Question 1 - Please explain the different types of instruments under

which a company under Companies Act, 2013 can raise capital.

Answer –
The Companies Act 2013 has replaced the Companies Act, 1956. The overall
objective is to build a smooth and easy corporate environment marked by ease
of doing business which is important for India to become more competitive. A
Company is considered a separate entity with a common seal, perpetual
succession and limited liability. Capital is the assets a company desires to
function nicely in the current environment and make it sustainable in the long
term within the marketplace. Because of the increase in start-ups over the past
year’s capital rising has become very prevalent in the market.
Newly formed companies can raise capital brought by the promoters and their
friends and families, the venture capital firms, private equity funds, and other
such special avenues available for entrepreneurs.
A public limited company can raise capital by public offer, offer for sale, right
issues, private placement.
A private limited company can raise capital through rights issue or private
placement.
Mainly the instruments used for Raising capital is done by using shares and
debentures-
A company can raise capital by issuing shares and through borrowings. Debt
and equity are the two ways through which a company can fund its operation.
Shares are used to raise the capital that is owned by the company’s
shareholders and debentures as a debt instrument are a secured way of raising
capital with a fixed rate if interest.
Share –
A share is the interest of a shareholder in a company. It is a movable property.
Share capital-
 Authorised capital: it is the maximum amount of share capital that a
company can issue. It is also known as registered or nominal capital.
 Issued capital: it is the part of authorized capital that is issued to the
public for subscription
  Subscribed capital: It is the portion of the issued capital that subscribed
or paid by the public.

TYPES OF SHARES-
 Equity shares (ordinary shares) – It gives the owner the right to vote in
the company’s general meetings. They are also entitled to dividends out
of profits. For the purpose of dividends, they rank after preference
shareholders. They also have a claim over the capital.
 Preference shares – these shares are those which carry a preference
right as regards the payment of dividend and repayment of capital. In
general, they are entitled to a affixed amount of dividend unlike equity
shares.

Debentures-
Debentures are the instruments of a company evidencing a debt,
whether constituting a charge on the assets of the company or not. It
includes debenture stock, bond, etc. They can be secured and unsecured
also, it can be convertible or non-convertible. They do not offer voting
rights to the owners.
Features:
 Fixed rate of interest – debentures holders are prioritized over
shareholders for the payment of interest. They receive a fixed rate of
interest.
 Maturity- debentures offer long-term funds to the company. The
maturity of debentures comes after a specific period
 Claims on assets – debenture holders have a right to claim on the assets
of the company.
 Call feature- a call feature offers at the time of the issuance of
debentures that entitles the company to redeem its debentures before
the maturity date at a certain price. this price is more than the issue
price.
 Control: debenture holders are considered as company’s creditors. They
do not have control over managerial operations and voting rights.
QUESTION 2 – Please give two real life instances where Indian
Employee related laws have ensured protection of welfare of
employees.
Answer-
In India there are about 60 laws concerning labour dealing with working
conditions, industrial relations, monetary benefits and social security issues in
India ministries and commercial establishments. The main motive of the laws is
to ensure protection, promote welfare to the employees and improve their
social life. There are three categories of labour laws in the country-
a) Laws framed and administered by the central government. Example-
provident fund, mines, etc.
b) Laws framed by the central government but administered by the state
government. Examples-trade unions
c) Laws framed by the central government but administered by both the
central and state government. Example- child labour, equal
remuneration
Various laws designed to promote welfare for the employees are-
 FACTORIES ACT,1948-
The factories act came into force on April 1,1949. It has been enacted
with an object to protect workers for which different provisions are
imposed on the owner and occupier of the factories. It is the principal
law concerning working conditions designed to protect labour against
industrial and occupational hazards.
 INDUSTRIAL DISPUTES ACT,1947-
This act offers the procedure and machinery for investigation and
settlement of industrial disputes by setting up of an in-house grievance
settlement authority to ensure fair terms between the employer and the
employee.
 MINIMUM WAGE ACT,1948-
The minimum wage act , 1948 provides protection to the labour against
the dangers of unfair methods and explotations. The act ensured that
the employees are paid their entitled wages, which enables them to
afford the basic necessities of the life.
 EMPLOYEES COMPENSATION ACT, 1923-
 In case of injury arising out of and in the course of employment and
resulting in disablement or death, payment is ensured and enacted as
per the provisions. The payment of the compensation to the workmen
or their dependents is ensured by the law.
 EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT,
1952-
This act is applicable to the whole India. The EPF Act aims to set up
provident fund, pension fund and deposit linked insurance as a means of
social security. It becomes applicable for establishments with 20 or more
employees.
 PAYMENT OF BONUS ACT, 1965-
It offers the regulation for the amount of bonus that is to be paid to the
employees in ana establishment on the basis of productivity and profit.
The PBA act is applied on the establishment that has more than 20
persons employed.
 PAYEMNT OF GRATUITY ACT,1972-
The main objective is to reward the employee for his past meritorious
services on his leaving the job after 5 years or more or on retirement.
Gratuity is defined as a monetary award.
 MATERNITY BENEFIT ACT, 1961-
This Indian law has made it mandatory for certain commercial
establishments to provide maternity benefits to the women employees
during and after pregnancy and childbirth. It has added various benefits
such as paid leaves, work from home.
TWO REAL LIFE INSTANCES-
QUESTION 3-
Gavit and Vinayak are partners who started a partnership under the
partnership act, 1932. There are differences arising between them and they
have approached you to advise them to resolve their differences:
a) Please suggest ways how they can resolve their differences without
approaching conventional court of laws
b) Please elaborate the advantages of resolving their differences without
approaching conventional court of laws
ANSWER- a)

A partnership is a legal relationship between persons who have

agreed to work together to perform certain business activities. It is a
contractual relationship between two or more people who have
agreed to share profits in an agreed ratio in order to conduct a
business. The association between partners must be based on an
agreement between two or more persons.
Hello during Asian times there were no codes to resolve the disputes
to resolve the dispute between Gavit and vinayal. It can be done by
the ADR.
ADR-
An ADR is an alternative to existing formal legal system which lessens
the burden of cases in the in law courts. ADR provides a better time
saving and cost effective way to resolve disputes among private
parties as compared to court litigation.
Types of ADR.-
1. Agreement- There are procedures such as mediation,
negotiation, mini trials and facilitation that help disputing
parties to derive out of court settlement on the basis of
agreement.
2. Decision- There are various procedures through which
settlement of a dispute can be done. One of which is on
 the basis of decision. By an outsider. The dominant
procedure of decision is arbitration in case of arbitration
and outsider decides how to resolve a dispute between
the conflicting parties. Hence, he or she is the ultimate
decision maker.
3. Advice- there are procedures that involves a neutral or
non-binding party to inform or advise the conflicting
parties on the basis of case evaluation or expert opinion.
It involves non-binding arbitration, facts, finding neutral
evaluation, etc.
Using this major ADR mechanisms, it can help too. Resolve the
conflicts differences between Gavit and Vinayak, without
approaching the conventional code of laws.
b)
ADR techniques are considered as one of the most acceptable
dispute resolution techniques used worldwide, either alongside or
combined with respective legal systems of various countries.
1. It can competently resolve multi party disputes.
2. It has a flexible procedure.
3. It is less expensive than traditional court litigation.
4. It is less complex as the hard and fast rules for legislation and
court procedure do not strictly apply.
5. The third party involved in ADR happens to be neutral to
provide unbiased decisions.
6. It provides practical solutions to parties that protects their
interest.
7. It says it’s the dispute without too much delay.
8. It maintains the privacy of the disputing parties.
9. It maintains relationships and reputations of the conflicting
parties. It is best suited for businesses that will prefer to
Continue doing business with each other in the future.
The process of ADRS is relatively less formal than the judicial
process is. The proceedings are flexible without any formal
extensive written documentation or former pleading. ADR.
Programs are the application of equity rather than the rule of law.
The participation of disputing parties in the dispute resolution is
direct, with a higher level of confidentiality and transparency. ADR
is a code out of court settlements to maintain social order and
cooperation. Be it commercial or civil or family or industrial cases,
ADR addresses all types of litigation matters. Parties can reach or
negotiate to reach the settlement in an easier and time saving
way.