In June 2015, the Government constituted the Companies Law Committee (CLC) to make recommendations arising from the implementation of the Companies Act, 2013. Yesterday, the CLC issued its report containing detailed recommendations for reforms relating to the Companies Act as well as several rules issued under the Act. A quick review of the report indicates that it has extensively addressed...
Board of Directors’ Reliance on Legal Advisers
The question of whether, and to what extent, the board of directors of a company can rely upon the advise of the legal advisers of the company came up for consideration before a division bench of the Rajasthan High Court in Rajasthan Urban Co-operative Bank Ltd. v. Ajay Kumar Katewa (hat-tip: LiveLaw, once again). In this case, certain employees of a co-operative bank were compulsorily retired...
MCA Establishes Central Registration Centre for Reservation of Names
[The following guest post is contributed by Nikita Snehil of Vinod Kothari & Co.] By way of a Notification dated 22nd January 2016 and in order to encourage incorporation of companies, the MCA has established a Central Registration Centre (CRC) having territorial jurisdiction all over India for discharging or carrying out the function of processing and disposal of applications for...
Exit Route For Companies Who Have Made Deemed Public Issues
[The following guest post is contributed by Amitabh Robin Singh, who is an Associate at DSK Legal] The Securities and Exchange Board of India (“SEBI”) has recently issued a circular (“Circular”) which has allowed companies which have made deemed public offers (allotment of securities to more than 49 persons under the Companies Act, 1956) to escape penal action if the securities have not been...
What is a Foreign Company Under the Companies Act?
[This guest post is contributed by Ananya Banerjee, who is a Fifth year B.A.LLB(H) Student, Department of Law, University of Calcutta. The post relates to an interpretation of certain provisions of the Companies Act, 2013, and represents the view of the author, which have been backed up by arguments and reasoning. The possibility of alternative views and interpretation cannot be ruled out] This...
Supreme Court Resolves Conflict Between SARFAESI Act and Companies Act
In Pegasus Asset Reconstruction P. Ltd. v. Haryana Concast Ltd., the Supreme Court was concerned with a conflict between the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity ‘the SARFAESI Act’) on the one hand and the Companies Act, 1956 on the other. The specific conflict was identified as follows: Whether a Company Court, directly...
Obligation to give an exit to dissenting shareholders
[The following guest post is authored by by Bhargavi Zaveri, Prateek Misra, Sumant Prashant, Shefali Malhotra, who are researchers at the National Institute for Public Finance and Policy. An earlier version of this post was published on Ajay Shah’s Blog.] The Companies Act, 2013 (Act) obligates the promoters and majority shareholders of a listed company to buy-out dissenting shareholders...
Omnibus Approval of Related Party Transactions and Threshold for Fraud Reporting by Auditors
[The following guest post is contributed by Amitabh Robin Singh, who is an Associate at DSK Legal] With the notification bringing Sections 13 and 14 of the Companies (Amendment) Act, 2015 (“Amendment Act”) into force being published in the official gazette on December 15, 2015, we now have new provisions on the omnibus approval of related party transactions by companies. On a separate note, a...
Voting Rights on Preference Shares: An Unclear Provision?
[The following guest post is contributed by Vignesh Iyer of Vinod Kothari & Co. The author can be contacted at [email protected]] The enactment of the Companies Act, 2013 (Act, 2013) has given rise to various issues with regard to compliance and interpretations of several statutory provisions. One such issue is the subject matter of this post. Section 47 of Act, 2013 – Voting...
Winding-Up of a Foreign Company: Lessons from Hong Kong
[The following guest post is contributed by Suprotik Das, a 4th year law student at the Jindal Global Law School, Sonepat, Haryana.] This post seeks to address some developments with regard to the winding up of foreign companies and multiple derivative actions. On November 11, 2015, the Hong Kong Court of Final Appeal handed down a landmark decision in the case of Kam Leung Sui Kwan v...
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