Option Contracts - Free Essay Example

Subject à ¢Ã¢â€š ¬Ã¢â‚¬Å" Company law 1 Option Contracts -An analysis of position in India Background Put and call options are one of the preferred mechanisms for investors in India, both foreign and domestic, and in different type of transactions like joint venture, stock market, etc. In lay manà ¢Ã¢â€š ¬Ã¢â€ž ¢s term a put option enjoyed by A against B gives A an option to sell certain securities at a future date at some specified price. Whereas a call option enjoyed by A against B gives A an option to compel B to sell the specified securities at a specified date and for a specified price. These options are founded in commercial practicalities. In some cases the promoter has call options by which he can buy out the investors. The investment carries certain pre emptive rights as well like Right to First Refusal, Drag Along Rights, etc. This is a standard that is practiced internationally, even in India though not expressly. The recent changes by regularity authorities like RBI, SEBI and Judiciary has made the position of investors very turbulent in India. Section 2(d) of the Securities Contract (Regulation) Act, 1956 defines à ¢Ã¢â€š ¬Ã…“options in securitiesà ¢Ã¢â€š ¬Ã‚  as a purchase or sell of a right to buy or sell securities in the future. The judiciary has upheld that options are not obligation but a right. Section 20 of the Securities Contract (Regulation) Act, 1956 (SCRA) had prohibited options upon securities. A 1995 amendment[1] had deleted the concerned provision, but still the air of ambiguity regarding option contracts wasnà ¢Ã¢â€š ¬Ã¢â€ž ¢t clear as a March 1, 2000 circular of SEBI[2] had prohibited the use of option contracts. If both the amendment and circular is read together it is logically deducible that option contracts are only valid till they are (a) spot delivery contracts; (b) hand delivery; (c) contracts for cash; (d) special delivery and (e) contracts for derivatives permissible under the SCRA or the SEBI 1992 rules.[3] Since the Amendment is still in force along with the circular by SEBI in 2000 that clarified ità ¢Ã¢â€š ¬Ã¢â€ž ¢s position related to prohibition on option contracts, there exists an contradiction between the 1995 amendment of SCRA and 2000 circular of SEBI. CURRENT SITUATION The SEBI by a recent 2013[4] circular has agreed to include clauses related to pre emptive rights, right of first offer, tag-along right, drag-along right and call and put options, when contained in shareholders agreements, as valid contracts, for the purpose of the SCRA. Some judicial decisions that lead to the str ategic acceptance of option contracts by SEBI has been enumerated below : In 2005 the Bombay High Court[5] dealing with the buy-back clause in a share agreement held that such a contract would not be valid under SCRA as it is not a spot delivery contract. In 2011, SEBI issued an informal guidance[6] that an agreed purchase of shares of a listed company through call or put options of a listed company is invalid, since it does not constitute a spot delivery. The contract was held not to be a derivative under SCRA as it was not a contract traded in stock exchange but settled on clearing house of a stock exchange. In 2012 Bombay High Court[7], dealing with the options of purchase or sell between parties, held that the options are mere privileges of option holder and a concluded contract would only come into existence when an option holder actually enforces the option. The appeal filed by SEBI was disposed off by the Supreme Court on grounds of mutual consent filed by parties. All this led to a deadlock which was cleared atlast by SEBI which by its 2013 circular enhanced the scope of option contracts under the SCRA. The notification clarifies that the contracts now included under SCRA shall be in accordance with the extant exchange control laws of India and that the changes shall not affect the validity of any contract entered prior to the notification. ANALYSIS Clearing the ambiguity and removing the deadlock Prior to the notification there was a lot of ambiguity related to the validity of option contracts. Two views existed, with one advocating that they were invalid as they were neither spot delivery contracts nor were they derivatives traded in the stock market as enumerated in Vulcan Engineers Case[8] and the other view advocating the validity of option contracts based on MCX[9] case judgement that advocated that such contracts were rights vested in the option holder and not a concluded contract. By including contracts for purchase or sale of securities pursuant to exercise of an option, SEBI has put to rest a long standing debate. Adding Some more Confusion While the validity of such contracts is settled by the circular, more confusion seems to be have had been added with respect to the enforcement of such contracts. As per the MCX judgement the option contract would become a contract only on exercise, hence to be settled as a spot delivery contract. However by including spot delivery and pre emptive contracts as a different class of contracts, the settlement of contracts is under ambiguity. Also as the above two contracts have been included in class of permitted contracts, there is ambiguity whether they can be traded as market securities. For example if a shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s agreement contains mere call option, could the right be traded by option holder. Controlling Speculation By legalising the concept of option contract, for the validity and enforceability of contracts the selling party is required to own the securities for a minimum period of one year. Also, the contract for such sale and purchase pursuant to the exercise of an option must be by actual delivery of the underlying securities. The intent behind this clause was to prevent any speculative transactions among the parties, which was the intent behind the introduction of SCRA. Existing Contracts The circular of 2013 expressly states that the contracts entered before the circular will not be affected by the change, hence the validity and enforceability of such contracts still remains questionable. The only option the affected parties are left with in order to continue their contract is by re entering the contract on a date after the circular came into force. RBI Perspective Though SEBI has permitted options in shareholders agreements, the same have been subjected to the extant exchange control regulations. RBI has often been uncomfortable with such contracts in shareholders agreements since it views these contracts as more in the nature of debt as opposed to equity, thereby defeating the spirit of the foreign direct investment policy. The RBI has even issued various show cause notices for removal of such provisions. Unless RBI issues a notification permitting options in shareholders agreements, these options in cross border deals might still remain questionable.[10] CONCLUSION The issue of the validity of call and put options has been debated frequently. SEBI has earlier held options to be invalid in Vulcan Engineering, and recently, has even asked parties to remove put options from their agreements, as in the recent case of Vedanta Resources Plcs acquisition of Cairn India Limited. Hence the Notification is a welcome move and will bring great r elief to the domestic investors, at least. Having said that, the call and put options are subject to extant exchange control regulations. RBI has been holding such options invalid on 2 counts. First, that they were not valid contracts under SCRA, and second, that they were in the nature of debt. By way of the Notification, the first of the two issues have been addressed. To that extent, since put options is more pertinent to the second objection- it remains to be seen whether call option would now be permitted. It seems that SEBI may have consulted with the RBI before coming out with the Notification, and it is expected that RBI may soon permit options and preemptive rights from an exchange control perspective, thereby clarifying the issue in relation to these contracts. Therefore to conclude we can say that the recent circular has on one hand cleared years long ambiguity in one hand by expressly validating option contracts but on the other hand has also created confusion ove r validity of such contracts entered earlier than the circular. This leaves interested latter parties with the only option of re entering contracts. [1] Available at https://www.sebi.gov.in/acts/contractact.pdf [2] Notification S.O. 184 (E) dated March 1, 2000 [3] Ankit Guha, Are Option Contracts Enforceable, available at https://www.legallyindia.com/20090831159/Legal-opinions/are-option-clauses-actually-enforcable. [4] The Notification No. LAD-NRO/GN/2013-14/26/6667 dated October 3, 2013 availableat www.sebi.gov.in [5] Niskalp Investments and Trading Co. Ltd. vs. Hinduja TMT Ltd. [[2008] 143 Comp Cas 204 (Bom)] [6] SEBI Informal Guidance in the matter of Vulcan Engineers Limited dated May 23, 2011 availablehere https://www.sebi.gov.in/takeover/vulcanlof.pdf [7] MCX Stock Exchange Limited vs. SEBI, 2012 (114) BomLR 1002 [8] in the matter of Vulcan Engineers Limited dated May 23, 2011 availablehere https://www.sebi.gov.in/takeover/vulcanlof.pdf [9] MCX Stock Exchange Limited vs. SEBI, 2012 (114) BomLR 1002 [10] Nishith Desai Associates, SEBI Permits options and Pre emptive Agreements, available at ht tps://www.mondaq.com/india/x/270684/Shareholders/SEBI+Permits+Options+And+Preemptive+Rights+Arrangements

The Best Free Gmat Essay Samples

<h1>The Best Free Gmat Essay Samples</h1><p>Free Gmat Essay tests can be handily discovered on the web. The best approach to discover them is to discover a site that offers these kind of expositions for nothing, so you can begin your free Gmat paper composing today.</p><p></p><p>You will be happy you did when you begin getting papers from different understudies in a matter of moments. It will make it simpler to compose your own paper on schedule. All things considered, composing is anything but a hard errand, yet it can get baffling when you can't complete your own exposition on time.</p><p></p><p>There are things that you have to observe while you are composing the paper. Perusing your example can assist you with this. Ensure that you won't overlook anything with the goal that you can ensure that you have the most ideal paper for your specific essay.</p><p></p><p>Looking with the expectation of complimentary examples is something that numerous understudies can't avoid doing. They are generally anxious to locate the best choice for their school papers. This is likewise the situation for the individuals who are taking the Gmat test. They need to realize the most ideal approach to compose their articles, so they can have a thought of what to expect.</p><p></p><p>No matter in the event that you are taking the Gmat or SAT test, you will need to be set up to compose a free paper. You can locate some free Gmat exposition tests by just doing a Google search. Simply go to Google and enter the name of the school that you might want to take, at that point search for some example essays.</p><p></p><p>Find one that you feel generally great with. Peruse it to become familiar with the point. You might need to check and perceive to what extent the paper is and in the event that it has any errors. You may likewise need to check the punctuati on and spelling and check whether it is acceptable with what you ought to expect.</p><p></p><p>If you don't realize which school you should take the Gmat, you might need to think about the best school in the nation. You will have numerous chances to browse in a brief timeframe. The best schools for the most part have the best free Gmat exposition samples.</p><p></p><p>In the end, recollect that the best free Gmat article tests are the ones that are adequate to finish effectively. Along these lines, ensure that you investigate them intently. All things considered, you are as yet figuring out how to compose a free Gmat article so ensure that you are agreeable before starting.</p>

Choosing Two Great Comparison Essay Topics

<h1>Choosing Two Great Comparison Essay Topics</h1><p>When an understudy is wanting to compose a correlation paper theme, a great general guideline is to choose two on-screen characters or two callings from which to choose two comparative subjects. A youngster may decide to do a paper about Barbie or Ken, a man about Ray Bradbury or Herman Melville, a man about the NFL or the NBA, a lady about America's First Ladies or Jackie Kennedy, thus on.</p><p></p><p>The understudies ought to be urged to peruse a book or paper to discover increasingly about each subject. Most universities necessitate that you enroll in a class to study each subject so the understudies are set up with probably some foundation. On the off chance that an understudy picks a subject with which they are new, the paper is more averse to be convincing.</p><p></p><p>Most individuals who expound on the entertainers or the stars frequently wind up committin g similar errors that they made while choosing their theme for their exposition. It is frequently difficult to abstain from committing a similar error as every other person in light of the fact that there is so much data accessible. Actually, the exposition points ought to be structured with the goal that missteps are anything but difficult to spot.</p><p></p><p>You must begin by figuring out what makes every entertainer or star so momentous. An understudy can ask themselves these inquiries, for example, What is the main explanation that they were so uncommon? How could they become so famous?</p><p></p><p>They likewise ought to have the option to characterize the genuine workmanship that made them so well known. Asking yourself these inquiries may appear to be a superfluous exercise.</p><p></p><p>Some scholars consider this activity an exposition of inquiries. Others consider it an article of realities. You shou ld figure out what it is that you are attempting to communicate in your examination article points before you start to think about how you can make an exposition theme that will give you greatest effect.</p><p></p><p>That is the reason it is regularly essential to investigate a subject before composing the paper subjects. All things considered, you are expounding on an on-screen character or a star. The subjects must be investigated, and you should utilize it as a guide with the goal that you can benefit as much as possible from the chance to portray your understudies' passion.</p>

How to Create Effective Research Paper Topics

<h1>How to Create Effective Research Paper Topics</h1><p>How to make successful research paper themes? While picking an article theme for an understudy, this is maybe the most troublesome piece of the process.</p><p></p><p>You need to settle on a particular subject that will give intriguing data and will be fascinating for your peruser to peruse. While you need to ensure that the data you're introducing is applicable, you likewise need to remember how extraordinary your subject is from the normal person.</p><p></p><p>When thinking about how to make compelling examination paper points, the most significant thing is to avoid cliché thoughts or circumstances. Remember the objectives you might want to accomplish by utilizing the topic.</p><p></p><p>When figuring out how to make powerful research paper subjects, you have to recollect that your crowd may not know a similar data as you do. This implie s you have to discover approaches to instruct them such that they can comprehend the substance. By attempting to go past what is normal from you, you'll be bound to discover fascinating subjects to choose.</p><p></p><p>Try to utilize the theme as a showing apparatus by utilizing it to show understudies some accommodating data about the point. Regardless of whether they don't learn much in this specific investigation, they will have taken in some valuable data about the topic.</p><p></p><p>It can likewise assist with making these exercises intriguing by making them intelligent. This will assist with attracting understudies who probably won't have an incredible enthusiasm for learning. They might be keen on realizing what different understudies are doing in the class so they can get included and help out with the class.</p><p></p><p>It can likewise assist with thinking of various approaches to move toward your exa mination paper themes. The more thoughts you have, the more ways you can introduce your data as an exercise that makes the theme additionally fascinating. Fortunately this will assist you with creating the best paper. By moving toward the point as such, you will have the option to show understudies what's in store, why certain thoughts are introduced, and how to direct their own exploration effectively.</p>

Find College Essay Objective Samples That Will Meet Your Requirements

Find College Essay Objective Samples That Will Meet Your RequirementsYou can easily find college essay objective samples on the Internet. However, you should avoid going directly to the website of the college as this can result in you getting into trouble with the college administration. It is important to first locate the college and get an idea of the essay topic before you proceed.This is usually done by looking for free or low cost essay sample websites. These sites give you sample essay topics that you can use without worrying about giving too much information. All you have to do is fill up the form available and upload the sample papers in your computer.These sites are always updated and give you an updated list of essays on a number of subjects. You can easily get the samples for common subjects like History, Geography, English Literature, etc. You can search for these topics on the Internet or in your local library.It is advisable to choose a specific subject that will be stu died in college. You can even go to college libraries and ask for the list of topics for their respective courses. However, if you want to avoid paying for the list then you can also take the help of the student newspapers that are published in all universities. The list will be in a classified form, where you will be able to access it easily.If you cannot find the essay objective samples on the internet then you can get them from the teachers in your college. If you study abroad, there are chances that the teachers will provide you with copies of the sample essays. When you have the requirements, you can also get in touch with the college.Once you have the instructions and the required subject for the essay, you can begin the process of obtaining the essay objectives. These instructions usually come in the form of guides and textbooks. Toget them in bulk you can make use of online auctions. There are many websites on the Internet that offering these manuals for sale.Sites that sell these manuals do not charge any form of fee. However, there are sites that sell the manuals at a higher price. Before buying anything, make sure that you check the authenticity of the site and make sure that you are buying from a reliable seller.College essay objective samples should be used wisely and should be written with complete knowledge of the subject. Always remember that these should be presented in such a way that students will read the essay and be able to analyze and use the information.

How Pragmatism Would Be Appealing For A Wide Audience Essay

I understand how Pragmatism would be appealing to a wide audience, specifically in its early development and introduction into the world of philosophy. As much as philosophy questions, seeks answers to the world, the nature of man and many other common unifying human experiences, it can be intimidating to many. Philosophy I believe is beneficial for all Although it hopes to be accessible to all individuals, some concepts, ideas, specialized vocabulary and sentence formations are not as straightforwardly understood by the everyman. Most philosophers do not do this to showcase their intellectual prowess but, because it is the jargon and practice within their field. If one was trying to understand how to solve a complex mathematical equation, it is expected that mathematicians will have their own specialized vernacular. Similarly, if say a skilled plumber was trying to explain a complex issue in their arena of specialization it is predictable that certain words or descriptions may b e considered foreign to those unfamiliar to the field. It is understood that any field of study has its own specified way of speaking, for once you have studied a subject extensively you are expected to understand the language of your peers. However, since again philosophy focuses so much on the concerns encountered by many people in their lifetime, there’s a certain expectation that it should be more accessible. But the fact of the situation is that many philosophical concepts deal in theShow MoreRelatedHow Pragmatism Would Be Appealing For A Wide Audience Essay1373 Words   |  6 PagesI can understand how Pragmatism would be appealing to a wide audience, specifically in its early development and introduction into the world of philosophy. 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Nevertheless, many philosophical concepts deal with the abstract and complex ideas that may require additional concentration and mastery. The mass appeal of pragmatism at the time of its ince ption had much to do with the fact that it was a practical tool for adapting to a world that was so rapidly changing. Additionally, the concepts put forth were much more comprehensible to novices in philosophy. For example, the main concept put forth by Mr. Charles S. Peirce the father of pragmatism in the text entitled How to Make Our Ideas Clear states, â€Å"that our beliefs are really rules for action†. It was a concise and elegant concept that allowed for mass appeal. However, I believe itShow MoreRelatedHow Pragmatism Would Be Appealing For A Wide Audience Essay1502 Words   |  7 PagesI understand how Pragmatism would be appealing to a wide audience, specifically in its early development and introduction into the world of philosophy. 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Contemporary Issues In Accounting Businessâ€Myassignmenthelp.Com

Question: Discuss About The Contemporary Issues In Accounting Business? Answer: Introduction The accounting conceptual framework is developed and prepared by the IASB (International Accounting Standards Board) for the purpose of providing assistance to the businesses for preparing their general purpose financial statements. The main reason for the development of conceptual accounting framework is to aid the financial decision-making of the end-users of the financial reports (Hoffman, 2016). In this regard, the present report presents an evaluation of financial reports of Huon Aquaculture Group Pty Ltd and ARK Mines as per the conceptual framework and AASB standard requirements. Also, it discusses the prudence re-introduction in the conceptual framework accounting principles. Analyzing the Annual Reports of Huon Aquaculture Group and ARK Mines as per the Conceptual framework and AASB standards The conceptual framework examines the usefulness of general purpose financial statements prepared by business corporations in accordance with the qualitative characteristics that are, relevance, reliability, consistency and understandability (Hoffman, 2016). Huon Aquaculture Group, a fish farming company that follows AASB (Australian Accounting Standards Board) requirements and is listed on ASX. The AASB provides guidelines to business operating within Australia as per the conceptual accounting framework principles. The annual report of the company reflects that it has complied with all the conceptual framework principles and has thus provided all the necessary financial information to the end-users of the financial reports (Growing for the Future: Huon Aquaculture, 2015). The directors report has stated all the financial facts and figures related to its profitability by clearly reflected the earnings before tax, earnings per share, net income as per the reliability qualitative chara cteristic of conceptual framework (Knight, 2004). The remuneration report of the company has all also provided all the necessary information about the compensation structure offered to the key management personnel (KMP) of the company as per the relevance conceptual framework qualitative characteristic. The principles and rules adopted for the preparation of the financial reports are clearly stated in the notes to the financial statements section of the annual report as per the understandability principle of conceptual framework. The company also prepares its consolidated financial statements as per the Corporations Act 2001. The financial facts and figures are compared with that of the previous year for reflecting the percentage growth in the revenue of the company as per the comparability principle of conceptual framework (Growing for the Future: Huon Aquaculture, 2015). On the contrary, ARK Mines does not provide all the necessary financial information in its annual report in accordance with the conceptual framework and AASB standards. The company is involved in the gold production in Australia and is a small-sized company in comparison to the Huon Aquaculture. The directors and remuneration report of the company has not provided appropriate information about the financial figures relating to its business operations and compensation structure of KMP (ARK Mines: Annual Report, 2015). Non-compliance Reason with conceptual framework and AASB standards The comparison of Huon Aquaculture Group and ARK Mines annual reports reflects that there is wide difference in the financial reports prepared by both the companies. The Huon Aquaculture effectively follows all the AASB and conceptual framework standard requirements while ARK Mines has not complied with all the ASX listing requirements. The main reason for the non-compliance of ARK Mines with the AASB and conceptual framework standards is its small size nature. The ARK Mines is still in evolving phase and is planning to expand its business operations in other parts of the world. As such, it does not develop and publishes its consolidated financial statements because it does not have subsidiaries. There is different set of financial standards developed by the AASB for SMEs and thus it does not comply with all the AASB standard requirements (Ataman et al., 2014). Conceptual Framework Revision for including Prudence in Corporate Reporting The IASB has incorporated the concept of prudence in the conceptual framework recently after it has been removed in the year 2010. The main objective of the IASB behind the inclusion of the prudence principle in the accounting conceptual framework is to protect the stakeholders interest by providing them realistic and non-biased financial information. The prudence concept states that businesses need to reflect the expense and liabilities in its financial reports as soon as they incurred but should state the revenue realization only when it is actually realized. The prudence concept mainly aims to overcome any disparity in financial reporting so that financial information reflected to the creditors and investors is error-free and reliable. The concept is re-introduced in the conceptual framework in order to prevent the manipulation of accounts by the companys executives for their personal benefits such as that incurred in Enron and in other business scandals (Araujo and Gomes, 2015). Recommendations On the basis of above discussion, it can be stated that business corporations listed under ASX should effectively follow AASB and conceptual framework standard requirements. The company should comply with all the principles of conceptual framework in order to promote transparency in their business operations nada chive stakeholders trust. The Huon Aquaculture has achieved good brand recognition on a global level as it effectively follows all the conceptual framework principles. However, ARK Mines has to still achieve brand recognition by effectively complying with all the AASB and conceptual framework standard requirements. Businesses all over the world are also recommended to include the principle of prudence at the time of developing their financial statements to promote transparency and fairness in their business operations in the stakeholders minds (Araujo and Gomes, 2015). Conclusion It can be inferred from the overall discussion held in the report that there is wide difference between the financial reporting of both the corporations, that are, Huon Aquaculture and ARK Mines. The current accounting framework is proving to be effective in meeting the need of users of financial reports as analyzed form the annual report of both the corporations. Also, the principle of prudence needs to be included in the conceptual framework for overcoming any fraudulent activities in corporate reporting. References Araujo, V. and Gomes, A. 2015. Analysis of Opinions Issued in Comment Letters on the Term Prudence. Journal of Education and Research in Accounting 9(2), pp. 209-225. ARK Mines. 2015. Annual Report. 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