ArchiveJune 2014

Guest Post: MCA notification on Audit Committee

[The following post is co-authored by Yogesh Chande and Manendra Singh. Yogesh is an Associate Partner and Manendra is an Associate with ELP. Views of the authors are personal.] In terms of section 177(1) of the Companies Act, 2013 (Act) read with rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014 (Rules), following companies are required to constitute an audit committee:...

Director Liability Under the New Regime

Types of Liability Being fiduciaries, directors are exposed to liabilities as a consequence of a breach of their duties. While liabilities may arise under various statutes, the focus here is on liabilities arising under company law. The first set of liabilities is statutory in nature, being specifically set forth in the Companies Act, 2013 (the 2013 Act). These could be either civil liability...

MCA Clarification on Independent Directors

Based on a request made by various stakeholders, the Ministry of Corporate Affairs (MCA) has issued a clarification explaining some of the provisions of the Companies Act, 2013 relating to independent directors. Some of the aspects clarified include the following: – For the purposes of the definition of an independent director, the concept of “pecuniary relationship” will not include...

The Influence of Corporate Law Firms in Policy & Regulatory Change

The Harvard Law School Program for the Legal Profession has posted a new paper titled Notes from the Field: How India’s Corporate Law Firms are Influencing Her Legal, Policy and Regulatory Frameworks by Bhargavi Zaveri. The abstract of the paper is as follows: While the Indian legal profession has been widely acclaimed for leading socio-political movements during the country’s independence...

Directors’ Actions: For Whose Benefit?

It is clear that directors ought to act in good faith for the benefit of the company. Since the company is a separate legal personality, there is often the question as to who represents the interests of the company. Generally, the interests of the company are said to equate with the interests of the shareholders, while in the case of an insolvent company (or one that is in the zone of insolvency)...

Guest Post: Reduction of Provident Fund Contributions to Statutory Limits

[The following post is contributed by Madhusudan Bose, who is a lawyer and company secretary by profession, at PRA Law Offices, New Delhi] Introduction Recently, the Employees Provident Fund Organization (“EPFO”) issued a communication dated May 27, 2014, directing all Regional PF Commissioners not to force employers to contribute over and above the statutory wage ceiling in respect of their...

Financing Domestic M&A

A Times of India report indicates that the Finance Ministry is considering a proposal to allow banks to finance domestic M&A, i.e. acquisitions of local targets by local acquirers. If this proposal goes through (although significant doubts have been raised regarding that), it will mark a sea-change in the funding of domestic M&A that is currently deprived of bank funding. At present...

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