Fundamental advantage of the corporate form of business is to be able to involve multiple stakeholders taking good care of their interests. Corporate form of business separates the owners as individuals from the institution of business. A business must have a right kind of legal nature and the relationships between the stakeholders must be governed by proper documentation. In order to take money from non-institutional and general people in the form of equity or in the form of debt, the business needs to be in a specific legal form. The more amount of money you want to avail as a business, the more number of people you want to avail the money from, the larger the number of people you want to procure capital from, the simpler the form of instrument that you want to issue to raise capital, the more rigorous the compliances and the more complicated the legal form of the business! However, the efforts are more than awarding!!
A lot of SMEs run as a proprietorship till is too late. A proprietorship runs on the money organised by the business man himself and the loan he can aware with his personal assets. This puts a natural cap on the amount of the fund that can be raised and the extent to which business can grow. Names of business must be converted into a corporate body the businessman aspires to grow the business beyond a certain threshold. Many serious and large-scale stakeholders including lenders, clients, suppliers, employees don’t engage with proprietorship as this is perceived to be very risky. Also, equity funding is very difficult or near impossible for proprietorship.
A business cannot grow beyond a limit in the form of a proprietorship. If a business is converted into a corporate body at a very later stage, a lot many issues arise. The first issue is the fresh start. The Legacy, experience, credentials, certifications, qualifications, project experience, etc of a proprietorship does not pass on to the private limited company incorporated by the businessman. All of them have to be procured afresh. The second issue is transfer of assets. Depending upon whether it is asset sale or slump sale, GST and capital gains tax are required to be paid. This Virtually trains the businessman of his money. Hence, conversion of a proprietorship into a limited company can be taken as good as starting a new company.
In the context of above, Apohan provides the following corporate management and corporate development services.
Depending upon the configuration of the products, services, expertise involved, interests of the specific promoters, tax advantages, legal function, work of the organisation, etc., a common set of promoters need to form many companies, trusts, societies, etc. All of these companies and organisations are related to each other in many ways. We provide consulting Services for the most effective group structure involving multiple entities and companies.
Not only that a business needs to be in a correct legal form, its constitutional documents such as articles of association and memorandum of association need to have appropriate kind of provisions for the harmonious functioning of the company. It needs to empower the business to undertake all the activities for growth and good financial performance.
At Apohan, we advise the promoters in personal capacity regarding management of their equity stake in various companies. This includes appointment of nominee directors, investment portfolio management, representation in the General Meeting, etc.
Apohan helps companies in formulation of a shareholding agreement. We take care of various rights, obligations, duties, liabilities, risks, etc by properly drafting the agreement no disputes arise in the future and the relationship between the shareholders is harmonious. We take care of the ownership, financial benefits, control of the management, rights of further investment, exit rights, transfer rights, tag along rights, drag along rights, first right of refusal, composition of the board, etc.
Ownership and control is very important aspect of management of a company. Some shareholders may be interested in and Competent for management of the company as directors. Some other shareholders might be more interested in the financial benefit. This would result in requirement of proper board composition and issue of various instruments search preference shares for differential voting right shares.
Control of a company
It is very important to formulate an efficient and effective board of directors for the proper management and growth of a company. Apohan helps a company in determination of the strength of the board, role of the chairman, role of the Managing Director (MD), role of the chief financial officer (CFO), role of the chief operating officer (COO), role of chief marketing director (CMO). We help the companies in deciding their performance obligations, rights, authorities also along with incentives and penal provisions for non-performance. Apohan devises the performance appraisal mechanism for the board of directors. A well laid down plan of action by all the directors propels the company in the direction of progress.
A company should be member of various industrial associations to develop a business network. It should be present in various online and offline forms. It should attend various industry events. It should participate in the industry related activities. It should be aware of the modern trends in the technology, regulation, international trade, etc. Apohan helps companies in identification of appropriate forums to be part of. Apohan also represents the companies in those forums.
Apohan identifies the various government schemes, incentives, tax benefits, exemptions, etc available for specific sector or location for the companies. A company should take membership of various chambers of commerce, be associated with the commercial attache of foreign embassies, commercial Chambers in India, etc to increase its Exports and foreign collaborations. A company also should we are associated with the sector related research institutions. Apohan represents specific interest of a company to all such business stakeholders. Apohan represents business to the central government, state government, municipal Corporation, multilateral institutions such as world Bank, a government institution or authority (such as NHAI, Port Trust Authority), etc. We provide excellent liaisoning services.
Apohan helps company in formulation of a local or foreign equity for contractual joint venture. Apohan identifies the partner, prepare the financial model, negotiate the relationship, prepare the contract draft, etc.
Also, Apohan helps company in identification of the various stakeholders for long term relationships such as franchisee through franchise agreement, licencee through licensing contract, distribution channel partners through distribution agreement, suppliers through procurement agreement, long term clients true offtake agreement, technology providers through technology transfer agreement, intellectual property providers or brand providers through royalty contracts. Apohan helps a business in formulation of specific custom contracts for a custom requirement of a business.
For Rapid growth and trust among the investors, a company must follow the practices of good corporate governance. Some of these practices are mandatory for certain large companies. Apohan helps these companies in implementation of good corporate governance practices. These practices are also desirable for companies with even smaller scale. Good corporate governance reduces the risk perception in the eyes of the investors. It improves the credit rating of the company. It is an indication of proper compliance of laws of land, laws applicable to the product or service, laws applicable to the sector, etc. It indicates that there is proper mechanism in the company to improve transparency, control financial frauds, management operates in a modern professional way. It also indicates that the company is governed by professional criteria and not at the whims of the unprofessional promoters.
A company has around 30 odd departments and functions of entirely different varieties. All of these functions differ widely from one company to another company. The senior/middle management is not able to take decisions because they have strategic effect, they involve large amount of money, they need to be referred to the directors, etc. Already there is very small and lean management in a small and medium enterprise. Also, they do not have a prior exposure to big companies where such decisions were taken smoothly. Thus, one or two promoters/ directors have to take care of all the complex functions in a growing company. They have to give decision and approval on every small and large activity happening in every nook and corner of the company. This creates the stress in their personal life, working life as they don’t have sufficient time and also they don’t have all the necessary skills and knowledge of each of the functions.
To free the top management of all the chores, routine work, non-strategic work, standard work, drudgery, it is important to create a corporate policy framework. The policies are regarding what to do and what not to do, what are the principles of the company, what are the activities to be done by the management in specific circumstances, how certain approvals are given or rejected, what are the criteria behind taking certain management decisions, etc.
Apohan prepares the corporate policies in nature of the code for board of directors, code for board committees, corporate affairs policies, company secretarial policies, financial policies, dividend policy, investment policy, financing policy, debt policy, succession policy, marketing policy, procurement policy, joint venture policy, corporate governance policy, human resource policies, administrative policies, information technology policies, public Relations policy, social media policy, advertising policy, etc.
Apohan prepares the standard operating procedures (SOPs), codes, policies, rules, etc for the specific circumstances and activities involving a company. And also prepares the incentive structure for complete compliance of the policies and penalty structure for non-compliance. Apohan also helps companies in identifiers means and ways to refine the existing corporate policies, to increase the effectiveness and efficiency, to modify them to take care of the new circumstances, etc. Apohan also helps companies in training of their staff in understanding and implementing the corporate policies.