent with the resurgence of this instrument in other parts of the world as a means to allow companies, especially those in the “new economy”, to list on the stock exchanges. It allows founders of such companies to retain control, thereby enabling them to take business decisions without short term investor pressures. The sunset provisions, however, ensure that the DVR structure is finite and will be put to rest once the purpose is served, which is determined to be the lapse of five years from the date of listing.

One missing piece in SEBI’s design for DVRs is that it does not requirement companies that issue FR shares or SR shares to observe higher standards of corporate governance. This is a precondition in some of the other leading jurisdictions that have permitted such structures, given the greater concerns regarding the ability of promoters holding higher voting rights to adversely affect the interests of minority shareholders. If certain checks and balances are not introduced, DVR structures carry the hazard of precipitating governance implosions if issuers and investors seeks to misuse the instrument. A backlash against such episodes will affect genuine issuers of DVRs as well.

[1] I have also previously analysed some of the broader issues on DVRs in this column on BloombergQuint.

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India’s Market Leaders: My 10 Key Observations

This issue of Outside the Box newsletter is authored by Jatin Khemani. Jatin shares his key observations from analyzing market leaders across industries in India.

One common advice I find veteran investors passing on to next-generation investors is to look for companies dominating their industry and enjoying entry barriers ensuring their profit pool share is protected.

Now, ideally, we may think that the top 3-4 players by market share in any category should be qualified as ‘dominant players’ even if their respective market share is in single digit. However, for the purpose of this research, I have restricted my analysis to only those companies that enjoy at least a 35% share in their respective categories.

You must be thinking that it is quite a stringent filter and there would only be a handful of companies that will make it to the list – after all, we are a free economy with enormous capital chasing opportunities on one side and ever-tightening regulations in the form of competition commission etc., on the other.

But you would be surprised to learn that having spent just a couple of days and recollecting about all the companies I have studied or read about over the last decade, I could actually pin down a list of 60 listed companies that enjoy a market share of 35% or higher.

I am sure I must have missed out on many other listed companies and so the list may get longer and even more if one were to include a few unlisted businesses like NSE, a virtual monopoly, or Amul, which boasts of a 40% share of the cheese and other value-add dairy products market.

You would see the complete list at the end of this article. But before that, let me share the top 10 observations while analyzing this distinct sub-set of dominant businesses –

India’s Market Leaders: 10 Key Observations

18 companies have sales of less than Rs 1,000 crore (Cr) despite having a lion’s share of the addressable market. This implies that these categories are small in size with limited profit pool. For companies operating in such a tiny pool but with such high market share, it is almost impossible to grow any faster than the category growth. This implies, at best, they would grow in line with the industry. And if we want to see them growing revenues at 15-20% CAGR over the next several years, we must be able to either make a case for similar growth at the industry level or they strategically increasing their addressable market. For instance, La Opala which operates in the opal ware segment has an addressable market of only Rs 500 Cr. and it has already garnered a 50% share. From here on, the category growth is extremely important to support the company’s growth. Further, if at all, the category saturates at these levels, the competitive intensity among incumbents could only increase and in fact dent margins while peers chase growth or attempt to protect market share, which is a double whammy – no topline growth with margin compression. To make it worse, markets often de-rate such stocks and investors end up losing a significant chunk of capital. Same applies for Triton Valves – annual revenues of merely Rs 227 Cr. with a market share of 65%. In the case of Zydus Wellness, whose brand Sugar-Free has a 94% market share in sugar substitute category, the company is practically the category itself but the annual revenue is only Rs 500 Cr.

Second key observation is that most of these companies are pioneers – Nestle created the instant noodle category in India with its Maggie noodles, and so did Colgate in a country where otherwise everybody was using ‘daatun’ (neem sticks). Marico in the 1980s and 90s created premium edible oils category with its Saffola brand which is now being leveraged to seed newer categories like healthy breakfast (oats). To seed a new category is an extremely long and painstaking process (even loss-making initially) with little odds of success. But when successful, it is very rewarding. Pidilite Industries’ brands have been so strong for generations now, that they literally define the category – users know the product (adhesives) by the brand name (Fevicol, Fevistik, Fevikwik, Dr. Fixit), thanks to those memorable advertisements backed by the widest possible distribution. Asian Paints pioneered the involvement of households in choosing decorative paints while slowly eliminating the painters from being the decision maker. While they have been the market leader since the 1960s, the tinting machines (paint dispensers) which they installed at stores in the 1990s was perhaps the inflection point in getting dealer loyalty as well as offering far more variety to consumers.

Average age of these 60 companies is about 60 years. Moreover, 18 businesses have been in existence from the pre-independence era. The oldest of the lot is United Spirits (McDowell’s) which is 193 years old, followed by United Breweries (Kingfisher) which is 162 years old. This shows that it takes an enormous amount of time for any business to scale up and attain leadership and that there is simply no shortcut. There are only three businesses that came into existence in the 21st century – MCX (2002), IEX (2006) and Interglobe Aviation (2006). The first two are exchanges which pioneered their respective segments creating virtual monopolies given winner-takes-all characteristic of the business. The unusual name, however, is Interglobe, an airline (Indigo) which came into existence just 13 years ago and today four out of 10 domestic passengers fly Indigo – this might be the only airline globally to have achieved this kind of market share and that too in such a short span of time. It surely did benefit from big incumbents going bust but it also had the ability to dream big and make sizable bets which were followed by remarkable execution.

Barring a few like HUL and M&M (acquired Swaraj), most of these businesses have grown organically. It is no wonder that given the poor base rate of successful M&As, that the leaders shown in the list have earned and sustained this position through decades and centuries of effort rather than buying market share.

Few of the segments are winner-takes-all kind of market: MCX (Commodity Exchange), IEX (Power Exchange) and NSE (Stock Exchange) are virtual monopolies given in this business, liquidity attracts liquidity which becomes a virtuous cycle. Some of the auto incumbents also enjoy network effects and scale advantage like Maruti (4W), Bajaj (3W) and Hero (2W) from an ecosystem of ancillaries, sales dealership, service centers and availability of spares – all culminating into trust and reliability.

There are four companies from so called ‘sin’ sectors (no surprise here) – tobacco (ITC) and liquor (United Spirits, United Breweries and Radico Khaitan) where regulations make it extremely difficult for new entrants to make inroads letting incumbents enjoy high market share from customers who are addicted to their brand.

In cases like Wabco and Bosch, it is the perhaps the advanced, and in some cases even patented technology which has led to such high market share.

For all the companies the market shares mentioned are domestic, except Vinati Organics. It is one of the lowest-cost producer of ATBS (a highly versatile molecule used to make polymers) in the world which is why it enjoyed 40% market share globally until recently, a rare feat for any Indian manufacturing company. And then in 2018, it got lucky – Lubrizol, a key competitor with 25% global share decided to exit the industry. This has helped the company increase its market share further. Two more chemical companies make it to the list – Oriental Carbon and NOCIL, both make products that are largely used in tire manufacturing.

The only PSU to appear in this list, Coal India, is a monopoly created by the Indian government as ownership of all of the country’s coal mines (India has world’s largest coal reserves) are with this entity. Also in some cases, it is very difficult to fathom the true reason behind market dominance. Take for instance Jamna Auto or Setco. Why would they command 70-80% market share in an industry with little to no entry barriers? I think it could simply be a favorable competitive scenario; a lack of interest from any major group to enter and the inability of smaller/unorganized guys to compete, may be due to the relatively small size of opportunity or the associated cyclicality as both supply to Commercial Vehicle OEMs like Tata and Ashok Leyland.

Over 75% of these businesses are consumer-facing entities, enjoying some sort of brand loyalty and/or distribution advantage. Further, barring six businesses which are service and retail-oriented, rest all of them (90%) are into manufacturing. Lastly, there is no point of having only sales leadership if that doesn’t translate into above-average return on capital employed (ROCE) for the shareholders. So how has this set of companies fared on that metric? To avoid any extremes/one-offs instead of FY18, I pulled FY16-18 average ROCE for each of these businesses. The 3-year average ROCE for the entire set of these companies is an impressive 33.6%.

Overall, I believe, it is an interesting set of companies (click here to download the list) that should find a place on your watch list, which must be carefully watched for any investment opportunities that their stocks may provide going forward.

Note: Annual Revenues are segmental. Where segmental data is not available, consolidated revenues are shown with (C) to indicate the same. Market shares are estimated and sourced from annual reports, industry bodies, credit rating agencies and/or our research. Market share is based on the size of the organized market only.

Disclaimer: This is not a recommendation to Buy/Sell stocks. Rather, the sole purpose is education and information. The author and his colleagues and clients may have investments in stocks discussed.   About the Author: Jatin is the founder and CEO of Stalwart Advisors, a SEBI registered investment advisor.

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