Actuarial Science – Whether to register from UK or India

Actuarial entrants often get confused between UK & Indian Actuaries. This post will surely clear most of their doubts.

Governing Body

UK Actuaries is governed by Institute and Faculty of Actuaries (IFOA). Whereas Indian Actuaries is governed by Institute of Actuaries of India (IAI). Both Indian & UK actuaries are sought after courses and have their own pros and cons. One point worth pointing is the Mutual Recognition Agreement signed between both these institutes.

Any IFOA candidate can claim exemption of any of the 15 subjects from IAI if he has cleared it from IFOA on payment of an exemption fees. In retrospect, an IAI candidate can also claim exemption from IFOA for any of the 15 subjects. It simply means that a candidate needs to clear a subject from one Insitute only.

Eligibility

IAI – Any person who has passed 12th can register for a ACET. Only after passing ACET can a person be eligible to take membership of IAI. ACET (entrance exam) is an online objective paper conducted twice a year (June/Dec) based on 12th Maths & Statistics.

IFOA – There are two criterias here

• Direct Membership – If the candidate has 80% in 12th Maths (or) 55% in Graduation Maths (or) 55% in MBA Finance he can directly register for membership and then appear for CT exams.
• Non-Membership – If the candidate doesn’t fulfill any of the above requirements he has to first sit for CT-1 ( Financial mathematics) and can register for membership only after clearing this exam.

Fees

IAI – Fees consist of –

• One time Fees for registering into ACET – Rs. 3000
• One time Fees for Admission into Actuarial course – Rs. 1500
• Per subject fees – Varies between 2000 & 4000 (This fees excludes the cost of Study Material i.e. Rs. 2500 which is compulsory to purchase)
• Annual Membership Subscription fees – Rs. 750

IFOA – You can find the fees structure of IFOA from this link. The fees is approximately 2.5 times of that of IAI.

Exams & Passing Percentage

Both IAI & IFOA has the same syllabus. In fact, IAI distributes the same study material issued by the IFOA. So anyone preparing for IAI exams can appear for IFOA and vice-a-versa. So, if you wish, you can sit for both the exams, it would simply enhance your chances of clearing it.

IAI – Syllabus

IFOA – Syllabus

Regarding Passing percentage, it’s a common trend that the CT level papers of IAI are tough as compared to that of IFOA. And the CA, ST & SA level papers of IFOA are tough as compared to IFOA. So, it would be wise enough to register for IFOA first than switch to IAI in the later stage. I just personally feel that the marking is lenient in IFoA.

One thing to note that, passing percentage in IAI is quite erratic. In some of the attempts the CT level papers have even seen a passing percentage of 0% !!

Scope

It hardly makes any difference whether you have registered yourself with IAI or IFOA with respect to Future scope if you are searching for a job in India. But, for a person seeking job in Foreign countries (US, UK, etc.) it is recommended to register through IFOA because IFOA has a mutual agreement with Society of Actuaries, US & many foreign universities also affiliated to IFoA. [Disclaimer : This observations are subjective and I am not an expert]

To conclude, Register for IFOA if you can afford it. You don’t need to appear for ACET and you can also take advantage of a better passing percentage there.

If you are doubtful and don’t want to shell out so much money appearing for IFOA, you can register for IAI and sit for the easy papers first (i.e. CT1, CT2, CT3 & CT7) and then decide on making a switch to IFOA.

You can find for articles on CA, MBA & Actuaries at RatLearnings

Cheating the Law – Section 8 Charitable Companies

Cheating the Law is a series of Posts I would be writing detailing the loopholes in the Tax Laws & how to deal with them. As one of my Tax Teacher used to tell me, “There is a very thin line between tax planning, tax avoidance and tax evasion”, I will make a sincere attempt not to breach that line.

 

What are Section 8 companies ?

A company whihc fulfills the following requirements as laid down by the Companies Act, 2013 :

(a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;
(b) intends to apply its profits, if any, or other income in promoting its objects; and
(c) intends to prohibit the payment of any dividend to its members,

 

Is section 56(2)(viia) of Income Tax Act applicable to a Section 8 Company ?

As per Sec. 2(18) of the Income Tax Act,

“company in which the public are substantially interested”—a company is said to be a company in which the public are substantially interested—

(aa) if it is a company which is registered under section 25 of the Companies Act, 1956 (1 of 1956) “

Thus, a company registered u/s 8 of Companies Act would be deemed to be a company in which public are substantially interested. Hence, the provisions of Section 56(2)(viia) isn’t applicable on a Sec. 8 Company.

 

Difficulties that a Section 8 Company could face:

A. RESTRICTION ON USE of FUNDS

1. Income shall be used only in Promotions of Commerce, Arts, Science etc.

The company shall have in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object & shall apply its profits, if any, or other income in promoting such objects; [Section 8(1)(b)]

2. Investment in Shares

There is nothing in the section or under the law debarring such companies to become holding companies and accordingly surplus funds, if any, of such companies may be utilized by investing in other companies.

However, the investments as standing in the books of a Sec. 8 company should not be substantial & making it a investment company as the main object of such companies is to promote art, commerce etc and not to invest for profits.

In addition, these companies can promote only such companies having objects similar to the investor company.

3. Receiving Gift of shares

There is nothing in law that restrictions a Section 8 company from receiving Gifts of shares of another company.

 

B. COMPLIANCE & REPORTING REQUIREMENTS

Every company is required to file with the ROC on an annual basis the following:

• Balance Sheet of the Company, and
• Annual Return

There are no specific Reporting Requirements for a company registered u/s 8.

 

C. EXIT ROUTE FOR SHAREHOLDERs

1. Payment of Dividend

Section 8 companies are prohibited from payment of any dividend to its members [Section 8(1 (c)]

2. Winding up (or) Dissolution

If on the winding up or dissolution of a Sec. 8 company, there remains, after the satisfaction of its debts and liabilities, any asset, they may be

• Transferred to another company registered under this section and having similar objects, or
• Sold & proceeds thereof shall be credited to the Rehabilitation & Insolvency Fund.

[Section 8(9)] [This Sub-section is yet to be notified].

3. Sale of Shares

If the company is a private company in nature, shares/membership cannot be transferred to outsiders.

If the company is a public company in nature, shares/memberships are freely transferable in accordance with Articles of Association of the company.

4. Amalgamation

A company registered under Section 8 shall amalgamate only with another company registered under Section 8 & having similar objects. [Section 8(10)]

5. Conversion into a Company of any other kind

For the conversion to a company of other kind, the company shall pass a SR and make an application to Regional Director for approval.

A copy of the application filed by the company with RD shall also be send to Chief CIT having jurisdiction over the company, ITO who has jurisdiction over the company, the Charity Commissioner, the Chief Secretary of the State in which the registered office of the company is situated, any organisation or Department of the Central Government or State Government or other authority under whose jurisdiction the company has been operating.  [Rule 21 & Rule 22 of Companies (Incorporation) Rules, 2014]