Companies Act_Practical Problems_94

A Company wants to provide financial assistance to its employees to enable them to subscribe for fully paid shares of the company. Does it amount to purchase of its own shares. If, in the instant case, the company itself purchasing to redeem its preference shares, does it amount to acquisition of its own shares?

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For what period a name can be reserved by Registrar?


The name can be reserved by ROC on approval of Form 1, for a period of 3 months from the date of intimation by the Registrar. However, Foreign LLP/Companies have an option to reserve their existing names, under which they are operating outside India, for a period of 3 years in India, which can be further renewed on application to Registrar in Form 25.

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What are the broad provisions of the Act in respect of names of LLPs?

Every limited liability partnership shall have either the words “limited liability partnership” or the acronym “LLP” as the last words of its name. LLPs would not be given names, which, in the opinion of the Central Government, are undesirable. Registrar would be under obligation to follow such rules, which would be framed by the Central Government in connection with allotting names to LLPs. There are also provisions in respect of ‘rectification of name’ in case two LLPs have been registered with the same name, inadvertently.

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Whether foreigners can incorporate LLP?

Yes, the LLP Act 2008 allows Foreign Nationals including Foreign Companies & LLPs to incorporate a LLP in India provided at least one designated partner is resident of India. However, the LLP/Partners would have to comply with all relevant Foreign Exchange Laws/ Rules/ Regulations/ Guidelines.

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How the mutual rights and duties of partners inter-se and those of partners and LLPs would be governed?

The mutual rights and duties of partners inter se and those of the LLP and its partners shall be governed by the agreement between partners or between the LLP and the partners. This Agreement would be known as “LLP Agreement”.

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Whether LLP Agreement would be mandatory for all LLPs?

As per provisions of the LLP Act, in the absence of agreement as to any matter, the mutual rights and liabilities shall be as provided for under Schedule I to the Act. Therefore, in case any LLP proposes to exclude provisions/requirements of Schedule I to the Act, it would have to enter into an LLP Agreement, specifically excluding applicability of any or all paragraphs of Schedule I.

Wild Boars

Wild Boars

There was a village that was attacked by wild boars.Everyday the wild boars would enter the village to rampage the whole village of their food. The villagers tried various means to fight and chase away the wild boars, but without much success.

One day a wise man approached the village headman to offer his advice. He told the villagers that they will have to follow all his advice and directions. Out of desperation, the villagers agreed. The wise man told the villagers to gather all the food from every household and put it in the middle of a big empty field. They followed his advice, and immediately they saw hundreds of wild boars approaching the vicinity where the food was placed. The wild boars were apprehensive initially, but after a while they went for the food.

Once the wild boars had a taste of the food they came back for the free food everyday. And everyday the villagers would put more food in the field and the wild boars would come to have their free meals. After a while, the wise man asked the villagers to erect four poles at the four-corners of the field.The wild boars were too busy having their food that they did not take notice of what was happening.

After a few weeks, the wild boars developed the habit of having free food. The wise man then asked the villagers to put fencing around the field, with a large gate through which the wild boars can enter to have their food. Finally once the fencing and the gate were completed the villagers closed the gate and all the wild boars were trapped inside the field. The wild boars were finally defeated!

Habits are easily developed but difficult to get rid of. The wild boars were trapped because out of their greed, they developed the habit of having free food, and without having to work for their food. They became so comfortable, that they did not realize they were being trapped. Most of us are like the wild boars because we become too comfortable with our jobs and businesses that we do not realize we are in one way or another being "trapped".

We seek security rather than freedom!

When we share

When we share laughter,
There's twice the fun;
When we share success,
We've surpassed what we've done.

When we share problems,
There's half the pain;
When we share tears,
A rainbow follows rain.

When we share dreams,
They become more real;
When we share secrets,
It's our hearts we reveal.

If we share a smile,
That's when our love shows;
If we share a hug,
That's when our love grows.

If we share with someone
On whom we depend,
That person is always
Family or friend.

And what draws us closer

And makes us all care,

Is not what we have,

But the things we share.

You are important

ThoughtFire