Investor should be God for companies who raise capital and the

Investor should never be at loss.

Most of the times we see good performing companies stock prices also crash when nothing has impacted their business. Still we are following this because this originated in developed countries. Stock prices should be an index basis the weight-age to the following factors which should be blended using an algorithm. This would promote a free and fair investment environment and reduce speculation and gambling.

(-6) Stock markets to remain closed till the new system and infrastructure is ready

(-5) Eliminate all Indices Indices influence investors to take biased decisions for investing without lookig at the fundamentals of the company. Now onwards, Investors need not worry about any indice/Index in the world. They need to just research on the company in which they want to invest thoroughly.

Fixed Price, no bargaining/speculation. Shares once sold will be taken back at the same price at which they were sold.

(-4) Eliminate price fluctuations in stocks, make shares similar to debentures with profit based dividends All stocks will have fixed price basis the current valuation. When a companies performance is better, they will be liable to give higher dividends. When the company is in losses and if any shareholder wants to sell the shares and if there are no buyers in the market, the company has to buy back the shares within 90 days (this can be done by raising capital from banks by giving the required security, this transfers the risk from the shareholder to the bank. Banks will obviously do the due diligence which a small investor cannot do). If the goodwill of the company is good, there will be other investors who will be ready to buy it. In short all shares will work like debentures where the company has full liability to payback to the investor.

• (a) All companies share prices will be relisted by the stock exchange boards basis the last financial statements. The stock prices of the companies may either go up or down. (There are lot of companies who operate on this model and are not listed on stock exchange, so this has to be extended to all the companies). Here, how big the promoter may be - he cannot set the prices. It will be purely based on the last financial statement issued to the stock exchanges.
• (b) There will be lot of investors who may suffer losses or can gain significantly. This will be one time correction for everlasting safety and precaution to promote speculation and gambling. The investors could have lost the money by speculation and still would have faced the similar challenges in future, but now it will be permanent solution where the investors money will not be at loss (Very rare cases will happen when the financial statements are biased)
• (c) The concept of demand and supply is eliminated. This helps the common man to invest in companies whose fundamentals are good. They have to be in queue to buy stocks of good companies and they will not be able to buy even when they are ready to pay higher prices (No speculation or demand/supply concept is present). First Come First Get basis, without any bias (People cannot quote to buy a stock at premium rates within or outside the market).

This helps the promoters to just focus on the business and not on the markets - this helps both the owners of the company, shareholders and the growth of the country. As they are not wasting there time in gambling. Any changes in the economy will directly be showcased in the profits, so need to map or link anything. Simple things are easy to understand.

(-3) Company's promoters and directors responsibility to ensure that shareholders do not suffer losses

• (a) Promoters of the company or the directors of the company will have full liability to pay back the shareholder value. They will have to face even criminal charges for utilizing the funds of the investors or when they have mis- represented financial statements.
  Currently a company who has suffered huge loses, their directors and promoters lead a very good life as before or even better, after the shareholders money is depreciated significantly.

Currently a company can make huge profits in one year(share prices increases) and in the next year make huge losses and exit the share market leaving the shareholders empty handed (Where there is no purchaser of the shares).

(-2) Companies can issue new shares(Now dividend based debenture) when they want to raise more capital from the markets. The prices will be valued on performance and fundamentals of the company. What you see is what you get. The company will have the first obligation to payback the investors equal to the amount which they have invested.
Example: Investor buys a stock for 400, so the investor should get minimum of 400 within 90 days of his order to sell using the stock exchanges

• (a) Prices of the stocks(Now dividend based debentures) should be only based on
  • (i) Timely redemption of money back to investors, when no one is able to buy the shares in the market.
  • (i) Profit and Loss ratio in comparison to the total Assets minus overall liabilities (Excluding shareholders amount)
  • (ii) Ratio of Turnover/revenue and expenditure.
  • (iii) Total Valuation of the company/firm basis all its Assets and liabilities
  • (iv) Proportion of revenue and expenses
• (b) Brand value or goodwill of the company should never be considered while valuating the stock price of the company and neither any news or future plans of the company - no matter how big they may be.
• (c) Companies can extrapolate or control the financial statements to make people fall in trap and suffer losses. Hence, the value of the share price cannot go below the issue price. This gives the shareholder a assurance that at least his investment will not be depreciated.

Good performing companies will be highly beneficial as they will be able to attract the investors immediately when they want to raise money from the markets. As they will be paying good dividends to the people who have already invested.
Example: Good performing company which was giving 12% returns every year, wants to raise fresh capital to expand business. They will give first option for the existing shareholders to buy new shares in the company and the share holder will get benefited as they cannot get any better returns

(-2) Unknown Auditors from stock exchanges will audit the financials of the company
Currently companies have tie up with auditors to do the audits. However from now on companies will be required to pay for mandatory audit fees basis the size of the company. The Auditors will be controlled by the CAG (Controller auditor Group of the Country ) of the which will be under direct supervision of the government. The Government will be responsible for any discrepancies and will be required to pay back the investors money, when the company is not able to payback in case of insolvency. The auditors will change every 3 months (1 quarter) to ensure that no company can build any relationship with the auditors. Special International audit team and squads will be formed in coordination with other countries when there is high suspicious activity with the help of investigating agencies in a proactive way, which is currently done on a reactive basis after a scandal is unearthed. The Auditors will be responsible when they are not able to flag off discrepancies and will result in loosing their job, penalties and imprisonment.
-(a) Government can do this by purchasing the current big audit firms and allowing them to work by releasing job opportunities. The management of the Audit firms can be changed post the purchase is made.

(0) Zero interest People will invest in stock markets when they do not get any return from the banks and actually will get negative returns if the amount increases above a threshold. People will be happy, even if they are getting 4-8% risk free returns. This will help the companies also to attract more funds when they are doing genuine business.

(1) Promote entrepreneurship People who have not started any business can also raise capital to start their shop/business by providing the business idea - strategy, existing competition, why this business will succeed, experience in the field. The promoter who aims to raise the capital will have to undergo a background check and his rating and scores will be published for investors to consider before investing. All the valid checks will be made by the team of micro and small industries - to check the authenticity of the claim to avoid any fraud. The amount raised shall go into an interim account from which only fixed assets can be purchased to start the business and the same will be credited to the person from whom the assets are going to be purchased. The Investors will get an equal amount of share in the profit basis the investments made. This helps small shop keepers also to raise funds and start doing business.

Smaller business can easily give good returns when compared to bigger companies.

(2) All the shareholders will get mandatory dividend basis the profits. This helps the investors to get annualized returns instead of waiting for long term. The existing shareholders will be given the first priority to buy any shares which the company may want to offer from time to time basis.

(3) Companies/firms which are not making any profit in the quarter have to submit the reason and logic of the losses. This will be compared with similar business in the same area and independent audit will be made to check the genuinity. As everything will be digital, the expenses and standard of living of the promoters will tell the story very easily and how they are making expenses when the company is making losses. Currently, this is not being done.

(4) The Concept of Indices, actually influences the investor in a very big way to invest in a wrong company basis the performance of 10 good companies. Hence the same should be eliminated. Every company/firm will be independent, without any influence of any indices. We most of times see that the majority of the companies are down but few are performing well, so the indices actually do not help the investor.

(5) When a company is need of money to grow the business - they can offer debentures which will have backing of the assets - this will also be based the deprecated value and estimated value at the end of the period, so has to safe guard the risk for the investor.

(6) Upper limit to raise funds Every company/firm/Enterprise will have an upper limit to raise funds basis the historic performance, returns issued, profit and expense ratio, ratings, assets held, proposed need and tangible assets into which the funds will be used. This ensures that no company can raise more funds then required, if they are falling short of funds they can borrow the money from banks at nominal interest rates who will have the appetite to take some risk.

(7) Companies carbon footprint and steps taken for conserving nature.

(8) Employee satisfaction scores should be carried by the government on specified parameters and will be published independently along with the results of the company.

(9) Companies status on following laws and regulations of the land. Compliance to audits and standards along with scores.

(10) Detailed and historic performance of the company along with the list of the promoters and their background should be available for the public to view.

(11) Buy back at any point of time Companies/firms/enterprise can buyback the shares when every they want without giving any notice to the shareholders.
*Example: A company which has 1 lakh share capital and is giving 8% return every year. Now, the enterprise has grown and has got good cash reserves, they can buy back the shares to avoid paying the dividend to share holders. The Enterprise can again raise capital when in need, by showcasing a good track record.

(12) Long term investment with lock-in period Companies who cannot break even within 3 years or may require even more gestation time can reach out to big institutional investors by showcasing the plan ahead and the lock in period with probable estimated returns. If they feel convinced that they can get better returns, they will invest in the Long term units. Also most of the wealth in the stock markets is managed by big institutional investors, the same will continue basis mutual agreements between both the parties.
This reduces the risk for the normal investor who cannot understand all these complex business plans and can avoid losing out money by seeing some one*

This would make companies to cut-down all the unnecessary expenses which they were making from the shareholders money and focus just on doing business.

Investors will get regular income, which they never even thought of.

Stock market will only be an option to raise capital for doing business and not to do business in stock market.

This will help genuine businesses, investors, economy, banks(as they will not give loans on fictitious assets), Auditors (lesser risk) and the customers as the companies will focus now all their energies(only on one route) to satisfy the customer through which they can grow business and earn more money.

This will encourage promising business Enterprises and startup's to be part of stock market, without any risk and help them to raise funds without any cost.

This would set a benchmark for other countries to follow & would ensure a bright future for everyone.