Importants for CS Executive - exclusively by CShelpers

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Important Ques for CS Executive Group II

Important Questions With Answers For CS Executive(Group 2)

• Company Law    Click Here
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• Securities Law    Click Here

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ICSI gives little relief to CS students – notifies exemption criteria for SIP training

The Council of the Institute of Company Secretaries of India, the apex body for regulating the Company Secretary Profession in India has approved the eligibility criteria for grant of exemption from undergoing Student Induction Programme (SIP) .The following candidates are exempted from under going SIP:

(i) Candidates having one year of working experience as assistant or any other post equivalent thereto by whatever name called or any other higher grade thereto in the field of Finance, Secretarial, Human Resource, Marketing, General Administration, Teaching, Research etc. in any body corporate, government body, statutory or autonomous body, public undertaking, financial institution, banks, consultancy firms, Law firms or any other organization/institution which in the opinion of the Council provides scope for adequate exposure for exemption from Students Induction Programme (SIP), or

(ii) Candidates possessing professional qualification e.g CA, CWA, LL.B, BE/B.Tech/B.Arch, MBBS, Post Graduate Degree/Diploma in Businesses Administration/ Management, MCA or any other qualification as approved by the Council from time to time. “

Students seeking exemption may apply within six months from the date of registration in the Executive Programme.

The students who were enrolled on or after 1st September 2009 and yet not undergone the SIP may also apply for the exemption.

Source of Information: ICSI website

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Companies Bill, 2011 – Secretarial Audit for All listed companies – Happy mood for practicing company secretaries

Its good to note that the Companies Bill, 2011 which was tabled in 14th Dec in Lok Sabha has few notable developments for the practicing company secretaries in India. The most awaited domain “SECRETARIAL AUDIT” is now near for Company Secretaries, says CScareer.Org Founder, CS. Bilu Balakrishnan, who is also the President of Corporate Intelligence Education & Research which owns Acsec-Inews Network.

The profession of company secretaries are given welcoming recognition in the new Companies Bill, 2011 – he added. As per clause 204 of the Bill every listed company have to conduct a Secretarial Audit and a secretarial audit report has to be annexed to the Board’s report. Further, the board’s report shall also mention about any qualification or observation made by the practicing company secretary in his secretarial audit report. By this move listed companies apart from their regular and traditional audits will have a strict compliance audit by a practisng secretary, thus ensures more corporate governance norms in their company.

The extract of the provision relating to Secretarial Audit is as under:

“Clause 204

(1) Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board’s report made in terms of sub-section (3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed.
(2) It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company.
(3) The Board of Directors, in their report made in terms of sub-section (3) of section 134, shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report under sub-section (1).
(4) If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this section, the company, every officer of the comapny or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.”

Source: INEWS

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Instructions for CS December Exam's Answer Sheet

Important Instruction for New OMR Sheets for CS December 2011 Attempt.

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Download CS Admit Card

Exclusively By: CA Helpers

Courtesy: ICSI & Indiaeducation

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Only This Much for CS executive LAWS - DOWNLOAD

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Green Shoe Issue

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Detailed Note on Automated Lending and Borrowing Mechanism

Automated Lending and Borrowing Mechanism

IN A stock market where fancied companies trade at astronomical prices, most people may be confronted by a dilemma: Should one enter at the current level when risks seem high? Will staying away mean losing a good opportunity?

Buying shares is not the only way to participate in the ongoing bull run in the stock market. Lending of securities and funds is a way by which individuals can take advantage of and participate in the bull run. Lending securities and funds allows one to participate in the market without worrying about downside risks and incidental problems.

The scheme was originally started a couple of years ago by lending securities (such as equity shares) to those who had sold without being in possession of the instruments (short-sellers). Simultaneously, it helped generate income for those with idle secu rities. This was to benefit the stock market as a whole through improved liquidity.

Subsequently, the scope of the scheme was widened to include lending of funds or financing those buying shares without funds. Typically, when traders are optimistic about the trend in share prices, they look for funds to make purchase. And in a bull mark et, as now, traders are willing to pay very high interest for funds.

Such a securities/funds lending scheme is offered by the National Stock Exchange (NSE) called the Automated Lending and Borrowing Mechanism (ALBM). The scheme is operated by the NSE for the securities traded on the exchange.

Operation

Here is how the scheme works: To lend money or shares to traders, one has to approach a stock broker who puts through such deals. A separate ALBM session is held on Wednesdays the NSE's settlement cycle starts on Wednesdays and ends on Tuesdays. On Wedne sdays, the person who wants to lend either funds/securities intimates the broker.

Once the lender commits funds/securities, he need not physically buy in the money/securities till the following Tuesday. This is because the settlement cycle allows a week's gap between the settlement close and the payment/receipt for contracts. For inst ance, when a settlement ends on a Tuesday, the obligations that investors may have, such as payment for a purchase of shares, is met the following Tuesday.

The next week, the lenders deliver funds/securities to the broker. The funds/securities enter the stock market system and are used by the borrowers to fulfil their obligations. At the next settlement, the lender gets his money/securities back with intere st. For instance, in the above example, the accounts would be settled on the second Tuesday following the Wednesday when the original commitment to lend was made.

The ALBM session determines the interest rate at which funds/securities are borrowed. In the current market with most traders keen to buy shares, it is largely financing that takes place. In last Wednesday's market, the interest rate was over 30 per cent _ an indication of the demand for funds.

Risks

Of concern to a lender is that at over 30 per cent, is there not a huge risk involved? Strangely enough, there is practically none. The ALBM is part of the NSE's stock market trading options. Therefore, the entire deal is guaranteed by its clearing corpo ration _ the National Securities Clearing Corporation (NSCCL).

The other matter of concern is what happens with some lending physical certificates and others opting for the dematerialised mode. The problem of physical certificates has been eliminated with the NSCCL allowing scrips only in the demat form to participa te in the ALBM. At present there are over 200, including the most active ones, in the category.

While the system looks almost free of risks in the short-term, investors must exercise caution even in this market. If the size of the market increases enormously, and given the volatile nature of trading in equity shares, the system can collapse. At the moment, however, such a possibility appears remote.

FAQs on securities lending

What is securities lending?

Securities lending was envisaged as a method wherein a person with idle shares can lend them to a borrower who does not have the shares to fulfil his obligation.

Who regulates it?

Securities lending is regulated by the Securities and Exchange Board of India. In 1997, SEBI introduced guidelines which provide a framework for the scheme. At another level, an approved intermediary handles the operational details of the scheme.

Who is an approved intermediary?

This is an entity registered with SEBI acting as an intermediary between lenders and borrowers. It is expected to guarantee the scheme, that is, if the borrower fails to honour his obligation the approved intermediary makes good the loss.

Can securities lending not take place without the intermediary?

No, the Securities Lending Scheme clearly states that there will be no direct contact between a borrower and a lender. In any case, if there has to be a nationwide market for determining the interest rate at which lenders are willing to part with securit ies and borrowers are willing to borrow, only a large entity would be able to provide the infrastructure.

Who holds the title of the securities lent?

The title temporarily vests with the borrowers. The borrower only has an obligation to return the equivalent number of securities along with any benefits (such as dividend) within a specified time-frame.

Does the borrower have any other obligations?

The borrower has to put up collateral to borrow securities. Generally, it may be the cash margin that is levied on the shares concerned by the authorities.

What are the tax implications of securities lending?

Income from securities lending is exempt from capital gains tax.

What is ALBM?

Automated Lending and Borrowing Mechanism (ALBM) is a scheme introduced by the NSE that acts as a facilitator for securities lending. It also facilitates financing in addition to securities lending.

How is the interest decided in financing?

As with securities lending, the interest rate for those who finance is also decided by demand and supply. The NSE provides a trading platform where the demand and supply is matched through computers and the interest rate determined.

What are the key terms in ALBM?

Securities Lending Price: The benchmark rate at which all lending and borrowing transactions are effected by the NSCCL. It is the closing price of the security at the NSE a day prior to ALBM.

Transaction price: The rate at which transactions are executed in the spot book of the trading system of the NSE.

Execution date: The date on which lenders and borrowers of securities have to deposit required securities/funds respectively, with the approved intermediary.

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