[Arun Kumar is a 4th-year student of NLIU Bhopal] The Company Law Committee (CLC) in its November 2019 report (CLC Report) to the Ministry of Corporate Affairs (MCA) has recommended amendments to 46 penal provisions in the Companies Act, 2013 (CA, 2013). This is in addition to the 16 offences already decriminalised by the Companies (Amendment) Act, 2019 (CAA, 2019). India is making rapid strides...
Some Comments on NCLAT’s Ruling in the Tata-Mistry Case
Last week, the National Company Law Appellate Tribunal (NCLAT) pronounced its ruling in the Tata-Mistry case. It held that the removal of Mr. Cyrus Mistry as executive chairman by the board of Tata Sons was illegal, and called for his reinstatement to that position. It also decided that consequential actions taken in the interim, including the appointment of a new executive chairman were illegal...
Schemes of Arrangement: Setting a Date
[Rudra Shankar is a fifth-year BA LLB (Hons.) student at Symbiosis Law School, Pune] The procedure for mergers and demergers of companies in India is governed by sections 230 to 232 of the Companies Act, 2013. Companies are required to approach the National Company Law Tribunal (NCLT) to obtain its sanction to such schemes of arrangement before they can take effect. Section 232(6) of the Act...
The Foibles of a Databank and Proficiency Test for Independent Directors
There is no gainsaying that board independence has come to assume a pivotal position in corporate governance. Although it continues to receive constant criticism on account its ineffectiveness, no one musters the courage to banish it or even diminish its importance. While the concept of independent directors only gradually received the required attention and seriousness in India, it has been the...
Delhi High Court Rules on Disqualification of Directors
In order to address the scores of shell companies in existence, the Ministry of Corporate Affairs (MCA) introduced a range of measures in the wake of the 2017 demonetization exercise. One of them pertains to the disqualification of directors in companies that have failed to file financial statements or annual returns for a continuous period of three financial years, as prescribed under section...
Qualifying test requirements for Independent Directors – a hasty, slipshod & cumbersome requirement
I have written a piece for Moneylife on the new requirements of the Ministry of Corporate Affairs for independent directors that mandate existing as well as first-time independent directors to enrol in a databank as also pass certain qualifying test. The Rules, that are spread over several notifications and also an FAQ, come into force from 1st December 2019 and some transition period is also...
Director Liability: Nexus with Role and not Position
[Pammy Jaiswal is a Partner at Vinod Kothari and Company, and can be reached at [email protected]] While there have been an increasing number of rulings on the liability of directors, the question that mostly came up for examination related to their involvement in the day-to-day operations of the company. The liability of non-executive directors has mostly been scanned to evaluate their...
Mergers or Demergers involving Listed Transferor Companies and Unlisted Transferee Companies
[Aishwarya Singh is a lawyer based in Mumbai. The views expressed in the article are personal.] This post discusses the regulatory framework relating to mergers or demergers involving a listed company and an unlisted company, wherein the whole or part of the undertaking, property or liabilities of a listed company, being the transferor company, are transferred to an unlisted company, i.e., the...
MCA Clarifies “Appointed Date” in Schemes of Arrangement
In schemes of arrangement, whether by way of a merger, demerger or other form of corporate restructuring, the timing of when the transaction takes effect becomes important. It is from such a date that the financial statements of the companies involved will reflect the effect of the transaction. Given that the transaction may be completed anytime during the course of a financial year, parties have...
Highlights of Companies (Amendment) Bill, 2019
[Vinod Kothari is a corporate and insolvency practitioner at Vinod Kothari & Co and can be reached at [email protected]] The Companies (Amendment) Bill, 2019 has been placed before the Parliament on 25 July 2019. While the Bill, 2019 is largely to enact into parliamentary law the provisions already promulgated by way of Presidential Ordinance, the Bill also brings some interesting...
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