what is ordinary course of business

In United States law, the ordinary course of business (OCB) covers the usual transactions, customs and practices of a certain business and of a certain firm. This term is used particularly to judge the validity of certain transactions. It is used in several different sections of the Uniform Commercial Code of the United States.

Full Answer

What is the ordinary course of business in law?

In United States law, the ordinary course of business ( OCB) covers the usual transactions, customs and practices of a certain business and of a certain firm. This term is used particularly to judge the validity of certain transactions. It is used in several different sections of the Uniform Commercial Code of the United States.

What is ordinary business for companies?

Companies Act, 2013 does not define what is ordinary for a company and what is not. It let the companies decide what is ordinary and what is extra-ordinary/ special kind of business for them.

What is the ordinary course of business for a grocery store?

When grocery stores sell produce to consumers, it is considered an 'ordinary course of business'. The ordinary course of business is anything that falls within the scope of activities that would be considered normal for a business.

What does it mean to buy in ordinary course?

and in the ordinary course from a person, other than a pawnbroker, in the business of selling goods of that kind. A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices.

What is ordinary business course?

The ordinary course of business is a standard used to indicate within a specified period, a business: Has been conducted consistently within the scope of past commercial customs and practices. Has not incurred any liabilities outside the day-to-day operations.

What is not ordinary business course?

outside of the ordinary course of business means transactions of an unusual size and incidence when compared to similar transactions which the company has enteredinto; Sample 1.

What are ordinary business activities?

There are three main types of business activities: operating, investing, and financing.

What is ordinary course of business as per Companies Act 2013?

In common parlance the term “ordinary course of business” is used to mean usual transactions, customs and practices as a part of doing regular business including the things which usually happen.

What is ordinary business and special business?

The Ordinary Business are transacted only at an AGM and not in any other general meeting. Special Business. At AGM, any business transacted except the above mentioned four business are considered as Special Business. In all other general meetings, all business to be transacted are considered as Special Business.

What is ordinary business income?

Ordinary business income includes any earnings your company makes through daily operations. Profit from selling a product or providing a service is ordinary business income. For example, you sell $20,000 worth of products. You have $10,000 in the cost of goods sold (COGS) and $5,000 in operating expenses.

What are material RPT?

Material Related Party Transaction (Material RPT) means related party transactions to be entered individually or taken together with previous transactions during a financial year, exceeds ten percent of the annual consolidated turnover of the Company as per last auditd financial statements of the company.

What is Section 62 of Companies Act, 2013?

➢ Section 62(1)(a) of the Companies Act, 2013 states that company making right issue should send a letter of offer. ➢ No prospectus is required for 'right issue' to existing members, even if the members have right to renounce the right to a third person, who may or may not be a member.

What is Section 185 of Companies Act, 2013?

Under Section 185 of the Companies Act, 2013, the company cannot provide loans directly or indirectly, including any loans represented by credit cards: To any of its directors. To any other person, the director is interested in. Provide security in respect of loans taken by the director or any such person.

What is a buyer in the ordinary course of business?

Section 1-201 of the Uniform Commercial Code defines a "Buyer in the ordinary course of business" by a four-part test: a person that buys goods in good faith, without knowledge that the sale violates the rights of another person in the goods [e.g. a security interest ] , and in the ordinary course from a person, other than a pawnbroker, ...

What does it mean when a person buys goods in the ordinary course?

A person buys goods in the ordinary course if the sale to the person comports with the usual or customary practices in the kind of business in which the seller is engaged or with the seller's own usual or customary practices. This legal term article is a stub. You can help Wikipedia by expanding it.

What is an OCB?

In United States law, the ordinary course of business ( OCB) covers the usual transactions, customs and practices of a certain business and of a certain firm. This term is used particularly to judge the validity of certain transactions. It is used in several different sections of the Uniform Commercial Code of the United States.

What is ordinary course of business?

The ordinary course of business is anything that falls within the scope of activities that would be considered normal for a business. When the legality or legitimacy of transactions is challenged, one of the tests used to determine whether ...

What is legal code?

Legal codes pertaining to business matters usually define this terminology for the benefit of people involved in legal disputes, and there may be further definitions in the areas of the legal code that cover specific industries. In order to be within the ordinary course of business, a transaction must adhere to the practices and customs ...

Is it unusual for businesses to engage in transactions similar to a transaction under examination?

It would not be unusual for businesses in the same industry to engage in transactions similar to a transaction under examination. All parties also engaged in the transaction in good faith, with the understanding or belief that the other party was operating within the law and that the transaction was normal. Thus, buying a sack of oranges ...

What does "in the ordinary course of business" mean?

The ordinary meaning of the expression ‘in the ordinary course of business in dictionaries is part of doing regular business; the regular or customary condition or course of things; as things usually happen. Many Dictionaries define the term as part of doing regular business; the regular or customary condition or course of things;

Is ordinary course of business defined in the Companies Act?

The term ‘ordinary course of business’ has, however, not been defined in the Act and the government also has ruled out defining the term which is used in the Companies Act, 2013 several times. So, boards are left to their different interpretations of the term, thus creating confusion. The lack of definition or framework leaves a lot to ...

Examples of Ordinary Course of Business Activities in a sentence

Company shall not directly own any assets other than (i) Capital Stock of Restricted Subsidiaries, (ii) assets in respect of Rate Management Transactions, (iii) Cash and Cash Equivalents and other immaterial assets held in accordance with Ordinary Course of Business Activities consistent with past practice, and (iv) intellectual property consistent with past practices..

Related to Ordinary Course of Business Activities

Ordinary Course of Business means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

What is subjective prong in OCB?

creditor relying on the subjective prong of the OCB defense must first demonstrate a pre-preference period payment history or “baseline of dealing” between the debtor and the creditor and then compare that to the alleged preferential transfers. As part of this analysis, the court usually considers the following factors: (i) the length of time the parties were engaged in the type of dealing at issue; (ii) whether the amounts of the alleged preferential transfers were larger than prior payments; (iii) whether the payments were tendered in a manner different from previous payments; (iv) whether there was any unusual action by either the debtor or the creditor to collect or pay the debt; and (v) whether the creditor did anything to gain an advantage in light of the debtor’s deteriorating financial condition.

What is the applicability of the subjective prong of the OCB defense?

Most court decisions dealing with the applicability of the subjective prong of the OCB defense have relied on the consistency in the timing of the alleged preference payments compared with the timing of payments during the parties’ prior course of dealing before the preference period. The courts have compared the timing of the payments made during and prior to the preference period based on a variety of methodologies that have sometimes led to conflicting decisions.

What is the OCB defense?

The OCB defense requires proof, by a preponderance of the evidence that (1) the alleged preferential transfer paid a debt that was incurred in the ordinary course of the debtor’s and creditor’s business or financial affairs— which merely requires proof of a trade creditor’s extension of credit terms to the debtor—and (2) that the transfer was either (a) made in the ordinary course of the debtor’s and creditor’s business or financial affairs (the “subjective” part of the OCB defense), or (b) made according to ordinary business terms (the “objective” part of the OCB defense).