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    Union Budget 2026 – Synopsis for Founders, Investors & Startups

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Author: Treelife

Are Trademark and Brand Name two sides of the same coin?

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Importance of Trademarks and Brand Names for Your Business:

Understanding the Differences Between a Brand & a Trademark

If you own a business, you have probably heard of the terms “brand” and “trademark.” While these words are often used interchangeably, they have distinct meanings. In this post, we will discuss the differences between a brand and a trademark, as well as the importance of each.

First, let’s define what brands and trademarks are. A ‘brand’ is a collection of features and elements that create a company’s identity in association with certain product(s) or service(s) that helps create brand value of the entity. This includes the brand name, logo, image, goodwill, personality, culture, and reputation.

On the other hand, a Trademark is defined in the Trademark Act, 1999 as, “a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include the shape of goods, their packaging and combination of colors.” A trademark is the intellectual property of a business. A trademark can be a visual symbol, logo, design, word, slogan, tagline, jingle or combination of these elements, created in relation to a particular brand. It differentiates a company’s products and services from competitors in the market.

Similarly, a brand name is the primary name of a company under which the company markets and sells its products or services, while a trademark is a representation in the form of logo or symbol or word or their combination for that brand name. A registered trademark allows a company to take legal action against those who copy or use the brand name or such trademark without permission in relation to the same goods or services. Trademarks often act as a distinguisher between two brands with similar names.

Registration of a trade mark is not mandatory, however, it is also not an inherent right available to the creator like is the case in copyright. Hence, it is important to protect your brand and intellectual property from infringement and misuse in the market and to secure your trademark’s creation, by opting for trademark registration. A registered trademark creates a niche in the industry, thus safeguarding your brand value and maintaining your position in the market. It also helps customers identify fraudsters trying to dupe them by using your mark. A brand value is one of the most important criteria that hold a company together and continuous usage of a certain trademark in relation to one’s brand helps build that brand value.

In summary, while brand and trademark are closely linked, they are separate concepts. A brand creates awareness and trust in a company, while a trademark provides a symbolic or graphic representation, and protection if it is registered to prevent theft or misuse of intellectual property.

FAQ’s

Q: What are examples of trademarks and brand names?

A: Some examples of trademarks include the Nike swoosh, the Apple logo, and the McDonald’s golden arches of ‘M’, or Coca-Cola in its unique italics font. Brand names include Coca-Cola, Google, and Amazon.

Q: What is the difference between brand, trademark, and copyright?

A: A brand is a collection of features that create a company’s identity, including the brand name, logo, image, personality, culture, and reputation. A trademark is a mark symbolizing that brand of a company and constitutes as its intellectual property, such as symbols, graphic representation, logos, designs, words, slogans or colors or combination. Copyright protects original works of authorship, including literary, artistic, cinematographic and musical works, and grants exclusive rights to the creator of the original work.

B2B SaaS – How Sales can be driven efficiently?

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Unlock the Secrets to Efficiently Drive B2B SaaS Sales – Boost Your Revenue Now

B2B SaaS or Business to Business Software as a Service is a cloud-based software distribution model that allows companies to sell access to their software to other businesses. Rather than downloading software to a desktop PC, businesses can access SaaS products through an internet application or web browser. B2B SaaS products can include any kind of software such as office management, customer support or communication software used within a business.

Here are some advantages of B2B SaaS that make it valuable to a business:

  • Accessibility: B2B SaaS products can be accessed from any web browser, allowing businesses to manage operations effectively without the need to be at a specific location or operating system.
  • Automatic updates: As a cloud-based service, B2B SaaS businesses can automatically update the product without impacting the user’s operations. Additionally, with cloud-based applications, there is no requirement for storage or hardware on the end-users side.
  • Data capture and analytics: Since B2B SaaS software is centralized and automated, it is easier to capture data and provide in-depth analytics.
  • Cost-effective: B2B SaaS eliminates the need for businesses to own products, systems, and hardware that can be costly.
  • Efficient operations: B2B SaaS allows businesses to automate internal functions and operations at a relatively low cost.

Examples of some B2B SaaS Companies are:

  • HubSpot: A cloud-based inbound marketing and sales platform that provides tools for CRM, web analytics, content management, SEO, and social media analytics.
  • Google: Famous for its search engine, Google also owns and operates more than 130 different SaaS products. Some of Google’s services include a search engine, online advertising, document creation, digital analytics, and other services.

While B2B SaaS and B2C SaaS sales and marketing share the same end goal of helping customers, there are many differences in the process that make the need for a strong sales strategy important.

The B2B SaaS sales cycle is much longer and more complex than the B2C SaaS sales cycle. Businesses generally have more than one buyer on a team communicating with many sales reps and maybe even sales teams, where consumer purchases are usually done between one customer and one sales rep. With B2C SaaS, a user can directly input their credit card information and start using the product, while a B2B SaaS deal often requires a demo and onboarding process.

As B2B SaaS companies grow, they usually deploy an enterprise sales team that enables them to effectively target enterprise-sized companies who have unique needs.

B2B SaaS Selling Tactics

For startups finding the right marketing strategy that will attract new sales and build brand awareness can be challenging. From targeting the right audience to preparing sales teams for a competitive market, marketers may find it challenging to get their SaaS product in customers’ hands.

Some of the sales tips and marketing strategies used in B2B SaaS sales that can help any startup succeed are:

  • Position your software around competitor brands: The SaaS market is incredibly competitive. To meet company sales goals, marketers need to elevate their company above the competition. To do so, this often requires positioning your software above and against your competitors. Use data-based metrics to prove why your SaaS products are the superior choice for meeting your client’s needs. This could mean using case studies or conducting surveys.
  • Focus on customer retention: As business needs and software solutions are constantly changing, building a strategy that includes customer retention could set your business apart from others. To ensure that your business is well-positioned, continue to prove to customers why your software fits their needs. To encourage customer retention, SaaS sales reps

Best Practices for Selling B2B SaaS Effectively

Curate a Targeted Portfolio

In a digital marketplace flooded with too many options, B2B SaaS buyers can quickly become overwhelmed. To effectively address their pain points and boost revenue, start small with software that is highly targeted to potential customers. By curating the choices buyers have, you act as an expert advisor, steering them to solutions that will work best for them. As your software ecosystem evolves with services targeted to different buyer segments, you can significantly increase your marketplace’s revenue.

Highlight the Value of Your App

Never assume potential buyers understand the value of your app. To stand out from the competition, clearly communicate how your B2B SaaS offerings are relevant and different. Don’t overlook the obvious benefits your app provides, as these may not be as clear to potential buyers as they are to you.

Bundle Apps with Core Services

While buyers love a good deal, multi-app bundles can complicate the sales message and cycle in B2B SaaS. Instead, package apps with your core services. For instance, a telecom provider bundled a mobile broadband subscription with a tablet device and Microsoft Office 365, generating 1,500 active users in just a few months. Avoid attempting to solve too many challenges simultaneously, which makes the offer too complex and the business use unclear.

Use a Human Touch to Sell

While consumer devices have programmed us to believe apps sell themselves, this isn’t the case with B2B SaaS. Buyers need human assistance to make informed decisions.

Sell Solutions

To effectively sell B2B SaaS, put potential customers and their challenges first. Sales teams need to adopt a different mindset and focus on how the SaaS product can help customers solve their issues, leading to further growth for both the customer and the company. By prioritizing solutions, instead of speeds and feeds, you can sell B2B SaaS effectively.

SaaS Contract Negotiation Checklist: Top Ten Considerations

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While SaaS has simplified enterprise software in multiple ways, however, subscribing to an “enterprise-class” system still requires a fairly complex contract negotiation process. Here is a SaaS contract negotiation checklist that covers the top ten crucial factors to consider when negotiating your SaaS Agreement:

1. Commercials

Usually discussed by the sales and/or the business teams and are negotiated before commencing the legal negotiation process. Pricing, payment terms, taxes, and billing methods should be negotiated with the sales or business teams before legal negotiation.

2. Liability Cap

The liability cap is the most important clause for protecting parties in claims as it sets a limit on the liability brought. Usually incorporated in an agreement to safeguard a party from any potential liability that may arise and to safeguard from any unlimited liabilities.

3. Intellectual Property (IP) Rights

While negotiating SaaS agreement, IP rights are of integral importance. The IP clause determines who owns IP rights and ensures that the agreement covers areas such as indemnity if a third-party claims IP infringement.

4. Effect of Termination

It’s important to stipulate what happens to data after termination of the agreement and for how long the customer has access to the platform, data backup frequency, and procedures.

5. Term

If a vendor offers pricing discounts, subscription metrics and additional fees, in such cases extended contract terms may be required. Vendors prefer longer terms because it provides more predictability in their revenue forecasting. Terms can range from 30 days to five years.

6. Indemnities

Clarify when indemnification is required and if limitations of liability apply to an indemnification claim. Ensure the contract provides indemnification for data as well as for security breaches and IP infringement.

7. Service Level Agreements (SLAs)

The SLA is the vendor’s commitment to keeping the system up and running and is typically expressed as a percentage of “up time”. You will almost always see the SLA represented as 95 to 99.9% or thereabouts. However, there is a wide variation in how the vendor calculates system uptime. A breach of the up time can result in grant of service credits, or a proportionate extension of the subscription period.

8. Data Protection Provisions

Include a differentiation between processor and controller and respective obligations in the agreement and ensure that it is GDPR-compliant.

9. Data Export

Two key things for consideration:

(a) you must ensure that data ownership is retained; and

(b) that you know how to export data in case of migrating to another system or the vendor going out of business and you need access to your data even before you select a new system.

10. Warranties

Generally, cloud service contracts contain many of the following warranties:

(1) that the service will materially conform to the documentation,

(2) the services will be performed in a workmanlike and professional manner,

(3) the provider will provide the necessary training for the customer to use the services

(4) the provider has sufficient authority to enter into this agreement

Other important considerations include disclaimers of warranties, force majeure, survival clause, and confidentiality provisions. Always ensure the customer fully understands that the services provided always carry inherent risks.

By prioritizing these ten factors in your SaaS contract negotiation checklist, you can create a solid SaaS agreement that aligns with your business’ needs, protects your interests, and ensures a successful and stress-free implementation.

FAQs on Points of Negotiation for SaaS Agreements

Q: How to negotiate the price for SaaS?

A: When negotiating the price for SaaS, it’s important to understand the service you’ll be receiving and what it’s worth to your business. You can request a detailed breakdown of the pricing structure and compare it with other vendors on the market. Be prepared to discuss payment terms and negotiate for discounts or bundling options when possible.

Q: How do you politely negotiate a contract? 

A: When negotiating a contract, it’s important to approach the process with an open and collaborative mindset. Be clear about your needs and priorities, but also take the time to understand the vendor’s perspective. Listen carefully and ask questions when necessary, and seek common ground where possible. Ultimately, aim for a mutually beneficial agreement that meets both parties needs.

Q: What are the key points in a SaaS agreement? 

A: The key points in a SaaS agreement include commercial terms, liability cap, intellectual property rights, effect of termination, terms, indemnities, service level agreements, data protection provisions, data export provisions and warranties. These areas cover crucial aspects such as pricing, data protection, and vendor responsibilities, and should be negotiated and agreed upon before signing the contract.

Q: What are the payment terms for SaaS contracts?

A: Payment terms for SaaS contracts can vary depending on the vendor and specific agreement. Some vendors may require payment upfront or on a monthly or annual basis. Others may offer more flexible payment schedules or subscription models. It’s important to review and negotiate payment terms to ensure they align with your business’ budget and cash flow needs.

Determining the exercise price of a stock option

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Exercise price or strike price is the price at which the holder of stock options has the right, but not the obligation, to purchase vested options within the term period.

ESOPs that have vested can be exercised. To do this, the employee has to reach out to the CHRO or the finance team, and initiate the process of exercising ESOPs. Note that the employee has to pay a tax while exercising ESOPs, and only after that he/she will receive the shares and then may choose to sell.

The strike price of options can be anything that is chosen by the company while giving out the ESOP grant letter. Some startups choose the exercise price as a nominal amount (say INR 10) while some startups choose the exercise price based upon the last round valuation of the company.

In the latter case, the difference in the company’s valuations between when the employee joined and the liquidity event in which he/she sells ESOPs, represents the money gained by the employee.

While there is no concrete formula to arrive at the ideal exercise price, we suggest founders set the exercise price at a nominal value (face value of shares at minimum). There are two advantages of a nominal exercise price:

  • Employee-friendly: Employees won’t have to pay a larger value for exercising their ESOPs
  • Independent of Valuation: If the valuation of the startup goes down significantly, employees might end up losing money from the ESOPs they would have exercised

Let’s say the exercise price of ESOPs as per the last round valuation of the company is INR 80, and the employee was offered 100 ESOPs at an exercise price of INR 70. The company went on to raise another round of funding 3 years after ESOPs were granted to this particular employee. Assuming that the valuation of the company has gone down and the FMV of shares is INR 65 now, the employee will make a loss of INR 5 per share if he/she exercises and sells the shares on the present day.    

Now if the employee was granted ESOPs at a nominal exercise price of INR 10 each, the employee will make some money despite the decreased valuation.

How Convertible Notes make fundraising seamless for startups?

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If you’re a seed or early-stage startup in need of funds for hiring and operations, you may find it difficult to determine a fair valuation. That’s where convertible notes come in.

A convertible note is a short-term debt instrument that startups can use to raise funding. It allows holders to convert their debt into equity in the company at a future date. The biggest advantage of convertible notes for early-stage startups is that they don’t need to determine the value of the company when issuing them.

Unlike traditional equity financing, issuing a convertible note is quick and efficient. There’s only one document to deal with, which saves time and money for both the company and investors.

Until 2016, convertible notes were not legally recognized in India. However, the Companies (Acceptance of Deposits) Rules, 2014 were amended to recognize them as a fundraising instrument for startups.

DPIIT-registered startups can now raise funding through convertible notes, subject to certain conditions. The investment amount must be at least INR 25 lakhs in a single note and converted within 10 years. The terms of conversion must also be determined upfront.

By linking convertible notes to expected returns instead of valuation and percentage of ownership, startups can avoid the valuation quagmire that often comes with very early-stage investments.

Post Incorporation Formalities for PLCs & LLPs

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After incorporating a Private Company (“PLC”) or Limited Liability Partnership (LLP), specific regulations in the Companies Act, 2013 and the Limited Liability Partnership Act, 2008 (“LLP Act”) must be followed to ensure compliance with the law. Certain post-incorporation compliances must be met before starting business operations to avoid any issues during the process. These activities exist due to provisions outlined in the Act or state-level laws such as the Shops and Establishment Act, State Stamp Act, and Professional Tax.

LLPs are a unique organizational form with characteristics of both a partnership firm and company and are governed by the LLP Act, 2008. Both PLCs and LLPs are administered by the Registrar of Companies (ROC). The following compliances must be met after receiving a certificate of incorporation.

Incorporation of a Private Limited Company (PLC) is a significant step in starting a business in India. However, it is important to note that certain compliances must be met to avoid penalties and ensure a smooth start to operations. Here are the mandatory post-incorporation compliances for PLCs:

1. Hold the first Board Meeting

According to Section 173, sub-section (1) of the Companies Act 2013, the company must hold the first board meeting within 30 days from the date of incorporation. The meeting must discuss important agenda items such as annual disclosures from directors, authorisation of share certificates, appointment of statutory auditor and such other agenda items. Failure to comply with this can result in a penalty of INR 25,000 for every officer of the company responsible for giving notice.

2. File Form INC-20A

All companies with share capital incorporated on or after November 2, 2018 having share capital, must file Form INC-20A within 180 days of incorporation in order to commence business or borrow funds. Failure to do so can result in a penalty of INR 50,000 for the company and a penalty of INR 1,000 per day for each officer in default during which the default continues, up to a maximum of INR 1,00,000.

3. Issue share certificates to first subscribers

Section 46(1) and 56, (4)(a) of the Companies Act 2013 mandates PLCs to issue share certificates to first subscribers, duly signed by two directors of the company and the company secretary, wherever the company has appointed a Company Secretary, if any, within a period of two months from the date of incorporation. Failure to comply can result in a penalty of INR 50,000 for the company and every officer of the company who is in default.

4. Payment of stamp duty on the share certificates

PLCs are required to pay stamp duty on the total consideration amount mentioned in the share certificates within 30 days of issuance. Failure to do so can result in a penalty as suggested by the Collector or officer in charge.

5. Appointment of first statutory auditor

As per Section 139, sub-section 6 of the Companies Act 2013, PLCs must appoint their first auditor within 30 days of incorporation. However, in case the Board fails to appoint, the shareholders must appoint the auditor within 90 days at an extraordinary general meeting. While there is no fine or penalty for failure to file Form ADT-1 for appointment of the first auditor, it is advisable to do so.

6. Shops and Establishment Registration/License

PLCs are required to obtain Shop and Establishment Registration under respective State’s as applicable. Penalty amount varies from state to state.

7. Professional Tax Registration (PTEC and PTRC)

PLCs must enroll under registration called (PTEC) and pay an annual mandatory fee of INR 2,500. Companies employing people with salaries above a specified limit (which varies from State to State) must obtain Professional Tax – Employee Registration (PTRC) when they begin to employ staff. The penalty amount for non-compliance varies from state to state.

8. Goods and Services Tax Registration

Every business whose annual turnover exceeds Rs. 40 lakhs or Rs. 20 lakhs for service providers, Rs. 10 Lakhs for North-Eastern States, Himachal Pradesh and Uttarakhand and J & K is required to obtain GST Registration under the Goods and Services Tax Act, 2017 and rules. While it is not mandatory to obtain GST Registration immediately upon incorporation, failure to pay tax can result in a penalty of 10% of the tax amount due subject to a minimum of Rs.10,000. In cases of deliberate tax evasion, the penalty will be at 100% of the tax amount due.

9. Trademark Registration

PLCs are encouraged to secure their business name through trademark registration under Section 18 of The Trademark Act, 1999.

10. MSME/SSI Registration

PLCs can also register under the MSME Development Act to get benefits such as collateral-free bank loan, preference in government tenders, and tax rebates.

Starting a Limited Liability Partnership (LLP) in India is a crucial milestone, and it’s essential to ensure compliance to avoid penalties and smoothly operate the business. Let’s go through the post-incorporation compliances required for LLPs:

i. File Form 3

After incorporating the LLP, the partners need to execute the LLP Agreement and file it with the Registrar. The LLP agreement is mandatory, and even in the absence of a specific LLP Agreement, the default LLP agreement given in Schedule I of the LLP Act shall apply. The form must be filed within 30 days of incorporation, and the penalty for non-compliance is Rs. 100 per day with no ceiling on the maximum fine.

ii. Apply for a PAN Card

The Issuance of PAN is integrated with the LLP incorporation process in form FiLLiP.

iii. Open a Bank Account

LLPs must open a bank account and transfer their capital to conduct transactions. No penalty or due date exists for this compliance.

FAQs

Q: When can a private company commence business?

A: A private company can commence business after filing form INC-20A within 180 days of Incorporation..

Q: What is the procedure after incorporation of a company?

A: After the incorporation of a company, the following procedures need to be carried out:

  • Hold first Board Meeting
  • Open a bank account for the company and transfer initial subscription
  • Appoint first a statutory auditor
  • Issue share certificates to the shareholders and payment of stamp duty
  • Registration for Goods and Services Tax (GST) if applicable
  • Registration for Professional Taxes if applicable
  • Startup India and Angel Tax exemption, if required
  • Obtain such other necessary licenses and permits if required for the business

Q: Which forms need to be filed after incorporation of a company?

A: After the incorporation of a company, the following forms need to be filed:

  • Form INC-22: This form is for the notice of the situation or change of registered office of the company, if the Company has been incorporated with a correspondence address
  • Form INC-20A: This form is for the declaration of commencement of business.
  • Form ADT-1: It is advisable to file this form appointment of first auditor.

Q: What documents are required to be filed at incorporation stage?

A: The following documents are required to be filed at the incorporation stage:

  • Spice Part-B: This is the e-form for the incorporation of a company.
  • Form INC-33 (E-MOA): This form is for e-memorandum of association.
  • Form INC-34 (E-AOA): This form is for e-articles of association.
  • INC-35: Agile Pro:Application for Goods and services tax Identification number , employees state Insurance corporation registration pLus Employees provident fund organisation registration, Profession tax Registration, Opening of bank account and Shops and Establishment Registration
  • INC-9: Declaration by Subscribers and First Directors

Q: Which is the first meeting to be held after incorporation?

A: The first meeting to be held after incorporation is the board meeting. It shall be held within 30 days of incorporation and typically includes the following agenda items;

  • To place the Certificate of Incorporation before the meeting;
  • Noting of First Directors;
  • To take a note of the disclosure of interest under Section 184(1) and certificate under Section 164(2) of the Companies Act, 2013;
  • Authority to open the Bank Account;
  • To inform the place of Registered Office;
  • To decide the Financial Year of the Company;
  • Appointment of First Auditor;
  • Adoption of Share Certificates;
  • Approval of Pre-Incorporation Expenses;
  • Commencement of Business;
  • Books and Registers;
  • Allotment of Shares and issuance of share certificates to the subscribers of the Memorandum of Association;
  • To decide and maintain minutes in Loose Leaf Folder;
  • To decide and maintain the Books of Accounts

Implications of a Force Majeure Clause

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Are you worried about force majeure events impacting your contract in India?

It’s crucial to understand the force majeure clause’s meaning and its legal definition. A force majeure clause in contract explicitly sets out the terms that excuses a party from performing its contractual obligations under certain force majeure conditions or events.

The recent COVID-19 pandemic has forced organizations to revisit their force majeure clauses, and it is essential to have a sample force majeure clause in your contract to avoid breaching the contract.

It is important to read the force majeure clause carefully, determine the force majeure event’s legal definition, and evaluate payment obligations under the clause. For instance, some contracts may have carve-outs for payment obligations, which may not be covered even if the force majeure event delays the performance of the contract.

In India, the government has declared the current situation of COVID-19 as a force majeure event, making it necessary for organizations to include a force majeure clause in their contracts to protect themselves during these uncertain times.

To give you a better force majeure clause example, suppose your business is bound by a contract to deliver goods to a customer, but a natural calamity occurs, resulting in the transportation means being shut down. In this case, the force majeure clause in your contract can protect you from breaching the contract due to non-performance.

In summary, understanding the force majeure clause meaning and having a sample force majeure clause in your contract is essential to protect your business during unprecedented events like the current COVID-19 pandemic.

Are you wondering how force majeure events like COVID-19 are affecting contractual obligations in India? 

As per the force majeure legal definition, the Force Majeure (FM) clause in contract allows parties to be excused from the contractual obligations in case of events beyond their control, such as pandemics, natural disasters, and government orders.

Due to the outbreak of COVID-19, labor shortages and shutdown of services have affected the physical and legal performance of contractual obligations in India. Parties that are unable to perform are taking help of FM clauses to avoid any contractual remedies for non-performance.

However, some FM clauses do not include pandemics, which can lead to possible disputes and even breach of contract. Hence, to avoid any discrepancies, it is essential to have a well-drafted sample force majeure clause that clearly defines force majeure events. A well-drafted FM clause can make both parties aware of which events are force majeure events and which are not, making it simpler and more effective to deal with force majeure conditions.

In summary, it is crucial to understand the force majeure clause meaning and have a strong FM clause in your contract, which includes pandemics, to avoid any disputes or breach of contract during force majeure events like COVID-19. So, make sure to evaluate payment obligations and seek good counsel while drafting a force majeure clause to protect yourself and your business during such uncertain times.

FAQs

Q: How to write the force majeure clause in a contract?

A: A force majeure clause is an essential section of any contract that outlines the terms that excuse a party from fulfilling its contractual obligations in certain force majeure events. Writing a force majeure clause in a contract involves a few key steps:

  1. Identify Force Majeure Events: You need to identify the force majeure events that would be covered under the clause. These events may include natural disasters, wars, pandemics, government orders, and other similar situations.
  2. Be Specific: The language of the clause should be specific and unambiguous. It should identify the events that would excuse the parties from fulfilling their obligations
  3. Evaluation of Payments: It is important to evaluate the payment obligations under the clause, as some contracts may have carve-outs for payment obligations, which may not be excused even if the force majeure event delays the performance of the contract.
  4. Review Applicable Laws: You also need to review applicable laws and regulations to ensure that the language in the clause is legally enforceable.
  5. Notice of Force Majeure: The clause should also include a notice of force majeure provision that requires the parties to inform each other when a force majeure event will delay or prevent performance of contractual obligations.

In summary, drafting a force majeure clause requires a careful and detailed approach. It is essential to identify force majeure events, be specific in the language, evaluate payment obligations, review applicable laws, and include a notice of force majeure provision. An experienced lawyer can help draft a comprehensive force majeure clause that protects your interests in case of a force majeure event.

Understanding SaaS or Software-as-a-Service

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SaaS or Software-as-a-Service is a software distribution model in which a third-party provider hosts applications centrally and licenses them to customers over the internet on a subscription basis. It is one of the three main categories  of cloud computing-based services, alongside Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS).

Pros and Cons of SaaS

SaaS has turned out to be quite helpful to organizations in terms of flexibility and cost-effectiveness, enabling businesses to provide efficient software-based services to large customer bases, using the widespread and ubiquitous availability of the cloud. However, recent stories around hacking and data leaks have shed light on the vulnerability of centrally and cloud-hosted software systems. In this regard, it is essential for SaaS-based startups and businesses to have well-drafted agreements, like a SaaS contract or software-as-a-service agreement, as well as strong technical and procedural security safeguards, to protect legal responsibility and safeguard the distribution and subscription licensing of the offering.

B2B vs B2C

B2B SaaS companies offer cloud business management solutions (products and services) to other companies and businesses, while B2C SaaS businesses sell products and services to consumers directly. Both B2B and B2C are subscription-based and track customer acquisition cost, churn rate, and user lifetime value metrics. However, their marketing strategies and approaches are different.

The Importance of a SaaS Agreement

A SaaS agreement, also known as a software-as-a-service agreement, sets out the provision and delivery of software services to customers through the internet, eliminating the hassle around conventional software licensing models. SaaS agreements are serious undertakings that require careful consideration.  Once properly drafted, a SaaS agreement eliminates the hassle around conventional software licensing models. The terms in a SaaS agreement can be renewed when the subscription period expires. A properly drafted SaaS agreement is crucial to prevent disputes from arising.

Essentials of Every SaaS Agreement

Here are the essential elements that every SaaS agreement should include:

  • Subscription and grant of rights, services, and functionality: Specify the type of service that you render to the client under the agreement, as well as ensure access to the software provided to users, subject to conditions, on a case-to-case basis.
  • Data Protection: Include a clause that highlights the protection of data that will be transmitted to the providers and how they will further process that data.
  • Intellectual Property (IP) Rights: Outline the intellectual properties of all parties involved in the SaaS agreement.
  • Confidentiality Clause: Safeguard confidential and proprietary information that will be shared between the parties.
  • Indemnities: Parties involved in an agreement may suffer certain losses and/or damages for which they shall stand liable and indemnify the other party for all losses, including costs that will be incurred during the course of legal suits.
  • Disclaimer: Include a disclaimer specifying what will not hold the provider liable.
  • Limitation of Liabilities: Limit liabilities of the provider under the SaaS agreement.
  • Representations and Warranties: Include the representations and warranties of both parties in the SaaS agreement. Since the provider will usually be the data processor and the user is the data controller, both parties should have certain warranties set out in the agreement
  • Terms of Service: Set out the term based on the subscription that the user has subscribed for.
  • Force Majeure: This clause will include the course of action at the time of extreme events that can be termed as ‘act of god’ – including hurricanes, tornadoes, floods, etc.
  • Service Level Agreements (SLA): A SaaS agreement should always include an SLA that covers the provisions of technical and support services, including availability and penalties.

SaaS vs EULA

While a SaaS provides the provision and delivery of software services to customers through the internet, an End User License Agreement (EULA)  licenses the end user to use the software in a limited manner. Under SaaS applications, users do not get a copy of the software. SaaS is usually hosted and accessed through the internet, similar to other commonly-used subscriptions availed by consumers for media, gaming, and more. A well-drafted SaaS example can provide more clarity and help in avoiding legal disputes.

SaaSEULA
Full FormSoftware-as-a-ServiceEnd User License Agreement
OwnershipVendor offers the software and users access it on the internet on a subscription basis. Ownership of software is not transferred to the userSoftware is purchased by the end user. Users have all rights – including copyrights. The user can make copies of the software for personal use
Termination of UsageUser’s right to the software ends upon termination of the SaaS agreementUser owns the software and has the grant of copying, downloading and installing it but is not allowed to resell it
Licensing/AccessThe customer is usually granted an access to use the softwareThe customer is provided with the licensing of the product/software

FAQs about SaaS Agreements

Q: What is included in a SaaS agreement?

A: A SaaS (Software as a Service) agreement typically includes terms and conditions related to the usage, access, and hosting of software applications provided via the internet. Key provisions that may be included are payment terms, data privacy and security, intellectual property rights, warranty, indemnification, termination, and liability limitations.

Q: Why use a SaaS agreement?

A: A SaaS agreement is used to establish a legal relationship between the provider and the customer for the use of software programs provided as a service. It sets out the terms and conditions of use to protect the rights of both parties.

Q: What is the difference between a license agreement and a SaaS agreement?

A: A license agreement typically refers to an agreement for the use of software installed on a specific computer or server, while a SaaS agreement governs access to software that is hosted on the internet and accessed via a web browser.

Q: What is the IP clause in the SaaS agreement?

A: The IP (intellectual property) clause in a SaaS agreement addresses ownership and licensing rights related to the software and its components. It defines what proprietary material is considered to be part of the software, how the provider can utilize the software, and how the user can transfer or sublicense the software.

Q: What is the difference between a SaaS agreement and EULA?

A: A EULA (End User License Agreement) is a legal agreement between the software provider and the end-user that governs the use of software, while a SaaS agreement is a legal document that sets out the terms and conditions for the use of software hosted on the internet and accessed via a web browser.

Q: What is a SaaS agreement?

A: An SaaS agreement is a legal contract between a software provider and a customer that outlines the terms and conditions of usage and support of the provider’s software as a service.

Q: What is a SaaS reseller agreement?

A: A SaaS reseller agreement is a legal contract between the software provider and a reseller that outlines the terms and conditions of reselling the provider’s software as a service. It sets out the relationship between the provider, the reseller, and the end-user customers.

Q: How are SaaS contracts structured?

A: SaaS contracts are typically structured to include different levels of service, pricing, payment terms, constraints on usage, data privacy, warranties, and disclaimers. They may also include provisions for technical support, customization, upgrades, and the termination of the agreement. To ensure compliance with applicable legal requirements and best practices, it is important that SaaS contracts are drafted and reviewed by experienced legal professionals.

What Is An Income Statement?

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An income statement helps business owners decide whether they can generate profit by increasing revenues, by decreasing costs, or both. It also shows the effectiveness of the strategies that the business set at the beginning of a financial period. The business owners can refer to this document to see if the strategies have paid off and they can come with the best solutions to yield more profit.

What is an Income Statement

An income statement is a financial statement that shows you the company’s income and expenditures. It also shows whether a company is making profit or loss for a given period. The income statement, along with balance sheet and cash flow statement, helps you understand the financial health of your business.

The income statement is also known as a profit and loss statement, statement of operation, statement of financial result or income, or earnings statement.

Components of an Income Statement

While all financial data helps paint a picture of a company’s financial health, an income statement is one of the most important documents a company’s leadership team and individual investors can review, because it includes a detailed breakdown of income and expenses over the course of a reporting period. This includes:

  • Revenue: The amount of money a business takes in during a reporting period
  • Expenses: The amount of money a business spends during a reporting period
  • Income before taxes: All revenue less expenses but before taxes
  • Net income: Income before taxes less taxes
  • Earnings per share (EPS): Division of net income by the total number of outstanding shares

Above categories may be further divided into individual line items, depending on a company’s policy and the granularity of its income statement.

Analysis of an Income Statement

There are two methods commonly used to read and analyze an organization’s financial documents: vertical analysis and horizontal analysis. The difference between the two is in the way a statement is read and the comparisons you can make from each type of analysis.

Upright Analysis It refers to the method of financial analysis where each line item is listed even as a percentage of a base figure. In short, it’s the process of reading down a single column of data in a financial statement, determining how individual line items relate to each other (e.g., showing the relative size of different expenses, as line items may be listed as a percentage of operating expenses). This type of analysis makes it simple to compare financial statements across periods and industries, and between companies, because you can see relative proportions. It also helps you analyze whether performance metrics are improving.

Parallel Analysis It reviews and compares changes in the amounts in a company’s financial statements over multiple reporting periods. It’s frequently used in absolute comparisons, but can be used as percentages, too. Horizontal analysis makes financial data and reporting consistent along with growth comparison to it’s competitors.

Conclusion

In conjunction with the cash flow statement, balance sheet, and annual report, income statements help company leaders, analysts, and investors understand the full picture of a business’s operational results so they can determine its value and efficiency and, ideally, predict its future trajectory. Financial analysis of an income statement can reveal that the costs of goods sold are falling, or that sales have been improving, while return on equity is rising. Income statements are also carefully reviewed when a business wants to cut spending or determine strategies for growth.

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Tax Calculator for Tax Regime – Old vs New

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Are you wondering which tax regime you should opt for? While there is no clear-cut solution to the same, this blog post may go some ways in providing some clarity to this question. We shall detail the new tax regime and have shared the download link to a simple tax calculator prepared by us.

The Budget 2020 has brought a unique concern to the taxpayers through announcement of a new tax regime. It offers more tax slabs and lower tax rates. This was long demanded by most taxpayers, but it came with the catch of removal of all the deductions and exemptions available.

To add to this confusion, the finance minister gave taxpayers a choice between the new regime and existing one, leaving it to the citizens to decide on the basis of their preference. Instead of providing simplicity, understanding the tax regime in India may have become more complex.

Let us understand the new tax regime and what does it bring as a package.

Applicability:

The New tax regime is applicable to resident Individuals and HUF (“Hindu Undivided Family”), from the Financial Year 2020-21.

Proposed Tax Rates:

Health and Education Cess and Surcharge provision remains the same irrespective of the option chosen.

Point to Choose:

Tax payers can either choose to continue with existing tax system or select the new tax regime.

Tax Calculator for Tax Regime - Old vs New
Tax Calculator for Tax Regime – Old vs New

What benefit does it offer?

There are various benefits to this, some of them listed below:

  • It provides an opportunity to increase the take home salary to the taxpayers;
  • No need to worry about investments/deductions every year;
  • Reduced compliances/paperwork as deductions/exemptions are not available;
  • Easy and Self-competent payment of taxes and filing of returns;
  • A good scheme for small taxpayers for a moderate class income range

What is there to lose:

Under this scheme, there is a list of exemptions/ deductions that have been withdrawn. Here is the list of exemptions/deductions not available anymore – Click.

Currently, under the old regime, the exemptions/ deductions allow you to lower your tax amount by investing, saving, or spending on specific items. However, it also means every year you have to find ways to optimize your salary and savings/investments so as to keep your taxable income to the minimum.

The Choice:

So basically, every person will have his own unique New Tax Slab Vs Old Tax Slab calculations as the deductions claimed by the person may be unique to him. Each individual tax payer ideally has to do their own calculations and depending on the amount of deductions/ exemptions being claimed, it is better to pick the better one between the two.

Here are steps you can follow:

  • Ascertain your income under each head;
  • Determine your exemptions/ deductions;
  • Calculate the tax liability using the tax calculator given below;
  • Decide where do you pay less

Tax Calculator:

We have created a simple tax calculator which will help you to determine your tax liability under both the tax regime considering the steps above.

You can access the calculator here – Download Tax Calculator

Our Support:

We care for the challenges and troubles that you face. We simplify your business so that you can spend time on things that matter. Please refer the “Resources” tab above to find more useful things.

Telemedicine Guidelines – Indian Laws for Tech Platforms

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Telemedicine is changing the way healthcare services are delivered. As more and more patients opt for virtual healthcare, it’s crucial for med-tech platforms to comply with telemedicine requirements.

The Notification of the Telemedicine Practice Guidelines (“Telemedicine Guidelines”/ “Guidelines”) as a part of Appendix 5 of the Indian Medical Council (Professional Conduct, Etiquette & Ethics) Regulations, 2002 (“MCI Code”), has made: (a) the practice of the medical profession; and (b) provision of medical care over technology platforms, legal and regulated. These Guidelines impact a cross-section of stakeholders, such as medical professionals (“MP”), registered medical practitioners (“RMPs”), patients, caregivers and med-tech platforms.

While med-tech platforms are primarily responsible for ensuring that the MPs providing services comply with the ethical and legal aspects of telemedicine, they must also abide by the relevant laws and regulations. The Guidelines are for guidance purposes, laying out the primary principles, i.e. the contours within which telemedicine practice in India is to be followed. However, the Guidelines need to be read in conjunction with other applicable laws.

The laws that med-tech offering telemedicine services in India must comply with include: (a) the Indian Medical Council Act, 1956 (MCI Act) and the MCI Code; the Drugs and Cosmetics Act, 1945 and Rules made thereunder (D&C Act); the Telecom Commercial Communication Customer Preference Regulations, 2018 (TCCP Regulations); the Consumer Protection Act, 2019 (CPA); and the Foreign Exchange Management Act, 1999 (FEMA).

In conclusion, while the Guidelines are crucial, the med-tech platforms offering telemedicine services must comply with the necessary ethical and legal aspects of telemedicine in order to avoid penalties and potential liabilities. Before implementing tech-based solutions for telemedicine, businesses should evaluate the mandatory requirements and ensure compliance with relevant laws and regulations, in order to reduce potential liabilities

FAQ’s

Q: How to start a telemedicine service in India?

A: Before starting telemedicine services in India, med-tech platforms must comply with telemedicine requirements laid out by the Ministry of Health and Family Welfare and NITI Aayog. They must evaluate the nature of services and ensure compliance with the relevant laws and regulations, such as the Indian Medical Council Act, 1956 and the Indian Medical Council (Professional Conduct, Etiquette & Ethics) Regulations, 2002 the Drugs and Cosmetics Act, 1945 and Rules made thereunder; the Telecom Commercial Communication Customer Preference Regulations, 2018; the Consumer Protection Act, 2019; and the Foreign Exchange Management Act, 1999.

Q: What are the requirements of telemedicine standards?

A: The requirements of telemedicine standards in India contain a set of Telemedicine Practice Guidelines (“Guidelines”) as part of Appendix 5 of the Indian Medical Council (Professional Conduct, Etiquette & Ethics) Regulations, 2002, which outlines the legal and regulatory aspects with respect to the practice of medical professionals through med-tech platforms, for medical care and consultations. These guidelines provide legal and ethical frameworks and impact various stakeholders like medical professionals, registered medical practitioners, patients, caregivers, and med-tech platforms.

Q: What are the protocols used in telemedicine services? 

A: Telemedicine services transmit medical information from the patient to the doctor via telecommunication technology as per the applicable laws. The protocol used in telemedicine services depends on the type of service provided, including audio-only consultation, video consultation, or text-based services. These protocols combine the use of equipment such as smartphones, tablets, laptops, and medical devices to assist edical professionals in providing the necessary healthcare services.

Q: Are telemedicine services legal in India? 

A: Yes, telemedicine services are legal in India provided that the businesses offering med-tech platforms comply with the Telemedicine Practice Guidelines (“Guidelines”) as a part of Appendix 5 of the Indian Medical Council (Professional Conduct, Etiquette & Ethics) Regulations, 2002, in addition to other relevant applicable laws and regulations. Med-tech platforms offering telemedicine services must evaluate the nature of services and comply with necessary legal and ethical aspects of telemedicine, in order to reduce potential liabilities and ensure better and qualitative healthcare.

Data Privacy for Telemedicine Platforms

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Telemedicine Platforms are those that provide a technology platform (website or an app) to facilitate online medical care, through audio, visual and text based means.

Such Telemedicine Platforms must be cognisant of: (a) their practices relating to handling data of patients, Medical Professional(s) (“MP(s)”) and other caregivers (hereinafter referred to as “User Data”); and (b) what impact mishandling of such User Data would have.

In India: (a) the Information Technology Act, 2000 (“IT Act”); (b) the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 (“Data Protection Rules”); and (c) the Information Technology (Intermediaries Guidelines) Rules, 2011 (“Intermediary Guidelines”), presently regulate how Platforms providing telemedicine services handle the data of its users.

Platforms which: (a) provide services that enable recording of Sensitive Personal Data or Information (“SPDI”); and (b) place cookies to record user behaviour,  could become liable under the  IT Act, the Data Protection Rules and the Intermediary Guidelines.

Given the sensitivity of health care data, the Indian Government proposed the Digital Information Security in Healthcare Act (“DISHA“) in the year 2018, and has been deliberating upon the establishment of a National e-health Authority (“NeHA”) since 2015 with a goal to ensure the development of an e-health ecosystem and enable people centric health services in a cost-effective manner. DISHA aims to establish NeHA and State e-health Authorities (SeHA). Moreover, the enactment of the Digital Personal Data Protection Bill, 2022 (“DPDP Bill”), and its consequent effect will be something that would impact how Platforms provide their services.

Role of Platforms as Intermediaries: Active or Passive?

The applicability of the IT Act is slightly different for Platforms which are set up to only facilitate the interaction between the patient and the MP, and are not directly involved in the provision of medical care. In such cases the Platform would be considered as an ‘Intermediary’ under the IT Act and the Intermediary Guidelines. Under the Indian legal framework, Intermediaries are exempt from many of the liabilities/obligations placed by the IT Act on entities processing personal data.

As per section 79 of the IT Act, an Intermediary is not liable for any third party information, data, or communication link made available or hosted by it. This exemption applies only if:

  1. the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted;
  2. the intermediary does not – initiate the transmission; select the receiver of the transmission AND select or modify the information contained in the transmission; and
  3. the intermediary observes due diligence (as prescribed under the Intermediaries Guidelines) while discharging its duties under the IT Act.

One of the key elements of section 79 of the IT Act is that a Platform must not, (a) initiate the transmission of communication/data by, between its users; and (b) select the receiver of the transmission; and (c) select or modify the information contained in the transmission.

The manner in which a Telemedicine Platform provides its services, would more often than not, require it to facilitate a transaction and/or transmission of data initiated by their users (i.e. MPs and patients), and thereby, many a times, placing more responsibility on a Telemedicine Platform than would be applicable to an Intermediary, under the IT Act. Since a Platform would need to build their tech framework in a manner that facilitates transactions/transmissions, this circumstance may seem harsh.

However, when it comes to initiating a transmission, selecting the receiver of a transmission or selecting or modifying the information contained in the transmission, the Courts in India have laid down the test of passivity.

Essentially, the following are the factors that could determine that a Telemedicine Platform is playing a passive role in the ecosystem, and is therefore granted the protection of an Intermediary:

  1. Whether the role played by that service provider is neutral, in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data which it stores;
  2. Whether the platform is responsible for initiating the transmission, i.e., placing the listing on the website (for Platforms the important question would be whether there is any active uploading, suggesting or placing on such Tech Platform, the services of an MP);
  3. Whether the platform is involved selecting the persons who receive the information (for Platforms this would mean whether they choose/have a say (apart from legally mandated due diligence requirements on MPs) in who/what gains access to their services); and
  4. Does the entity controlling the platform have the power to select or modify the information that is being exchanged on its platform.

Thus, Platforms would only be considered as Intermediaries if their conduct is passive, technical and automatic in their facilitation of Telemedicine based care.

Privacy related Protocols to be followed by Telemedicine Platforms

1.    A Platform would be required to have in place a set of rules and regulations in place that determine how data of users of its Platform will be used. This would require the publishing of a privacy policy, user agreement, terms and conditions et al. that determine the terms of access and use of the service provided by the Platform.

2.    The privacy policy and terms of use/user agreement of a Tech Platform, should be designed and stated in such a way that the patients using the Platform, are aware of the type of SPDI collected, the purpose for which the same is done, the intended recipients of the SPDI and the requirement and the persons/parties to whom SPDI will be disclosed to.

3.    Before the SPDI of a patient/user is disclosed to a third party, or before the same is transferred, consent of such patient/user must be acquired.

4.    The Platform shall be required to have in place a grievance officer, the details of which are provided on the user agreement/privacy policy of the Platform, and such an officer shall be required to deal with the grievances of the patients/users in relation to their processing of the SPDI.

5.    The Platform shall be required to comply with ‘reasonable security procedures and practices’ under the IT Act. A Platform will be deemed compliant with such procedures and practices if it implements the data security standard afforded by the IS/ISO/IEC 27001 on “Information Technology– Security Techniques – Information Security Management System – Requirements” or similar standards, in order to protect the SPDI.

Implementing ‘POSH’ (Policy on Sexual Harassment) at Workplace – Complaints & Compliance

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Introduction:

Learn how start-ups and small businesses can effectively implement the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 (POSH Act). This legislation gained global attention due to the significant impact of the ‘MeToo’ movement, emphasizing the importance of protecting women against sexual harassment, particularly in the workplace. Sexual Harassment at workplace is an extension of violence in everyday life and is discriminatory and exploitative, as it affects women’s right to life and livelihood. In India, for the first time in 1997, a petition was filed in the Supreme Court to enforce the fundamental rights of working women, after the brutal gang rape of Bhanwari Devi a social worker from Rajasthan. As an outcome of the landmark judgment of the Vishaka and Others v State of Rajasthan the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, was enacted wherein it was made mandatory for every employer to provide a mechanism to redress grievances pertaining to workplace sexual harassment and enforce the right to gender equality of working women. The Act is also unique for its wide ambit as it is applicable to the organized sector as well as the unorganized sector.

What is POSH and why was it enacted?

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, popularly known as POSH Act, is a landmark legislation in India enacted on December 9, 2013. It aims to protect women from sexual harassment at their workplace and provide a safe and respectful working environment for them.

The POSH Act defines sexual harassment as any unwelcome sexual advances, requests for sexual favours, or other verbal or physical conduct of a sexual nature that:

  • Affects the dignity of a woman employee.
  • Creates a hostile work environment for her.
  • Interferes with her work performance.
  • Leads to her intimidation or humiliation.

The Act applies to all workplaces in India, regardless of their size or nature, whether public or private. It covers not only employees but also interns, trainees, apprentices, and domestic workers.

Prior to the POSH Act, there was no specific law addressing sexual harassment at workplaces in India. This often led to underreporting of incidents and inadequate grievance redressal mechanisms. The POSH Act was enacted to address this gap and ensure effective prevention, prohibition, and redressal of sexual harassment at workplaces.

Popular Sections of POSH Act are:

  • Section 3: Defines sexual harassment and its various forms.
  • Section 4: Mandates every employer to constitute an Internal Complaints Committee (ICC) to investigate complaints of sexual harassment.
  • Section 5: Outlines the composition and functions of the ICC.
  • Section 6: Defines the procedure for filing a complaint of sexual harassment.
  • Section 7: Specifies the powers of the ICC to investigate complaints and recommend appropriate action.
  • Section 8: Provides for penalties for sexual harassment, including dismissal from service.
  • Section 9: Mandates employers to organize awareness programs on sexual harassment for all employees.

Who is responsible for implementing POSH policies in the workplace?

In the workplace, the ultimate responsibility for implementing and enforcing POSH (Prevention of Sexual Harassment) policies falls squarely on the employer’s shoulders. This legal obligation, often mandated by national and regional regulations, requires employers to take proactive steps to foster a safe and respectful work environment for all employees. This encompasses various tasks, including crafting a comprehensive POSH policy outlining prohibited behaviors, establishing a dedicated Internal Complaints Committee (ICC) to handle harassment reports, conducting regular training sessions for employees and managers on recognizing and preventing sexual harassment, and ensuring prompt and fair investigation and resolution of any reported incidents. By taking ownership of POSH implementation, employers demonstrate their commitment to creating a workplace free from harassment and discrimination, fostering a culture of mutual respect and dignity for all.

Applicability of the Act:

The Act applies to all employers, whether in public or private establishments, including institutions, organizations, and establishments with contractual obligations towards their employees.

Key Compliance Steps to be followed for POSH:

  1. Establish an Internal Policy: Formulate and widely disseminate an internal policy outlining workplace guidelines, defining sexual harassment, explaining the grievance and complaints redressal mechanism, and providing details about the Internal Committee and Local Committee. The Policy must be notified or displayed prominently at a common place and employees must be aware of it and should have ready access to it at all times.
  2. Set up an Internal Committee: Create an Internal Committee and inform employees about its existence in writing. The committee should consist of a Presiding Officer (a senior-level woman employee), at least two members with social work or legal knowledge, and one member from an NGO or someone familiar with sexual harassment issues. Ensure that at least half of the committee members are women. Tenure of each member of the Internal Committee shall be maximum 3 years.
  3. Raise Awareness: Conduct workshops and seminars at the workplace to promote general awareness of sexual harassment, its prevention, and the Act’s provisions.

Importance of Internal Complaints Committee for POSH 

If your organization has more than 10 employees, it is mandatory to establish an Internal Complaints Committee.

A. Structure

This committee consists of –

  • Chairperson/Presiding Officer: Women who hold top positions in the company’s workforce shall serve in these roles.
  • Two Members: They must be staff members and ideally dedicated to the advancement of women’s rights, possess social work expertise, or be knowledgeable about the law.
  • External Member: NGOs that oppose women’s rights, physicians, and advocates are examples of external members. They also provide external member empanelment and capitalize on tax refunds where applicable

B. Responsibilities

The Internal Complaints Committee is essential to the operation of the Act’s provisions and the accomplishment of the Internal Complaints Committee Policy’s goals. Therefore, the Internal Complaints Committee’s primary duty is:

  • Putting into practice the internal complaints committee’s anti-sexual harassment policy. addressing grievances filed by parties in accordance with the Internal Complaints Committee Policy.
  • Advising the Employer to take certain measures
  • This committee serves as an internal platform for addressing and resolving sexual harassment complaints. It provides immediate accessibility to the victim to report to the internal committee within the organization and ensures timely actions can be taken. The Internal Committee and the parties involved in each case are required to maintain absolute confidentiality about the case and proceedings.

C. Authority

The Internal Complaints Committee is essential to the operation of the Act’s provisions and the accomplishment of the Internal Complaints Committee Policy’s goals. 

  • In accordance with the Internal Complaints Committee Policy, it has the authority to open an investigation into a complaint of sexual harassment at work.
  • IC has the authority to call parties and witnesses to testify before the committee.
  • It has the authority to call witnesses for examination at its discretion if the Committee members think it essential.

According to POSH law, every organization must post the names and contact information of its current IC members on its official website and in conspicuous locations within the building.

D. Principal Duties of Internal Complaints Committee:

  • Get reports on workplace sexual harassment
  • Launch and carry out a probe in accordance with the business protocol.
  • Provide the results and suggestions of any such investigations.
  • Work together with the Employer to adopt the necessary measures.
  • Observe complete secrecy throughout the procedure in accordance with the Internal Complaints Committee Policy’s stated requirements.
  • Send in yearly reports using the format specified.
  • It is necessary for the Internal accusations Committee to remain watchful in order to address and promptly handle any accusations of sexual harassment.

Role of the Local Committee in POSH

In the absence of an Internal Complaints Committee, victims can approach the Local Committee, established by the Government for each district, to file complaints against their employers.

Compliance Requirements

Employers covered under the Act must submit an annual report at the end of each calendar year to the local District Officer, providing details of complaints received, actions taken, pending and resolved complaints, current committee members and details of awareness workshops conducted during the year.

Penalties for Non-compliance to POSH

Failure to comply with the Act may result in a fine of up to Rs. 50,000/- and potential cancellation of the business license for repeated violations.

Relief Provided by the POSH Act

Any woman who experiences sexual harassment can lodge a complaint with either the Internal Committee or the Local Committee within three months of the incident. A legal heir or authorized person of the victim can also file the complaint as prescribed by the POSH Act.

Step by Step Redressal Process for POSH Complaints

1.) Procedure for Conciliation:

In the event that the Complainant submits a written request, the Internal Complaints Committee may attempt to resolve the issue through conciliation before opening an investigation. Such conciliation cannot be predicated on a monetary settlement. If a settlement has been reached, the IC will document it and send it to the company so that it can proceed with the actions outlined in the IC’s recommendation. Additionally, copies of the settlement as recorded shall be given to the Respondent and the Complainant by the Internal Complaints Committee. In the event that conciliation is achieved, the IC won’t have to carry out any more investigation. Complainant may file a formal complaint with the IC to request that the matter be looked into if they believe the Respondent is not abiding by the conditions of the Settlement or that the Company has not taken any action.

2.) Inquiry

When conciliation fails to produce a settlement or could not be reached, the investigation process starts, and the Internal Complaints Committee is required to look into the complaint. If the aggrieved party notifies the IC that the respondent has not followed any of the provisions of the settlement, an investigation may also be opened. After receiving the complaint, the Internal Complaints Committee will send one copy to the respondent and request a response within seven working days. Within ten working days after receiving the complaint, the responder must file a response that includes the names and addresses of all witnesses as well as a list of supporting documents. It must not be permitted for either the complainant or the responder to have a lawyer represent them. Throughout the whole process of the IC proceedings, neither the respondent nor the complainant may have a lawyer represent them.

The complainant and respondent will be heard by the Internal Complaints Committee on the date(s) that have been communicated to them beforehand, and natural justice principles will be upheld. The Independent Commission (IC) may halt the investigation process or provide an ex-parte ruling if the complainant or respondent misses three consecutive personal hearings without good reason. However, the IC must give written notice to the party or parties 15 days prior to any such termination or ex-parte order. The Internal Complaints Committee has ninety days from the date of complaint receipt to conclude the investigation. Within ten days of the inquiry’s conclusion, the IC will transmit its findings and recommendations to the relevant authorities, the complainant(s), and the respondent(s).

3.) Interim Relief

In accordance with the Internal Complaints Committee Policy, in the event that the complainant submits a written request, the Internal Complaints Committee may suggest to the employer, while the investigation is still pending: To transfer the responder or the resentful party to a different place of employment. To allow the resentful party to take leave for a maximum of three months; however, this must be in addition to any leave to which she would otherwise be entitled. To provide the harmed party with any further remedy that is deemed suitable. To prevent the respondent from providing information regarding the complainant’s performance.

4.) Compensation

According to Internal Complaints Committee policy, IC’s remuneration will be decided upon by taking into account:

  • The emotional agony, grief, suffering, and mental damage inflicted upon the resentful employee;
  • The loss of a professional chance as a result of the sexual harassment occurrence;
  • The victim’s out-of-pocket costs for medical and/or psychological care;
  • The accused person’s earnings and social standing; and Whether such payment might be made in full or in installments.

Conclusion

The acronym “POSH” might bring culinary delights to mind, but in India, it stands for something far more crucial: the Prevention of Sexual Harassment (POSH) Act, 2013. This landmark legislation has brought about a seismic shift in safeguarding women’s right to a safe and dignified workplace. While challenges remain, the impact of POSH cannot be understated.

  • Sexual Harassment: The Act defines and prohibits various forms of unwelcome sexual conduct, empowering women to speak up and seek redressal.
  • Workplace: POSH applies to all organizations, public and private, creating a safer environment across sectors.
  • Internal Complaints Committee (ICC): This mandatory body within organizations investigates complaints and recommends action, ensuring internal accountability.
  • Awareness and Training: POSH mandates sensitization programs for employers and employees, fostering a culture of respect and equality.
  • Penalties: Non-compliance with POSH provisions attracts penalties, deterring misconduct and encouraging adherence.

Progress and Challenges:

  • Increased Reporting: POSH has led to a surge in reported cases, indicating greater awareness and confidence in the system.
  • Empowered Women: The Act has provided women with a legal framework to challenge harassment and seek justice.
  • Shifting Norms: POSH has sparked important conversations about gender equality and acceptable workplace behavior.

Challenges Remain:

  • Implementation Gaps: Ensuring effective implementation across organizations, especially smaller ones, requires ongoing efforts.
  • Victim Blaming: Societal attitudes and victim-blaming tendencies can still deter reporting.
  • Timely Redressal: Ensuring swift and fair investigations and outcomes remains crucial.

Looking Ahead:

POSH has been a game-changer in creating safer workplaces for women in India. Continued awareness campaigns, robust implementation, and addressing cultural nuances are key to fully realizing its potential. As this journey progresses, POSH holds the promise of a future where workplaces are truly respectful and equitable for all.

FAQs about POSH Policy

Q. What is POSH? 

POSH stands for Prevention of Sexual Harassment. It’s a law in India mandating organizations to create a safe work environment free from sexual harassment. 

Q. Who is covered under POSH? 

Any woman working or visiting a workplace, including permanent, temporary, interns, trainees, and visitors can file a complaint under POSH.

Q. What constitutes sexual harassment? 

POSH broadly defines it as unwelcome sexual advances, requests for sexual favors, verbal or physical conduct of a sexual nature, creating a hostile work environment, and retaliation for reporting harassment.

Q. Is POSH applicable to my organization? 

YES. The POSH Act applies to all organizations in India, regardless of size or industry, with 10 or more employees.

Q. What are my organization’s responsibilities under POSH?

You must form an Internal Complaints Committee (ICC) to investigate complaints, provide training on POSH awareness, and maintain records.

Q. How do I form an ICC? 

The ICC requires at least one external member, preferably a woman, and internal members from different departments. Training and orientation are crucial.

Q. What is the complaint process?

 An aggrieved woman can file a written or verbal complaint with the ICC, who then conduct an inquiry and recommend appropriate action.

Q. What are my options if I experience sexual harassment? 

You can file a complaint with the ICC or directly approach the Local Complaints Committee (LC) set up by the government. Legal action is also an option.

Q. What are some resources available for understanding and implementing POSH?

The Ministry of Women & Child Development website offers extensive information, including FAQs, guidelines, and training modules. Several NGOs and legal resources also provide support.

Q. Where can I get further help? 

If you have specific questions or require assistance, consider contacting a lawyer specializing in women’s rights or reach Treelife. Additionally you may gain more insights on POSH policy via this Official Handbook from Govt. of India

https://wcd.nic.in/sites/default/files/Handbook%20on%20Sexual%20Harassment%20of%20Women%20at%20Workplace.pdf 

STAY SAFE, KNOW YOUR RIGHTS!

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