Corporate scams

7/25/2019 Corporate scams

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FINANCIAL

ACCOUNTING

ASSIGNMENT


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CONTENTS1. Parmalat (Italy) 2003................................................................................3

2. Bank ! Cr"#$t an# Cmm"r%" Int"rnat$nal (BCCI).............................................4

3. Ty% $nt"rnat$nal...................................................................................5

&. 'r$% M"#$a G"rmany.............................................................................6

*. +rl#Cm...........................................................................................8

,. Enrn.................................................................................................9-. $/"n#$ Fran%" (2002).............................................................................10

. Ma"ll %mmn$%at$n4 %r5rat$n4 an# m$rrr 6r5 n"45a5"r U' (1771).............11

7. T" 'a8l Bank S%am A!6an$4tan (2012)......................................................12

10. Satyam 4%am In#$a (200).......................................................................13

Ty5"4 an# Frm4 O! B4$n"44 Or6an$4at$n........................................................15

Types of businesses.................................................................................................. 15

Forms of Business Organisation.................................................................................. 15

Sr%"4................................................................................................19

1. Parmalat (Italy) 2003

Parmalat was formed in 1961 by Calisto Tanzi, from a small family business. By te 199!"s, it asgrown into a large #ompany. $ts main line of operations were mil% and dairy produ#ts. By te end of199!"s te #ompany went international in te form of multinational. Parmalat engaged into ea&y

a#'uisitions in te food industry in te (). *s a #onse'uen#e, Parmalat be#ame an important foodand be&erage #onglomerates in te world wit international listings in si+ sto#% e+#anges e+#ludingilan )to#% -+#ange.

Fra#4

$n te 19!"s only Parmalat already started a&ing finan#ial diffi#ulties. $n 19/, Tanzi wor%ed are&erse merger, under wi# it sold itself to a dormant olding already listed on te ilan )to#%-+#ange. Te #ombined firm raised about 01!million. By 1992, Parmalat started fa%ing


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transa#tions to inflate its finan#ial statements. From 199! to 3!!3 te #ompany #ontinuously forgeddo#uments in order to de#ei&e ban%s and regulatory autorities.

M#4 O5"ran#$ ! t" Fra#

1. 4ouble BillingTe fraud was mainly a system of double billing to $talian supermar%ets and #ustomers. By so doing,

te a##ounts re#ei&able were signifi#antly inflated and it sowed a mu# larger amount tan wattey a#tually were.

3. Off5)ore Companies to #on#eal lossesParmalat used to transfer all te losses of te loss ma%ing a#'uisitions tat it used to ma%e to te o&er3!! off5sore #ompanies lo#ated in ta+ a&ens. Tis was #le&erly done troug a##ountingmanipulations and a#tually sowing tem as assets.

2. Bonds for Fraudulent Transa#tionsFrom 199! to 3!!2, Parmalat issued bonds to Ban% of *meri#a, Citi#orps and .P. organ to raisemoney. $t also borrowed ea&ily from global ban%s. *s 7ustifi#ation to loans it used to inflatere&enues troug fi#titious sale to retailers. 8ater on tese debts were transferred to sell #ompanieslo#ated in off5sore ta+ a&ens.

. Bogus #ompany:en te fraud was intensifying, Tanzi and two auditors #oo%ed up te a##ounts by saying a bogusmil% produ#er in )ingapore tat supposedly supplied 2!!,!!!tons of non5e+istent mil% powder to aCuban importer tat eld te fa%e Ban% of *meri#a a##ount

E54r"

$n early 3!!2, Parmalat tried and failed to sell bonds wort 0!! million. Te CFO Fausto Tonnaresigned and repla#ed by *l&erto Ferrari. Te latter was barred from &iewing some of te #ompaniy"sa##ount, e resigned and te problems be#ame publi# in ;o&ember 3!!2. $n 4e#ember 3!!2,Parmalat #onfirmed tat an a##ount it #laimed to a&e at Ban% of *meri#a wit 02.9million wasine+istent, after wi# oter fraud were dis#o&ered.

A!t"rmat

Tanzi retired as #airman and C-O. Te #ompany was li'uidated wit debts of nearly 01 billionma%ing it one of te biggest fraud in -uropean istory. Tanzi was senten#ed to 1 years in 7ail in3!1!.

2. Bank ! Cr"#$t an# Cmm"r%" Int"rnat$nal (BCCI)

Ban% of Credit and Commer#e $nternational assan *bedi, a Pa%istani finan#ier. Te BCC$ was in#orporated in 8u+embourg wit eadoffi#es in ?ara#i and 8ondon. Te 'uadrupling of oil pri#es in 19/2519/ led to uge deposits by

*rab oil produ#ers. :itin a de#ade, BCC$ tou#ed its pea%. $t operated in / #ountries, ad o&er !!bran#es and ad assets in e+#ess of () @3! billion, ma%ing it te /tlargest pri&ate ban% in teworld by assets ten.

*ltoug BCC$"s publised results sowed e&er5rising profits, by te late 19/!s te ban% wassuffering an alarming le&el of bad debts due to re#%less lending. *s te losses mounted *bediresorted to different ways su# as proprietary trading, but te results were furter uge losses. $n'uiryreport in une 1991 for BCC$ by Pri#e :aterouse at te beest of Ban% of -ngland #ode named


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A)andstorm eport" re&ealed tat BCC$ was in&ol&ed in massi&e money laundering, oter finan#ial#rimes and illegally gained #ontrolling interest in a ma7or *meri#an ban%. Te report indi#atedmassi&e manipulation of non5performing loans, fi#titious transa#tions and #arges, unre#ordeddeposit liabilities, fi#titious profits and #on#ealment of losses. Terefore in 1991, #ustoms and ban%regulators in se&en #ountries seized te ban%"s bran#es in te (?, (), Fran#e, )pain, )witzerland,8u+embourg and te Cayman $slands.

Te BCC$ s#andal was te biggest ban% fraud in istory. $ts #losure left 1!,!!! depositorss#rambling to re#o&er lost money, e&entually re#o&ering / per#ent of teir #laims, lea&ing a finalloss of around @3 billion. *bedi was indi#ted in te () but e died in 199 before fa#ing te trial.

Te primary reasons tat #ould be attributed to te ban%"s losses were

= 8a+ Corporate o&ernan#ei= anipulation by ban% offi#ers wit teir own personal agendasii= eneral fraud&= Failure of fundamental ris% management stru#tures

&= (ntenable loans and a#'uisition strategies&i= Poor treasury and re#ord5%eeping pra#ti#es&ii= Comple+ stru#ture of BCC$ leading to numerous regulatory &iolations and legal liabilities.

Fla4 $n Cr5rat" G/"rnan%"

. )wartz were #arged wit misappropriating more tan @1/! million from te


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#ompany. Tey were also a##used of stealing more tan @2! million troug fraudulent sales ofTy#o sto#%. Tey were #arged wit more tan tirty #ounts of mis#ondu#t, in#luding grand lar#eny,enterprise #orruption and falsifying business re#ords.

Ty#o"s sare pri#e de#lined nearly ! in a si+5wee% period from its pea% of nearly @62 to @13 by temiddle of 3!!3 representing a loss of @! billion in mar%et &alue. Ty#o owe&er sur&i&ed te s#andal

in wi# its new management team reorganized te #ompany and re#o&ered some of te funds. $timplemented safeguards to ensure greater ob7e#ti&ity on te part of te board of dire#tors. TeCompany restated its 3!!3 finan#ial results by @23.3 million.

9$4" ! Ty%

Ty#o $nternational was originally establised as Ty#o 8aboratories in 196! as an in&estment andolding #ompany in Bermuda. $n 1993, wit its new C-O ?ozlows%i, te #ompany ad an aggressi&eprogram of a#'uisitions were an estimated @63 billion was spent to pur#ase more tan 1!!!#ompanies. $n 1992 its name was #anged to Ty#o $nternational 8td. to refle#t Ty#o"s globalpresen#e. By 3!!1 Ty#o was one of *meri#a"s largest #onglomerates wit re&enues of @2 billion and

3!,!!! employees worldwide.

Ca4"4 ! t" :n!all


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of is tenure, is #ompensation was supplemented wit te loans from Ty#o wi#, wit te supportof te board, was forgi&en.

A#$t Fa$lr"

Te e+ternal auditor of Ty#o, Pri#ewaterouse Coopers olding and its tree ma7or subsidiaries, ?ri# media,?ri# Pay TG and ?ri# Beteiligung de#lared insol&ent.

3= erman Poli#e in O#tober 3!!2 arrested >erbert )#roder , former #ief finan#ial Offi#er of ?ri#edia, on suspi#ion of fraud lin%ed to te #ompanyHs insol&en#y.

Fla4 $n %r5rat" 6/"rnan%";

1= $nade'uate finan#ial dis#losuresD Te finan#ial dis#losures made by ?ri# edia were inade'uateand &ague.


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3= Failure of %eeping le&erage witin manageable limitsD Te broad of dire#tors of ?ri# edia andte ban%ers permitted te le&erage to grow to an un5manageable le&el.

2= Failure of strategi# poli#iesD Te board of dire#tors of ?ri# edia failed miserably in formulatingstrategi# poli#ies of a#'uisitions in te interest of te #ompany. Te top management failed inper#ei&ing realisti# supply and demand pro7e#tions for pay5#annel in ermany.


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*. +rl#Cm

*s#ensionD :orldCom started in 192 as a tele#om ser&i#e pro&ider for long distan#e dis#ountser&i#es


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3= :orldCom #anged its name to C$ on *pril 1, 3!!2. (nder te ban%rupt#y reorganizationagreement, te #ompany paid /! million dollars to )e#urities and -+#ange Commission in#as.2= Bernard -bbers, te C-O of te #ompany was found guilty and #on&i#ted of all te #argesrelated to 11 billion dollars a##ounting s#andal in ar# 3!!. Oter former :orldCom offi#ialsin#luding Cief finan#ial offi#er )#ott )ulli&an were #arged wit #riminal penalties relating to

#ompanyIs finan#ial misstatements.= :orldCom sto#% pri#e ad fallen from 6. dollar a sare in mid 1999 to less tan 3 dollar asare. :orldCom employees wo old te #ompanyIs sto#% in teir retirement plans alsosuffered uge losses.

,. Enrn

A4%"n4$n

?ennet 8ay merged te natural gas pipeline #ompanies of >ouston ;atural as and $nter nort

to form -nron in 19. -arly in te 199!Is, deregulation of sale of natural gas in te ()* madeway for -nron to sell energy at iger pri#es, tus in#reasing its re&enue substantially. By 1993,-nron be#ame te largest seller of natural gas in ;ort *meri#a. To furter grow, -nron followeddi&ersifi#ation strategy and so entered into &arious fields su# as gas pipelines, pulp and paperplants, ele#tri#ity plants, water plants and broadband ser&i#es a#ross te globe. On 4e#ember 21,3!!!, -nronIs sto#% pri#e was 2.12 dollars and its mar%et #apitalization e+#eeded 6! billiondollars, wi# is /! times of te earnings. Tus -nron was rated te most inno&ati&e large#ompany in *meri#a in FortuneIs ost admired #ompanies sur&ey.

9"a4n4 ! :n!all;

* #ombination of te following issues led to te downfall of -nronD

1= Faulty e&enue e#ognition odelD -nron adopted te Ier#ant odelI of re&enue reportingin respe#t of pro&iding ser&i#es in wolesale trading and ris% management. Te entire sales &aluewas reported as re&enue and produ#ts #osts as te #ost of goods sold in tis model. Tis model ismu# more aggressi&e in te a##ounting interpretation tan te Iagent modelI were only tradingand bro%erage are #onsidered as re&enue, not te full &alue of te transa#tion.

3= ar%5to5mar%et *##ountingD -nron adopted tis a##ounting to a##ount for #omple+ long5term#ontra#ts. Tis a##ounting re'uires tat on#e a long5term #ontra#t was signed, in#ome as was#al#ulated as te present &alue of net future #as flows. 4ue to large dis#repan#ies of attemptingto mat# profits and #as, in&estors were gi&en false and misleading reports. >owe&er in futureyears te profits #ould not be in#luded, so new and additional in#omes were in#luded from more

pro7e#ts to de&elop additional growt to appease in&estors.

2= )pe#ial Purpose -ntitiesD -nron #reated spe#ial purpose entities li%e limited partnersips or#ompanies to fulfill a spe#ifi# purpose of pro&iding fund or managing ris%s asso#iated witspe#ifi# assets.

= :istle Blower Poli#yD )erron :at%ins, one of te employees of -nron raised #on#ern aboutte a##ounting metods followed in te #ompany in 1996 but no noti#e was ta%en of er #on#ern


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and se was sifted to anoter department. Finally in 3!!1, wen se raised te matter ofe+tensi&e frauds at spe#ial purpose entities again loudly, ten te s#andal #ame to te surfa#e.

= *udit CommitteeD -nronIs audit #ommittee did not a&e te te#ni#al %nowledge to properly'uestion te auditors on a##ounting issues related to #ompanyIs spe#ial purpose entities. Teaudit #ommittee failed to re&iew te related party transa#tions wit te )P-Is.

6= )ta%eoldersD sta%eolders of te #ompany in#luding #reditors, #redit rating agen#ies andregulators


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pro7e#tions and aead of te targets. Te press releases of te first, se#ond and tird 'uarter of 3!!3presented a materially misleading pi#ture of te finan#ial #ondition of Gi&endi.

3) A66r"44$/" a%%nt$n6;4uring 3!!15!3, Gi&endi engaged in a &ariety of improper a##ountingpra#ti#es to present a false impression of #ompanyHs operating profits. $n 3!!3, a minoritysareoldersH asso#iation filed a suit against Gi&endi a##using it of #on#ealing finan#ial information

and presenting fraudulent information.

G/"rnan%" !la4;

1) La%k ! 5r5"r l"a#"r4$5;8a#% of proper leadersip was a&ident in Gi&endi wit essier on aspree of e+pansion troug a#'uisition.

2) In"!!"%t$/" 8ar# ! #$r"%tr4;Te board was largely ineffe#ti&e #omposed of HC-O friendlyHdire#tors and dominated by essier.

3)


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in&estigation re&ealed a+well group owed =2.billion to its ban%ers. Oter ban%s started #alling infor massi&e loans. Te most famous (? 5"n4$n 4%an#al ! =*30 m$ll$n was re&ealed affe#tingmore tan 16!!! employees.

9"a4n4 ! t" :"8a%l"

1. *#'uisitions troug ea&y debts

a+well used to borrow bot on personal and #ompany"s a##ounts. Conse'uently a+well wasfa#ing finan#ial troubles as e ad ea&y borrowings. Te #ompany borrowed @2Billion in 19.Teir ob7e#ti&e was to a#'uire publisers from (), $srael, and >ungary. $t was later dis#o&ered tata+well ad pledged te same #ompany"s assets a #ollateral for &arious loans.

3. Finan#ial 4iffi#ulties and 4i&ersion of FundsTe group #omprised more tan !! #ompanies by te end of 19!"s. $t ad no oter #oi#es otertan sifting funds a#ross te pri&ate #ompanies, misappropriating pensioners" fund in order to ideits finan#ial frauds and li'uidity problems. onts before a+well"s deat, tere was trouble inmeeting te repayment s#edule due to de#lining #as flows and uge debt payments. $n 1991, ina#ute need for money, a+well sold Pergamond and floated irror roup ;ewspapers as a publi##ompany.

2. (n#ertainties following te deat of obert a+wellFollowing te deat of obert a+well, te sto#% of a+well Communi#ation fell to @3.1 on;o&ember 1991 from a ig of @.3 in *pril 1991 furter dropped to @!.6. Creditors were iglyaffe#ted. a+well sudden deat triggered un#ertainty among #reditors and e&entually te a+well-mpire #ollapsed.

A!t"rmat

a+well siponed undreds of millions of pounds from is #ompanies" pension funds to sow agreater &alue of te sares of is group and to sa&e is #ompany from ban%rupt#y.Pensioners re#ei&ed only about ! of teir #ompany pension entitlement.Te sons, ?e&in and $an were de#lared ban%rupted wit debts of L!!.*uditors were Cooper and

8ybrand and admitted 9 errors of 7udgment.

7. T" 'a8l Bank S%am A!6an$4tan (2012)

elati&e to te size of *fganistanIs e#onomy, te ?abul Ban% #risis tat #ame into ligt in;o&ember 3!13 was te biggest ban%ing s#andal te world ad e&er seen, e'ui&alent to around ofnational in#ome. *t te time of te s#am, ?abul Ban% was a #entral institution in te li&es of millionsof *fgans, for many it was teir first e+perien#e wit formal ban%ing.

T" m#4 5"ran#$ ! t" 4%am

)enior management dire#ted -mployees to open and administer o&erdraft and loan a##ounts for

pro+y borrowers supported by fa%e re#ords and unreliable ?now Mour Customer forms tat were

pro#essed witout meeting te #lients. $n#onsistent information and la#% of supporting e&iden#e was

a #ommon feature in te loan files. Te a#tual benefi#iaries of te loan a##ounts were #on#ealed by

passing false entries gi&ing te impression tat funds were being transferred o&erseas by #ustomers to

suppliers supported by fa%e ):$FT messages and in&oi#es from fa%e suppliers #reated by te Credit

4epartment. (ltimately te funds were deposited in a##ounts #ontrolled by te true benefi#iaries. Te

)aeen -+#ange 5 in wi# te now e+5Cairman of ?abul Ban% ad a 9 per#ent sta%e 5 opened


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an a##ount at ?abul Ban% te mont after te Ban% was granted a ban%ing li#ense and ad

appro+imately 16! pro+y loans assigned to it at te time of #onser&atorsip. Te e+#ange was used

to launder disbursementsK #on#eal benefi#iariesK use depositors funds for illegitimate and ris%y

business in&estmentsK satisfy loan repayment s#edulesK and to enable te )aeen to operate as a

>awala.

$n addition to initiating and administering fraudulent loans, ?abul Ban% management disbursed Ban%

funds as operating e+penses for te benefit of outside businesses tey #ontrolled, or #reated fi#titious

assets to #on#eal illi#it witdrawals. isuse of a##ounts also in#luded payment of ad&an#e salaries

and tra&el e+penses, te #laims of wi# ad no supporting do#uments. )alaries were also paid to

un'ualified employees, employees engaged in fraudulent a#ti&ities, or tose wo simply did not wor%

for te Ban%. For e+ample, te broter of te e+5Cief -+e#uti&e Offi#er was being paid a yearly

salary of @96,!93 and was granted four5years paid lea&e, but ne&er wor%ed at te Ban%. )e&eral

transa#tions were #reated to appear as toug e+penses were being in#urred for #apital e+penses. *

purported payment to a te#nology #ompany for @/29,!!! in *ugust 3!!9 was paid &ia te )aeen

-+#ange and transferred to te e+5Cief -+e#uti&e Offi#er on te same day.

Ca4"4 an# A!t"rmat ! t" 4%am*fter te s#am #ame into ligt, as per *fgan law, a #onser&ator was appointed to en'uire into te

matter, and it was dis#o&ered tat o&er 93 per#ent of te Ban%"s loan5boo%, or @61 million, was

granted to 19 related indi&iduals and businesses ultimately rea#ing 13 indi&iduals, wit te

remaining @/ million being e+tended to legitimate #ustomers. ;ew ?abul Ban% to allow good assets

to mo&e from ?abul Ban% to a #lean ban%, wile te bad assets remain wit ?abul Ban% re#ei&ersip.

>ig politi#al in&ol&ement #ombined wit te wea% regulatory and super&isory re'uirements, and

inade'uate reporting and auditing laws led to te ?abul Ban% Crisis. 4espite efforts on te part of te

go&ernment, te in&estigation and figt against #orruption #ontinues in *fganistan.

10. Satyam 4%am In#$a (200)

)atyam Computers, founded in 19/ by amalinga a7u, was te fourt largest $T #ompany in $ndiain 3!!9 wen te founder #onfessed to one of te biggest fraud in $ndia"s #orporate istory. Onanuary /, 3!!9, e announ#ed tat e ad been falsifying a##ounts for years, te s#ale of te fraud isestimated to be /!!! #rore. a7u was #ompelled to admit to te fraud after a failed attempt to a&e)atyam in&est @1.6 billion in aytas $nfrastru#ture and aytas properties5 two firms promoted and#ontrolled by is family members. Te deal, wi# was initially #leared by te board of dire#tors,

was aborted after institutional in&estors 'uestioned te use of a software #ompany"s money to buytwo infrastru#ture #ompanies. Te aim was to fill te fi#titious assets wit real ones, wit te failureof te attempt a7u ad no oter option but to admit to te s#am.

Ma6n$t#" ! t" S%am

*s per te #onfession )atyam"s Balan#e seet in#luded s /126 #rore in non e+istent #as and ban%

balan#es, a##rued interest and misstatements. Te #ompany ad also inflated its 3!! se#ond 'uarter

re&enues by s #rore to s 3/!! #rore and a#tual operating margines were less tan a tent of te


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stated s 69 #rore.

T" m#4 5"ran#$ ! t" 4%am

Te ten senior management allowed #ertain employees to a&e Nsuper user login password to

a##ess te billing systems and were dire#ted to #reate fa%e in&oi#es for no e+isting #ustomers. * total

of 66!2 fa%e in&oi#es were #reated in te fi&e year period wi# boosted te #ompany"s profits

fraudulently. Te fa%e re&enues were ten sowed as #as re#eipts by falsifying ban% statements to

sow iger deposits tan wat a#tually e+isted. oreo&er, falsified interest on fi+ed deposits was

sown to #omplete te fraud #y#le.

A!t"rmat

Te #onfession of a7u emanated so#% wa&es in te sto#% mar%et and te sare of te #ompany

nosedi&ed from a ig of s 1/.9 on anuary 6, 3!!9 it fell below s !, wiping out s 92/6 #rore

of in&estor"s wealt in 7ust one day. *n all time low of s 32./ was rea#ed on anuary 9, 3!!9,

#ompared to te igest of s 2.9 on ay 39, 3!!. *fter te satyam s#am, te o&ernment

realized te loopoles in te #orporate go&ernan#e poli#ies and introdu#ed ma7or #anges regarding

te pro&isons go&erning independent auditors and dire#tors on #ompanies.

Ca4"4 ! t" 4%am

4espite a&ing a ma7ority of independent dire#tors, te Board of dire#tors" of )atyam falied teir

prime duty of o&ersigt and failed to noti#e te s#am #oo%ing up in te #ompany. Te audit

#ommittee failed to #arry out teir responsibilities, despite an email from a wistle blower tey did

not ta%e up te matter until te s#am was already e+posed. 4iligen#e on te part of e+ternal auditors

#ould a&e a&oided te s#am, tey relied #ompletely on te information pro&ided by te management

and did not #ondu#t any pysi#al #e#%s. $f tey would a&e #onta#ted te ban%s to &erify te

balan#es in te a##ounts of )atyam te mismat# would a&e been e&ident.


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Ty5"4 an# Frm4 O! B4$n"44 Or6an$4at$n

Ty5"4 ! 84$n"44"4

Tra#$n6 Or6an$4at$n* trading organization is one tat is in&ol&ed as an intermediary between te #ustomer and tesupplier. Te trading organisation neiter produ#es nor stores. For e+ampleD )to#% bro%ersD $ndiabulls)e#urities.

Man!a%tr$n6 r6an$>at$n

* manufa#turing organization is one tat is a#ti&ely in&ol&ed in pro#uring raw material, #on&ert teminto finised goods as per #ustomer re'uirements and later on dispat# tem to distributors for sale.For e+ampleD FCD >industan (nile&er.

S"r/$%" Or6an$4at$n

* ser&i#e organization is one tat pro&ides an intangible ser&i#e to #ustomers. Tese ser&i#es areusually spe#ialized in nature and re'uire a ig le&el of professionalism. For e+ampleD Ban%ingser&i#eD *+is Ban%.

Sl" Pr5r$"tr4$5

)ole proprietorsip is a model in wi# an indi&idual starts a business &enture on is own. >epro#ures te initial #apital from is past sa&ings, borrowing from #lose relati&es and friends or maystart wit a personal ban% loan. (nder tis mode, te entrepreneur de#ides is re&enue model and teway e wants te business to operate. Often, e is e+pe#ted to wor% beyond e+pe#ted ours. Temain ad&antage is tat all te profit earned are sole is and te disad&antage is unlimited liability.

Frm4 ! B4$n"44 Or6an$4at$n

Partn"r4$5

:en a group of indi&iduals pool up teir resour#es eiter finan#ial or non5finan#ial to #arry out abusiness &enture togeter based on agreed terms stipulated on a partnersip deed is %nown aspartnersip. Often tese indi&iduals are professionals as tey are not allowed to form #ompanies.Tere is te #on#ept of dormant and a#ti&e partners. Te main ad&antage of partnersip is tat teinitial #apital is pooled up more easily as #ompared to sole proprietorsip. Te disad&antage is tatpartners under te partnersip still a&e unlimited liability.

L$m$t"# L$a8$l$ty Partn"r4$5

:ile traditionally only tree forms of organizing business a#ti&ities e+isted


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of te partners is limited to te e+tent of teir agreed #ontribution to te partnersip and partnerswould not be responsibilities of te liabilities of te 88P.

Cara%t"r$4t$%4 ! an LLP

1. *n 88P is a body #orporate and as a legal entity and is separate from its partners. *n 88P alsoas te feature of perpetual su##ession, meaning te e+isten#e of te 88P is not dependent on te

partners.3. Te pro&isions of te $ndian Partnersip a#t, 1923 are not appli#able to an 88P, and e&ery

8imited 8iability partnersip must use te words N8imited 8iability partnersip or N88P as te lastwords of its name.

2. -&ery 88P must a&e at least 3 designated partners being indi&iduals and at least one of temsould be a esident of $ndia. Te rigts and duties of te partners of an 88P is go&erned by teagreement between te partners and te 88P sub7e#t to te pro&isions of te 88P *#t.

. -&ery partner of an 88P is an agent of te 88P, but not an agent of te oter partners.. * firm or a #ompany #an #on&ert into an 88P as per te pro&isions of te a#t. *fter te #ertifi#ate

of registration is issued as per te a#t, all assets and liabilities of te firm or #ompany is transferredand sall &est in te 88P.

6. *n 88P li%e a #ompany, is re'uired to maintain annual boo%s of a##ounts refle#ting a true andfair &iew of te 88P, te statement of a##ounts and sol&en#y must be filed wit te registrar. Tea##ounts of an 88P need to be audited unless any #lass of 88Ps as been e+empted from tisre'uirement by te Central o&ernment.

Cm5any Frm

A4 5"r Cm5an$"4 A%t 2013

NCompany means a #ompany in#orporated under tis *#t or under anypre&ious #ompany lawK

NCompany limited by guarantee means a #ompany a&ing te liability of itsmembers limitedby te memorandum to su# amount as te members may respe#ti&ely underta%e to #ontribute tote assets of te #ompany in te e&ent of its being wound upK

NCompany limited by sares means a #ompany a&ing te liability of itsmembers limited byte memorandum to te amount, if any, unpaid on te sares respe#ti&ely eld by tem.

Pr$/at" L$m$t"# Cm5any

NPri&ate #ompany means a #ompany a&ing a minimum paid5up sare#apital of one la%

rupees or su# iger paid5up sare #apital as may be pres#ribed,and wi# by its arti#les,


17/22


18/22

Public 2ffer to be in

3emateriali4ed orm

*ot /pplicable n case of public offe

securities% the securities ha

be in 3emateriali4ed

Securities in Public 2ffer to be

listed in Stoc6 e&changes

*ot /pplicable Securities offered in P

2ffer% to be listed in Recog

Stoc6 7&changes

Purchase 8 ,oan for Purchase

of 2#n Shares

*ot allo#ed to Purchase its

o#n Shares

*ot allo#ed to Purchase its

Shares *o inancial assis

to be gi)en to purchase its

shares

/cceptance of 3eposits *ot allo#ed to accept deposit /llo#ed if Paid up share c

is Rs. 100 Crores or mo

"urno)er of Rs. 500 Cror

more 9 See

nternal /udit /pplicable in case of

1. "urno)er ; Rs. 00 Crore

in preceding financial year

2r

. ,oans from ban6 or

*Cs ; Rs. 100 Crore in

preceding financial year

/pplicable in case of

1.Paid


19/22

year

/nnual 7)aluation in the

oard?s Report

*ot /pplicable f Paid up share capital i

5 Crore or more% the deta

annual e)aluation in the o

Report

Rotation of /uditor /pplicable in case of Paid up

Capital is Rs. 0 Crore or

more 9

/pplicable in case of Pa

Capital is Rs. 10 Crore or m

*o. of 3irectors and

ndependent 3irectors

!"#o$@*ot required to

appoint independent director

= !"hree$@ and n case of ,

Companies% at least 2ne9

as independent directors

Restriction on Managerial

Remuneration

*o restriction on amount of

managerial remuneration

Managerial Remuneratio

Restricted to 11A of *et

!subBect to conditions$% 2

least Rs. =0 la6h p.a. depe

upon paid up capital

Sr%"4


20/22

1. eport of te publi# en'uiry into ?abul Ban% Crisis, $ndependent oint *nti5Corruptiononitoring *nd -&aluation CommitteeK etri&ed fromDttpDQQwww.globalse#urity.orgQmilitaryQlibraryQreportQ3!13Qi7a#me#5%abul5ban%5in'uiry.pdf

3. *fgan elite ransa#%ed @9!!m from ?abul Ban%, Te uardianKttpDQQwww.teguardian.#omQworldQ3!13Qno&Q3Qafgan5elite5ransa#%ed5%abul5ban%

2. Corporate *##ounting FraudD * Case )tudy of )atyam Computers 8imitedDttpDQQwww.s#irp.orgQ7ournalQPaper$nformation.asp+Rpaper$4S2!33!.GaTnwUi5ig

. o&ernan#e, -ti#s and )o#ial esponsibility of BusinessD *nil ?umar and yotsna a7an *rora

. Con#epts of Business law, 3!11D ).?. *ggarwal

6. Te 8imited liability Partnersip *#t, 3!!DttpDQQwww.m#a.go&.inQinistryG3Qllpa#t.tml

/. 4efinitions as per Companies *#t 3!12, inistry of Corporate affairsDttpDQQwww.m#a.go&.inQ)ear#able*#tsQ)e#tion3.tm

INENTO9IES OF COMPANIES

1. AUTOMOBILE COMPAN?

aw aterialsD seats, weels, engines, nuts and bolts et#.:or% in progressD Gei#les tat are being assembled and are under pro#essFinised oodsD Cars tat are ready for sale.

2. SE9ICE IN:UST9? COMPAN?; TCS
http://www.globalsecurity.org/military/library/report/2012/ijacmec-kabul-bank-inquiry.pdfhttp://www.theguardian.com/world/2012/nov/28/afghan-elite-ransacked-kabul-bankhttp://www.scirp.org/journal/PaperInformation.aspx?paperID=30220#.VaTnwXi-igRhttp://www.mca.gov.in/MinistryV2/llpact.htmlhttp://www.mca.gov.in/MinistryV2/llpact.htmlhttp://www.theguardian.com/world/2012/nov/28/afghan-elite-ransacked-kabul-bankhttp://www.scirp.org/journal/PaperInformation.aspx?paperID=30220#.VaTnwXi-igRhttp://www.mca.gov.in/MinistryV2/llpact.htmlhttp://www.globalsecurity.org/military/library/report/2012/ijacmec-kabul-bank-inquiry.pdf


21/22

Balan#e seet )our#eDttpDQQwww.t#s.#omQin&estorsQ4o#umentsQ*nnual3!eportsQTC)V*nnualVeportV3!1253!1.pdf

;otes forming part of Finan#ial *##ounts pro&idesD

3. BAN'ING COMPAN?;

* Ban%ing Company in $ndia prepares its Balan#e seet as per )#edule $$$ ofBan%ing egulations *#t 199. Tere is no ead of N$n&entories in a ban%ing#ompany"s balan#e seet. >owe&er, as a ban% deals wit money, it #an be said tat
http://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2013-2014.pdfhttp://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2013-2014.pdfhttp://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2013-2014.pdfhttp://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2013-2014.pdfhttp://www.tcs.com/investors/Documents/Annual%20Reports/TCS_Annual_Report_2013-2014.pdf


22/22

ban%s %eep money balan#es and #as in order to meet teir #ustomer"sre'uirements.

)our#eD ttpDQQwww.i#ai%nowledgegateway.orgQlittledmsQfolder1Q#apter565

finan#ial5statements5of5ban%ing5#ompanies.pdf