Monday, July 2, 2018
Thursday, July 13, 2017
Competition Commission vs Small Medium Enterprises
The Competition Commission of India and Small
and Medium Enterprises (SMEs)
The
Small and Medium Enterprises (SMEs) have been globally recognized as a priority
sector for growth and development and India is not an exception to this
generality. In India, the Micro, Small and Medium Enterprises (MSMEs)
contribute over 45 percent of the country s industrial production and around 40
percent of total exports. The SMEs increase competition, contribute
comprehensively by the GDP ensure varied supply of goods and services and give
customers wider and customized choice. Thus MSMEs unhesitatingly play a vital
role and in fact they are the backbone of the Indian economy and prudence
suggests that the backbone not only be protected but strengthened too on a
perennial basis.
Small and Medium Enterprises (SMEs) needs to
know
What
SMEs needs to know is that the law is applicable to them as well. The focus of
law is not on “size of the enterprise” which could be in terms of assets
/turnover or investment in plant and machinery etc. but on the effects of
business practices on competition in the relevant market in India. However, it
is unlikely that SMEs would unwittingly fall foul of the law. On individual
basis, since SMEs lack market power, their actions are not likely to have
appreciable adverse effects on competition in India. Moreover, the exclusions
and exemptions from the applicability of law are likely to dilute the
effectiveness of competition law which is increasingly believed to be benign
for consumers, enterprises as well as economies.
Power of Small and Medium Enterprises (SMEs)
A
SMEs or an Association can file information in the prescribed form with the CCI
and request for enquiry against any delinquent enterprises in case the latter
is allegedly indulging in anti-competitive practices/ agreement or abuse the
dominant position. SMEs can also file objection with the CCI in response to
public notice or otherwise against any proposed acquisition, merger or
amalgamation as sometimes a survival of SME is threatened. Thus, there is an
obligation on the CCI to listen to the aggrieved SMEs.
Competition Commission of India and
Competition Appellate Tribunal (COMPAT)
The
Amendment made to the Act in 2007, casts an obligation upon the Central
Government to establish Competition Appellate Tribunal (COMPAT), which shall be
a three member quasi –judicial body to
•Hear
and dispose of appeals against any direction issued or decision made or the
Order passed by the Commission;
•Adjudicate
on any claim for compensation that may arise from the findings of the
Commission or the Orders of the Appellate Tribunal in an appeal against any
finding of the Commission or under section 42A or sub-section (2) of section
53Q of this Act, and pass Orders for the recovery of compensation under section
53N of the Act.
The
Competition Appellate Tribunal will be guided by principle of natural justice
and it can regulate its own procedure. COMPAT can dismiss a petition for
default or decide it ex parte and such order of dismissal or ex parte order can
be set aside. The proceedings before COMPAT are deemed to be judicial proceedings.
If Appellate Tribunal cannot execute its order, it will be sent to Court within
whose local jurisdiction the registered office of the company or place of
residence of the person is situated. Order of the C OMPAT will be executed as a
degree of court. COMPAT can directly send the order to a civil court for
execution. The order will be executed by that Court as if it is a decree of
that Court.
Procedure for Investigation of Combination by
the Competition Commission of India
On
coming to a prima facie opinion that the combination is likely to cause or has
caused appreciable adverse effect on competition within the relevant market,
the commission shall issue a show cause notice to parties to the combination
calling upon them to show within 30 days of receipt as to why investigation of
such combination should not be conducted. After the receipt of the response
from the parties, the commission may call for a report from the DG within the
time as may be specified.
Orders that CCI can pass in respect of
Combinations
The
commission is empowered to pass the following orders after the due process:
a) Approve
the combination where no appreciable adverse effect on competition in the
relevant market in India;
b) Direct
that combination shall not take effect where the Commission is opinion that
there is or is likely to have appreciable adverse effect on competition;
c) Propose
modification in the combination where the commission is of the appreciable
adverse effect cause or likely to be caused by the combination can be
eliminated by the modification.
Competition Law and Leniency Provisions
Most
competition laws either exempt specific sectors and/ or types of economic
activity, and /or have provision s for the granting of such exemptions in given
situations. It is worth observing that there generally tend to be fewer
exemptions in countries which have recently adopted competition laws (mainly
developing and transition market economies) as compared with more
industrialized nations. In India the Competition Commission of India ,While
passing orders in respect of cartels , the Commission is vested with the
discretion to impose a proportionate /lesser penalty than leviable under the
Act upon a producer, seller, distributor, trader or service providers, provided
the following conditions are met;
1. Such
producer, seller, distributor, trader or service provider included in the
cartel had made full and true disclosure in respect of the alleged violations
and such disclosure is vital.
2. Such
disclosure has been made before receipt of DG s report on investigation order
under section 26 of the Act
3. The
party making disclosure s continues to co-operate with the Commission till the
completion of proceedings before the commission.
4. The
party making disclosure s has;
a) Complied
with the condition of which the lesser penalty was imposed and
b) Not
given false evidence.
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FINANCIAL INFORMATION TRANSPARENCY
FINANCIAL INFORMATION AND TRANSPARENCY RELATED
DISCLOSURE FOR GOOD CORPORATE GOVERNANCE
1) Financial
Calendar
2) Listing
of Shares in Stock Exchange
3) Details
of Shareholders/ Shares
4) International
Listing
5) Stock
Market Data (Share Price Volatility)
6) Share
Transfer Process
7) Dividend
Payment
8) Special
Resolution by Postal Ballot
1) Financial
Calendar:
In
all the companies disclosure of financial calendar include following data:
•Financial
Calendar •Date, Time and Venue of Last Annual General Meeting •Book Closure
Date •Dividend Payment Date •Date of Posting of Annual Report •Last Date of
Receipt of Proxy forms •Approval Date of Quarterly Results •Stock Code •Special
Resolution of Postal Ballot •Reporting on Conciliation of Account GAAP •Board
Meeting Date •Probable Date of Dispatch of Warrants for Dividend
2) Listing of
Shares in Stock Exchange:
Listing
means admission of securities to dealings on a recognized stock exchange. The
securities may be of any public limited company, Central or State Government,
quasi-governmental and other financial institutions/corporations,
municipalities, etc.
The
objectives of listing are mainly to:
• Provide
liquidity to securities;
• Mobilize
savings for economic development;
• Protect
interest of investors by ensuring full disclosures.
3) Details of
Shareholders/ Shares:
Following
details of shareholders/shares are disclosed in sampled companies include:
• Name
of Investors/Shareholders
• Number
of shares and number of Shareholders
• Percentage
of total shares and total Shareholders
• Percentage
of Share Capital
• Amount
of Shareholding
• Shareholding
of Nominal Value
• Number
of Shares held in demat form
4) International
Listing:
GDR
(Global Depositary Receipt):
A
global depositary receipt (GDR) is a bank certificate issued in more than one
country for shares in a foreign company. The shares are held by a foreign
branch of an international bank. The shares trade as domestic shares, but are
offered for sale globally through the various bank branches.
A
financial instrument used by private markets to raise capital denominated in
either U.S. dollars or Euros.
ADR
(American Depositary Receipt):
An
American depositary receipt (ADR) is a negotiable certificate issued by a U.S.
bank representing a specified number of shares (or one share) in a foreign
stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars,
with the underlying security held by a U.S. financial institution overseas.
ADRs help to reduce administration and duty costs that would otherwise be
levied on each transaction. This is an excellent way to buy shares in a foreign
company while realizing any dividends and capital gains in U.S. dollars.
However, ADRs do not eliminate the currency and economic risks for the
underlying shares in another country. For example, dividend payments in Euros
would be converted to U.S. dollars, net of conversion expenses and foreign
taxes and in accordance with the deposit agreement. ADRs are listed on the
NYSE, AMEX or Nasdaq as well as OTC.
5) Stock Market
Data (Share Price Volatility):
Volatility
is a statistical measure of the dispersion of returns for a given security or
market index. Volatility can either be measured by using the standard deviation
or variance between returns from that same security or market index. Commonly,
the higher the volatility, the riskier the security. Stock price volatility is
an indicator that is most often used by options traders to find changes
in trends in the market place. There are two main
types of stock volatility including Historical Volatility and Implied
Volatility that are used in the options markets. The increase or
decrease in volatility results from changes in investors emotions in the market
place. More specifically greed and fear in the market place are the two main
factors that cause stock prices to change. Stock price volatility tends to rise
when there is new information released in the markets however the extent to
which it rises is determined by the relevance of that new information as well
as to the degree in which the news surprises investors.
6) Share Transfer
Process:
The
shares of a company are movable property and are generally freely transferable.
Though there might be certain restrictions on transfer of shares of private
companies provided in the articles of the company, such restrictions are
generally added to protect the rights of one set of investors or the
shareholders. However, shares of a public company are always freely
transferable. Here, researcher has taken 3 aspects of share transfer process
which are normally disclosed in sampled companies.
• Shares
in physical form
• Share
transfer is allotted agent
• Time
period for share transfer process
Power
of refusal to register transfer of shares is to be exercised by the company
within thirty (30) days from the date on which the instrument of transfer or
the intimation of transfer, as the case may be is delivered to the Company.
7) Dividend
Payment:
The
term ‘dividend’ has been defined under Section 2(35) of the Companies Act,
2013. The term “Dividend” includes any interim dividend. It is an inclusive and
not an exhaustive definition. According to the generally accepted definition,
“dividend” means the profit of a company, which is not retained in the business
and is distributed among the shareholders in proportion to the amount paid-up
on the shares held by them.
8) Special
Resolution by Postal Ballot:
Applicable
for E-Voting:
• Every
listed company or
• A
company having not less than one thousand shareholders shall provide to its
members facility to exercise their right to vote at general meetings by
electronic means.
• E-Voting
Period:
• The
e-voting shall remain open for not less than one day and not more than three
days.
• In
all such cases, such voting period shall be completed three days prior to the
date of the general meeting.
We, "PNJ Legal
Consultants" are one of
the well known organizations engaged in providing Consultancy Services keeping
in mind the Client Service requirements.
Our
team members deliver excellent performance in providing these services and our
clients can avail the services at affordable prices.
Our
sophisticated team has complete knowledge of various exercises and
technicalities that are used in our services. Our services includes Strategy
Consulting, GST Consulting, Asset Management, Feasibility Study, International
Arbitration, Due Dilligence, Franchisee Consulting, Financial Audits,
Operational Audits, Tax Heaven Registrations, Shareholder Agreements, Start up
Consulting, IP Consulting, Taxation Services, Accounting system design and Mergers
Acquisitions.
Contact at parascs@gmail.com or refer website
www.pnjlegal.com
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