1.

WHAT IS THE DIFFERENCE BETWEEN A PUBLIC COMPANY AND PRIVATE

COMPANY?

- Public Company: Shares freely transferable; Minimum 7 and maximum

unlimited number of members; Can raise capital through public issue of its
securities.
- Private Company: Shares are not freely transferable; Minimum 2 and
maximum 200 members; Cannot raise capital through public issue of its
securities.

2. DIFFERENCE BETWEEN COMPANY AD PARTNERSHIP.

- A partnership firm is an unincorporated association, a firm is not a person

and as such it cannot become the member of the company. But the firm can
hold shares in the individual’s name of the partners as joint shareholders.

3. WHAT IS A PROSPECTUS AND A STATEMENT IN LIEU OF PROSPECTUS?

- Prospectus: To raise capital from the general public, the first and foremost
requirement of a public company is to issue a prospectus. A prospectus is a
disclosure document used to invite the general public to subscribe for shares.
It contains all the relevant details and facts about the company that helps the
investors in rational decision making. Only public company can issue
prospectus.
- Statement in lieu of prospectus: The Statement in Lieu of Prospectus is a
document filed with the Registrar of the Companies (ROC) when the company
has not issued prospectus to the public for inviting them to subscribe for
shares. The statement must contain the signatures of all the directors or their
agents authorised in writing. It is similar to a prospectus but contains brief
information.
The Statement in Lieu of Prospectus needs to be filed with the registrar if the
company does not issues prospectus or the company issued prospectus but
because minimum subscription has not been received the company has not
proceeded for the allotment of shares. The prospectus is issued with a view to
encouraging public subscription. On the other hand, Statement in lieu of
Prospectus is issued in order to be filed with the registrar of companies.

4. TYPES OF PROSPECTUS?

- Red Herring Prospectus: Prospectus which lacks the complete particulars

about the quantum or the price of the securities to be issued. A company may
issue a red herring prospectus prior to the issue of prospectus when it is
proposing to make an offer of securities.
This type of prospectus needs to be filed with the registrar at least three days
prior to the opening of the subscription list or the offer. The obligations
carried by a red herring prospectus are same as a prospectus. If there is any
 variation between a red herring prospectus and a prospectus then it should
be highlighted in the prospectus as variations.
- Shelf Prospectus: A prospectus in respect of which the securities or class of
securities included therein are issued for subscription in one or more issues
over a certain period without the issue of a further prospectus i.e. when a
shelf prospectus is issued then the issuer does not need to issue a separate
prospectus for each offering he can offer or sell securities without issuing any
further prospectus. The prospectus shall prescribe the validity period of the
prospectus and it should be not be exceeding one year. This period
commences from the opening date of the first offer of the securities. For any
second or further offer, no separate prospectus is required.
- Abridged prospectus: The abridged prospectus is a summary of a
prospectus filed before the registrar. It contains all the features of a
prospectus. An abridged prospectus contains all the information of the
prospectus in brief so that it should be convenient and quick for an investor
to know all the useful information in short. when any form for the purchase of
securities of a company is issued, it must be accompanied by an abridged
prospectus. It contains all the useful and materialistic information so that the
investor can take a rational decision and it also reduces the cost of public
issue of the capital as it is a short form of a prospectus.
- Deemed Prospectus (S. 25): Final Document Containing Offer of Securities
for Sale. When any company to offer securities for sale to the public, allots or
agrees to allot securities, the document will be considered as a deemed
prospectus through which the offer is made to the public for sale. The
document is deemed to be a prospectus of a company for all purposes and all
the provision of content and liabilities of a prospectus will be applied upon it.

5. WHAT ARE MOU AND AOA & WHAT DO THEY CONTAIN?

- Memorandum of Association (Section 4) is the document that reveals the

name, State of registered office address, aims and objectives of the company,
clause about its limited liability, share capital, Nominal/Authorised share
capital of the Company, face value of shares, replacement member’s name in
case OPC director dies etc. MOA also gives information about its first
shareholders including the number of shares subscribed by them. MOA is one
document that tells people all about the company and its relationship with the
outside world.
- Articles of Association (Section 5), also simply referred to as Articles, are
necessary to be submitted during incorporation of a company with the ROC.
Contain the regulations for management of the company. When Articles are
taken in conjunction with MOA, they form what is called as the constitution of
the company. Though there are differences in these articles as to their
requirements in different countries, in general AOA is a document that
provides following information about the company-
Allotment of shares; Call on shares (the Board may, at any time, call upon
the members w.r.t unpaid monies); Lien on shares; Transfer and
 transmission of shares; Forfeiture of shares; Alteration of capital; Share
certificates; Buy-back of shares; Voting right and proxies; Meeting;
Directors and their appointment; Borrowing powers; Dividend and
reserves; Accounts and audit; Winding up etc.

6. HOW CAN AN MOA BE ALTERED?

- As per the provisions of Section 13(1) of the CA, 2013, a company is required
to pass special resolution for altering its MOA. For alteration of name or
State of registered office, approval of Central Government through an
application is also required. All clauses of Memorandum except Capital clause
can be altered by following the provisions of Section 13 of Companies Act,
2013 by passing special resolution.

7. PREFERENCE SHARES?

- Preference shares are those, which enjoy the following two preferential
rights:

1. Dividend at a fixed rate or a fixed amount on these shares before any

dividend on equity shares.
2. Given preference during liquidation. Return of preference share capital
before the return of equity share capital at the time of liquidation of the
 company. Preference shares also have a right to participate or in part in
excess profits left after been paid to equity shares, or has a right to
participate in the premium (an extra amount above the nominal value) at
the time of redemption of preference shares

- One limitation: these shares do not carry voting rights.

(i) Classes of Preference Shares with reference to Dividend

Cumulative: When the outstanding payment of a dividend is cumulative. If a

company does not have the financial capability to pay a dividend to the
owners of its preference shares at any point of time, then it will not pay a
dividend to its common shareholders, as long as the preference shareholders
are not paid. The dividend amount gets carried on to the next year.
Non-cumulative: Only payable from each year’s net profit. A non-cumulative
preference shareholder will not be paid from future profits. So, if a company
undergoes a loss in that year, then the outstanding payment of dividend
cannot be claimed in subsequent years like in the case of cumulative
preference shares.

(ii) Classes of Preference Shares With reference to Redemption

Redeemable: Those Preference Shares which are redeemed by the company

at a specific time (not exceeding 20 years from the date of issue) for the
repayment or earlier. We call this repayment of the amount as Redemption. A
redeemable preference share is good for the company.
Non-redeemable: The amount returned by the company at the time of wind
up to the holders of such shares is called Irredeemable Preference Shares.
They are a perpetual liability, which cannot be redeemed during the lifetime
of the company.

(iii) Classes of Preference Shares With reference to Participation in Surplus

Profits

Participating: The Articles of Association of a company may provide that

after the company pays the dividend to the Equity Shareholders, the holders
of Preference Shares will also have a right to participate in the remaining
profits. The Preference Shares who carries this right are called Participating
Preference Shares.
Non-participating: Preference Shares which do not carry the right to
participate in the profits remaining after Equity Shareholders are paid are
called Non-Participating Preference Shares.

(iv) Classes of Preference Shares With reference to Convertibility

Convertible: Those Preference Shares which have the right to be converted

into Equity Shares are called Convertible Preference Shares.
Non-convertible: Non-Convertible Preference Shares do not have the right
to be converted into Equity Shares.
8. WHAT IS DEMERGER

- A demerger is a form of corporate restructuring in which the entity's

business operations are segregated into one or more components. It is the
converse of a merger or acquisition. It is a business strategy in which a single
business is broken into components, either to operate on their own, to be sold
or to be dissolved. A de-merger allows a large company, such as a
conglomerate, to split off its various brands to invite or prevent an acquisition
or to raise capital by selling off components that are no longer part of the
business's core product line, or to create separate legal entities to handle
different operations.
The various forms of demerger are:
Spin-off is a kind of divestiture strategy where the company’s division or
undertaking is separated from the parent company. Once they are spun- off,
both the parent company and the resulting company act as separate
corporate entities. The reason behind this type of divestiture is to attract
more outside investments which can be done when the business unit is
operating under independent management. It is expected that after the spin-
off the companies will be worth more as independent entities than as parts of
a larger business. This strategy is also adopted when the company wants to
dispose of the non- core assets. The parent company typically receives no
cash consideration for the spin-off. Existing shareholders benefit by now
holding shares of two separate companies after the spin-off instead of one.
In a split up, a company splits up into one or more independent companies
by which the parent company ceases to exist. Once the company is split into
different entities, the shares held by the parent company are exchanged for
the shares in the new company formed. These shares are distributed in the
same proportion as they are held by the original company, depending on the
situation. No infusion of cash.
A third situation is when a company may want to sell off its logistics business
to an external party. Hence, it may sell some portion of its equity stake in a
subsidiary company to a third party or to a strategic investor. This type of
transaction is called an equity carve out. Spin-offs and splits do not
constitute a sale to an external party. Hence, an equity carve-out results in
the infusion of cash whereas spinoffs and splits do not.

9. DIRECTOR’S FIDUCIARY DUTIES?

- Duties of a Director:

 Duty to act in good faith and in the best interest of the company.
 Duty to act for a proper purpose.
 Duty to avoid a conflict of interest.
 Duty to retain discretion.

- Rights of Directors:

 Right to participate in the affairs of the company

  Right to have remuneration
 Right to compensation.

10. WHAT ARE THE DIFFERENT TYPES OF CAPITAL?

- Nominal Capital or Authorized Capital: is the total fee value of the shares
which the company is authorized to issue.
- Issued Capital: is that part of authorized capital which is actually offered to
the public for sale.
- Subscribed Capital: is that part of issued capital which is taken up and
accepted by the public.
- Paid up Capital: is the amount of money actually paid by the subscribers or
credited as so paid.
- Uncalled Capital: is the unpaid portion of the subscribed capital.

11. WHAT IS MEANT BY CORPORATE VEIL?

- A company is a legal person and is distinct from its members. This principle is
regarded as a curtain or a veil between the company and its members
protecting the later from the liabilities of the former.
- When there are cases of dishonesty and fraudulence in incorporation, the law
lifts the veil. Other circumstances: avoidance pf welfare legislation; when
company is a sham, fraud or improper conduct; when it evades tax liabilities.
Ben Hashem vs Al Sayif case enlists 6 principles which guide in lifting of the
corporate veil.

12. MINIMUM NUMBER OF MEMBERS? AND MAXIMUM?

- Minimum: Public- 7, private- 2. If this statutory threshold is violated for more

than 6 months, liability of the members become unlimited.
- Maximum: Public- unlimited number of members, private- 200.

13. TYPES OF COMPANY?

- On the basis of number of member:

 Private company:
1. Restricts the rights of members to transfer the shares.
2. Limits the number of its members to 200 (Excluding employees and
members who were past-employees).
3. Prohibits any invitation to the public to subscribe for any shares or
debentures of the company.
 Public company: No restriction as to transferability of shares, minimum 7
and maximum unlimited numbers; Can invite public to subscribe to its
securities.
  One person company (only a natural person who is an Indian citizen and
resident in India is eligible to incorporate an OPC): Lesser corporate
governance norms: No need to show cash inflow etc.
 Small Company: Private company with turnover less than or equal to 2
crores and capital contribution less than or equal to 50 lakhs.

- On the Basis of Incorporation:

 Statutory Companies: The companies incorporated by means of

Statute of special Act of the parliament or any State Legislative e.g.
RBI, LIC etc.
 Registered Companies: The companies registered under the
companies Act, 1956 or the earlier Companies Act.
 Charter Company: Established by some Royal Charter. No more in
existence. Like East India Company.
 Foreign Company: Incorporated outside but place of
business/conducts business in India.

- On the basis of liability:

 Companies limited by Share: The companies in which the liability of

the members are limited by the memorandum to the amount, if any,
unpaid on the share respectively held by them. Liability to pay unpaid
amount can arise whenever called by the Directors even the company is
a going concern.

 Companies limited by Guarantee: The companies in which the

liability of the members are limited to such amounts as they may
respectively undertake by the memorandum to contribute to the assets
of the company in the event of being its wound up. Clubs, trade
associations and societies for promoting different objects are examples
of such a company. The liability of members to pay their guaranteed
amounts arises only when the company has gone into liquidation and
not when it is a going concern.

 Unlimited Companies: The companies in which the liability of the

members is not limited at all.

- On the basis of Control:

 Holding Company: Controls the composition of BOD of another

company (subsidiary). Exercises control over more than half of the total
voting power of such other company (either solely or together with its
other subsidiaries).
[Sec. 2(27) "control" shall include
(i) the right to appoint majority of the directors; or
(ii) to control the management or policy decisions exercisable by a
person or persons acting individually or in concert, directly or
 indirectly, including by virtue of their shareholding or
management rights or shareholders agreements or voting
agreements or in any other manner]
 Subsidiary Company: Same as explained above.
 Associate Company: If a company exercises ‘significant influence’
over such companies but which is not a subsidiary. The expression
"significant influence" means control of at least twenty per cent of total
voting power, or control of or participation in business decisions under
an agreement.

- Other Companies:

 Section 8 Company: An “Association not for profit” means a

association which is formed not for earning profit but for commerce,
art, science, charily, religion or other useful social purpose. These
associations may or may not be registered as a company under the
companies Act. When such type of the association are registered as a
company as a company with limited liability, they must be granted a
license by the Central Government. Need not put “Ltd.” or “Pvt. Ltd.”
after its name. When the following two conditions are satisfied than
only the Central Government will grant the licence to an association,
conditions are as follows:-
1. Intends to apply or use its profits of other income in promoting its
objects and to prohibits the payment of any dividend to its members.
2. Is important to form a limited company for promoting commerce,
science, religion charity or for other useful object.
As per Section 8(10) of CA, 2013, a company registered under Section 8
can only be merged with another Section 8 company which has similar
objects; Section 8 Company is required to obtain prior approval of
Central Government (power delegated to “RD”) for alteration of its
articles
 Government Companies: In which CG/SG has at least 51% of paid-up
share capital.
 Investment Companies: Acquires/holds/deals with securities
(Shares/debentures etc.) of other companies with an aim to make profit.
AKA Venture Capitalists
 Producer Companies: Kind of farmer co-operative, formed by farmers
for their own benefit.
 Dormant Companies: No ‘significant accounting transaction’. For
future projects or holding some asset/IPR, if a company has no
significant accounting transaction for more than 2 years, ROC will make
it a Dormant Company.- Exemptions like- no need to show cash flow
granted.

14. WHAT IS A DEBENTURE?

- A debenture is an instrument of debt executed by the company
acknowledging its obligation to repay the sum at a specified rate and also
carrying an interest. It is one of the methods of raising the loan capital of the
company. A debenture is thus like a certificate of loan evidencing the fact
that the company is liable to pay a specified amount with interest and
although the money raised by the debentures becomes a part of the
company's capital structure, it does not become share capital. It can be
secure or unsecure. They are different from Bonds which are also issued for
raising capital but are always backed by some security. Usually, bond give
you low rate of interest as compared to debentures.

15. HOW IS A PUBLIC COMPANY CONVERTED INTO A PRIVATE COMPANY?

1. A Public company can be converted into a private company by altering the

articles and memorandum, incorporating the three restrictions, mentioned in
section 3(i)(iii).
2. Approval of the central government is necessary for converting a Public
company into a private company.
3. Notice to all the creditors of the Company is to be given.
4. Special resolution is to be passed within 30 days, after obtaining the
approval of the Central Government for conversion.
5. The word private Ltd. is used.

16. WHAT IS THE DOCTRINE OF CONSTRUCTIVE NOTICE?

- Those dealing with the company whether a shareholder or an outsider is

presumed to have read the two documents (AOA and MOA) and understood
its true meaning. This deemed knowledge of the two documents and their
contents is knows as the doctrine of Constructive Notice. When a person
deals with a company in a way, which is not in accordance with the provision
of the Memorandum of Association or Articles of association or enters into a
transaction which is beyond the scope of the power of the company he must
take the consequences in respect of such dealing.

17. WHAT IS THE DOCTRINE OF INDOOR MANAGEMENT?

- The doctrine of indoor management is an exception to rules of constructive

notice. As per the doctrine of indoor management, the person dealing with
the company have right to assume that as far as the internal proceeding of
the company are concerned everything has been done properly. A company's
indoor affairs are the company's problem. It is necessary to read the
registered documents and to see that the proposed dealing in not inconsistent
therewith. They are not required to do anything more as per the regularity of
the internal proceeding.

18. DOCTRINE OF ULTRA VIRES

- Whatever is not stated in the MOM as the objects/powers of the company, is
prohibited. An ultra vires act is void and does not bind the company and the
Company cannot make it valid even if the members assent to it. The rule is
meant to protect the interest of the shareholders and creditors. On the other
hand, if an act is ultra vires the AOA, the members can ratify it later on.
Over the time, the principle of ‘reasonable construction of memorandum’ has
evolved which allows ratification of those actions which are considered
necessary in furtherance of the objects (incidental to attainment of object) of
the Company, even if not stated in MOM- Ashbury Railway carriage vs Riche

19. PRIVILEGES AND EXEMPTIONS OF PRIVATE COMPANY

- Need not prepare a report on the Annual General Meeting.

- Private company need not have more than two directors.
- Need not appoint independent directors on its Board.
- Financial assistance can be given to its employees for purchase of or
subscribing to its own shares or shares in its holding company.
- A proportion of directors need not retire every year.
- Additional disqualification grounds for appointment/vacation of office of
directors can be specified.

20. DIFFERENCE BETWEEN OPC AND SOLE PROPRIETORSHIP

- A one-person company is different from a sole proprietorship because it is a

separate legal entity that distinguishes between the promoter and the
company. The promoter’s liability is limited in an OPC in the event of a
default or legal issues. On the other hand, in sole proprietorships, the liability
is not restricted and extends to the individual and his or her entire assets.

21. IS IT MANDATORY FOR A COMPANY TO HAVE A COMMON SEAL?

- No, as per the Companies (Amendment) Act 2015, the companies are not
mandatorily required to have common seal. Further, the existing companies
may amend their AOA to this effect. All such documents which required
affixing the common seal may now instead be signed by two directors or one
director and a company secretary of the company.

22. WHAT ARE THE MODES AVAILABLE FOR ISSUE OF FURTHER SHARES?

- As per Section 23 of the CA, 2013, following modes are available for issue of
further shares:

1. For Public Companies:

a) Public offer through issue of prospectus
b) Private Placement/ Preferential allotment:
Private placement : (Section 42) AKA non-public offering, is a funding mode
through Shares or Other Securities which are sold not through a public
offering, but rather through a private offering, mostly to a small number of
chosen investors. Offer or Invitation of Securities shall be made to Maximum
of 50 Persons at a time and 200 Persons in aggregate during a Financial Year
and this limit of 50/200 shall exclude QIBs ( Qualified Institutional Buyers)
and Employees who are being offered securities under ESOPs. Usually made
to outsiders only and no valuation is required before issuing.
Preferential allotment: Similar to Private placement as it is offered to select
group of individuals However, issue of shares to both Existing Shareholders
and/or outsiders. Valuation report is a must while issuing the shares on a
preferential basis.

c) Issue of shares to employees under a scheme of employees’ stock option

(ESPOs): Company gives its employees ownership interest by issuing stock to
existing employees of the company at a predetermined price (aka ‘offer
price’) irrespective of the current market price of the stock of the company.
ESOP is issued by the company to reward their employees or make their
employees happy and ensure that employee remains in the company for a
long time.

d) Right issue/ bonus issue:

Rights Issue: Company issue right shares when they are in need of funds due
to expansion requirement or working capital requirement of the company, by
further issue. Gives right to the existing shareholder to purchase shares of
the company at discounted price to market price through a letter of an issue,
proportional to their current holding. The shareholder is required to inform
the company about the number of shares opted by him/her, within stipulated
period. The shareholders can forfeit this right, partially or completely, to
enable the company issue shares to the general public or selected investors
on preferential basis, through the special resolution.
Bonus Issue: Bonus Shares denotes free share of stock issued to the existing
shareholders of the company, depending on the number of shares held by the
shareholder. The bonus issue only raises the total number of shares issued,
but it does not make any change in the entity’s net worth. Bonus shares do
not inject fresh capital into the company, as they are issued to the
shareholders without any consideration. As per Section 63 of the Companies
Act 2013, the company can issue fully paid up bonus shares, out of any of the
following reserves/account:

i. Free reserves (such reserves which, as per the latest audited balance
sheet of a company, are available for distribution as dividend)
ii. Securities premium account (This account is credited for money paid,
or promised to be paid, by a shareholder for a share, but only when the
shareholder pays more than the face value/ par value of a share. This
 account can be used to write off equity-related expenses, such as
underwriting costs, and may also be used to issue bonus shares.)
iii. Capital redemption reserve account [mandatorily has to be maintained
by Companies (just like CRR of banks) to deal with shares which are
redeemable.]

2. For Private Companies:

a) Right issue/ bonus issue;
b) Issue of shares to employees under a scheme of employees’ stock option;
and
c) Issue of shares to any person through preferential allotment/ private
placement.

BASIS FOR RIGHT SHARES BONUS SHARES

COMPARISO
N
Meaning Right shares are the one Bonus shares refers to the
available to the existing shares issued by the company
shareholders equivalent to free of cost to the existing
their holdings, that can be shareholders in the proportion
bought at a fixed price, for of their holdings, out of
a definite period of time. accumulated profits and
reserves.
Price Issued at discounted prices Issued free of cost
Objective To raise fresh capital for To bring the market price per
the firm. share, within a more popular
range.
Renunciation Shareholders may fully or No such renunciation.
partly renounce their
rights.
Paid up value Either fully or partly paid Always fully paid up.
up.

23. CAN SUBSIDIARY COMPANY HOLD SHARES IN ITS HOLDING COMPANY?

- As per Section 19 of the CA, 2013, subsidiary company cannot hold shares in
its holding company and any such holding shall be void except in following
circumstances:
a) where the subsidiary company holds such shares as the legal
representative of a deceased member of the holding company;
b) where the subsidiary company holds such shares as a trustee;
c) where the subsidiary company is a shareholder even before it became a
subsidiary company of the holding company.
24. CAN A COMPANY ISSUE SHARES AT A DISCOUNT?

- As per Section 53 of CA, 2013, no company shall issue shares at a discount.

Two exceptions to this general rule: Any shares issued by a company at a
discounted price shall be void.

i. Issuance of issue of sweat equity shares.

ii. As per the 2017 Companies Amendment Act, a company may issue
shares at a discount to its creditors when its debt is converted into
shares in pursuance of any statutory resolution plan or debt
restructuring scheme in accordance with any guidelines or directions or
regulations specified by the Reserve Bank of India under the Reserve
Bank of India Act, 1934 or the Banking (Regulation) Act, 1949.

- Sweat Equity Shares (Section 54): These are those shares which are already
issued. These are equity shares as are issued by a company to its directors or
employees at a discount or for consideration, other than cash, for providing
their know-how or making available rights in the nature of intellectual
property rights or value additions. The sweat equity that is issued to
directors or employees shall be locked in for a period of three years from the
date of allotment of the shares.
- A company may issue sweat equity shares of a class of shares already issued,
if the following conditions are fulfilled, namely:—
(a) the issue is authorised by a special resolution passed by the company;
(b) the resolution specifies the number of shares, the current market price,
consideration, if any, and the class or classes of directors or employees to
whom such equity shares are to be issued;
- Sweat equity shares can be issued to employees of the company as classified
below:

(i) Permanent employee of the Company who has been working in India or
outside India, for at least one year;
(ii) A Director of the Company, whether a whole time Director or not;
(iii) An employee or a director as specified above of a subsidiary or of a
holding of the company

25. DIFFERENCE BETWEEN SWEAT EQUITY AND ESOPS

Basis Sweat Equity Shares Employee Stock Options

Reason of Sweat Equity Shares are ESOPs are given in the nature of
Issuance issued as consideration for Incentive and retention plan these
+ creation or transfer of IPRs can be issued to employees and
To whom to the company or as other officers. ESOPs cannot be issued to
issued value addition these can be Promoter or person belonging to
issued to employees, Officers the promoter group.
and Directors of the
Company.
Relevant Issue of Sweat Equity is Issue of ESOP is governed by
 section governed by Section 54 of Section 62(1)(b) of Companies Act,
Companies Act, 2013, read 2013, read with Rule 12 of
with Rule 8 of Companies Companies (Share Capital and
(Share Capital and Debenture) Rules, 2014.`
Debenture) Rules, 2014.
Value These shares can be issued These options can be issued with
at discounted price or free conversion right at a pre-
for know-how and services to determined price. The issue price
the company. can be less than the intrinsic value
of the shares.
Considera The consideration can be The consideration has to be paid in
tion partly cash and partly cash.
IPRs/value addition or fully
non-cash consideration.
Lock-in These Shares have Lock-In period is not specified for
period compulsory Lock-In Period of the ESOP.
3 years
Restrictio The company shall not issue There is no such restriction in case
n on sweat equity shares for more of ESOPs
quantum than 15% of the existing
paid-up equity share capital
in a year or shares of the
issue value of 5 crore,
whichever is higher. At any
time, it should not exceed
25% of the total paid up
capital.
Pricing Pricing Guidelines are No Pricing guidelines are defined.
guidelines defined for Sweat Equity
Shares.

26. CAN A COMPANY CONVERT THE EXISTING SHARES INTO SHARES WITH
DIFFERENTIAL VOTING RIGHTS AND VICE VERSA?

- No, as per Rule 4(3) of Companies (Share Capital and Debenture) Rules 2014,
company cannot convert its existing shares into shares with differential
voting rights and vice versa.
- Differential voting rights ("DVRs") refer to equity shares holding
differential rights as to dividend and/or voting. In India, section 43 (a) (ii) of
the Companies Act, 2013 allows a company limited by shares to issue DVRs
as part of its share capital. It can only be issued if the AOA authorises such
issuance and an ordinary resolution has been passed at a general meeting of
the shareholders. The shares with differential rights shall not exceed 74%
(seventy four per cent of the total post-issue paid up equity share capital) and
the company should have a consistent track record of distributable profits for
the last 3 (three) years. It is a viable option for raising investments and
retaining control over the company at the same time. Usually shareholders
subscribing to DVRs are given higher dividends (otherwise why would
someone buy such shares?).
 Section 47 prescribes the general rule of ‘one share-one vote’ by stating that
every shareholder of a company the right to vote on every resolution
presented before the company, in proportion to his/her share of the paid-up
equity share capital. But the same is subject to Section 43 of DVRs.

27. WHAT IS MEANT BY THE TERM “BUY BACK OF SHARES” AND FUNDS
UTILIZED FOR BUY BACK?

- “Buy back” (aka share repurchase) is a concept by which a company

purchases its own shares or other specified securities by following the
procedures laid down in Section 68 of the CA, 2013. It leads to a reduction in
the share capital of a company as opposed to the issue of shares which results
in an increase in the share capital. The company can utilize free reserves,
securities premium account or proceeds of the issue of fresh issue shares or
other specified securities to purchase its own shares.
- Buy back is done at ‘fair market value’ of the shares, hence, it consolidates
ownership, and gives benefit from temporary undervaluation of the stock.

Conditions for buy-back of shares:

i. Authorised by AOA.
ii. Special resolution of shareholders passed in a general meeting of
shareholders.
iii. The company can buy back shares not exceeding 25% of the aggregate
of paid-up capital and free reserves of the company.
iv. Above conditions need not be fulfilled if the buy-back is 10% per cent or
less of the total paid-up equity capital and free reserves of the company
+ such buy-back has been authorised by the Board by means of a
resolution passed at its meeting.

28. DIFFERENCE BETWEEN SHARE REDUCTION AND BUY BACK (CROSS CHECK
THE ANSWER)

- Under a share capital reduction, any money paid to a company in respect of a

member’s share is returned to the member.
Buy back of shares and redemption of Preference Shares are also reduction of
share capital but governed by specific provisions prescribed under Act. What
distinguishes a share buy-back from share capital reduction is that the
member decides whether or not to accept the company’s offer to buy-back the
shares. In contrast, with a share capital reduction once the relevant
shareholder approval has been given, the reduction may affect shareholders
that did not vote on, or voted against, the resolution.

29. WHO ARE KMPS?

- KMP has been defined under Section 2(51) of the CA, 2013, to mean:
 i. CEO or MD or Manager;
ii. Whole Time Director;
iii. Company Secretary;
iv. Chief Financial Officer (CFO)
v. Any other office (not below one level of Directors) who is in whole-time
employment of the Company and has been designated as KMP by the
BOD.

- The following companies, are required to appoint KMP:

i. Listed company;
ii. Public company having paid up share capital of INR 10 crores or more

30. CAN A PRIVATE COMPANY GRANT LOAN TO ITS DIRECTORS?

- NO. Sec 185 of the CA 2013 restricts giving loan or advancing security for
loans taken by:

i. Directors;
ii. the firms in which such directors are partners.

- However as per the 2017 amendments, a private company may grant

loan/provide security/guarantee for loan taken by any person in whom the
director is interested if:


a special resolution is passed by the company in general meeting.

the loans are utilised by the borrowing company for its principal
business activities.
- Section 185 has nothing to do with loans/guarantee advanced to MD or any
Whole time director; or WOS of the Holding Company; or any financial
institution.

31. IS IT MANDATORY FOR A COMPANY TO DECLARE DIVIDEND?

- NO, depends on the dividend policy of the company and also the profit that it
is making.

32. CAN A COMPANY WHICH HAS INADEQUATE PROFITS OR HAS INCURRED LOSS
IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR DECLARE FINAL DIVIDEND?
I.E. WHEN COMPANY EAGER TO GIVE DIVIDENDS.

- As per Section 123(1) of the CA, 2013, a company which has inadequate
profit or has incurred loss in the immediately preceding financial year may
declare dividend out of the accumulated profits of the company.
- However, as per Rule 3 of Companies (Declaration and Payment of Dividend)
Rules, 2014, the rate of dividend shall not exceed the average of the rates at
which dividend was declared by the company in the immediately preceding
 three financial years. If a company has not declared dividend in any of the
preceding three financial years, the restriction on the rate of dividend would
not be applicable.

33. CAN DIVIDEND BE DECLARED TO CERTAIN CLASS OF SHAREHOLDERS ONLY?

- Dividend can be paid to any class of shareholders, but separate resolution for
declaration of dividend to each class of shares is required to be passed at the
meeting of the Board or shareholders, as the case may be.

34. WHETHER PROVISIONS GOVERNING CORPORATE SOCIAL RESPONSIBILITY

ARE APPLICABLE TO PRIVATE COMPANIES?

- Yes. Corporate social responsibility refers to the initiative and contribution of

an enterprise towards the economic, environmental and social welfare of the
general community. Every company irrespective of Private or Public Limited
or a foreign company having its branch office or project office in India having:

• net worth of INR 500 crores or more

• turnover of INR 1000 crores or more
• net profit of INR 5 crores or more
shall formulate a CSR Committee (having 3 members including one
Independent Director), who shall determine the CSR policy of the company
and every such company is required to spend of 2% of average net profits of
the company for last 3 years towards CSR.

35. WHAT ARE THE KEY HIGHLIGHTS UNDER COMPANIES ACT, 2015?

 No Minimum Paid-up Share Capital: The minimum paid-up share

capital requirement of INR 100,000 (in case of a private company) and INR
500,000 (in case of a public company) under CA 2013 has been done away
with. Accordingly, no minimum paid-up capital requirements will now
apply for incorporating private as well as public companies in India.
 Related Party Transactions: The CA Amendment 2015 has relaxed the
approval requirement from a special resolution (i.e. requiring approval of
three-fourth majority of shareholders) to an ordinary resolution (i.e.
requiring approval of simple majority of shareholders) in case of related
party transactions which require shareholder’s approval.
 Common Seal Optional: CA 2013 required common seal to be affixed on
certain documents (such as bill of exchange, share certificates, etc.) Now,
the use of common seal has been made optional. All such documents which
required affixing the common seal may now instead be signed by two
directors or one director and a company secretary of the company.
 No declarations for commencement of business, etc.: CA 2013
required all companies to file following additional declarations with the
 Registrar of Companies prior to commencement of business or exercising
any borrowing power:

(i) declaration by a director that minimum paid-up share capital has

been paid; and
(ii) company has filed verification of registered office.
 Dividend: Section 123 is an enabling provision for companies to declare
divided in a financial year, subject to fulfilment of prescribed conditions.
The CA Amendment 2015 has introduced a new proviso which states that a
company cannot declare dividend for a financial year, unless the losses
and depreciation carried over from past years have been set-off against the
profits of the company, in the year it proposes to declare a dividend.
 Inspection of Resolutions, etc. by public: The CA Amendment 2015
has limited public access of certain resolutions (e.g. all special resolutions,
resolutions for terms of appointment of managing director, winding-up
resolutions, resolutions in relation to sale of undertaking / borrowings,
etc.) relating mainly to strategic business matters. Such documents will no
longer be available for public review or permitted to take copies of. This
addresses the concerns raised by several corporates in India, specifically
private companies, in terms of exposure of critical business matters in
public.
 Punishment for violation of provisions relating to
Acceptance/Renewal of deposit: Section 73 prohibits any company to
accept/invite deposit from public except in the manner provided in the Act.
However, a company can accept deposits from the members of the
Company subject to fulfilment of certain conditions. There was no
provision earlier prescribing penalty for such violations. Section 76A has
been added which now prescribes penalty for the same.
 Sec. 185: Advancing loan to Subsidiary Company of the Holding Company
and also to Financial Institutions has been added (apart from the already
existing exceptions for MD, whole time director etc.)
 Special Courts: Section 435 read with Section 436 provides the Central
Government the power to set up special courts to try offences under CA
2013. Special courts may now only try offences punishable under CA 2013,
with imprisonment for 2 years or more. All other offences are to be tried
by a Metropolitan Magistrate or a Judicial Magistrate of the First Class.

36. LEGAL PROCEDURE FOR A MERGER? – SECTION 230

 Examining the Object Clauses

 Information to stock exchanges
 Confirmation of the Draft Merger Proposal by the respective Board of
directors (compromise/arrangement reached between the Company and its
creditors/class of creditors; or company and its members/class of
members)
 Application to NCLT by the Company/member/creditor/liquidator (if
company being wound up) disclosing all material facts relating to
 Company (latest financial/audit report), any scheme of capital debt
restricting (creditor’s responsibility statement) and if there is any
reduction of capital by the said compromise/arrangement.
 Meetings notice dispatched to Members and Creditors (accompanying the
copy of compromise/arrangement and valuation report etc. explaining its
effect on creditors/shareholders/KMPs etc.) + Mention of the fact that they
can vote on the compromise/arrangement either in person or through
proxies etc. within 30 days from receipt of notice.
 Similar notice to Central Govt., and relevant regulatory authorities giving
them deadline of 30 days from receipt of notice to make representation
(otherwise deemed to be given)
 Shareholders and Creditors meetings: Dual majority requirement -
Majority of all the creditors/members + 75% in value of creditors/members
approval either through proxies or by themselves in person to confirm the
approval of the scheme of the finalization of Merger- same shall be
bounding on all members/creditors/ liquidator etc.
 Submission of petition to NCLT for the confirmation of the
compromise/arrangement
 Filing of the order of NCLT sanctioning the scheme with the Registrar of
companies:

37. WHAT IS THE ROLE OF NCLT WHILE APPROVING A SCHEME OF

COMPROMISE/ARRANGEMENT?

- NCLT plays an active role and is not a mute spectator in the process of
compromise/arrangement. Under Section 230(7), it has to ensure that:
(a) where the compromise or arrangement provides for conversion of
preference shares into equity shares, such preference shareholders shall be
given an option to either obtain arrears of dividend in cash or accept equity
shares equal to the value of the dividend payable;
(b) the protection of any class of creditors;
(c) if the compromise or arrangement results in the variation of the
shareholders’ rights, it shall be given effect to under the provisions of section
48 (asking for their written consent);
(e)such other matters including exit offer to dissenting shareholders, if any,
as are in the opinion of the Tribunal necessary to effectively implement the
terms of the compromise or arrangement.
- The Tribunal may dispense with calling of a meeting of creditor or class of
creditors where such creditors or class of creditors, having at least ninety per
cent value, agree and confirm, by way of affidavit, to the scheme of
compromise or arrangement.

38. MEGER V. ACQUISITION

- Merger refers to the mutual consolidation of two or more entities to form a

new enterprise with a new name. In a merger, multiple companies of similar
 size agree to integrate their operations into a single entity, in which there is
shared ownership, control, and profit. It is a type of amalgamation.
- The purchase of the business of an enterprise by another enterprise is known
as Acquisition. This can be done either by the purchase of the assets of the
company or by the acquiring ownership over 51% of its paid-up share capital.
The acquiring company is more powerful in terms of size, structure, and
operations, which overpower or takes over the weaker company i.e. the
target company. Most of the firm uses the acquisition strategy for gaining
instant growth, competitiveness in a short notice and expanding their area of
operation, market share, profitability, etc. The types of Acquisition are: a)
Hostile; b) Friendly; and c) Buyout

- Differences:

1. In the merger, the two companies dissolve to form a new enterprise

whereas, in the acquisition, the two companies do not lose their existence.
2. Two companies of the same nature and size go for the merger . Unlike
acquisition, in which the larger company overpowers the smaller company
3. The merger is done voluntarily by the companies while the acquisition is
done either voluntarily or involuntarily.
4. In a merger, there are more legal formalities (court driven process) as
compared to the acquisition (largely contractual).

- Examples of Mergers and Acquisitions in India

 Acquisition of Myntra by Flipkart in the year 2014.
 The merger of Fortis Healthcare India and Fortis Healthcare International.
 Acquisition of Ranbaxy Laboratories by Sun Pharmaceuticals.

39. DIFFERENCE BETWEEN ORDINARY RESOLUTION AND SPECIAL RESOLUTION

- An ordinary resolution is passed by the members of the company by a

simple majority. In general, the ordinary resolution must be passed to
transact the ordinary business at AGM (Annual General Meeting). Ordinary
Business includes adoption of final accounts, declaration of the dividend,
retirement and appointment of Directors (rotational), retirement and
appointment of Auditors and fixing their remuneration, in approving certain
RPT transactions (earlier required special resolution but now amended by
2015 amendment Act).
- Special Resolution (SR) is passed by the members of the company through
75% votes. There are certain things, which can be done by the company only
if a special resolution is affirmed at the duly constituted general meeting.
Matters which require Special Resolution are the issue of sweat equity
shares, alteration in the provisions of the memorandum of association,
alteration of articles of association, buy back of shares or securities , variation
in the objects of the prospectus, shifting of registered office of the company
and so on.

40. WHAT IS A JOINT VENTURE?

- A joint venture (JV) is a business arrangement in which two or more parties
agree to pool their resources for the purpose of accomplishing a specific task.
This task can be a new project or any other business activity. In a joint
venture (JV), each of the participants is responsible for profits, losses and
costs associated with it, and the rights/responsibilities of all the members to
the JV is specified in the joint venture agreement. However, the venture is its
own entity, separate and apart from the participants' other business interests.
Usually made when a conglomerate wants to protect its other business
operation while investing in a new or risky sector.

41. WHAT IS DUE DILIGENCE? PURPOSE

- The process of inquiry performed by investors into the details of a potential

investment, including an examination of operations and management and
verification of material. DD is a tool for Risk Management. Due diligence
helps identify and apportion risks between parties and accordingly structure
the deal.
- Purpose:
 To determine the commercial value of the subject of the due
diligence.
 To verify if there are any major issues involved. This helps in
structuring and negotiating the transaction.
 Collect information to facilitate informed decision making
 Verify the existence and quality of the business/ assets of the target.
 Identify legal and contractual impediments to Closing (e.g. third
party approvals/consents).
 Verify the accuracy and completeness of warranties and place the
Purchaser in a better position to negotiate the cost of the acquisition
or tailor the warranties and indemnities.

42. WHAT ARE THE BROAD HEADS OF A DILIGENCE REPORT?

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43. WHEN DOES IT BECOME AN ILLEGAL ASSOCIATION OF PERSON

- Under Section 464 of the Companies Act, 2013, not more than 50 persons can
come together for carrying on any business, unless the association is
registered under the Companies Act or any other Indian law. Any association
which does not comply with the above norms is an illegal association.
- However, this provision does not apply in the following cases :-

i. A Joint Hindu Family business comprising of family members only.

ii. An association or partnership, if it is formed by professionals who are
governed by special Acts.

44. CERTIFICATE OF REGISTRATION OR CERTIFICATE OF COMMENCEMENT

- It is a declaration by a company having a share capital before it commences

its business or exercises borrowing power. A declaration has to be filed with
the ROC within 180 days of incorporation. Penalty (and not fine) imposed for
violation of this provision.

45. WHAT TYPE OF RESOLUTION DO YOU NEED TO INCREASE THE CAPITAL IN THE
CAPITAL CLAUSE IN THE AOA.

- Ordinary Resolution is required for alteration of capital clause in MOM.

46. WHAT ARE THE DIFFERENT TYPES OF SHARES

- Ordinary shares/Equity Shares: Most shares traded on ‘ordinary’ shares.

Ordinary shares carry no special or preferred rights. Holders of ordinary
shares will usually have the right to vote at a general meeting of the
 company, and to participate in any dividends or any distribution of assets on
winding up of the company on the same basis as other ordinary shareholders.
- Preference shares: Preference shares usually give their holder a priority or
'preference' over ordinary shareholders to payments of dividends or on
winding up of the company. There are different kinds of preference shares
with different rights and characteristics. Holders of preference shares usually
have voting rights which are restricted to particular circumstances or
particular resolutions, however this will depend on the terms of the shares.
- Partly-paid shares: Partly-paid shares (AKA contributing shares) are issued
without the company requiring payment of the full issue price. At a specified
future date or dates, the company is entitled to call for all or part of the
outstanding issue price, and the shareholder at the time the call is due is
legally obliged to pay the call. Generally, a holder of a partly paid share has
the same rights as an ordinary shareholder to vote, to dividends and on
winding up of the company, but those rights will be proportional to the
amount paid on the share (except for a vote by show of hands, where a holder
of a partly paid share has one vote, the same as any ordinary shareholder).

47. WHAT IS STATUTORY MEETING, GENERAL MEETING (AGM) AND EGM

- A. Statutory Meeting
(Must for a Public Company) A public company limited by shares or a
guarantee company having share capital is required to hold a statutory
meeting. Such a statutory meeting is held only once in the lifetime of the
company. Such a meeting must be held within a period of not less than one
month and not more than six months from the date it obtains certificate of
commencement of business. It has been omitted in CA 2013 and is only for
Companies incorporated under CA 1956. The purpose of the meeting is to
enable members to know all important matters pertaining to the formation of
the company and its initial life history. The matters discussed include which
shares have been taken up, what money has been received, what contracts
have been entered into, what sums have been spent on preliminary expenses,
etc. In a statutory meeting, the following matters only can be discussed :-

a. Floatation of shares / debentures by the company

b. Modification to contracts mentioned in the prospectus

B. Annual General Meeting

 Must be held by every type of company, public or private, limited by

shares or by guarantee, with or without share capital or unlimited
company (except OPC), once a year. Every company must in each year
hold an annual general meeting.
 First AGM within 9 months after the end of first financial year of the
company’s operation (Hence, no AGM in the first year of incorporation).
 Subsequent AGMs should be held within 6 months from the closing of
the financial year.
  Not more than 15 months must elapse between two annual general
meetings.
 In the case there is any difficulty in holding any AGM (except the first
annual meeting), the Registrar may grant an extension of time for
holding the meeting by a period not exceeding 3 months provided the
application for the purpose is made before the due date of the annual
general meeting.
 If any default is made in holding the annual general meeting of a
company, the Tribunal may, on the application of any member of the
company, call, or direct the calling of, an AGM.
 Business to be Transacted at Annual General Meeting :
Consideration of annual accounts, director’s report and the auditor’s
report, declaration of dividend, appointment of directors in the place of
those retiring, appointment of and the fixing of the remuneration of the
statutory auditors.

C. Extraordinary General Meeting

 Every general meeting (i.e. meeting of members of the company) other

than the statutory meeting and the annual general meeting or any
adjournment thereof, is an extraordinary general meeting.
 Such meeting is usually called by the BOD for some urgent business
which cannot wait to be decided till the next AGM.
 Who can call AGM?
i. Either the BOD itself, or
ii. BOD on requisition of shareholders (having 1/10 th voting power or
Share capital), or
iii. The Requisitionists themselves (if the BOD is not considering
their request then not within 21 days), or
iv. By the NCLT (either suo motu or on request of some member)

48. DIFFERENT TYPES OF DIRECTORS? COMPOSITION? CAN A MANAGING

DIRECTOR BE A DIRECTOR OF MORE THAN ONE COMPANY?

- Min. Number of Directors:

i. One Person Company: – One Director

ii. Private Limited Company: – Two Directors.
iii. Public Limited Company: – Three Directors.
- Max. Number of Directors: Fifteen in all the type of Companies, can be
extended beyond this by special resolution
- Types of Directors:
i. Resident Director: Stays in India for a total period of not less than 182
days during the financial year. One Resident Director must in every
company.
 ii. Women Director: Every Company to appoint minimum one woman
director in case it is listed or has more than 100 Cr. Paid up share
Capital.
iii. Independent Director: (Section 149) Independent directors are non-
executive directors of a company and help the company to improve
corporate credibility and enhance the governance standards, without a
relationship with a company which might influence the independence of
his judgment. An independent director in relation to a company, means
a director other than a managing director or a whole-time director or a
nominee director. He carries relevant expertise/experience and has no
‘pecuniary relationship’ with the promoter/director of the Company. He
shall hold office for a term up to five consecutive years on the Board of
a company, but shall be eligible for reappointment on passing of a
special resolution. No independent director shall hold office for more
than two consecutive terms.
a. Every listed public Company to have at least 1/3 rd Independent
directors
b. Every public company to have at least 2 Independent directors if
has more than 10 Cr. Paid up share Capital; or 100 Cr. Turnover;
or have more than 50 Cr. outstanding aggregate loan.
iv. Small Shareholders Directors: – Small shareholders can appoint a
single director in a listed company. But this action needs a proper
procedure like handing over a notice to at least 1000 Shareholders or
1/10th of the total shareholders.
v. Additional Directors:- BOD has the power to appoint any person,
other than a person who fails to get appointed as a director in a general
meeting, as an additional director at any time who shall hold office up
to the date of the next annual general meeting.
vi. Alternate Directors:- A company may appoint, if the articles confer
such power on the company or a resolution is passed, appoint an
alternate director to act for a director during his absence (if a director
is absent from India for at least three months).
vii. Shadow Director:- A person who is not the member of Board but has
some power to run it can be appointed as the director but according to
his/her wish.

- Number of Directorship: A person cannot hold directorship, including any

alternate directorship, in more than twenty companies (including a total of
10 public companies) at the same time. But a directorship in a dormant
company is to be excluded.
- Yes, a Company can appoint a director as its MD even if it is already an MD in
some other company (bot not more than one) by passing a resolution to that
effect by BOD.

49. EXECUTIVE VS NON-EXECUTIVE DIRECTORS

- A person who is DIRECTOR + Whole Time Employee of the Company
indirectly shall be considered as Executive Director (aka whole time
directors).
- All the Directors except ‘Whole Time Director’ and “Managing Director’ shall
be considered as Non- Executive Director. Non-executive directors are not
involved in the day to day activities of the company

50. YOU ARE GIVEN A MOA AND AOA. THE NAME OF THE COMPANY IS BLACKED
OUT. IS IT A PRIVATE CO OR PUBLIC COMPANY?

- Ways to figure out:

(i) See if the name clause in MOA mentions “Pvt. Ltd.” or “Ltd.”
(ii) See if the Company allows transferability of shares in the AOA.

51. THERE IS A COMPANY WITH 30 MEMBERS AND 5 CRORES AS SHARE CAPITAL.

IS IT A PRIVATE COMPANY OR PUBLIC COMPANY?

- Not determinable from the given facts.       

52.  WINDING UP PROVISIONS UNDER COMPANIES ACT VIS-A-VIS INSOLVENCY

CODE

- Winding up on grounds other than inability to pay debts under IBC

(Section 33): When no resolution plan could be approved within the CIRP
period, or when it is rejected by the NCLT, or when approved but not
implemented in terms of the resolution plan, or when the COC determines so.
- Voluntary winding up under IBC (Section 59): When the corporate has
committed a default.
- Other grounds of winding up under Companies Act (Section 271):
Circumstances in Which Company May be Wound Up by Tribunal:
(a) if the company has, by special resolution, resolved that the company be
wound up by the Tribunal;
(b) if the company has acted against the interests of the sovereignty and
integrity of India, the security of the State, friendly relations with foreign
States, public order, decency or morality;
(c) if on an application made by the Registrar tribunal is of the opinion that
the affairs of the company have been conducted in a fraudulent manner or the
company was formed for fraudulent and unlawful purpose or the persons
concerned in the formation or management of its affairs have been guilty of
fraud, misfeasance or misconduct;
(d) if the company has made a default in filing with the Registrar its financial
statements or annual returns for immediately preceding five consecutive
financial years; or
(e) if the Tribunal is of the opinion that it is just and equitable that the
company should be wound up.".
53. RECENT AMENDMENTS TO COMPANIES ACT - COMPANIES AMENDMENT ACT
2015 AND COMPANIES AMENDMENT ACT 2017 AND COMPANIES AMENDMENT
ACT 2019.