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Social media, though, a door to millions of new opportunities, can turn out to be a very dark space if misused. The technology that was put in place in order to help us and make our lives easier is now being misused by many offenders to commit serious cybercrimes. In this blog, we endeavour to explain the procedure for filing a cyber complaint online. 

TYPES OF CYBER CRIMES

• Child Pornography: Any material containing any sexual image of any child who is being abused or exploited comes under child pornography. Section 67(B) of the Information Technology Act, 2000 makes the act of publishing or transmitting child pornography in any electronic form a punishable offence. 
• Cyberbullying: Harassing someone through any electronic means or by using any social media platform, either through messages, images, videos, etc., counts as cyberbullying.
• Cyber-Stalking: Cyber-stalking is the act of invading someone’s privacy and following their online presence without their consent.
• Online Financial Frauds: Online financial frauds include a variety of frauds that involve the loss of money of the victim. Some examples are – credit/debit card fraud, online job fraud, vishing/phishing, ransomware, etc.
• Identity theft: Personifying someone’s identity dishonestly online in order to commit crimes in their name is referred to as identity theft.

 

HOW TO REGISTER YOUR ONLINE COMPLAINT

One can register and report any cybercrime against them or any other person online on the National Cyber Crime Reporting Portal, which is a government initiative in order to facilitate victims who want to report cybercrimes online and not in physical mode. 

Depending upon the nature of the cybercrime one wishes to report, the portal invites complaints under three major heads:

• Women/child-related crime

• Financial fraud

• Any other cyber crime 

The portal offers to file online complaints in two modes:

• Register Anonymously

 

If you don’t want to disclose your identity or report a complaint on someone else’s behalf without giving personal details about yourself, you can register an online complaint anonymously. 

However, if you choose to register anonymously, then you do not have the option to track your online complaint. 

• Register & Track 

 

If you choose to register and track your online complaint on the portal, you can know the status of your complaint through a unique number of your complaint given to your registered email ID and phone number. However, this requires you to make a user profile on the portal and it asks for certain personal information, including your name, date of birth, mobile number, gender, email ID, address, etc.

Step By Step Guide To Register And Track Your Online Complaint 

1. Step 1: Incident Details: Also referred to as complaint details, this section requires you to give all important details regarding the cybercrime, including:

• • Category of the complaint
  • Subcategory of the complaint
  • Approximate date/time of the incident
  • Whether there was any delay in reporting the incident
  • Where did the incident occur?

• Supporting evidence: Any case is as strong as its evidence. Remember to be vigilant and record and gather as much evidence as you can, such as bank statements, credit receipts, online money transfer receipts in cases of financial fraud, screenshots, website URLs, email IDs, brochures/pamphlets, images, videos, voice recordings, etc.

• Additional information about the incident

1. Step 2: Suspect Details: 

• The next section is about the suspect’s details. This includes recording any information that you might have regarding the suspect, including their name/ email ID/ photograph or address of the suspect.
• Since these details of the suspect are not always known by the complainant, this section is not mandatory to fill out. 
• You can also file a complaint against multiple suspects and share details regarding each one of them.

 

1. Step 3: Complainant/Victim Details: Under this section, you are required to fill out details regarding the victim or yourself if you are complaining on behalf of someone else. It includes information such as

• Name
• Mobile Number
• Gender
• Date of Birth
• Email ID
• Relationship with the victim (Self in case you are the victim of the cybercrime)
• Any national ID of the victim (Aadhar, Passport, Ration Card, or any other governmentt issued ID)

1. Step 4: Complainant/Victim Address: Fill out the complete address of the victim/complainant in order to track your complaint and help the police contact you in case of any development in the case concerned.

2. Step 5: Submit your application: Make sure to preview your details thoroughly before submitting your application, as giving any wrong information is punishable. Please note that complaints filed under ‘women/child-related crime’ cannot be withdrawn. Other complaints can be redacted until they get converted into an FIR.  

 

TRACK YOUR COMPLAINT

Once your complaint has been successfully registered, you will receive an acknowledgment number on your registered mail ID and phone number. One should note this number carefully, as it will be used to track the status of your complaint on the national cybercrime reporting portal itself.

Your online complaint shall be transferred to the nearest police station. The name and number of the police officer investigating your complaint is also sent to you via SMS. 

The investigation generally takes a few days towards completion and it is only recommended to wait until this period of time before filing any duplicate complaint. 

 

CONCLUSION 

If we report cybercrimes, we will not only aid ourselves as victims, rather  also contribute towards making the nation’s online environment safer for all. By being vigilant, people can contribute to the development of a safer online environment and help law enforcement agencies better combat cyber threats or cyber crimes.

The National Cyber Crime Reporting Portal link is provided below. Take action against cybercrimes right now!

https://cybercrime.gov.in/

One of the most important decisions when starting a business is deciding upon the type of business organization to go ahead with. This decision establishes the organization’s legal requirements, operational procedures, and the management officers’ level of liability. Group ownership structures and sole proprietorships are the two main categories into which business organizations can be divided. Let’s examine these forms in greater depth!

Types of Business Organizations

• Sole Proprietorship

A sole proprietorship is the simplest and oldest form of business organization. It is owned and operated by a single individual who enjoys complete control and retains all profits. The owner may employ others but remains solely responsible for decision-making and business outcomes.

Key Features:

• Exclusive Ownership: The proprietor has complete control over the business operations.
• Simplified Management: Minimal legal formalities make it easy to start and operate.
• Unlimited Liability: The owner’s personal assets can be used to meet business liabilities.

While straightforward, the sole proprietorship is limited in scalability and financial resources, making it suitable for small businesses.

• Hindu Undivided Family (HUF)

The Hindu Undivided Family business structure is unique to India, rooted in Hindu law. It operates based on inherited property managed by the ‘Karta,’ the head of the family. This structure allows family members, or coparceners, to jointly own and manage the business.

Key Features:

• Inheritance-Based Structure: Comes into existence through Hindu law, not contractual agreements.
• Managed by the Karta: The Karta manages the business, while other family members have a shared interest.
• Limited Liability for Members: Only the Karta bears unlimited liability.

This form is advantageous for preserving family wealth but may face challenges in decision-making due to collective ownership over a period of time.

• Partnership Firms

A partnership firm is formed when two or more individuals agree to share profits and manage a business together. Governed by the Indian Partnership Act, 1932, partnerships are based on mutual agreements and shared responsibilities.

Key Features:

• Mutual Agreement: Formed through a partnership deed specifying roles, responsibilities, and profit-sharing.
• Joint Management: Partners share decision-making and liability.
• Limited Scalability: Unlike companies, partnerships face limitations in raising capital. Partnership firms offer flexibility and shared expertise but expose partners to joint liabilities.

• Cooperative Societies
  
  A cooperative society is an association of individuals who voluntarily come together to achieve common economic goals. It operates on principles of democratic control and equitable distribution of benefits.

Key Features:

• Democratic Management: Each member has an equal say in decisions.
• Profit Sharing: Members usually share profits based on their contributions.
• Limited Liability: Members’ liability is restricted to their share in the society. Cooperative societies promote collective welfare but often struggle with inefficiency due to diverse member interests.

• Companies

A company is a legal entity created under the Companies Act, 2013. It has a distinct identity from its members and enjoys perpetual existence. Companies are formed for profit-making and can range from small private entities to large public corporations.

Key Features:

• Incorporated Association: Registered under the Companies Act, 2013.
• Separate Legal Entity: Distinct from its shareholders, capable of enjoying rights and being subjected to duties like owning property, and entering contracts.
• Limited Liability: Shareholders’ liabilities are limited to the shares they hold in the company and their private property cannot be used to recover dues.
• Perpetual Succession: The company continues to function as long as it fulfils the requirements under the law irrespective of any change in the membership.
• Transferability of Shares: Shares are movable property and can be transferred as per the company’s incorporation articles.
• Common Seal: All contracts entered into by the agents of the company must be under the seal of the company which acts as its official signature.

Further, companies can also be categorized based on liability:

• Limited by Shares: Members’ liability is limited to their shareholding.
• Limited by Guarantee: Liability is restricted to the amount members have agreed to contribute towards the assets of the company in case it goes for winding up.
• Unlimited Companies: Members have to discharge the liability of the company through personal assets.

• Limited Liability Partnership (LLP)

Introduced through the Limited Liability Partnership Act, 2008, LLPs combine the benefits of a partnership and a private limited company. An LLP is a separate legal entity with limited liability for its partners.

Key Features:

• Separate Legal Entity: Can own property and sue or be sued in its name.
• Limited Liability: Partners are not personally liable for business debts.
• Minimal Compliance: LLPs require fewer filings compared to companies. An LLP is ideal for professional services and small businesses seeking limited liability without complex compliance obligations.

INCORPORATION OF COMPANIES

The procedure of incorporation is essential to start a business. Guaranteeing adherence to the legal requirements under the Companies Act, 2013 entails a number of actions.

Steps to Incorporate a Company in India:

• Formation of Company: Section 3(1) of the Companies Act outlines the procedure for establishing a company. It specifies that a public company can be formed by seven or more individuals, a private company by two or more individuals (up to two-hundred), and a one-person company by a single individual.
  In each case, the individuals must subscribe their names to a memorandum and fulfil the registration requirements set forth in the Companies Act 2013 Act for lawful purposes.
• Check Company Name: Ensure the proposed name complies with the Companies Act’s guidelines, avoiding resemblance to existing names and restricted terms. After the name approval from the concerned Registrar of Companies (RoC), the applicant has to fill Forms 1, 18 and 32 within 60 days of approval to apply for registration.
• Prepare Pre-registration Documents:

○   Digital Signature Certificate (DSC): For electronic document authentication.

○   Director Identification Number (DIN): Unique ID for prospective directors.

○   Memorandum of Association (MoA): It sets out the foundation of the company and defines the company’s objectives, activities and relationship with the outside world.

○   Articles of Association (AoA): Lays out rules and regulations for internal governance for achieving the objectives laid down in the MoA.

• The applicant has to fill out the Declaration of Compliance i.e. Form-1, Notice of situation of the registered office of the company i.e. Form-18 and the Particulars of the Directors, Manager or Secretary i.e. Form-32.

• Select Business Type:

○   Private Limited: Owned by private investors with limited liability.

○   Partnership Firm: Collaborative ownership with shared profits.

○   LLP: Partnership with limited liability.

○   Sole Proprietorship: Single-owner business.

○   One Person Company (OPC): Owned by a single individual with corporate benefits.

• Submit Documents to the RoC: After preparing and submitting the requisite e-forms and fees, the RoC examines the application. If required, RoC instructs the authorised person to make necessary corrections.

• Receive Certificate of Incorporation: The RoC issues the certificate, granting the company legal existence. It conclusively proves that all requirements under the Company Act, 2013 have been complied with in respect of registration and it is authorised to be registered.

Advantages of Incorporation

• Independent Corporate Existence: The company operates independently of its members.
• Limited Liability: Protects members’ personal assets.
• Perpetual Succession: Ensures continuity irrespective of changes in membership.
• Ease of Ownership Transfer: Shares can be sold or transferred, providing liquidity.
• Efficient Capital Raising: Companies can attract public investments.
• Legal Standing: Companies can sue and be sued in their name.

The choice of corporate structure has a huge impact on its scalability, liability, and operational efficiency. Small, family-run businesses are best suited for sole proprietorships and HUFs, whereas cooperative societies and partnerships are better suited for joint ventures. Companies and LLPs provide organized frameworks for enterprises that prioritize legal identity and restricted liability. Entrepreneurs can make well-informed judgments that are in line with their legal requirements and company objectives by being aware of the subtleties of each form.

The 21st century has seen multiple daily efficiency Artificial intelligence (AI) technologies, including Roomba (2002), a robotic vacuum; Microsoft Kinect (2010), a motion-sensing gaming device; and Siri (2011), Apple’s voice assistant that revolutionised human-computer interaction. And today, ChatGPT! Further, the recent launch of DeepSeek by China has garnered the world’s attention.

While these developments enhanced convenience, they also came along with concerns of misinformation, copyright violations and job market disruptions, leading to varied regulatory responses around the globe. 

In this evolving landscape, India finds itself in a testing spot, like many other countries across the globe. India’s current legislative framework on cybersecurity and data privacy is pertinent even though there are no particular laws that specifically address DeepSeek. The Information Technology Act, 2000 (IT Act) and the Digital Personal Data Protection Act, 2023 (DPDP Act) offer a robust framework for cybersecurity and data protection. These regulations would be essential in regulating the application of AI tools such as ChatGPT and DeepSeek, guaranteeing that they adhere to Indian legal norms.

Where Does Our Legal Framework Stand?

India currently prioritizes fostering innovation and technological development, believing that excessive regulation could disincentivize foreign investments. While this approach attracts foreign capital, it may also leave significant regulatory gaps to be addressed in the future. AI, in all its forms, must be regulated – whether it functions as a lawyer, accountant, or facilitator. While AI is currently subject to the country’s existing data privacy, cybersecurity, and copyright laws, it is equally important to understand how these regulations can be effectively implemented in practice and how the responsibility will fall on the creator. 

Pertinently, Section 4 under the DPDP Act mandates that personal data can be processed only under the provisions of the Act and only for a lawful purpose, thus implying that AI systems must exercise caution in handling data. Further, under section 11, the Data Principal shall have the right to access information about her/his personal data from the Data Fiduciary to whom she/he has previously given consent. Further, section12 ensures that the right to correction and erasure of personal data of any Data Principal stand protected.

Additionally, Section 43A under the IT Act, imposes penalties on companies for negligent data handling, which can also be extended to AI systems.

Apart from this, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 impose due diligence obligations on platforms. In this regard, the Ministry of Electronics and Information Technology (MeitY) has issued advisories requiring AI models to be clearly labelled if they are in a trial phase or deemed unreliable and to secure government approval before deploying certain models. Additionally, AI-generated content must comply with all applicable laws, not just the IT Act.

EU’s AI Act Serving as a Global Lighthouse      

The EU has taken the front stage in AI regulation. The AI Act launched by the EU in 2024 is the world’s first comprehensive AI law. This centralised law adopts a risk-based approach, the higher the harm posed by an AI application, the stricter the compliance requirements. The Act applies across all sectors and industries mandating transparency, technical documentation, human oversight, and data quality. 

Pertinently, the EU AI Act applies extra-territorially in the manner that even if an AI system is placed by a foreign entity in the EU market, the AI Act will apply. Just as the EU’s General Data Protection Regulation (GDPR) has influenced national data protection regimes worldwide, including the DPDP Act, the EU AI Act may serve as a global template for AI regulation.

India Taking Small Steps Forward

India has taken some active measures in this regard. The policy think tank, NITI Aayog has been tasked with the regulated use of AI. In 2018, the body launched the National Strategy for Artificial Intelligence #AIForAll initiative featuring AI-driven developments in the key areas of smart cities, healthcare, agriculture, education, etc. 

It further launched a two-part framework on responsible use of AI – first, Principles for Responsible AI (2021) outlining considerations such as inclusivity, accountability, and societal impact; and second, Operationalizing Principles for Responsible AI (2021) providing feasible steps for the public and private sectors to implement responsible AI practices in partnership with research institutes.

AI Governance: Role of Sectoral Regulators

Sectoral regulators also play a crucial role in AI governance by introducing dedicated compliance requirements. Further, ministry advisories can help tackle misinformation, deepfakes, and other unethical practices. It is reported that the government is also considering introducing specific provisions for AI regulation in the proposed Digital India Act. In particular, AI deployment in critical sectors such as healthcare, aviation, and banking is expected to be regulated through quality-testing frameworks, threat and vulnerability assessments, and content moderation mechanisms.

India’s Playing Its Part on International Fora

India has been actively involved in global AI governance. Recently it signed “Inclusive and Sustainable Artificial Intelligence (AI) for People and the Planet” at the Paris AI Action Summit along with 57 other nations. As a member of the Global Partnership on Artificial Intelligence (GPAI) and the Organization for Economic Co-operation and Development (OECD), India collaborates with international stakeholders to promote ethical AI practices. The New Delhi AI Meeting and the Global IndiaAI Summit (July 2024) further highlight India’s commitment to shaping global AI policies. These summits focus on AI research, computational capacity, startup funding, and AI safety, aligning with India’s broader AI development strategy.

India’s regulatory environment needs to find a strategic balance between encouraging innovation and defending the interests of society as AI develops further. Through the integration of worldwide best practices and the implementation of methodical domestic regulations, India can create a strong framework for AI governance that guarantees ethical and responsible AI development.

Future of AI in India

With sustained government support, an expanding startup ecosystem, and a rise in research and development initiatives, AI in India appears to have a bright future. The nation is in a strong position to lead the world in artificial intelligence, advancing both technology and society. The World Economic Forum has released an article titled “Why AI for India 2030 is a blueprint for inclusive growth,” which offers insightful information about the development of AI in India going forward.

Case for consideration: James Kunjwal v. State of Uttarakhand & Anr. [2024] 8 S.C.R. 332: 2024 INSC 601

Court: The Supreme Court of India

Decision date: 13 August 2024

Could a false statement land you in jail? India’s apex Court has provided the much-needed clarity!

James Kunjwal v. State of Uttarakhand & Anr. can be understood as a landmark judgment shedding light upon the interpretation and application of Section 193 of the Indian Penal Code, 1860 (IPC) which deals with punishment for false evidence. 

Notably, in the present case, i.e., the James Kunjwal judgment, the central legal issue before the Supreme Court of India was whether the filing of a false affidavit before a High Court, ipso facto, constitutes an offence punishable under Section 193 IPC.

What led to the present case?

The appellant herein was subject to a First Information Report (FIR) registered under Sections 376 (rape) and 504 (intentional insult with intent to provoke breach of the peace) of the IPC.  A bail application was initially presented before the Additional and Sessions Judge but was unsuccessful. 

Subsequently, the High Court of Uttarakhand at Nainital (High Court), vide order dated 8th June 2021, granted bail to the appellant. This grant of bail prompted the complainant to file a bail cancellation, citing that the appellant had intentionally filed a false affidavit before the High Court. This application was dismissed by the learned Single Judge of the High Court after directing the concerned Registrar (Judicial) to file a formal complaint against the appellant for submission of a false affidavit. Resultantly, a complaint under Section 193 of the IPC was filed before the Chief Judicial Magistrate, Nainital.

The present Special Leave Petition arises from the aforementioned complaint.

Legal trajectory till date – what have courts previously held?

The definition of false evidence is dealt with under Section 191 of the IPC, therefore to constitute an offence under Section 193 of the IPC, the elements of Section 191 must be met. Section 191 states that any person legally obligated, through oath or other legal requirement, to provide a statement, who then makes a false statement, or who knows or has reason to believe their statement is untrue, is considered to have given false evidence. The statement can be verbal or by any other means and perjury includes falsely stating what one believes, not just what one knows to be untrue.

Under Section 193, the essential factors required to prosecute are firstly, false statement should be given under oath, and secondly, that such statement should be under judicial proceedings. Lastly, such statements be made before the authority that has been expressly deemed to be a “Court”. 

These essential factors were held to be sine qua non in the case of Bhima Razu Prasad vs State Rep. by Deputy Supdt. of Police. The apex court has time and again held that a conviction cannot be sustained unless the prosecution proves beyond reasonable doubt that the accused made a false statement to mislead the court. To attract the provisions of Section 193, it must be established that the deponent made a deliberate false statement on a material matter intending to deceive the court.  

In Dr S.P Kohli, Civil Surgeon, Ferozepur v. High Court of Haryana, a medical officer was prosecuted for perjury as his statement was found to be false. The Supreme Court clarified that while initiating proceedings requires supporting evidence for allegations, sufficient grounds must still exist to justify activating the criminal justice system to avoid wrongful persecution.

In the case of Chajoo Ram vs Radhey Shyam & Anr., the appellant in this case was also accused of filing false evidence before the High Court of Allahabad. The Court held that the prosecution in perjury cases should be in the interest of justice and not simply because there are minor inaccuracies in statements that could be irrelevant. The Court should only proceed with such a matter because it is in the interest of justice to adequately punish such delinquency and not just inconsistencies. Prime facie intention must be established for basing the charges.  Both the above-mentioned cases were again referred to in Himanshu Kumar & Ors vs State of Chhattisgarh & Ors. The Supreme Court thus clarified that a finding of perjury cannot be based solely on contradictory statements in affidavits. There must be persuasive evidence to demonstrate a conscious and wilful intention to mislead the court. 

In the case of R. S Sujtha vs State of Karnataka,  which was also referred to in Aarish Asgar Qureshi vs Fareed Ahmad Qureshi, the Court held that inquiry or contempt proceedings should be initiated only in exceptional cases where deliberate perjury aims for a favourable order from the Court, thus again highlighting the requirement of mala fide intention. 

Section 195(1)(b) of the Code of Criminal Procedure, 1973 (CrPC) deals with the procedure of perjury or contempt cases. 

In the present judgment, the Court observed that the High Court was not ‘bound’ to make a complaint under the section unless it was in the interest of justice to do so. In Iqbal Singh Marwah v. Meenakshi Marwah the Supreme Court dealt with the issue of whether a criminal complaint for forgery of a document used in civil proceedings could be initiated independently, or whether it required a complaint by the court itself under Section 195 of the CrPC. The Court clarified the scope of Section 195 CrPC, which bars courts from taking cognizance of certain offences unless a complaint is made by the court itself. The Court held that this bar applies only when the alleged offence is committed by a party to the proceeding in respect of a document produced or given in evidence in that proceeding. The decision emphasized the importance of a formal inquiry by the court before initiating criminal proceedings for offences like forgery or perjury. This inquiry is necessary to determine whether there is sufficient prima facie evidence to justify a criminal prosecution.

Laying down the law, final decision of the Supreme Court of India!

The Supreme Court, in its judgment, overturned the High Court’s direction to file a complaint for perjury against the appellant. The Court emphasized a crucial distinction: a mere contradiction or inconsistency in an affidavit does not automatically equate to the offence of giving false evidence under Section 191 of the IPC.

INTRODUCTION

In today’s global economy, Intellectual Property (IP) driven commercial transactions have witnessed exponential growth. With technological advancements and dynamic innovations, India stands tall as an important player in the world of IP. To ensure its Intellectual Property Rights (IPR) laws keep up with international standards, India follows various international treaties and agreements. These international treaties outline the approach for a country regarding patents, trademarks, copyrights, and any other kind of IP.

1. World Trade Organization (WTO) and the TRIPS Agreement

One of the most important international treaties commanding India’s IPR laws is the Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), which was created under the World Trade Organization (WTO). India became a member of the WTO in 1995, and since then, it has been required to follow the rules set out by the TRIPS Agreement. The TRIPS Agreement, which came into effect on 1 January 1995 , sets minimum standards for various forms of IPR protection, including patents, copyrights, trademarks, geographical indications, and trade secrets.The Agreement requires Member countries to provide a basic level of protection for IPRs as set forth under the Agreement, ensuring that there is uniformity across such countries.

Key aspects of TRIPS Agreement providing for minimum standards of protection of IP  in India:

• Patents: The TRIPS Agreement enforces the protection of patents for 20 years counted from the filing date, thereby providing patent holders exclusive rights to their inventions.
• Copyrights: TRIPS Agreement lays down that the term of protection shall be the life of the author and 50 years after his death. 
• Enforcement: TRIPS Agreement contains provisions that emphasize on effective enforcement of IPR, including criminal penalties. It specifically provides for criminal procedures to be applied for, at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale.

2. Paris Convention for the Protection of Industrial Property

The Paris Convention is one of the earliest international treaties regulating IP. It was adopted in 1883 and India has been a Member since 1998. This Treaty deals with the protection of industrial property, including patents, trademarks, and industrial designs, utility models, geographical indications (GIs), etc. One of the substantive provisions of this Treaty is the Right of Priority, which allows an inventor or business in one country (on the basis of a regular first application filed in one of the Contracting States) to apply for protection in other member countries within a certain period of time, from the date of first application. Thus, in line with Right of Priority, Indian inventors can apply for protection in one of the Contracting States and then apply for protection in any of the other Contracting States within 12 months for patents and utility models and 6 months for industrial designs and marks without losing their original filing date. Whereas, in National Treatment, each Contracting State must treat and grant the same protection to nationals of other Contracting States that it grants to its own nationals in matters of IPR protection. The Paris Convention has made it easier for Indian IP owners to grow globally by making sure that their IP can be easily protected in several nations.

3. Berne Convention for the Protection of Literary and Artistic Works

The Berne Convention for the Protection of Literary and Artistic Works focuses on protection of works and the rights of their authors and has been in force since 1886, with India becoming its Member in 1928. It is based on three basic  principles i.e., principle of national treatment, automatic protection and independence of protection. The Convention ensures that works like books, music, and art created in one Member country are automatically protected in all other Member countries without additional formality compliances. The Convention also ensures that the rights of creators are equally respected, even internationally as authors, musicians, and artists automatically get protection for their work of origin in other Contracting States. Additionally, the Convention also provides for moral rights, that is, the right to claim authorship of the work and the right to object to any mutilation, deformation or other modification of, or other derogatory action in relation to, the work that would be prejudicial to the author’s honor or reputation. The Berne Convention is a  crucial instrument for Indian creators, allowing their works to be protected globally.

 

4. Madrid Protocol for the International Registration of Marks

The Madrid Protocol is an international system for registering trademarks in multiple countries with just one single streamlined application. India adopted Madrid Protocol in 2013, which allows Indian businesses to file for trademark protection in several countries with a single application. Businesses can protect their trademarks in over 100 countries with one application. The Madrid Protocol reduces the cost and effort involved in applying for trademarks in multiple countries. It offers a more affordable and streamlined way for businesses to register their trademarks globally. This has made it convenient for Indian businesses to expand internationally by legally protecting their trademarks.

 

5. Patent Cooperation Treaty (PCT)

Patent Cooperation Treaty (PCT) is regulated by the World Intellectual Property Organization (WIPO) and allows innovators to file one international patent application that is accepted in over 150 nations. India has been a Member of the PCT since 1998 and it has been of great  significance for Indian innovators who want to protect their inventions internationally. Patent applicants can file a single patent application that is valid in several countries. PCT allows up to 30-31 months to decide in which countries to seek patent protection, giving businesses more time to assess international markets. Also, PCT helps Indian innovators gain recognition and protection in global markets, which is crucial for international trade.

 

6. WIPO Copyright Treaty (WCT) and WIPO Performances and Phonograms Treaty (WPPT)

WCT and WPPT together are known as “Internet Treaties”. India signed the WCT and WPPT treaties in 2018 to address the protection of digital content, including music and films in the digital age. These Treaties are designed to provide more protection for creators whose works are used in digital formats or transmitted over the Internet.

How the WCT and WPPT Benefit India:

• Protection for Digital Works: Indian creators can now protect their works from unauthorized use online.
• Rights for Performers and Producers: These Treaties ensure that performers (like actors and musicians) and producers (like record companies) also have rights over their digital performances and recordings.

These Treaties are particularly important as the borderless digital world continues to expand, thereby ensuring that the work of Indian creators are protected in the online environment.

Conclusion

India’s IPR laws are shaped by several important international treaties that help Indian inventors, businesses and creators protect their IP worldwide. Thus, the TRIPS Agreement, Paris Convention, Berne Convention, Madrid Protocol, PCT, and WIPO Treaties play a crucial role in harmonizing India’s legal framework governing IP with global standards.Further, India’s active participation in the aforementioned treaties ensures that its IP remains competitive and aligned with the ever-evolving international best practices, also incentivising  innovation.

 

This blog post is written by Jui K, Graduate of Government Law College, Mumbai who pursued Mergers & Acquisitions Course from Bettering Results (BR). 

 

CROSS- BORDER MERGERS & ACQUISITIONS

UNDERSTANDING CROSS BORDER M&A

Cross-Border Merger means any merger, amalgamation or arrangement between an Indian company & Foreign company in accordance with (Compromises, Arrangements & Amalgamation) Rules, 2016.  Under the Companies Act, 2013, a Foreign Company is defined as a company or body incorporated outside India having a business place in India or not. 

There are two types of cross border mergers, Inbound Merger where the resultant company is an Indian company. Example, Acquisition of 77% stake in Flipkart by Walmart, Another is Outbound Merger where the resultant company is a foreign company. Example, acquisition of Hamleys by Reliance Group.

This concept has been mushrooming time and again and presently Indian companies are more prone to Cross Border Mergers & Acquisitions than other countries. For instance, TATA Steel acquired UK based company Corus. 

Mostly companies engage in cross border mergers to enter new geographical markets which enable companies to reach new customer bases and boost their global presence. Merging operations leads to growth in innovation and faster product development which aids to diversify revenue streams, reduction in dependency on the single market. This in turn mitigates risks associated with economic downturns, regulatory fluctuations and so on. Companies can gain access by merging/acquiring a company in another country because they can cross-sell products & services, leverage combined marketing efforts & improve competitive edge. 

GOVERNING LAWS:

1. Companies Act, 2013
2. SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011
3. Foreign Exchange Management (Cross Border Merger) Regulations, 2018
4. Competition Act, 2002
5. Insolvency & Bankruptcy Code, 2016
6. Income Tax Act, 1961
7. Department of Industrial Policy & Promotion 
8. Transfer of Property Act, 1882
9. Indian Stamp Act, 1899
10. Foreign Exchange Management Act, 1999
11. IFRS 3B Business Combinations

DUE DILIGENCE SIGNIFICANCE

Due diligence is a comprehensive and a cumbersome process carried out before finalizing any significant deal such as mergers, acquisitions or investments which comprises thorough inspection and scrutiny of a target company such as its assets, liabilities, risks, potential etc. to ensure the buyer/investor knows what they are getting into. This process is generally undertaken by acquiring a company or investors with the cooperation of an expert team of Lawyers, Accountants, Financial Analysts and Industry Specialists for reviewing documents, analyzing data and conducting on-site visits or interviews with key personnel sometimes. Though the process is tedious it ends up in protecting buyers from unanticipated issues and gives a clear picture of what they expect from the deal. For the seller victoriously passing due diligence is crucial as it would result in successful completion of deal gaining trust and confidence of investors/buyers in their business.

1. Legal DD:

• It is the most crucial part of due diligence consisting of navigating through tedious & complex legal regulatory framework.
• Review of all the notable documents such as customer-service agreement, partnership agreements etc. 
• Investigate any ongoing litigation, its history, current disputes and pending claims.
• Evaluation of IP regulation, ownership, and registration, status of patents, trademark, copyrights, trade secrets & IP related disputes.
  
  2. Financial DD:
• Scrutinizing Target Company’s financial health is imperative including audited financial statements, interim financial reports etc. 
• Examination of any debts/liabilities including loans, bonds, off balance sheet liabilities & thorough analysis of profit margins, sustainable earnings, etc. 
• Understand working capital position, company’s liquidity, etc.

 

3. Tax DD:

• Ensure compliance with local, international tax laws, VAT/GST, & other relevant taxes, transfer pricing policies.

 

4. Operational DD:

• Assess if business operations, supply chain management, manufacturing processes etc. could create additional value in transaction or not.
• Analyze IT infrastructures software, cyber security & other issues, if any, employee – contracts, compensation structure, labor agreements, etc.

 

5. Cultural DD:

• The corporate culture, management style, employee values, communication style including language differences & communication preference, workplace practices, conflict resolution should be reviewed.

 

6. Corporate Governance Ethics:

• Study the company’s corporate governance practices, internal control system, bond structure & adherence to ethical standards, anti-corruption policies, bribery regulations, etc.. 

 

7. Environmental & Social DD:

• Assesses if the company has complied with environmental regulations, sustainability practices, environmental liabilities, labor practices & community engagement & its impact on brand reputation & stakeholder relationships.

 

8. Other risks:

• Indemnifying any geopolitical risks which may influence company’s government policies, sanctions, business restriction, etc. 
• Analysis of currency fluctuations on valuation of a target company & its impact on the deal will be worth studying. 
• Understanding market dynamics including market share, competition, customer base, customer supplier relationships is a key.

RECENT & RENOWNED DEALS:

• Allen & Ovary & Shearman & Sterling:

Beginning with the most prominent leading international law firms who announced their merger by creating a law firm with over 3,900 lawyers across 49 offices worldwide & the merged entity aims to leverage their strengths with extensive geographical reach to offer their best services to global clients worldwide.

• Microsoft’s Acquisition of Activision Blizzard:

Two words capture the tenor of times in the gaming industry. Microsoft finalized a $68.7 billion deal to acquire Activision Blizzard. This could be termed as one of the arduous acquisitions as a 20 months battle was faced with UK & USA regulators. However, Microsoft managed to crack the deal by triumphing over the Federal Trade Commission in USA Federal Court & reconstructing the arrangement to mollify UK’s Competition & Markets Authority, the acquisition crossed the finished line on October 13, 2023 finally.

• Vodafone Mannesmann 

This acquisition is a landmark case in the history of cross border mergers & acquisitions & took place in the year 2000. It was one of the biggest horizontal mergers in the telecom industry. The deal was time consuming including significant challenges such as cultural differences, regulatory scanning, financial crash, threat of political interference & so on. Nonetheless, this merger proved Vodafone to be the giant global player in the telecom sector.

KEY TRANSACTION DOCUMENTS

1. Letter of Intent: 

• It’s a written non-binding document which outlines an agreement in principle for buyer to purchase seller’s business stating proposed price & terms.
  2. Regulatory filings & approvals:

• It consists of foreign investment approvals, securities law filings, antitrust filings & any other governmental consents.

3. Board Resolution & Shareholders approvals:

• It comprises resolutions authorizing transactions, approval of transaction documents & any amendments to corporate charters & bylaws.4. Non-disclosure agreement:

• It plays a vital role in protecting sensitive and confidential information exchanged in the negotiation process. 

 

5. Share Purchase Agreement:

• This is the primary document governing sale/purchase of shares in the target company.

 

6. Asset Purchase Agreement:

• Used when a transaction consists of purchase of specific assets instead of shares, purchase price allocation, representations & warranties, indemnities, closing conditions, etc.

 

7. Merger Agreement:

• Used to outline terms under which two companies will combine & includes exchange ratios, representations & warranties, closing conditions, post-merger integration. 

 

8. Disclosure schedule:

• It provides detailed information & exceptions to representations & warranties made in SPA/APA.

 

9. Term Sheet:

• Summarizes key terms & conditions similar to letter of intent but meticulous in terms of tax structure, pricing, condition precedent & termination provisions.

 

10. Escrow Agreement:

• Sets up an escrow to hold funds temporarily to ensure seller’s obligations & indemnities are met.

 

11. Transaction service agreement:

• It governs provision of services by seller to buyer for a transactional period post-closing.

 

TAX CONSIDERATIONS:

• If transfer is made for inadequate consideration & tax proceedings are on-going, then the transferor authorities can claim the amount from the transferee on proceedings completion.
• No GST applicable to slump sale where all assets, rights, property, liability are transferred to transferee whereas where particular assets are bought GST is applicable. 
• Section 50B implies tax implication of slump sale which applies to both domestic & Cross Border Mergers & Acquisitions transactions. Undertaker’s net worth is deducted from sale consideration to arrive at capital gains. If undertaking has been held for more than 36 months, LTCG (Long-Term Capital Gains) tax would apply & if the duration is less, then STCG (Short- Term Capital Gains) tax would apply. Any foreign currency consideration received in cross-border slump sale must be converted to INR at prevailing exchange rate on transaction date.
• If acquisition is via selling shares, Securities Transaction Tax is payable by both buyer & if sales are sold through Stock Exchange, STT is imposed on purchase/sales of equity shares on the Indian Stock Exchange at 0.1% based on purchase/sales price.
• When foreign company transfers shares of foreign company to another company & share value is procured from assets in India then capital gains derived on transfer will attract Income Tax in India.
• Furthermore such shares payments are subject to withholding tax. Foreign company shares are deemed to derive value from Indian assets if such assets are valued at minimum 100 million & constitute at least 50% of asset value by such foreign company.
• Transactions between parties in different countries must be conducted at arm’s length price which requires proper documents/compliance with transfer pricing regulations to tax penalty.
• DTAA between countries could provide comfort from double taxation allowing tax credits/exemption which includes Slump sale also.
• When a foreign (Parent) company owns an Indian subsidiary & this foreign company merges with another foreign company giving rise to newly formed company, this new company becomes the owner of the Indian subsidiary on the condition that at least 25% of the shareholders from original foreign company must also be shareholders in the new merged company & if this condition is met then the merger qualifies for certain tax exemptions.
• A tax neutral status is provided where the resultant company is Indian (Inbound Merger) given transfer occurs through slump sale & shareholders continuing 3/4th of shares.

CONCLUSION

Cross border mergers & acquisitions are convoluted strategy becoming strenuous for the companies which desire to expand globally. Though it has got benefits, it also faces several challenges namely failure to integrate, political landscape, strategic, legal, accounting challenges, etc. Recently, cross border mergers & acquisitions noticed remarkable deals for instance Brookfield’s investment in Avaada Group which signifies ongoing globalization & sector specific trends. In order to navigate a successful deal, a thorough analysis of the above discussed is crucial which will circumvent perilous missteps, cultural clashes, etc. Meticulous study on latest happenings, peculiar case studies, commentaries provided by field experts provides valuable insights.

This blog post is written by Ms. Afreen El Siddique, Chief Legal Officer, Skyline City Construction LLP. She pursued Companies Act, 2013 & SEBI Law Course from Bettering Results (BR). 

Criminal Liability of Directors in India: Unveiling the Legal Labyrinth

1. Introduction

In the dynamic world of corporate governance, directors hold a position of immense responsibility. These individuals steer the course of companies, making critical decisions that impact employees, shareholders, and the economy at large. In India, the role of directors is subject to stringent legal regulations, ensuring transparency, accountability, and integrity in the affairs of the company. This blog post explores the concept of criminal liability for directors in India, providing real-world examples and citing relevant legal provisions to shed light on the implications of their actions.

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2. Understanding the Legal Framework

Directors in India operate within a multifaceted legal framework, which combines civil and criminal provisions. The primary legal instrument governing the criminal liability of directors is the Companies Act, 2013. Section 166 of the Companies Act, 2013 defines the fiduciary duties and responsibilities of directors, while liabilities are peppered across the legislation, thus, compelling them to act in the best interests of the company and its stakeholders.

3. Criminal Liability Under the Companies Act, 2013

The Companies Act, 2013, encompasses provisions through which directors can be held criminally liable for various offences, including:

a) Fraudulent Activities (Section 447): This section defines the offence of fraud, incorporating activities such as making false statements, committing fraud against the company, or engaging in any fraudulent conduct resulting in financial loss to the company or its creditors. Directors found guilty of such offences can face imprisonment and substantial fines. 

b) Mismanagement (Section 241): The Act allows for the initiation of legal proceedings against directors for mismanagement of the company’s affairs. If mismanagement is proven, the court can order the removal of the director and impose other penalties as it deems fit.

*4. Criminal Liability Under the Indian Penal Code (IPC) 

Directors can also be held liable for dishonest or malicious conduct, such as siphoning off company funds, diverting assets, or engaging in unfair business practices.They may be held criminally liable under the IPC for a variety of offences, including:

a) Criminal Breach of Trust (Section 405 IPC): Directors can be charged with criminal breach of trust if they misappropriate company funds or assets. This offence carries penalties including imprisonment and fines.

b) Cheating (Section 415 IPC): Directors who engage in fraudulent activities to deceive the company, its shareholders, or the public can be charged with cheating under the IPC. This offence can lead to imprisonment and fines.

c) Forgery (Section 463 IPC): If directors forge documents or records to commit financial fraud or any other illegal activity, they may be charged with forgery under the IPC.

d) Concealment of Property (Section 120-B IPC): Directors involved in criminal conspiracies to conceal or misappropriate the company’s property may face criminal liability under this section, resulting in imprisonment and fines.

5. Real-World Cases

To understand the practical implications of criminal liability for directors in India, let’s examine some real-world cases:

a) The Satyam Scandal: One of the most notorious corporate fraud cases in India’s history, the Satyam Computer Services scandal of 2009 shook the corporate world. Ramalinga Raju, the founder, and chairman of Satyam, confessed to inflating the company’s assets by over ₹7,000 crores. Several other directors were implicated, facing charges of forgery, criminal breach of trust, and falsification of records. This case led to the prosecution of Raju and several other directors under various sections of the Companies Act and the IPC, resulting in significant legal consequences, including imprisonment and fines.

Legal Provisions in Action:

– Ramalinga Raju and other directors were charged with fraud and falsification of records under Section 447 of the Companies Act, 2013.

– Criminal breach of trust (Section 405 IPC) charges were brought against those involved in misappropriating funds.

– Forgery (Section 463 IPC) charges were filed against individuals for manipulating documents to commit financial fraud.

b) Kingfisher Airlines and Vijay Mallya: The case of Kingfisher Airlines is another high-profile example. Vijay Mallya, the company’s director, faced allegations of financial irregularities, loan defaults, and misappropriation of funds. This case involved criminal charges of cheating, criminal breach of trust, and money laundering. Mallya eventually fled the country to avoid prosecution, underscoring the gravity of the legal consequences directors can face in cases of financial mismanagement.

Legal Provisions in Action

– Vijay Mallya faced charges of cheating (Section 415 IPC) for misleading lenders and creditors.

– The accusations of financial mismanagement and loan defaults pointed towards criminal breach of trust (Section 405 IPC).

– Money laundering charges were also invoked, implying a complex web of financial crimes.

6. Conclusion

The real-world cases and legal provisions cited in this blog post underscore the profound implications of criminal liability for directors in India. Directors, while entrusted with substantial authority in corporate governance, must adhere to the law, act in the company’s best interests, and maintain transparency and integrity in their actions.

Understanding the legal framework is not merely an academic exercise; it is a crucial aspect of effective corporate management. Both directors and companies must prioritise ethical practices and strict compliance to ensure their continued growth and success in the Indian corporate landscape. As the examples of the Satyam scandal and the case of Vijay Mallya demonstrate, directors can face severe consequences when their actions breach the law. The onus is on them to navigate the intricate legal labyrinth, always adhering to the law and acting in the best interests of their organisations and stakeholders.

 

Note: *The IPC will be replaced by the Bharatiya Nyaya (Second) Sanhita Bill, 2023 once it comes into implementation.

The term “bond market” refers to all debt securities, trades and issuance, and it is also used interchangeably with the terms “debt market,” “fixed-income market,” and “credit market.” The bond market serves as a platform for investors to buy and sell bonds, which are essentially loans made by investors to borrowers. The bond market serves as an essential component of the financial system by facilitating trading and issuance of debt securities. It offers investors opportunities for income generation while providing valuable insights into their economic conditions. This market includes debt securities issued by the government as well as corporate entities. Furthermore, the bond market is closely watched by economists and policymakers as it reflects broader trends in interest rates and economic stability. Changes in interest rates can have significant implications for borrowing costs across sectors like housing or business investments. One key characteristic of the bond market is its diversity, each type has its own risk profile and yield potential. 

Let us try to understand the frequent debt issuances undertaken by an entity.

I. Debentures 

In terms of the Companies Act 2013 (“CA 2013”), debentures include debentures stocks, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the Company or not. In simple terms, a debenture may be defined as an instrument acknowledging a debt by a Company to some person or persons. 

(A) Debt Instruments Investing in debentures in India can be made by way of various instruments, such as: 

1. Non-Convertible Debentures are debt instruments which cannot be converted into equity shares of a company. 
2. Optionally Convertible Debentures are instruments that may be converted to equity shares of a company but such conversion is not mandatory. 

(B) Procedure For Issue of Debenture on Private Placement Basis 

1. Calling a Board Meeting and pass resolutions for approval of the following: – 

To issue debentures and decide its type whether secured or unsecured and terms & conditions thereof – Offer letter for private placement in Form No. PAS – 4 and Application Forms/Debenture Subscription agreement Approval of Form No. PAS – 5 (record of a private placement offer) – Written consent of a Debenture Trustee and appointment thereof (In case of secured debenture) – Approval of Debenture Trustee Agreement (In case of secured debenture) To authorize for – Creation of charge on the assets of the company (In case of secured debenture) 

2. Issuing notices to the shareholders for Extra-Ordinary General Meetings. 

The notice must contain an explanatory statement bearing the particulars of the offer, date of passing board resolution, kinds of securities offered and their price, basis or justification for the price, name and address of valuer who performed valuation, amount which the company intends to raise, material terms of raising such securities, proposed schedule, purpose or objects of the offer, contribution being made by the promotes or directors. 

3. Passing a Special Resolution 

IIn the Shareholders’ meeting, a Special Resolution must be passed for the Private Placement of Debenture and for increasing the borrowing limit for the issuance of Debenture. 

4. Filing of e-form MGT-14 

E-form MGT-14 will be filed along with an offer letter, Valuation Report and CTC of Special Resolution carrying an explanatory statement appended with the Notice of the EGM. 

5. Sending of Offer Letters in form PAS-4

Offer letters are sent to identified persons within 30 days of recording the names of the identified persons and the value of the share will be as per the valuation report of a Registered Valuer as provided under Section 247 of CA 2013. 

6. Opening of separate bank account  

A separate bank account must be opened to receive application money within the offer period as per the offer letter.

7. Holding of Board Meeting 

Board meeting must be held after the closure of the offer period and passing Resolution for the following Allotment of Debenture to the entitled subscribers. Issue of Debenture Certificate Debenture Deed (SH-12) Creation of DRR Creation of charge on an asset if required. 

8. File e-form PAS-3 “Return of Allotment” within 15 days of passing Board Resolution for allotment. 
9. Issuance of share certificate as per Section 56(4) of CA 2013, applicants will be allotted a share certificate within 6 months of allotment. 

(C) Issue of debt securities under SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

 A public corporation must adhere to the CA 2013 as well as the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 if it seeks to issue and list its debt securities on stock exchanges. Furthermore, the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 must be followed for debt Securities to be listed. It should be noted that the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 also apply to the issuance and listing of debt instruments. 

II. Derivatives 

A financial contract or an instrument derives its value from the value of the underlying asset. The underlying asset can be a stock, bond, commodity, currency, market index, interest rate etc. Derivatives can be classified into segments. 

They are: 

1. Forwards 
2. Futures 
3. Options 

A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date. A forward contract can be used for hedging or speculation, although its non-standardized nature makes it particularly apt for hedging. 

Futures are derivative financial contracts that obligate the parties to transact an asset at a predetermined future date and price. Here, the buyer must purchase, or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date. 

Options are financial instruments that are derivatives that are based on the value of underlying securities such as stocks. 

An options contract offers the buyer the opportunity to buy or sell depending on the type of contract they hold the underlying asset. Trading in Derivative Markets is governed by two legislations: 

• Securities Contracts (Regulation) Act, 1956 
• Securities and Exchange Board of India Act, 1992 

Both these acts form the regulatory framework for derivatives trading in India. 

III. Bonds 

A bond is a loan given to a fund seeker by an investor or a fund giver. It is a fixed-income instrument where an investor gets periodic payments of interest or a lump sum interest along with principal at the time of maturity. Like shares, bonds are traded in secondary markets in their debt segment, bonds can be issued by the government or corporate companies.

Bonds can be classified into the following categories based on their underlying features: 

a) Zero-coupon Bonds 

These bonds are sold at a discount on their actual face value at the time of issue. On maturity, the investor is paid only the maturity value, but no interest or coupon payment is made in between. Hence it is called a zero-coupon Bond. If the discount offered is very high, it is called a ‘deep discount bond’. 

b) Deep Discount Bonds

 A deep discount bond is issued at a high discount on its face value. These bonds are considered the safest as there is a fixed income that is available with high returns on maturity. But the maturity proceeds for the interest component are subjected to tax, owing to the prospects of earning high income with low levels of risk they are rated high by the rating agencies. 

c) Easy Exit Bonds 

These bonds come with relatively easier and quicker ways to redeem as and when the investor decides to redeem. This enhances the liquidity of the money invested for the investor. Generally, the issuing entity will have enough cash reserves to accommodate this arrangement and hence come with low risk and because of the same, they are graded high and attract more investments. 

d) Disaster Bonds 

The entities issuing these bonds are engaged in the business of insurance who wish to raise capital by aligning the returns with the business risk i.e. losses. If the insurance entity makes heavy losses, then the investor of this bond is expected to make less return. So, higher the probability of a disaster, lower will be the chances of earning high on these bonds. 

e) Commodity Bonds

A commodity-backed bond is a type of bond whose value is directly related to the price of a specified commodity. Most bonds have a fixed value determined at the time of purchase. This value is a combination of the bond’s face value and its interest rate, both of which are set at the time of issue. A commodity-backed bond, however, will experience fluctuations in value when the price of the specified commodity rises or falls. The bond’s issuer determines how the bond’s value will change with the price of the commodity. These bonds are generally issued by the companies that produce the associated commodity. 

f) Carrot and Stick Bond 

A convertible bond that comes with a carrot-and-stick provision. Differently stated, its carrot provision provides for a low conversion premium to allure holders to exercise conversion earlier than usual (the carrot). The stick provision allows the issuer to call the bond at a specified premium if the common stock of the issuer is trading at a certain percentage above the conversion price (the stick). This structure combines both rewards and punishments and it is up to the holder to go either course as its investment policy dictates. 

h) Stepped Coupon Bond 

In this type of bond, the interest rate payable on the bond is not fixed. Either it periodically goes up or goes down as per the prevailing interest rate scenario in the economy. If the interest rates are expected to go up then the investor will fetch higher returns. Alternatively, he will lose returns if the interest rates are expected to go down. 

The legal framework surrounding the bond market is designed to maintain integrity and trust among participants. Laws govern the issuance, trading, and settlement of bonds, ensuring fair practices and preventing fraudulent activities. Investors rely on these laws to make informed decisions when investing in bonds. They can be assured that their rights as bondholders are protected by legal recourse in case of default or breach of contract. 

In conclusion, the issuance of debt securities provides an important mechanism for raising capital in the financial markets. By offering fixed income opportunities and relatively lower risk profiles, these instruments attract investors looking for stable returns on their investment. As such, debt securities continue to be an integral part of the global economy and the investment landscape.