bharat anand
DESCRIPTION
SADTRANSCRIPT
Copyright © Khaitan & Co 2013
| 2
Contents
1. Concepts relevant for Mergers & Acquisitions
1. Enforcement of Shareholders‟ Agreements
2. Court approved schemes & Squeeze Out
3. Restrictions on Slump Sale
4. Buy-back
2. Other Key Changes
1. Private companies | Increased compliance burden
2. One Person Companies
3. Layered Investments
4. Related Party Transactions
5. Financial Assistance
Copyright © Khaitan & Co 2013
| 3
Out of Scope!
• Corporate Social Responsibility
• Governance, Disclosures & Transparency
• Independent Director - Role & Responsibility
• Directors & KMPs - Duties, Responsibilities
& Liabilities
• Audit and financial statements
Copyright © Khaitan & Co 2013
| 5
Enforcement of Shareholders‟
Agreement Background
• Under CA1956, share transfer restrictions in
shareholders‟ agreement between shareholders of a public
company challenging (S 111A; no safe harbour for transfer
restrictions inter-se existing shareholders)
Key Change
• CA2013 recognises that arrangements in respect of
transfer of securities (even in case of a „public
company‟) shall be enforceable as a contract [S 58(2)
Proviso]
• A public subsidiary can continue to be in the nature of a
private company in its articles – i.e. it can have
transferability restrictions [S 2(71) Proviso]
Impact
• The change finally settles the position on
enforceability of agreements providing for pre-emptive
rights inter-se shareholders of a public company such as
lock-in period, ROFR, ROFO, tag-along, drag-along
• As CA2013 requires all transfers of securities to be in
compliance with SCRA [S 59(4)] | Enforceability of
put/call options is still an issue?
Copyright © Khaitan & Co 2013
| 6
Enforcement of Shareholders‟
AgreementS 5
• Flexibility to specify that certain provisions of the
articles may only be altered if specified conditions or
procedures more restrictive than a special resolution are
complied with
• For a private company, entrenchment provisions must be
inserted at the time of formation or by a unanimous
shareholders‟ resolution
• For a public company, entrenchment provisions must be
inserted at the time of formation or by a special
resolution
• ROC will need to be notified of entrenchment provisions
within 30 days of incorporation or amendment to articles
[R 2.7]
• Unclear how this would dovetail with S 6(b) of CA2013
(Articles cannot be repugnant to the provisions of
CA2013)
Impact
• Super-majority voting provisions preferred over veto
rights?
• Statutory sanction to entrenchment provisions will
strengthen the enforceability of those provisions
Watch outs
Entrenchment provisions should be incorporated in compliance with special
/unanimous approval requirements of CA2013, depending on type of company
Copyright © Khaitan & Co 2013
| 8
Court Approved Schemes
• Broadly still requires 75% approval from the shareholders
• Wide powers of NCLT to sanction
Procedural Issues
• Application to Tribunal by company/members/creditors for a scheme of
compromise, arrangement, reconstruction or amalgamation | Scheme for
reorganisation of share capital included [S 230 read with S 232]
• Application to contain prescribed disclosures | Disclosure
obligations increased [S 230(2), S 232(2) in case of reconstruction
or amalgamation]
• Tribunal shall call meeting of members/creditors
• Notice for meeting to be accompanied with: (a) statement disclosing
details of scheme; (b) copy of valuation report; (c) effect on
creditors, key managerial personnel, promoters and non-promoters [S
230(2)] | Additional documents to be circulated in cases of
reconstructions or amalgamations [S 232(2)]
• Notice to be given to Central Government, IT authorities, RBI, SEBI,
CCI, Official Liquidator, Registrar or stock exchanges or other
sectoral regulators [S 230 (5)]
• If Central Government, IT authorities, RBI, SEBI, CCI, Official
Liquidator, Registrar or stock exchanges do not represent on a
scheme of compromise or arrangement, within 30 days of notice, then
presumption of no representation [S 230 (5)]
Copyright © Khaitan & Co 2013
| 9
Court Approved Schemes
Procedural Issues (Contd)
• Objection to scheme of compromise or arrangement can now
be made by: (a) shareholders holding at least 10% of
shareholding; or (b) 5% of total outstanding debt per
latest audited financial statements [S 230(4), Proviso]
• Dispensation from calling of creditors meeting by the
Tribunal if 90% in value agree and confirm [S 230 (9)]
• Approval of 75% member/creditors required for Tribunal to
sanction the scheme
• Creditors, members or debenture holders can also vote by
proxy within 1 month from receipt of notice | Voting to be
in person or postal ballot or by proxy [S 230(6)]
• Filing of certificate from company‟s auditor on conformity
of accounting treatment as proposed in the scheme with the
accounting standards under CA2013 is pre-requisite to
sanction [S 230 (7), Proviso, 232(3), Proviso]
• Filing of order with the Registrar within 30 days of
receipt of order [S 230(8), 232(5)]
• Tribunal has power to set-off stamp duty paid against
stamp duty payable for increase in authorised share
capital
• Scheme not whitewash for offences by officers-in-default
of the transferor company [S 232(3)(c)]
Copyright © Khaitan & Co 2013
| 10
Court Schemes | Overall (Contd)
Other Changes
• Order for compromises and arrangements to include: [S 230(7)
• Option to preference shareholders to either obtain arrears of
dividend in cash or equity shares of equal value
• Variation of shareholder rights
• Abatement of SICA proceedings before BIFR if scheme approved by
3/4th of creditors in value
• Exit offer to dissenting shareholders
• „Appointed date‟ finds its place; scheme to be effective from the
designated appointed date and not a date afterwards [S 232(6)]
• Where any scheme or contract approved by 90% shareholders,
transferee company has the option to acquire the shares of the
dissenting shareholders [S 235]
• Payments held by transferor company on trust for the
dissenting minority
• Drag along clauses : enforceable after 90% shareholders
approve?
• No treasury shares can now be issued; to be cancelled /
extinguished [S 232(3)(b)] | Tax implications on continuing
shareholders pursuant to change of rule relating to treasury
shares to be analysed
X merged with it's subsidiary Y; the merged entity ended up
with its own stock held by a trust, specially created for the
purpose. Separate ownership so full voting rights, full dividends,
right to participate in meetings | Now no longer possible
Copyright © Khaitan & Co 2013
| 11
Listed company mergers
Scheme of a listed transferor with an unlisted transferee [S
232(3)(h)]
• No “backdoor listing” permitted: If listed company merges with
unlisted company, then transferee company will remain
unlisted
• Shareholders of listed company have right to opt out of the
transferee company by payment of the value of shares and other
benefits in accordance with pre-determined formula or post
valuation (subject to floor price specified by SEBI);
arrangements for this to be made by the Tribunal
Impact
• Potential to make the process efficient and less time
consuming
Copyright © Khaitan & Co 2013
| 12
Short-Form Merger
New Concept
Short-Form Merger permitted for merger between:
• holding company and its wholly-owned subsidiary
• 2 or more small companies
• other specified companies [S 233]
In Brief
Option for eligible companies to use short-form process or the
usual process
• Need 90% shareholders approval at general meeting
• Need approval of majority of lenders representing 9/10th in
value of creditors in a meeting convened with 21 days‟ notice
• Declaration of solvency to be filed
• Registrar and Official Liquidator call for objections within
30 days; if no objections then approval, and, if objections,
then referred to Central Government for consideration by
Tribunal
Impact
• Positive development, but needs to be tested for practical
challenges
Copyright © Khaitan & Co 2013
| 13
Cross-Border Merger
Concept
• Concept of Indian company merging with foreign company
recognised [s. 234]
• Consideration can be mix of cash and depository
receipts
Impact
• If works, then can greatly benefit structuring cross-
border M&A transactions
Blind Spots
• Companies of countries that will be entitled to regime
are to be notified by the Government
• RBI regulations on such mergers will be determinant
• Several issues, like holding of real estate, and other
FDI issues may need to examined / tested
Copyright © Khaitan & Co 2013
| 14
Minority Squeeze-out
• New Concept [S 236]
• Acquirer or PAC (as understood under Takeover Regulations) with 90% ormore of issued equity capital can notify the company of intent tosqueeze-out minority
• Price to be determined on the basis of valuation by a registeredvaluer
• However, minority shareholders may also initiate this process! ExitOpportunity
• Escrow account with amount equal to the value of the minority sharesto be created and maintained for at least 1 year
• Payment to be made within 60 days of minority shareholder tenderingshares
• Anti Embarrassment provisions : s236(8); typo? Drafting unclear!
• Blind Spots
• Is this a mandatory requirement? What if the majority shareholder hasno „intention‟ to acquire? Does „intention‟ not to buy have to benotified to the company?
• If the „intention‟ is not there upon acquiring 90%, can the right beexercised later?
• When does the escrow account need to be created in the course of theprocess?
• Mechanism for minority to trigger this process? Threshold?
• Will this apply only to listed companies or all companies?
Copyright © Khaitan & Co 2013
| 16
Slump Sale
• Background
• Under the CA1956, ordinary resolution required for
sale, lease or otherwise disposal of whole or
substantially whole of the „undertaking‟ of a company
by public companies and private companies that are
subsidiary of public companies [S 293(1)(a)]
• Key Changes
• Special resolution required by all companies for any
transfer of the whole or substantially the whole a
substantial Undertaking under CA2013 [S 180(1)]
• “Undertaking” means an undertaking:
• with investment of the company exceeding 20% of its net
worth determined as per its latest audited balance sheet OR
• which generates 20% or more of total income during previous
FY
• “Substantially whole of the undertaking” means 20% or
more of value of undertaking per preceding FY‟s audited
balance sheet
• Not all transfers of „undertakings‟ covered! |
„undertakings‟ which do not satisfy the above
materiality tests will not be subject to the
requirement for a special resolution
Copyright © Khaitan & Co 2013
| 17
• Impact
• Private companies included
• Blind spots
• How is reference to the word “investment” to
be construed? All debt and equity injected in
the Undertaking?
• Is the book value of the undertaking
irrelevant?
• Asset deals, involving cherry picking assets,
also intended to be covered – substantially
all of an Undertaking
Slump Sale
Copyright © Khaitan & Co 2013
| 18
Slump Sale
Practical Examples
• Company A, a manufacturing company with a
turnover of INR 1000 crore, wishes to
transfer a business unit „X‟ which has a
book value of less than 20% of the net
worth and generates less than 20% income?
• Company B with a net worth of INR 700
crore wishes to transfer “land bank” of
500 acres which it purchased 3 years back
for INR 200 crore?
• Company C, a WOS of Company B (a listed
company), wishes to transfer an
Undertaking to XYZ exceeding the 20% test.
Will a special resolution be require by
the shareholders of Company B?
Copyright © Khaitan & Co 2013
| 20
Buy-Back
• 1 year cooling-off period between all buy-backs.
“Board buy-back” followed by “shareholders buy-
back” not possible
• Buy-back not possible if default in repayment of
deposits or interest, or redemption of debentures,
or preference shares, or payment of dividend,
repayment of term loan to bank / financial
institution unless the default is remedied and 3
years have lapsed
• Buy-back by odd lots not recognised
• On contravention: (a) company punishable with fine
between INR 1 lakh–3 lakh; and (b) officer-in-
default punishable with up to 3 years imprisonment,
or fine between INR 1 lakh-3 lakh or both
Buy-back through Board Approval Buy-back through
Shareholders Approval
Buy-back of 10% or less of the total
paid-up equity capital and free
reserves
Buy-back of more than 10% of the
total paid-up equity capital and
free reserves
To be completed within 1 year from
the date of the Board resolution
To be completed within 1 year from
the date of the special resolution
Key Changes
Copyright © Khaitan & Co 2013
| 21
Buy-Back
Impact
• 1 year cooling-off period can significantly impact
transactions where multiple buy-backs are required
(subject to the overall cap); Exits through buy-back
will become more difficult
• Applicability of this restriction even where buy-
back achieved through Court Scheme (which expressly
recognizes and permits buy-back, but requires
conditions of S 68 to be satisfied) [S 230(10)]
Copyright © Khaitan & Co 2013
| 23
Withdrawal of Dispensations
available for Private Companies
under CA1956Key Changes
• Many of the privileges and exemptions currently
available to private companies in the CA1956 stand
withdrawn in CA2013.
• Stricter compliance and disclosure regime for private
companies under the CA2013.
• This would require revamping and scaling up internal
processes by the private companies.
• The long term objective is to boost the standards of
corporate governance in private companies.
Copyright © Khaitan & Co 2013
| 24
Withdrawal of Dispensations available
for Private Companies under CA1956
Particulars Provision under
CA1956
Provisions under CA2013 Implications
Shares Sections 85 (Two kinds
of share capital), 86
(New issues of share
capital to be only of
two kinds) and 87
(Voting rights): Section
90(2) exempts a private
company (unless it is a
subsidiary of a public
company) from the
provisions under
Sections 85-87 of the
Act.
Sections 43 (Kinds of share
capital) and 47 (Voting
rights): Sections applicable to
both public companies as well
as private companies.
Exemption to private
companies has been done
away with. This means
that:
• Types of share
capital: Private
companies can now
have only two kinds
of share capital i.e.
equity and
preference; and
• Voting Rights:
- Equity Shareholder:
Right to vote on
every resolution pro
rata on poll
- Preference
Shareholder: Right to
vote only on
resolutions which
directly affect the
rights attached to
his preference shares
and any resolution
for winding up or
repayment or
reduction of share
capital | Right to
vote on all
Copyright © Khaitan & Co 2013
| 25
Withdrawal of Dispensations available
for Private Companies under CA1956
Particulars Provision under
CA1956
Provisions under CA2013 Implications
Further Issue
of Share
Capital |
Renouncement
Section 81(1)(c):
Unless the AOA of
the company
otherwise provide, a
shareholder has the
right to renounce
the shares offered
to him in favour of
any other persons.
Not applicable to
private companies.
Section 62(1)(a)(ii):
Similar provision as
Section 81(1)(c) of
CA1956. However,
applicable to private
companies also.
Restrictions on
renouncement to be
specifically
included in the AOA
of private
companies.
Preferential
Allotment
Section 81A:
Preferential
allotment requires
special resolution.
Not applicable to
private companies.
Section 62(c):
Preferential allotment -
special resolution
required for both public
companies as well as
private companies.
Price of shares to be
determined by the
registered valuer.
Copyright © Khaitan & Co 2013
| 26
Withdrawal of Dispensations available
for Private Companies under CA1956
Particulars Provision under
CA1956
Provisions under CA2013 Implications
General Meeting Sections 171-185:
Under Section 170(ii),
provisions of AOA of a
private company will
override provisions of
Sections 171-185 of
the Act i.e.
Section 171: Length of
notice
Section 172: Contents
and manner of service
of notice
Section 173:
Explanatory statement
Section 174: Quorum
Section 175: Chairman
Section 176: Proxies
Section 177: Voting to
be by show of hands in
first instance
Section 178:
Chairman‟s declaration
of result of voting by
show of hands to be
conclusive
Sections 96-121: No
provision like Section
170(ii) of the Act | Private
companies to mandatorily
comply with provisions of
CA2013 regarding conduct of
general meeting including:
• Minimum 21 days notice of
meeting (Section 101)
• Explanatory statement
(Section 102)
• Quorum (Section 103)
• Chairman of the meeting
(Section 104)
• Proxies (Section 105)
• Restriction on exercise of
voting right of members
who have not paid calls,
etc. (Section 106)
• Voting by show of hands
(Section 107)
• Demand for Poll (Section
108)
Copyright © Khaitan & Co 2013
| 27
WITHDRAWAL OF DISPENSATIONS AVAILABLE FOR
PRIVATE COMPANIES UNDER THE ACT
Particulars Provision under
CA1956
Provisions under CA2013 Implications
General Meeting Section 179: Demand
for poll
Section 180: Time of
taking poll
Section 181:
Restriction on
exercise of voting
right of members who
have not paid calls,
etc.
Section 182:
Restrictions on
exercise of voting
right in other cases
to be void
Section 183: Right of
member to use his
votes differently
Section 184:
Scrutineers at poll
Section 185: Manner of
taking poll and result
thereof
Copyright © Khaitan & Co 2013
| 28
Withdrawal of Dispensations available
for Private Companies under CA1956
Particulars Provision under
CA1956
Provisions under CA2013 Implications
Financial
Statements
Section 220:
Financial statements
of a private company
filed with the ROC
is not open to
inspection by any
person other than a
member of the
company.
Section 137: Privilege to
private companies under
Section 220 of the Act
has been done away with.
Financial
statements of the
private companies
will now be
accessible to
general public.
(Section 399(1)(a))
Requirement for
one resident
director
No such provision
existed.
Section 149(3): Mandatory
for every company to have
at least one resident
director (resident in India
for 182 days).
WoSs of foreign
companies must have
one resident
director.
Copyright © Khaitan & Co 2013
| 29
Withdrawal of Dispensations available
for Private Companies under CA1956
Particulars Provision under
CA1956
Provisions under CA2013 Implications
Restriction on
number of
Directorships
Section 275: No person
to be a director of
more than 15 companies.
Section 278: A private
company (which is
neither subsidiary nor
a holding company of a
public company) is
excluded while
calculating the number
of companies one can be
a director for.
Section 165:
• Cap on total number of
directorships increased
from 15 to 20
• Out of 20 directorships,
not more than 10 can be of
public companies
• Directorships of private
companies will also be
counted.
Directorship in
private companies will
now be taken into
account while
calculating the number
of companies one can
be a director for.
What about section 25
Companies?
Copyright © Khaitan & Co 2013
| 30
Withdrawal of Dispensations available
for Private Companies under CA1956
Particulars Provision under
CA1956
Provisions under CA2013 Implications
Interested
Directors not
to Participate
or Vote in
Board‟s
Proceedings
Section 300:
Restriction on a
director to take
part in the
discussion of or
vote on any contract
or arrangement if he
is interested in
such contract or
arrangement.
Exemption for a
private company
which is not a
subsidiary or
holding company of a
public company.
Section 184(2): Any
interested director must
disclose such interest
at the beginning of the
meeting and shall not
participate in such
meeting.
No exemption to private
companies.
• Problematic for
closely-held or
family-owned
private companies.
• Quorum restriction
applies to private
companies.
Copyright © Khaitan & Co 2013
| 32
OPC | Concept
New Concept
• One Person Company (“OPC”) is a new business vehicle
introduced as a private company
• Clause 2 (62) of CA2013 defines an OPC as a company
which has only one person (Indian citizen) as a member
[R 1.1(Chapt II)]
• OPC may either be a company limited by shares, a company
limited by guarantee or an unlimited company
• Words “One Person Company” are required to be mentioned
in brackets below the name of the OPC, wherever such
name is printed, affixed or engraved [S 12(3)(d),
Proviso]
Copyright © Khaitan & Co 2013
| 33
OPC | Salient Features
New Concept
• Minimum paid up share capital of INR 100,000
• Change in nominee to be intimated to the OPC and the
Registrar of Companies (“ROC”)
• Sole member to act as the first director, until the OPC
appoints director(s) [S 152(1)]
• OPC can appoint maximum 15 directors, but minimum should
be one director.
• Resolutions to require communication by the
member/director to the company and entry in minutes-book.
The minutes-book to be signed and dated by the member and
such date shall be deemed to be the date of the meeting
for all the purposes under CA2013 [S 122(3) and (4)]
• Public disclosure of financial statements: OPC to file
its financial statements with ROC within 180 days from
the closure of the financial year [S 137(1), Proviso]
Copyright © Khaitan & Co 2013
| 34
OPC | Disadvantages
• Only an Indian citizen and „resident‟ in India can
be a member [R 2.1(1)]
• Mandatory conversion to a private or public
company within 6 months if paid-up capital exceeds
INR 5 million or average annual turnover during
the relevant period* exceeds INR 20 million [R
2.3(2)]
*“relevant period” means the period of immediately
preceding 3 financial years
Copyright © Khaitan & Co 2013
| 36
Layered Investments
Background
• Recommendation from the Parliamentary Standing
Committee on Finance post Satyam scam
• For transparency; to prevent convoluted structures
and diversion of funds
New Restriction
• A company cannot make investments through more than
2 layers of investment companies
• “Investment company” means a company whose
principal business is acquisition of shares,
debentures or other securities
• Whether the restriction is applicable only to
„investment subsidiaries‟?
Copyright © Khaitan & Co 2013
| 37
Layered Investments
Investor Co
A Co
(Investment
Company)
Permissible
Structure
Investor Co
A Co
(Investment
Company)
Workable
Structure?
C Co
(Operating
Company)
B Co
(Operating
Company)
D Co
(Investment
Company)
B Co
(Investment
Company)
Target
Target
Investor Co
A Co
(Operating
Company)
Workable Structure?
B Co
(Investment
Company)
Target
X
Y
30%
60%
10%
C Co
(Investment
Company)
Copyright © Khaitan & Co 2013
| 38
Layered Investments
Impact
• Takes away flexibility to structure
investments
• Genuine transactions will be severely
impacted, in particular, investments in
the Infrastructure sector
• Ability of India Inc to monetise at
various subsidiary levels will be
impaired
• Companies will have to demonstrate
operations in the subsidiaries |
operation and compliance costs
Outbound Acquisitions
• Statutory recognition of more than one
layers for offshore acquisitions
Copyright © Khaitan & Co 2013
| 39
Layered Investments
Exemptions:
• Offshore acquisition possible if the
offshore target has investment
subsidiaries beyond 2 levels, as per the
laws of such country
• Subsidiary can have investment subsidiary
to meet regulatory requirements
Watch outs
On contravention: (a) company punishable with fine
between INR 25,000-5 lakh; (b) officer-in-default
punishable with up to 2 years imprisonment + fine
between INR 25,000-1 lakh
Copyright © Khaitan & Co 2013
| 41
Related Party – Definition
Director, key managerial personnel or relative of such person
Firm in which a director, manager or relative is a partner
Private company in which a director or manager is a member or director
A public company in which a director or manager is (a) a director; or (b) along with relatives holds more than 2%
Any body corporate whose Board, MD or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager
Any person on whose advice, directions or instructions a director or manager is accustomed to act
Includes holding company, subsidiary, associate company, fellow company
Copyright © Khaitan & Co 2013
| 42
Related Party Transactions
Transactions covered [S 188]
• Sale, purchase or supply of any goods or materials
• Selling or otherwise disposing of, or buying,
property
• Leasing of property
• Availing or rendering of any services
• Appointment of any agent for purchase or sale of
goods, materials, services or property
• Such related party's appointment to any office or
place of profit in the company, its subsidiary or
associate company
• Underwriting the subscription of any securities or
derivatives thereof, of the company
Copyright © Khaitan & Co 2013
| 43
Related Party Transactions
Board Meeting Notice Requirements [R 12.13 (1)]:
• Name of the related party and nature of the
relationship;
• Nature, duration and particulars of the contract;
• Material terms of the contract, including the value,
if any;
• Advance paid or received for the contract, if any;
and
• Any other information relevant to the Board‟s
decision
Board Meeting Attendance [R 12.13 (2)]:
• Interested director to leave a Board meeting during
any discussion on the subject matter of a resolution
on a related party contract in which he is interested
Copyright © Khaitan & Co 2013
| 44
Related Party Transactions
Exemption:
• Transactions on an arm‟s length basis entered into in
the ordinary course of business
Board‟s Report:
• Related party transactions, including the reasons for
entering into the relevant transactions, to be included
in the Board‟s report to the shareholders
Impact:
• Reconciliation of board Vs. shareholder approval
• The scope of the existing provisions has been enlarged
Blind spots:
• How will prohibition on members voting be counted? Will
it apply to all items or only if members that are also
related parties are interested in the contract
Copyright © Khaitan & Co 2013
| 46
Financial Assistance
What is the law under S 67?
• “No public company shall give, whether directly or
indirectly and whether by means of a loan, guarantee, the
provision of security or otherwise, any financial
assistance for the purpose of, or in connection with, a
purchase or subscription made or to be made, by any
person of or for any shares in the company or in its
holding company.”
Issues?
• Payment of due diligence costs or advisors fees by Target
• Indemnity by Target in the underwriting agreement
• Joint venture with royalty by Target to partner
Any exception?
• PROVISIONS NOT APPLICABLE TO PRIVATE COMPANIES
• Exemption to:
• lending by banking companies in the ordinary course;
• financial assistance for purchase/subscription of shares
under ESOP; and
• loan to employees (other than directors or KMP) for an
amount not exceeding their 6 months salary for
purchase/subscription of shares of the company or its
holding company to be held by them by way of beneficial
ownership
• Financial assistance to subsidiary company not prohibited
Copyright © Khaitan & Co 2013
| 47
Financial Assistance
• On contravention: (a) company punishable with
fine between INR 1 lakh-INR 25 lakh; and (b)
officer-in-default with up to 3 years
imprisonment, and fine between INR 1 lakh-INR
25 lakh
Impact
• One of the most severe consequences on
default
• Logic? UK has abolished Financial Assistance
offense for unlisted companies; no one has
gone to jail