Category: Blog Posts

What makes a Company unique for carrying out business

A company has some unique features that set it apart from the rest of the organizations that also carry out businesses. One can carry out business without having registered as a company under the law.

Corporate character

A Company is vested with a corporate character, so it bears its name, functions under that name, and might also additionally have a seal. A company’s property is separate and different from the ones of its individuals. It is different from the individuals who compose it. Therefore, it can own its property, incur debts, borrow money, etc. so a Company can enter into contracts and sue or be sued like an individual. Its shareholders are its notional proprietors, and they do not own anything besides possession of stocks issued. A shareholder cannot be held answerable for the acts of the employer although he holds the whole percentage capital. Thus, ‘incorporation’ is the act of forming a legal business enterprise as a juristic character. A juristic character is in regulation additionally conferred with rights and duties and is dealt with in accordance with regulation. A Company is an artificial person created via law. It isn’t a person, however; it acts through human beings. It is taken into consideration as a legal person who can contract own properties in its name, sue, and may be sued. Furthermore, it is known as an artificial person considering it’s far invisible, intangible which exists only in the eyes of law. Though considered as an Artificial and juristic person, the company is not a citizen.

Limited Liability

The privilege of limited liability is one of the fundamental advantages of doing business under the type of organization as a company. The company, being a separate person, is the proprietor of its belongings and bound to the extent of its liabilities. The legal responsibility of a member as a shareholder extends to the contribution to the capital as much as the nominal fee of the stocks held.

Perpetual Succession

An integrated corporation by no means dies, besides while it is wound up as according to law. A corporation, being a separate individual in the eyes of law, is unaffected by the demise or departure of any member, and it stays the same as before, regardless of overall changes that take place in the membership. Perpetual succession can be understood as the membership of an organization and can also additionally be changing from time to time, however that shall have no effect on its continuity. The membership of an incorporated corporation can also additionally be altered both due to the fact, that one shareholder has sold/transferred his stocks to any other or his stocks devolve on his representatives on his demise, or he ceases to be a member according to the provisions of the Companies Act. Thus, perpetual succession denotes the capacity of a corporation to keep its life through the succession of people who step into the shoes of those who are no longer a part of the company.

Transferability of Shares

The capital of a company is split into parts, known as stocks. The stocks are assumed to be movable belongings and, restricted by positive conditions, are freely transferable so that no shareholder is completely or always wedded to a company. When the joint-stock companies had been established, the idea was that their stocks ought to be transferable. Section 44 of the Companies Act, 2013 enunciates the principle providing that the stocks are movable belongings held via way of means of the individuals and may be transferred from one individual to another in accordance with the articles.

Limitation of Action

A company that is incorporated under the Companies Act cannot go past the power given to it in its Memorandum of Association. The Memorandum of Association of the company regulates the powers and describes the objectives of the company and gives the edifice upon which the whole shape of the company. Every action taken by the company is limited within the scope of its Memorandum of Association. To allow it to perform its actions without such restrictions and barriers generally enough powers are granted within the Memorandum of Association. But as soon as the powers have been laid down, it cannot go past such powers until the Memorandum of Association, itself is altered before doing any such act.

Termination of Existence of a Company

Being an artificial juridical person, a company cannot die a natural death. Since it is created via law, includes its affairs in accordance with the law for the duration of its existence and the long run is effaced by the law itself. Generally, the life of a company is terminated through winding up. However, to keep away from winding up, on certain occasions companies adopt techniques like reorganization, reconstruction, and amalgamation.

Conclusion

To conclude it can be said that a company can be understood as an organization that is separate from its members, that can own its property, incur bets, or borrow loans. It can sue and can be sued. It is created by law and effaced also through law.

The Doctrine of Constructive Notice

We are well aware that over time certain doctrines are formulated to aid the existing laws. The Doctrine of Constructive Notice is one of such doctrines that evolved. The origin of this doctrine can be traced back to the 1850s under English Law.

What is the Doctrine of Constructive Notice?

The doctrine of Constructive Notice works on the basic assumption that when one deals with a company one will gather necessary information related to it that is available to him. The Article of Association must be well-known to the outsider who intends to enter into a contract or hold any relation with the company. The law provides that the Article of Association of the Company must be available to the public and is made available to everyone according to Section 399 of the Companies Act, 2013.

From the inception when the company is formed and registered, the Article of Association and the Memorandum of Association are assumed to be public documents. These documents are available for inspection by anyone from the general public.

Article of Association and the Memorandum of Association are significant documents that aid a person to understand the nature of business and the running of a company. The doctrine of constructive notice also extends to all the other documents. All the documents that are required to be registered with the Registrar of Companies are included. However, the doctrine does not apply to the documents that are filed with the registrar of companies for the sake of records only.

Initially, this doctrine was applied to cases of fraud only but later on it was extended to cases of gross negligence also.

It is the duty of the party entering into an agreement to collect, examine and apprehend the documents. The constructive notice means that a notice is assumed to be given, even without a real notice existing.

Effect of the Doctrine of Constructive Liability

The courts assume it to be the obligation of the party that is getting into the agreement with a company to investigate the legal documents before agreeing to the settlement phrases. It is likewise anticipated that the individual is aware of every phrase of the settlement before agreeing to it. This doctrine prevents legal complaints from being filed.

In other words, if someone enters right into an agreement that’s beyond the powers of a company, then the agreement cannot be executed and he has no right as stated in the agreement against the company. The Memorandum of Association indicates the powers and limitations of the company. Also, if the agreement is past the authority of the directors as described within the Articles, the outsider has no rights.

Drawbacks of the Doctrine

The doctrine itself creates destructive weather for the enterprise because it creates a disproportionate burden on a part of the outsider, which was, in turn, impeding easy trading. This belief of the doctrine is strongly criticized, unanimously with the aid of using the jurists in addition to writers. The outsiders could only understand the company with the limited information available. The public documents cannot tell whether the company complies with the internal formalities.

The rule established by the doctrine of constructive notice was considered to be inconvenient for many companies as it hindered their daily business transactions.

The doctrine of Constructive Notice is frequently quoted as an unreal doctrine. The motive at the back of that is that the doctrine is created through courts through judicial pronouncements and is an imaginary doctrine. Many contracts take place in a company day in and day out. The doctrine lays a responsibility on the outsider making him responsible to have prior knowledge of all of the legal documents of the organization before entering into a deal or contract.

Types Of Directors and Their Duties as Per Companies Act, 2013

A director is an elected person who, along with other directors, is responsible for the operation of a company. Listed companies must have at least 3 directors whereas private companies must have a minimum of 2 directors, and one-person companies shall have a minimum of 1 director.

Independent directors

Independent directors are non-executive directors of the company, helping the company improve corporate credibility and governance. In other words, independent directors are non-executive directors that have nothing to do with the company and have independence in their judgments. Independent directors have a maximum term of 5 years; however, they will have the right to re-elect through special resolutions, which will be disclosed in the report of the board of directors.

Woman Director

  • A company, whether private or listed, must appoint at least one female director if any of the following conditions are met: The Company is a listed company and its securities are listed on the stock market. The paid capital of the company is Rs.100 crore or more, and its turnover is Rs Rs.300 crores or more.

Additional Directors

  • A person may be appointed as an additional director and may hold office until the next annual general meeting. In the absence of an annual general meeting of shareholders, the term of office shall end on the date on which the annual general meeting of shareholders should have been held.

Alternate Directors

  • Alternate Directors refer to persons appointed by the board of directors to occupy directors who may be abroad for more than 3 months.

Nominee Directors

  • Nominee directors may be appointed by contract by specific types of shareholders, banks or financial lending institutions, third parties, or by the federal government in case of mismanagement or oppression.

Whole-time Directors and Part-time Directors

  • A Whole-time Director is a person that is engaged in whole-time employment of the Company and includes the Managing Director.

Internal directors

  • Internal directors work for the benefit of major shareholders, managers, and employees. His expertise comes from his experience in the company.
  • Internal directors will not receive additional compensation for attending meetings or providing guidance, because these functions are included in their job descriptions.

Outside directors

  • Outside or independent directors are not internal employees. When outside directors attend meetings or provide guidance, they are usually paid extra because these responsibilities are not part of their formal work. The experience of independent directors comes from the cooperation with other companies and the work in the entire industry. Since they are not as interested in business as internal directors, independent directors can view more objectively how the company achieves its goals and how to resolve disputes.

Duties and responsibilities of company directors

The main objective of the board of directors is to pay attention to the financial situation of the company and “promote the success of the company for the benefit of all its members. General Directors Responsibilities include:
  • Establishment of the company objectives and implementation of company policies
  • Adoption of bylaws
  • Hiring, supervision, and dismissal of senior executives
  • Formulation of dividend policies and payment of compensation to executives
  • Issuance of additional shares
  • Prepare a directors report at the end of each fiscal year.
The power of the directors is derived from the company’s articles of association.

How are the new directors appointed?

  • Directors are typically appointed by shareholders at the company’s annual general meeting. The appointment is subject to a vote, and if the majority of the shareholders vote in favor of the appointment, the appointment will be approved.
  • In some cases, it may be necessary to vote at an Extraordinary General Shareholders’ Meeting, for example, if a director resigns suddenly or an unexpected vacancy occurs. In this case, the remaining directors may temporarily appoint new directors, but the new appointments must be confirmed by a vote of the shareholders as soon as possible.
  • The procedures for appointing new directors vary from company to company, and the specific procedures are generally stipulated in the company’s articles of association.
  • Whenever a new director is appointed, the company must notify the company building within 14 days of the appointment.

Important Compliance Requirements for IT Companies

In the last decade, we witnessed the IT field growing and pushing all limits. Today with other businesses many companies are focused on providing services in the IT field.

Incorporation

A company can be incorporated under the Companies Act and choose any one company type depending on its need for capital.
These types consist of public limited companies, private constrained companies, one-person companies, limited liability partnerships, foreign companies, etc. Barring some minor differences, in these types of companies, the process of incorporation is done more or less the same way.

According to Section 33 of the Companies Act, 2013, the registration of a company is acquired through applying with the Registrar of Companies. Other than the application, the subsequent files need to be additionally submitted. These consist of the Memorandum of Associations and the Articles of Association.

Articles of Association are deemed to be vital only in the case of unlimited companies. An agreement copy through which the company proposes to enter into a contract with any individual for their appointment as a director or a supervisor additionally requires to be accepted by the ROC if at all a person has been appointed. Lastly, an assertion that all the necessities of the Act had complied has to be given.

Memorandum of Association

The first step to forming a company is the preparation of a Memorandum of Association. This document includes important details of the company that enables one to understand the object of the company. According to Section 12 & 13 of the Companies Act of 2013, the Memorandum of Association is split into 5 clauses:

  1. Name Clause
  2. Registered Office
  3. Clause Objects Clause
  4. Liability Clause
  5. Capital Clause

Articles of Association

Articles of Association is the second most essential document, which needs to be registered with the memorandum in the case of a few companies. Articles are inner guidelines and bye-legal guidelines to outline how the company will in reality operate. Companies that should have the articles of affiliation are:

  • Unlimited Companies
  • Companies limited by guarantee; and
  • Private companies are limited by shares.

Board Meeting

As quickly as the company receives its incorporation certificate, the company has to hold a meeting of its directors within 30 days. A Notice should be issued by one of the directors for the first meeting of the board of directors of the company, at least seven days before the meeting. A minimum of 4 Board meetings shall be held in a company in one calendar year.

The minutes of the board meeting is required to be organized within fifteen days of the board meeting and maybe finalized within thirty days from the date of the meeting.

Appointment of the Auditor

The Company has to Appoint the first Auditor within 30 days of incorporation.

Maintenance of Records

Every company registered under the act has to preserve certain Statutory Registers as given in Section 85, Section 88, and so on of the Companies Act, 2013 and are required to preserve it at its registered workplace in the prescribed form. In case of any failure in retaining the statutory register, the company, in addition to directors, can be fined and prosecuted.

Filing of Annual Accounts and Annual Return

The company is required to file the annual financial statements within 30 days and within 60 days from the date of the Annual General meeting.

Filing of Annual Accounts- Form AOC-4 and Form AOC-4 CFS (in case of consolidated financial statements) should be filed within 30 days from the conclusion of the AGM. In the case of OPC, it should be filed within 180 days from the close of the financial year.

Filing of Annual Return should be done in Form MGT-7 within 60 days from the conclusion of AGM.

Filing of resolutions with MCA regarding Board Report and Annual Accounts should be done in Form MGT-14 within 30 days from the date of financial statements and Board Report by the Board of Directors.

Securing a Domain Name

Irrespective of whether the company is registered as a partnership firm, LLP, or a company all registration files require the specification of a business name. Like any other company, the Name of your software company will become your identity and therefore it is of most important significance to have ownership over the domain name of the Company, as nearly all of your clients, providers, and traders might need to look up at your online presence.

Intellectual Property Rights and Compliance

Make sure that your company has secured its IPR and at the same time it should not infringe other party’s IPR. IP value of a Company is important to attract investors. The Name of the Company, the logo, etc contain IP value.

License Permits and Other Approval

Depending on the field of focus different licenses and approvals must be obtained to carry on smooth business. Especially when we talk about Information technology and Softwares, it is very crucial to double-check on the requirements.

The Special Purpose Acquisition Company (SPAC) Life Cycle

SPAC (Special Purpose Acquisition Company), is an element explicitly set up to acquire a company in a specific area. A fund-raise through Initial Public Offering (IPO) is the objective of SPAC. When the cash is raised from people in general, it is kept in an escrow account, which can be made use of while acquiring a company. The SPAC is delisted and the cash is returned to the financial investors in case the acquisition is not made within two years of the IPO. SPACs were not a commonly used investment process until recent times. Even in the last two decades, it was observed that SPAC IPOs represented only a little level of total IPO movement. SPACs have just seen a flood in issuance in the last three years, trailed by a sensational expansion in 2020 and 2021 specifically.

Administrative Framework in India

The current system for regulation in India isn’t supportive of the SPAC structure. For example, the Companies Act 2013 approves the Registrar of Companies to strike off the name of those companies that don’t start their activity within a year of incorporation. Whereas, in the case of SPACs generally 2 years is required to recognize a Target and perform due diligence. Empowering arrangements should be embedded in the Companies Act to make SPACs functional in India. As of now, Indian laws have not recommended any extensive administrative necessities for SPACs. SEBI as of late framed a gathering of specialists to inspect the plausibility of presenting Special Purpose Acquisition Companies (SPACs) under its Primary Market Advisory Committee (PMAC) with a plan to investigate the capability of SPACs. While simultaneously building adequate balanced governance in the administrative structure to deal with the related dangers.

The SPAC Life Cycle

Establishment of the SPAC and its IPO:

The sponsors or speculation experts, or both, decide to shape a SPAC. The SPAC has to complete the administrative filings that are important to open up to the world, which is moderately easier than those required for a conventional IPO measure. This effortlessness is because the organization is a “shell” with no formal tasks, and the worth of the organization will be generally comparable to the net worth of the money it raises.

Target Identification:

After the SPAC opens up to the world and goes global, the sponsors start to look for an organization to acquire. By and large, this is a privately owned business, yet there have been uncommon cases where a SPAC has focused on a portion of a public company. SPACs generally have only 18 months to two years to recognize and secure an objective organization (except if the existence of the SPAC is broadened), in any case, the SPAC liquidates and the capital raised is given back to financial investors. SPAC sponsors have to quickly discover and consolidate with potential targets because of the structured timeframe.

Target determination/de-SPAC measure:

The de-SPAC measure alludes to the interaction of a privately owned business turning out to be public through a merger with a SPAC. When a target organization is distinguished and declared, the de-SPACing measure starts. De-SPACing is ostensibly the most significant and extraordinary stage in the lifecycle of a SPAC. During this time, the SPAC sponsors and target proprietors meet and the target’s valuation and exchange structures are resolved. Even though the exchange is between the seller, the SPAC sponsor, valuation and terms should eventually be approved by the public.

Private Investments in Public Equity (PIPEs):

PIPEs are extra value responsibilities from either institutional financial investors who took part in the SPAC or from new institutional investors. After the SPAC and the target company concurs on exchange terms, design, and valuation, they can go to the market to raise extra money to complete the acquisition. This extra capital is generally raised by PIPEs.

Conclusion

SPACs can offer numerous exceptional benefits in comparison to other traditional options. Different nations like, USA, Australia, Canada have the administrative system/rules on SPACs and have seen a high rise in SPAC bargains. in India, the administrative structure isn’t steady enough. Overseas listing is not a new concept in India and has brought about some new investment opportunities in Indian organizations. Keeping in view, the advantages and disadvantages of the SPAC course, it is the best fit for Indian organizations to go with a foreign holding company.

Intellectual Property Audit and IP laws

Intellectual Property (IP) pertains to the manifestations of the human psyche like developments, abstract and imaginative works, and images, names, pictures, and plans utilized in business. Now, Intellectual Property is a broad concept that can be further divided into two classes: Industrial property and Copyright. Examples of Industrial Property are brand names, mechanical plans, innovations (licenses) and geographic signs of source, etc; and Copyright includes creative works like books, sonnets, plays, films, melodic works, imaginative works like drawings, canvases, photos, etc.

Intellectual Property is the essence of any organization in this competitive world. Intellectual Property rights ensure the interests of makers by giving them property rights over their manifestations. The most recognizable distinction between Intellectual Property and different types of property is that Intellectual Property is theoretical, it cannot be characterized. It should be communicated in some perceptible approach to be protectable.

What is an IP Audit?

A deliberate survey of an organization’s Intellectual Property resources, all Intellectual Property-related dangers and opportunities can be understood as an IP Audit. IP reviews can help an organization to save, and upgrade, set unused IP to use, identify chances that an organization’s items or administrations encroach another’s IP, and execute best practices. An exhaustive IP audit includes not just a survey of an organization’s Intellectual Property resources, but also the organization’s IP-related arrangements, strategies, and techniques, etc.

Since Intellectual Property Rights are made and characterized by law, Intellectual Property audits are regularly led by an attorney or law officer. An attorney is usually a person who has an expansive scope of involvement and in-depth knowledge in different kinds of Intellectual Properties and Intellectual Property valuation matters.

Intellectual Properties Audits can be either general in nature or be focused around a specific subject. Intellectual Property Specific audits are required when the Company wants to:

  • Assess the effect and expected benefit of getting or selling IP
  • Evaluate Intellectual Property rights and dangers implying the securing or dispatch of another item or administration
  • Evaluate Intellectual Properties rights and dangers implied in venturing into new business sectors or channels of exchange
  • Decide if its licensees are consenting to the provisions of a permit;
  • Help guarantee that a Research and development program is intended to best catch future business openings;
  • Recognize changes associated with receiving another brand name or new item claims and guarantees;
  • Evaluate an outsider’s encroachment claims and the potential results;
  • Exhibit the organization’s worth to acquire or give financing or venture capital; or

Legislations that Govern Intellectual Properties Rights in India:

The Copyright Act, 1957: The Copyright Act, 1957 ensures unique scholarly, sensational, melodic, and imaginative works and cinematograph movies and sound chronicles from unapproved uses. There is no copyright security for thoughts, systems, strategies for an activity, or numerical ideas in that capacity.

The Patents Act, 1970: The patent framework in India is administered by the Patents Act, 1970, the Rules have been altered occasionally in consonance with the evolving times. A Patent is a legal right given by the Government for a creation conceded for a restricted time frame to the patentee in return for total disclosure of his creation for barring others, from making, utilizing, selling, bringing in the licensed item without his assent.

The Trade Marks Act, 1999: A Trade Mark is prevalently known as a brand name in layman’s language which is a visual image that might be a word signature, name, gadget, mark, numerals, or blend of tones or colors utilized by one specific undertaking so that its products differentiable.

The Geographical Indications of Goods (Registration and Protection) Act, 1999: “geological sign”, corresponding to products, implies a sign which distinguishes such products as horticultural merchandise, characteristic products, or made merchandise that originates, or are manufactured in a specific area.

The Design Act, 2000: Design means just the highlights of shape, setup, design or trimming or structure of lines or shading or blend thereof applied to any article which in the completed article appeal to and are judged exclusively by the eye.

What makes the IP Audit So Significant?

  • IP Audits assist organizations in more than one way.
  • It helps the organization to distinguish and identify exactly what kind of IP is possessed by the organization.
  • They are significant in safeguarding and improving the existing IP and making the most benefit out of it.
  • Identifying the existing rights also helps in discovering new opportunities to benefit from IP.
  • It helps discover any defects in IP rights.

Ideas, after all, are the most valuable asset that any organization must protect at any cost. Intellectual Property Rights are more valuable than any tangible rights. On the other hand, breaching the IP rights of another can cost you a lot. One must always do business keeping in mind the value of Intellectual Property Rights

Top 5 types of “Compliance Risk”

Compliance risk management can be considered as a sub-branch of compliance management and it involves identifying, assessing, and controlling the risks that your business might have to face. It compares regulations and industry standards while employing internal controls equipped to ensure that your business is compliant with all the relevant laws and regulations along with monitoring those risks involved to be sure that they’re effective on an ongoing basis.
Compliance risk management is a process of recording the material losses that your organization might incur or any danger that your organization is exposed to as a result of non-compliance like penalties, fines, reputational loss, or any kind of business loss.

Types of  Compliance Risk

The major forms of compliance risk are factors of the operation that have to affect overall businesses. These include:

  • Regulatory and Political Uncertainty: Political events substantially affect law and legal guidelines that may alter how enterprises have to be conducted. When the environment is uncertain, it may be understood that the kinds of policies that could have an impact also are unknown, and that can result in pressure on enterprise’ operations.
  • Market Risk: Institutional managers have to continue to be aware of what’s going on inside the average marketplace to gauge risk, particularly while it comes to “safe alternatives” like electronically traded funds (ETFs).
  • Conduct Risk: Compliance risk doesn’t just merely cope with outdoor forces, however, it additionally calls for employees to continue to be conscious and in keeping with codes of conduct. For example, sexual discrimination and harassment problems have internal as well as external effects that cannot be ignored.
  • Conflicts of Interest: This difficulty in particular plagues the monetary enterprise as investment agents have to steer clear of performing in their best interest with insider data or setting their customers’ cash in locations that could cause a conflict of interest.
  • Corruption: Businesses are accountable such that their employees don’t have interaction in or aren’t harmed by bribery or fraud.
  • Quality: Product features and services that have to be created and presented must be consistent with particular standards, and failure to conform may bring about penalties, product seizure, or enterprise being shut down.

The Risks can be categorized according to their Impact on the Business

  1. Legal Impact:
    If a business enterprise fails to conform with the legal requirements, then legal actions can be taken against it which can result in fines, penalties, imprisonment, product seizures, or debarment.
  2. Financial Impact:
    Some outcomes that affect the business’s bottom line, lack of investor confidence, can be categorized as risks causing financial impact.
  3. Reputational Impact:
    These are risks that affect client’s trust and loyalty or causes a lack of employee’s confidence in the organization. Once reputation is affected, it might also affect your business.

What is the difference between Compliance and Risk Management?

Compliance and Risk Management are intently aligned undoubtedly. Compliance with already established policies and guidelines facilitates shield companies from a lot of dangers, even Risk Management facilitates shield companies from dangers that might result in non-compliance. Ultimately, compliance and Risk Management assist companies to preserve their balance and integrity on a lot of levels. A business can’t have strong Risk Management software without compliance and the reverse is also true.

However, their variations are well worth noting since Compliance-associated functions and Risk Control-associated functions deserve precise methods and execution tactics.

Since non-compliance can cause high-priced fines and penalties, in addition to damaging the reputation, it ought to now no longer be undervalued. Still, it demands to make certain that the employer is obeying prescribed policies and guidelines. Risk control, on the other hand, ought to rely on evaluation as a way to stay clear of dangers or decide dangers well worth taking.

Compliance is prescriptive in nature and risk management predictive in nature and this explains why the previous is tactical and the latter is more strategic. With compliance, companies should adhere to policies and guidelines already in place. But when it comes to risk management the company ought to be capable of forecasting the dangers and spurring new and revolutionary strategies (in preference to subscribing to already set up policies) that decrease dangers or take gain in their upsides.

Conclusion

One can choose to employ whatever approach best suits the business but regardless of it, one must first be clear about why compliance risk and its management is essential to run a business properly and what every business needs in particular. Whether it is big or small all businesses must have a Compliance risk management program. Every business is equally exposed to compliance risk as it does not differentiate against business type or size and therefore it is not something that one can take lightly.

Unorganized Workers’ Social Security Act, 2008

Challenges in Unorganized Sector

The relentless increment of an unorganized workforce has become a typical element of the world economy over the most recent couple of years. Developed nations having big-time salary levels rely less upon the casual or unorganized sector while nations having low and center pay generally rely upon them. For convenience, The Ministry of Labour, Government of India has broadly classified the unorganized workforce into four bunches, dependent on the occupation, nature of business, particularly distressed classes and services class.

The National Commission on Labour 1969, expressed that it is hard to characterize the unorganized workers yet it very well may be conceptualized. The Unorganised Worker’s Social Security Act, 2008 characterizes unorganized workers as home-based laborers or independently employed specialists or a wage laborer in the unorganized area and including the laborers for the organized sector who are not covered by some other Act.

Issues that unorganized workers have to face:

The expansion of the labor force in the disorderly area has become a huge element of the Indian economy. They are discovered both in rustic just as metropolitan zones. Indian economy is overwhelmed by sloppy works. Notwithstanding the reality, the disorderly specialists have been dealing with different issues in their everyday life.

  1.  Low Wages: The workers that belong to the unorganized sectors are less paid laborers in the general public. Equivalent compensation for equivalent work isn’t a principle that is applied to the unorganized laborers. Any kind of remittances, reward, incidental advantages are most certainly not given to them.
  2. Lack of security: The unorganized workers are not satisfactorily secured by the law. They work in unhygienic conditions and get less consideration from the work and worker’s organizations. They are intellectually tormented. Child laborers are manhandled.
  3. Lack of Basic amenities: The unorganized laborers work in unhygienic and packed conditions where there is no satisfactory sterilization and water in their functioning regions. They live in an extremely blocked room. The offspring of such laborers are denied the necessities like schooling, wellbeing, and nourishment.
  4. No Job stability: The idea of work among unorganized sector laborers is impermanent. Their work is unstable and they don’t get steady and lasting job opportunities. They take part in easygoing exercises with no particular obligations. The Irregular nature of their work makes them masked workers.

The Unorganized Worker’s Social Security Act, 2008:

The Government of India has sanctioned The Unorganized Worker’s Social Security Act, 2008 to advance government-backed retirement measures for the laborers in the unorganized sectors. This act is only intended for the laborers in the unorganized sector to take up measures for Unorganized Workers identifying with the issue covering life and incapacity, wellbeing and maternity benefits, old-age insurance, and some other advantages dictated by the local government.

Popular schemes

The Indra Gandhi National Old Age Pension Scheme (IGNOAPS):

This scheme was released on the fifteenth August 1995 and it was a part of the National Social Assistant Programme (NSAP) was renamed The Indra Gandhi National Old Age Pension Scheme (IGNOAPS). The scheme is a Pension Scheme in which the recipients don’t have to contribute any add up to get the month-to-month annuity of Rs. 200/ – for the age between 60-79 years and Rs. 500/ – for the age group of 80 or more.

The National Family Benefit Scheme (NFBS):

The National Family Benefit Scheme (NFBS) likewise was a part of the National Social Assistant Programme (NSAP). Under the plan the deprived family is given the help of Rs. 20, 000/ – if the main income holder of the family including the female (sole breadwinner) has passed away because of normal or unplanned cases. This advantage is appropriate to the age group of 18- 60 years.

Child Labour (Prohibition and Regulation) Act, 1986

In our Country, child labour is practiced in various forms. It is both surprising and saddening that it is the parents or the guardians of the child that encourage such practices, some out of need and some out of greed.

Who is a Child?

The definition of Child” in the Child Labour (Prohibition and Regulation) Act, 1986 is a person who has not completed the age of fourteen years.

Child labour

A child is by will or forcibly utilized to work in the brutal conditions and environment which turns into a danger to their life. But according to the law, no child who is below the age of fourteen shall be utilized for any kind of employment or should be allowed to work in any establishment or process. Employing kids below the age of 14 years for any sort of work, other than in certain family-based work, is a cognizable offense and will draw in a prison term of up to 2 years. Teenagers between the age of 14 – 18 years can’t be utilized in any dangerous occupation.

Hazardous Employment

Child labour that involves a child to perform is his work in an extremely dangerous, hazardous, unfavorable, and unhealthy condition which can be extremely detrimental to the life and health of the child, and which leads to any serious injuries is considered as ‘Hazardous Employment’ Examples of hazardous employment are-
  • Any labour that has a high possibility of causing spills or trips. For example, if the establishment has cords running across the floor or ice and likely to cause a fall if not careful is a hazardous environment.
  • Anything that can cause falls like working from high statures, including stepping stools, frameworks, rooftops, or any raised work territory.
  • Unguarded hardware and moving apparatus parts or any machinery that a labourer can accidentally come in contact with and thereby cause an injury.
  • Places that have electrical risks like frayed strings, missing ground pins, inappropriate wiring.
Rules for employing Adolescents Children are prohibited from any kind of labour but the Child Labour (Prevention and Regulation) Amendment Act permits adolescents to work in non-hazardous working conditions and processes. If an employer wishes to employ an adolescent in his establishment as a Labourer, then certain conditions must be satisfied by the employer:
  • The time of work on every day ought to be fixed in a way that no period or work would surpass three hours.
  • The young adult should have a span for rest, one hour subsequent to working for three hours.
  • The complete time spent working by a juvenile can’t surpass 6 hours in a day, incorporating the time spent in sitting tight for work.
  • An adolescent can’t be utilized during the long stretches of 7 PM to 8 AM.
  • There shall be no overtime for an adolescent
  • The employer has to make sure that the adolescent is not employed in any other establishment while he is working with his establishment.

Punishments relating to child labour

In Case of an offense committed by parents/guardians There will not be any punishment in the event of a first offense by guardians or parents of the child but if there should arise an occurrence of a second offense, then the punishment recommended is a maximum fine of Rs. 10,000. In case of an offense committed by an employer- When an employer has committed any offence which is culpable under the child labour act and the same is a cognizable offence then the authorities are empowered to file a first information report and commence with further investigation in to the offence committed even without the court warrant and an arrest can also be done without a warrant in this matter.

Penalty

Engaging a child in any kind of labour or permitting a child to continue work in any kind of establishment or occupation or process in contravention to the provisions of the State can attract punishment of imprisonment of a minimum of six months and a maximum of two years. The Fine shall be Rs. 20,000 to Rs. 50,000 or both.

Conclusion

At such tender age, a child is supposed to focus on education. Education is a basic right. On its establishment rest the foundations of opportunity and feasible human improvement. Child labour can restrict the time and energy kids spend on education. Numerous types of youngsters, work are precluded in worldwide norms. While child labour can be an obstruction to training, simultaneously education is instrumental in the process of eradicating Child labour. It is through education that the parents and the kids become more mindful of its advantages, and the mischief that child labour can cause.

Elements and Importance of Corporate Social Responsibility

The concept of Corporate Social Responsibility was introduced with the aim of encouraging social accountability of Corporates. Corporate social responsibility as defined by United Nations Industrial Development Organization (UNIDO) is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. Corporate social responsibility makes people focused on social sustainability, environmental sustainability, and economic sustainability that bring about a positive change on society and the environment, and at the same time, it also gives them a good reputation. Rather than a mere statutory compliance, the companies take CSR projects very seriously. It is one way that the Company builds its reputation.

Law in India prescribes that every company having a net worth of rupees five hundred crores or more, or turnover of rupees one thousand crores or more or a net profit of rupees five crores or more during any financial year shall constitute a Corporate Social Responsibility Committee. It is through this board that a company shall undertake CSR projects.

Elements of CSR programs:

Environmental concerns

Many companies are unpopular as they have large carbon footprints and since now, the public in general is more aware of environmental crises any efforts to reduce them can prove to be beneficial to both the environment and their reputation. It includes recycling, or using locally sourced products or cutting down on waste by managing their packaging in an eco-friendly manner. These efforts also help the companies save money and the planet at the same time. An eco-friendly brand is warmly welcomed by the public at large. Effectively managing the resource while not compromising the efficiency is the ultimate goal for which now the companies are beginning to focus. They implement such methods as the effects of climate change accelerate. Consumers who are conscious of environmental impact are more likely to support a company that takes steps to improve the environment.

Philanthropy

CSR and corporate philanthropy are often used interchangeably but both are not the same. Corporate philanthropy can be understood as the general practice of a business giving back to the public, through charitable donations and so on but CSR is a broader strategy through philanthropic efforts align and are integrated while implementing CSR projects. When a company involves directly in a project it is covered under CSR. When a company gives financial support to another organization to undertake the organization’s motive it is Corporate philanthropy. On the other hand, if the same company takes up a project with the organization and becomes a partner and works for the same motive then such an activity can be understood as a CSR project.

Ethical labour practices

CSR programs encourage fair and ethical treatment of employees. Ensuring employee safety and promoting a healthy workplace for them and other practices that contribute to employees’ wellbeing. The companies that have international locations take it very seriously as they have to comply with different regulations which involves paying employees a fair and competitive salary and making sure of their wellbeing and their ability to provide for themselves and their families.

Benefits of Doing CSR

  • Increase employee satisfaction: CSR encourages good labour practices and ethical labour standards and therefore people who working such places have strong core values and facilitate positive change in the world around them. When a company enables its employees to make an impact on their environment, it creates a sense of unity, both within the company and also within the outer world. The workers of the organization also become more involved in their contribution when they feel valued by their employers. When a company gets more engaged and dedicated, the employees are more productive they ever will be. It is proven that companies with highly dedicated employees tend to achieve 21% higher profitability.
  • Boost customer loyalty: Having loyal customers is the greatest asset a company could ever have and in today’s super-competitive business world customer loyalty matters even more. Watching the trend now we can tell that the customers wish to buy from socially responsible brands. 56% of consumers are of the opinion that they are more likely to buy from a brand that is known for its social value. Customers evaluate a brand’s commitment to community and involvement before purchasing from it.

Conclusion

Well, it is true that one must not consider public perception as the driving motivation behind CSR but it would be impossible to ignore the benefits that CSR activities can have on a company’s image, and subsequently play a role in increasing profits. The Companies which are socially responsible companies generate positive vibes among the public.