[Mohammad Kaif is a penultimate year student at Campus Law Centre, Faculty of Law, University of Delhi] Crowdfunding has become increasingly popular as a way to raise funds, where numerous individuals invest in a project or a company, usually via an internet-based platform. Some companies have used crowdfunding platforms to issue securities in violation of the provisions of Private Placement...
SEBI’s Proposals to Enhance Corporate Governance by Empowering Shareholders
Over the last decade and, in particular, following the enactment of the Companies Act, 2013, the Securities and Exchange Board of India (SEBI) has been gradually and consistently strengthening the governance norms pertaining to listed companies. Among other measures, SEBI has sought to focus on two specific matters, viz., (i) enhancing transparency in corporate matters; and (ii) empowering...
Liability of Company Secretary for Misstatements: SC Remits Case to SAT
In November 2022, we had discussed a somewhat curious ruling of the Securities Appellate Tribunal (SAT) in V. Shankar v. Securities and Exchange Board of India which exonerated the Company Secretary of Deccan Chronicle Holdings Limited (DHCL) from liability for certain misstatements and incorrect disclosures made by the company. We had noted that the SAT largely arrived at the ruling on first...
Derivative Action – Where Does the Jurisdiction Lie?
[Pratyush Singh is a third-year student at the National Law School of India University, Bangalore] Does the National Company Law Tribunal (NCLT) have exclusive jurisdiction over matters pertaining to derivative action? In November 2022, the Madras High Court in Valluvar Kuzhumam Pvt. Ltd. v. APC Drilling & Construction Pvt. Ltd. ruled in the affirmative. The argument to bar a civil court’s...
Supreme Court Reiterates Rectificatory Jurisdiction Under Companies Act: A Conundrum Involving NCLT and SEBI
[Anshita Dave and Abhyudaya Yadav are 5th year B.A., LL.B. (Hons.) students at Dharmashastra National Law University, Jabalpur] Recently, the Supreme Court in IFB Agro Industries Limited v. SICGIL India Limited held that the National Company Law Tribunal (“NCLT”) cannot exercise its rectificatory jurisdiction under section 59 of the Companies Act, 2013 (“the Act”) to...
The Regulatory Progression of ESG in India
The concept of corporate social responsibility (CSR) has had a pivotal status in the debates surrounding corporate law and governance at the turn of the century. Although CSR was ensconced in the idea of voluntarism by which companies and their boards are invited to pay attention to the interests of various constituencies affected by a company’s activities, in some jurisdictions such as India it...
SAT on the Non-Liability of a Company Secretary for Incorrect Disclosures
On 1 November 2022, the Securities Appellate Tribunal (SAT) in V. Shankar v. Securities and Exchange Board of India exonerated the company secretary of Deccan Chronicle Holdings Limited (DCHL) from liability for certain misstatements and incorrect disclosures made by the company. Background and Decision The Securities and Exchange Board of India (SEBI) had conducted investigation for certain...
Utilisation of Accumulated Surplus by Section 8 Companies
[Pammy Jaiswal is a Partner and Shraddha Shivani an Executive at Vinod Kothari and Company] Section 8 of the Companies Act, 2013 provides for the formation of companies with specific objects. The profits earned by such companies necessarily get redeployed to pursue the very same objects for which the company is formed and cannot be distributed to the shareholders. There are several restraints to...
Ratification of Director’s Breach of Duty: Opportunity to Evade Liability?
[Arjun Tyagi is a fourth year B.A., LL.B. (Hons.) student at National Law University Odisha.] Directors of companies owe fiduciary and ‘statutory’ (section 166 of the Companies Act 2013) duties to the company, its employees and the shareholders. Common law principles provide ratification of breach of duty by directors, if the shareholders pass a resolution agreeing to absolve directors from...
Covid-19 and Company Law: The Impact of Digitalisation
[Dharini Shanker is a 1st Year LL.B student at Campus Law Centre, University of Delhi] The Company Law Committee (“Committee”), set up to make recommendations to the Government for reforms directed at promoting greater ease of business in India and the effective implementation of the Companies Act, 2013 (“Act”), the LLP Act, 2008 and the Rules made thereunder, has submitted its report in March...
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