Book Review – Let’s Talk Money by Monika Halan

By Gaurav Pingle, Practising Company Secretary.

 

To begin with, there are many books on investing, personal finance, insurances, mutual funds, etc. However, not all the books fascinate a common man to read it. The reason could be legal jargon, technical concepts, statistical information, graphs/charts, discussion on macro-economic factors, global factors, financial crises, etc. There are very few books in simple language on investing and personal finance that address important questions of common man. ‘Let’s Talk Money’ by Ms. Monika Halan is one such unique book.

The book covers various topics of investing and personal finance which ultimately empowers readers in taking important decisions relating to his investments. The book is written in very simple English language (which has been further translated into many vernacular languages in India). The simplicity of language makes the book as ‘finance for non-finance’. Even software engineer or electrical engineer or doctor or an architect (non-commerce professionals, as they are not taught personal finance as part of their academic course) will find this book interesting and relevant. The book is a practical guide and helps the reader to take informed decisions relating to personal finance.

The author has given many practical examples of her friends and relatives, which makes the book very relatable to the readers. The author doesn’t recommend the use of any spreadsheets or complex calculations, etc. In fact, the author empowers the readers in asking right question to right people about financial product. The book is a conversation about money. The book also empowers common man in taking unbiased financial decisions. At relevant places in the book, the author has also recommended to take help of financial planner.

217-pages book has 14 chapters. At the end of each chapter, author has summarised important action points or preliminary questions to be asked by the reader and important financial ratios discussed in few chapter (e.g. living cost vis-à-vis take-home income, EMI payouts vis-à-vis take-home income, savings vis-à-vis take-home income, etc.). The book is helpful for employed as well as self-employed professional and even for students.

The author has explained the concept of ‘money box’ in detail with practical tips for the readers. ‘Money Box’ helps us properly maintain the cash flow system, monitoring income and expenses, and investments on regular basis. ‘Emergency Fund’ – its importance, way to maintaining funds, amount, etc. has also been explained in a separate chapter in the book. There is a detailed discussion on medical cover, types policies, premiums, benefits, important questions to be asked to an insurance agent for getting the right policy. In a separate chapter, the author explains the need and importance of life cover. There is a detailed discussion on investment (+) life cover or only life cover. There is reference to coverage, amount of premium, time of buying the policy, taxation aspect, etc. In 6^th Chapter, the author now discusses ‘investing’. The author suggests the reader to note their short term, medium term and long-term investment goals based on which investments can be classified.

In the chapter titled as ‘let’s de-jargon investing’, the author has explained investment products in very simple language. The investment products include debt, gold, real estate, equity, index funds, etc. The author has given some important rules of equity investing, which includes: patience, risk, alternative option, lock-in, continuous education by reading good material on personal finance.

The chapter on Mutual Funds explains the concepts, legal structure, ‘safety’, kinds of funds, NAV, growth vs. dividend options, how does MFs make money, direct plan, systematic investment plan, etc. In the Chapter titled ‘putting it all together’, the author explains the parameters on which investment-oriented financial products must be evaluated, which includes: cost of investing, returns, lock-in, cost to exit early, holding period, taxes. The chapter concludes with a discussion on ‘asset allocation’ – a very important concept in investing.

There is a separate chapter on ‘retirement’. Taking into consideration the possibility of change in financial needs/requirements, and the plan, the author has suggested a review of goals on periodical basis. Without going much in legal jargon, the author has explained the importance of Wills and prescribed Do’s and Don’ts in preparation of Will.

In the last chapter, the author discusses and explains the factors that ‘kills the money box’ – the concept (‘money box’) that was discussed in the first chapter. Some of the factors are spending too much, high cost of borrowing on credit cards, investing in multi-level marketing schemes, investments in high-risk IPOs, bitcoins, etc.

After reading the book, the reader will be able to organise his/her finances in a rational manner. The book will help the reader to build a system and is not a ‘single shot’ solution for personal finance. It is also not a get-rich-quick book but a book that will develop good habits and discipline which will ultimately make us more confident about our investments. The book has been revised and updated with financial lessons from Covid-19.

In my view, everyone should read the book – Let’s Talk Money. The book should also be basic reading material for all graduation courses in India. This would significantly improve the financial literacy, which is also the objective of the author. It is a book that empowers readers in taking important financial decisions in unbiased manner.

Amazon Link: https://www.amazon.in/Lets-Talk-Money-Youve-Worked/dp/9352779398

Book Review - CSR, ESG & Charitable Institutions - authored by Dr. KS Ravichandran

 

CSR, ESG & Charitable Institutions authored by Dr. KS Ravichandran

Book review by Gaurav Pingle, Practising Company Secretary

Along with Related Party Transactions & Independent Directors, Corporate Social Responsibility (CSR) has been one of the most deliberated concepts of the Companies Act, 2013. Interestingly, CSR (section 135 of the Companies Act, 2013 and CSR Rules) is also one of the most amended provisions. The book (published by Lexis Nexis) titled – CSR, ESG & Charitable Institutions, authored by Dr. KS Ravichandran helps the readers in understanding the concepts of CSR, Environmental, Social and Governance (ESG) reporting practices and Charitable Institutions.

This book provides 360-degree perspective of CSR. The author has explained the concepts in very simple language, which would be very helpful for corporate law professionals and students pursuing CS/CA/CMA course or students of law school and management institutions. The discussion is not only about company law but also, about foreign exchange laws, foreign contribution regulation law, income tax law and accounting practices.

Philosophy of CSR: Initially, the author has discussed in detail nine principles that constitute the social responsibility of the company (as provided in National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business). At necessary places, the author has given reference to the practical application of the said principles. He has also given practical and latest examples of unethical and undesirable corporate practices (e.g. Volkswagen, Mitsubishi, Ranbaxy, Johnson & Johnson, etc.). The author has also given references and details of the CSR initiatives at Paris, CSR principles in Indonesia, OECD principles on CSR, etc. By reading the first chapter, the reader gets a global outlook, ‘principle-based’ approach and not just as compliance-oriented perspective.

ESG reporting practices: After discussing the concept of ESG, the author has presented a thorough study of ESG activities of top 50 listed companies. This study will be helpful in understating the effectiveness of ESG in India. The author has concluded this important chapter by stating that “it is essential to note that the concept of business responsibility and sustainability reporting, introduced by SEBI under the provisions of LODR Regulations has brought much needed changes to bring a lot of thrust on the significance of Socio-Enviro Governance” 

CSR & CSR expenditure: There is a detailed discussion on the provisions of section 135 of the Companies Act and the CSR Rules made there under. There is detailed analysis of the said provisions, accounting aspects, accounting of CSR assets, grants received, disclosure in financial statements, audit and action for fraud, falsification of books of accounts. This discussion will help compliance officers, finance heads and accountants to understand and apply the said provisions.

CSR Vehicles: There are 3 separate chapters on CSR vehicles, which covers section 8 companies, trusts and societies. There is detailed discussion on grant of license to section 8 companies, grounds of revocation, corporate restructuring in such entities, etc. There is also detailed discussion on establishment of societies, registration requirements, procedural & administrative aspect of societies, de facto doctrine & legal status of societies as not body corporate. On the trust as CSR vehicle, after explaining the concepts of public trusts and private trust, the author has discussed in detail provisions relating to duties, authorities, general powers & rights of trustees, etc. There is detailed discussion on other important concepts of trust law, which becomes relevant when promoters of company / social entrepreneurs decide to set up a trust for CSR activities.

Income Tax aspect of CSR: In a separate chapter, the author has also discussed the procedure and critical aspects of registration of trusts under the Income Tax Act, 1961 and exemptions from income tax. There is also a detailed discussion on section 12A of the Income Tax Act along with registration procedure, factors considered by prescribed authority, conditions for being entitled to exemption under section 11 and 12 of Income Tax Act. In a separate chapter, the author explains the benefits of contributions to funds, trusts and Institutions registered under section 80G of Income Tax Act. There is clause by clause analysis of Section 80G of Income Tax Act. The author has also analyzed in the detail the taxation aspects of CSR expenditure (under section 30 to 36 of Income Tax Act).

Foreign contributions as CSR: There is a separate chapter and detailed discussion on CSR vis-a-vis Foreign Contribution Regulation Act, 2010. There section-wise commentary on the said Act. This will be helpful for the readers who are connected with companies accepting foreign donations. There are references to notifications issued by the Ministry of Home Affairs.

CSR spend pattern analysis: The author has also presented a study of CSR spend pattern analysis. Top 50 listed companies are considered by the author for this study. The statistical analysis relates to applicability of CSR provisions by average threshold, analysis of CSR required to be spent, actually spent and unspent CSR in 3 financial years, amount spent on various categories of CSR activities during last 3 FYs, amount spent on most preferred and least preferred categories of CSR activities, CSR amount spent on funds specified in Schedule VII in 3 FYs. The author has also presented detailed statistics and analysis on amount spent directly and amount spent on CSR activities through implementation agencies in 3 FYs. After every statistical information and presentation, author has provided his analysis and views on the same. There is detailed discussion on the findings of such research and statistical information. This will be helpful for the Government agencies/ departments in further refining, amending and implementing CSR provisions effectively.

In the book, the author has also discussed 100 FAQs on CSR provisions. The answers are not simply – yes or no. But there is a short discussion on the relevant question and references to the provisions of the Companies Act, CSR Rules, MCA Circulars, etc. The FAQs covers discussion on the critical questions w.r.t. CSR applicability, spending, reporting, calculation of net profits, nature of expenditure included and excluded in CSR spending, coverage of policy, CSR activities vis-à-vis CSR policy, approval process, role of board of directors / CSR committee, corporate restructuring and applicability of CSR provisions, etc. All these questions are relevant and the replies / answers to the same are researched-based and practical. Some of the important questions relates to: frequency of meetings of CSR committee, whether systems required for monitoring CSR expenditure, consequences of the failure to undertake CSR activities, including at least one KMP as member of CSR committee, whether creating awareness constitutes CSR activity, display of CSR activities on website, mandatory requirement of 3 years track record, reference to various MCA Circulars in relation to MCA notification dated January 22, 2021, etc.

 

For the benefit of readers, the author has given a model memorandum of association and articles of association of a section 8 company for undertaking CSR activities and project report. There is also a model trust deed for undertaking CSR activities.

 

The overall deliberations in the book would be useful to professionals, directors, officers, trustees, office bearers of NGOs, social entrepreneurs, academicians, Government officers, law makers, students, etc. Every reader will get a different and unique experience on CSR. In my view, every corporate law professional and student must have this book for having a global and broader perspective of CSR, ESG & Charitable Institutions.