Question: I had handed over my shares and securities to my broker to cover the cost of any investments which I may make in future. I find that he has used those securities without my consent for trading on his own. I am now finding it difficult to retrieve those shares and securities though he has promised to do so in the near future. I am very much concerned about this misuse done by some brokers. Is the government taking any steps to protect investors from unscrupulous brokers?

The regulator, Securities & Exchange Board of India, has last month issued a directive that brokers can accept collateral from clients in the form of shares and securities solely for the purpose of margin pledge created in the depository system. It has prohibited brokers from making an off-market transfer of shares and securities because such transfers tantamount to change in ownership and cannot be treated as a pledge. It has been further clarified that transfer of securities to the demat account of a broker who may be a trading member or clearing member of a stock exchange is prohibited.

It is also specified in the circular issued by SEBI that brokers should open a separate demat account for accepting ‘margin pledge’. This action has been taken by SEBI to protect the interest of investors like you who have suffered in the past as a result of broking firms illegally pledging shares belonging to their clients with banks and non-banking finance companies to raise money with which the brokers enter into business activities for themselves. In case of defaults made by brokers in the past, they may apply for insolvency, but the clients whose shares have been illegally transferred have been left without recourse and would suffer losses. Therefore, in future, you should specify when you hand over your shares and securities to a broker that these should be used only as ‘margin pledge’ and should be credited by the broker in a separate demat account pertaining to such ‘margin pledge’.

Q: Auditors in the past have been found to be negligent in not reporting financial irregularities committed by companies. Shareholders and investors have therefore suffered and their investments have lost value. This brings no relief to shareholders even if the auditor is debarred from practice. Is anything being done about this?

The Ministry of Corporate Affairs has now made it mandatory for auditors to furnish details of tangible and intangible assets belonging to the company, loans given to promoters and related parties and a report on whistle blower complaints. If there is a discrepancy of more than 10% in inventories, the auditors are required to report this fact in their report to shareholders. If title deeds of immovable properties are not in the name of the company, the auditor would have to report the same.

The auditor of the holding company is required to disclose any adverse remarks which may be made by auditors of the subsidiary companies. He will also be required to give an opinion on financial ratios, the age and expected dates of realisation of financial assets and payment of financial liabilities. To reduce manipulation of books of account, auditors will have to verify whether quarterly statements filed with banks are in agreement with the books of account. Earlier, under the Companies Auditors’ Report Order, 2016, comments had to be given by auditors on 21 issues. This has now been increased to 50 issues under the revised order of 2020.

Q: My son who is working in India is required to travel to some South East Asian countries. I want to know whether any travel policy is available which would cover risks like corona virus?

Most insurance companies are not issuing new policies for travel to China and other South East Asian countries, including Hong Kong and Macau, in the wake of an advisory issued by those Governments. However, some companies like Bajaj Allianz General Insurance Co. Ltd. issue policies through the underwriting process which will be in operation until the advisory is withdrawn. Companies like ICICI Lombard General Insurance Co. Ltd. have retained the option to issue the policy on a case by case basis depending upon the perceived risks. Insurance companies generally assess the situation before issuing a policy, considering the region or area where the travel is to be undertaken.

A multi-trip or annual policy does not require the applicant to give details of his travel in advance. Hence, policies are generally issued. However, at the time of claim, expenses relating to China are rejected on the ground that an advisory has been issued for not travelling to that country. Generally, people are being treated or quarantined at Government facilities. Therefore, the claim for medical expenses would not arise.

Source:https://www.khaleejtimes.com/business/local/mandatory-for-auditors-to-furnish-details-of-tangible-and-intangible-assets

The Business Registration and Licensing (BRL) sector at Dubai Economy reported that 4,692 Instant Licences were issued since the launch of the service in July 2017 to date.

Among the Instant Licences issued, 3,448 were in the commercial (73.5 per cent) and 1,244 were professional (26.5 per cent) categories.

The Instant Licence service provides a convenient model for businessmen who can now obtain a commercial licence within five minutes, enabling them to establish and conduct business in Dubai easily. The initiative is a path-breaking service whereby businesses can secure their commercial license in one-step for the first year without having a company’s lease or location.

Through the Instant Licence, Dubai Economy seeks to highlight the sustainable economic development and competitiveness of the emirate.

All business activities can benefit from the service, except public and private shareholding companies, through eServices (ded.ae/instant), the various outsourced service centres in Dubai, or the Happiness and Smart Lounges.

Holders of general trade licences can only use electronic services. All business partners or one of them must be present while applying through the outsourced service centres or the Happiness Lounge and must provide a valid passport copy of all parties (partner and manager), residence visa copy and no-objection letter from the sponsor to the foreign parties.

The Instant Licence offers the option of an electronic memorandum of Association (eMOA), in addition to obtaining the license and entry in the Dubai Economy commercial registry.

Furthermore, the licencee is given membership in the Dubai Chamber instantly, an establishment card of the General Directorate of Residency & Foreigners Affairs as well as three work permits for employees from the Ministry of Human Resources & Emiratisation once the trade license is issued.

‘Native’ workers registration

The registration of ‘Native’ workers in the Ministry of Human Resources and Emiratisation is done while issuing the Instant Licence. If the partners wish to appoint the employees before the issuance of the Instant Licence, they need to follow a few simple steps or else skip the screen and complete the procedures.

The number of Instant Licence owners reached 16,935 and 87.6 per cent (14,842) of them are men while women account for 12.4 per cent (2,093). The businessmen who secured Instant Licences so far include those from Britain, Turkey, Saudi Arabia, India, China, Pakistan, Egypt, Jordan and Sudan.

An Instant Licence can be obtained for four legal forms of businesses – limited liability company (LLC), single member LLC, sole proprietorship and civil company.

The Instant Licence initiative has also contributed to the sub-indicator ‘Starting a business’ in the Ease of Doing Business Index 2020 issued by the World Bank, which ranked the UAE 17th globally.

Source:https://www.khaleejtimes.com/business/local/dubai-economy-issues-4692-instant-licences-since-2017