2018 was an interesting year for legal changes in corporate, finance and technology sector and the “Way of Doing Business” in India which dominated the headlines and we can expect 2019 to continue in the same way. Our article- Key Legal Developments in 2018 highlights some of the key legal changes of 2018 that you should take the time to understand and be prepared for. It’s important for any business owner to be aware of the changes affecting their business & put in place suitable safeguards. Failing to be prepared is often costly in terms of money, resource & time.
The document discusses how the COVID-19 pandemic impacts commercial leases between landlords and corporate tenants. It examines force majeure clauses that may allow relief from obligations if performance is prevented by circumstances beyond a party's control. These clauses often exempt rent payments. Frustration of contract is also considered if force majeure does not apply. The document advises landlords and tenants to review their specific lease terms regarding rent obligations, quiet enjoyment, and termination rights given the current disruptions caused by COVID-19 and government lockdowns.
Collective Investment Schemes (CIS) refer to schemes where money is pooled from investors and managed on their behalf by a third party. The Securities and Exchange Board of India regulates CIS through the CIS Regulations of 1999. To operate a CIS legally in India, an entity must register as a Collective Investment Management Company with SEBI. This involves meeting eligibility criteria like a minimum net worth and having experienced directors. SEBI takes strict action against unregistered entities operating illegal CIS through courts, imposing penalties and prosecuting for offenses. Notable cases include orders to wind up schemes against Alchemist Infra Realty and Maitreya Services.
Presentation borrowing and lending-ca 2013Nalin Ganatra
This document provides a summary of key provisions relating to borrowing and lending under the Companies Act 2013. It discusses restrictions on borrowing such as limits on borrowing from related parties and restrictions on lending such as limits on loans to directors and others. It also summarizes new concepts like 'one person company', 'arm's length transactions', and duties of directors. Procedures for compliance with existing deposit rules and exemptions are also outlined.
Doing CIS activity in Guise of Running Real Estate Business: A Case StudyCS (Dr)Rajeev Babel
My Article titled as 'Doing CIS activity in Guise of Running Real Estate Business: A Case Study' published and displayed by the Taxmann. Citation: [2016] 68 taxmann.com 72 (Article)
Doing cis activity in guise of running real estate business a case studyCS (Dr)Rajeev Babel
SEBI investigated PACL Ltd for potentially running illegal collective investment schemes (CIS) disguised as a real estate business. SEBI found that PACL had collected over Rs. 11,700 crores from investors for agricultural land investments and development schemes since 1998. However, an inspection revealed PACL was actually running sham CIS in violation of SEBI regulations. SEBI ordered PACL to wind up its existing CIS and refund investors' money with promised returns. PACL challenged this in the Securities Appellate Tribunal, but the tribunal upheld SEBI's order, finding PACL was running illegal CIS detrimental to investors disguised as a real estate business.
This document provides an overview of the Companies Act 2013 in India. Some key points:
- The Act was divided into 29 chapters and 7 schedules, with 98 sections notified and published on September 12, 2013. The remaining sections will be notified separately.
- The Act applies to companies incorporated in India, insurance companies, banking companies, companies generating/supplying electricity, and other companies governed by special Acts.
- The 98 notified sections cover topics like definitions, share capital, prospectus requirements, meetings, directors qualifications, and penalties for non-compliance.
- The document includes an index of the notified sections mapping them to corresponding sections from the previous Companies Act of 1956.
Companies amendment bill 2014 (highlights)Mayur Buha
The document summarizes key proposed amendments to the Companies Act 2013 based on the Companies (Amendment) Bill 2014 passed by the Lok Sabha. Some key points include:
- Removing the minimum paid-up capital requirement for public and private companies.
- Making common seals optional for companies.
- Introducing specific penalties for violations of deposit acceptance provisions.
- Certain board resolutions will no longer be publicly available for inspection.
- Requiring companies to set off previous losses and depreciation before declaring dividends.
- Introducing thresholds for auditor reporting of fraud to the central government.
- Providing additional exemptions to restrictions on loans to directors under section 185.
- Replacing the requirement for
The document discusses how the COVID-19 pandemic impacts commercial leases between landlords and corporate tenants. It examines force majeure clauses that may allow relief from obligations if performance is prevented by circumstances beyond a party's control. These clauses often exempt rent payments. Frustration of contract is also considered if force majeure does not apply. The document advises landlords and tenants to review their specific lease terms regarding rent obligations, quiet enjoyment, and termination rights given the current disruptions caused by COVID-19 and government lockdowns.
Collective Investment Schemes (CIS) refer to schemes where money is pooled from investors and managed on their behalf by a third party. The Securities and Exchange Board of India regulates CIS through the CIS Regulations of 1999. To operate a CIS legally in India, an entity must register as a Collective Investment Management Company with SEBI. This involves meeting eligibility criteria like a minimum net worth and having experienced directors. SEBI takes strict action against unregistered entities operating illegal CIS through courts, imposing penalties and prosecuting for offenses. Notable cases include orders to wind up schemes against Alchemist Infra Realty and Maitreya Services.
Presentation borrowing and lending-ca 2013Nalin Ganatra
This document provides a summary of key provisions relating to borrowing and lending under the Companies Act 2013. It discusses restrictions on borrowing such as limits on borrowing from related parties and restrictions on lending such as limits on loans to directors and others. It also summarizes new concepts like 'one person company', 'arm's length transactions', and duties of directors. Procedures for compliance with existing deposit rules and exemptions are also outlined.
Doing CIS activity in Guise of Running Real Estate Business: A Case StudyCS (Dr)Rajeev Babel
My Article titled as 'Doing CIS activity in Guise of Running Real Estate Business: A Case Study' published and displayed by the Taxmann. Citation: [2016] 68 taxmann.com 72 (Article)
Doing cis activity in guise of running real estate business a case studyCS (Dr)Rajeev Babel
SEBI investigated PACL Ltd for potentially running illegal collective investment schemes (CIS) disguised as a real estate business. SEBI found that PACL had collected over Rs. 11,700 crores from investors for agricultural land investments and development schemes since 1998. However, an inspection revealed PACL was actually running sham CIS in violation of SEBI regulations. SEBI ordered PACL to wind up its existing CIS and refund investors' money with promised returns. PACL challenged this in the Securities Appellate Tribunal, but the tribunal upheld SEBI's order, finding PACL was running illegal CIS detrimental to investors disguised as a real estate business.
This document provides an overview of the Companies Act 2013 in India. Some key points:
- The Act was divided into 29 chapters and 7 schedules, with 98 sections notified and published on September 12, 2013. The remaining sections will be notified separately.
- The Act applies to companies incorporated in India, insurance companies, banking companies, companies generating/supplying electricity, and other companies governed by special Acts.
- The 98 notified sections cover topics like definitions, share capital, prospectus requirements, meetings, directors qualifications, and penalties for non-compliance.
- The document includes an index of the notified sections mapping them to corresponding sections from the previous Companies Act of 1956.
Companies amendment bill 2014 (highlights)Mayur Buha
The document summarizes key proposed amendments to the Companies Act 2013 based on the Companies (Amendment) Bill 2014 passed by the Lok Sabha. Some key points include:
- Removing the minimum paid-up capital requirement for public and private companies.
- Making common seals optional for companies.
- Introducing specific penalties for violations of deposit acceptance provisions.
- Certain board resolutions will no longer be publicly available for inspection.
- Requiring companies to set off previous losses and depreciation before declaring dividends.
- Introducing thresholds for auditor reporting of fraud to the central government.
- Providing additional exemptions to restrictions on loans to directors under section 185.
- Replacing the requirement for
New Companies Act, 2013- implications on banksHarshul Shah
The document discusses various provisions of the Companies Act that apply to banking companies. It states that the Companies Act applies to banking companies except where inconsistent with the Banking Regulation Act. It also discusses restrictions on companies providing loans for share purchases, prohibitions on share buybacks during loan defaults, and prohibitions on accepting deposits from the public, which do not apply to banking companies. The financial statements of banking companies are not required to be in the form provided in Schedule III of the Companies Act, but in the form required under the Banking Regulation Act.
This document provides an overview of deemed dividend under section 2(22)(e) of the Indian Income Tax Act of 1961. It discusses the legislative history, defines key terms like loan and advance, and outlines the scope and applicability of section 2(22)(e). Specifically, it notes that section 2(22)(e) treats certain payments made by closely held companies to shareholders as deemed dividends, including loans or advances unless lending is a substantial part of the company's business. It also discusses the types of companies and shareholders that fall under this section, as well as certain exclusions.
This article takes the viewer through the Accounting Aspects related to Insurance under IFRS and the Income Tax requirements in India. It also touches upon the Direct Tax Code and its impact on Insurance based deductions.
1. The document discusses key concepts relating to maintenance of capital in company law, including reduction of share capital, redemption of preference shares, financial assistance for acquiring shares, share buybacks, dividends, and the solvency test.
2. It summarizes landmark court cases that established principles for protecting shareholder and creditor interests during capital maintenance operations.
3. The document also outlines the procedures and legal requirements for various capital maintenance activities under the Companies Act 2016 and relevant case law. It traces the evolution of the law on financial assistance through amendments to the Act.
The document discusses the provisions around deemed dividend under section 2(22)(e) of the Income Tax Act. It provides details on the 7 conditions that must be satisfied for a payment to be considered a deemed dividend, including that it must be a loan or advance from a non-public company to a shareholder holding 10% or more voting rights. It also discusses what types of payments and companies are covered, exceptions, treatment of repayments, and what profits are included in accumulated profits.
The document discusses the key provisions around acceptance of deposits and issue of securities by companies under the Companies Act, 2013. It provides 10 exclusions for what does not constitute a 'deposit' according to the Act. It also outlines the conditions stipulated under Section 73 for a company to accept deposits from members, including issuing a circular, maintaining a deposit repayment reserve account, and obtaining credit ratings. Specific additional conditions are provided for eligible companies to restrict the amount of deposits accepted.
This document discusses borrowing powers under company law. It notes that trading companies have an implied power to borrow, while non-trading companies must be expressly authorized to borrow in their memorandum and articles of association. It also discusses unauthorized or "ultra vires" borrowings, noting that borrowings beyond a company's authorized amount are void, though lenders may have remedies against directors or seek to recover funds. Examples of cases related to ultra vires borrowings are provided. Finally, it briefly outlines different types of borrowings and forms of security that can be provided for borrowings.
The document summarizes new rules notified in India that permit cross-border mergers through a scheme sanctioned by the National Company Law Tribunal. Key points:
- Section 234 of the Companies Act 2013 and new Rule 25A allow an Indian company to merge with a foreign company or vice versa, as long as the foreign company is from a recognized jurisdiction.
- Mergers require compliance with Sections 230-232 of the Act, RBI approval, valuation of both companies by qualified valuers, and regulations on foreign investments into India if an Indian company merges with a foreign one.
- If an Indian company merges into a foreign one, regulations on overseas investments will apply to the resultant foreign company.
Section 186 of the Companies Act 2013 governs loans, investments, guarantees and security provided by companies. It places limits on such activities and requires prior approval if certain thresholds are exceeded. Companies must disclose full particulars of such transactions in their financial statements and maintain a register containing details of loans, guarantees, security and acquisitions. Certain exceptions apply for banks, insurance companies, housing finance companies and those principally engaged in financing or infrastructure activities. Contravention of this section may result in fines for the company and imprisonment for officers in default.
The Life Insurance Corporation Act of 1956 established the Life Insurance Corporation of India as a statutory body to carry on life insurance business in India. Some key points:
- The Act was passed by Parliament in 1956 and came into effect on July 1, 1956. It established LIC as a body corporate with perpetual succession.
- LIC has exclusive privilege to carry on life insurance business in India. It must establish zonal offices in major cities and can form committees to oversee investments and operations.
- LIC is governed by a board of directors appointed by the central government. It must have its accounts audited annually and submit reports to Parliament. Any surplus funds are allocated to policyholders.
- The
Companies Act 2013 : Loans, Advances and Related Party Transactions (Sec. 185...Chintan N. Patel
The document discusses loans, investments and related party transactions under the Companies Act 2013.
It summarizes the key provisions around loans to directors (Section 185), loans and investments by companies (Section 186), and related party transactions (Section 188).
Section 185 prohibits a company from providing loans to its directors or entities related to directors. Section 186 specifies limits and procedures around loans and investments by companies. It requires prior approval by special resolution for certain loans and investments exceeding thresholds. Section 188 requires prior approval of related party transactions if they exceed specified limits and are not at arm's length.
Lebanese Code of Commerce - Guide to Amendments - 2019Frederic Chemaly
This table compares between the articles of the Lebanese Code of Commerce as they currently are and the amendments introduced by law no. 126. Where applicable, only the changes are reflected, and not the full articles.
Prepared by Frederic Chemaly | frederic@ccny.co | mob: +961 70384466
Section 185,186,188 of companies act, 2013arpit1314
The document discusses related party transactions, loans to directors, and loans/investments by companies under the Companies Act 2013. It defines related parties and key managerial personnel. It outlines the limits and approval processes for related party transactions involving sale/purchase of goods, property transactions, service contracts, and appointments. It also discusses the provisions around loans to directors and other persons in whom a director is interested, and the penalties for non-compliance. Finally, it covers the limits, approvals and disclosures required for loans and investments made by companies.
Section 185 of the Companies Act 2013 prohibits public companies from making loans or providing guarantees to their directors and other related parties like firms/companies where the director has an interest. It allows for some exceptions including loans as part of employment terms or approved by shareholders. Contravention can attract fines and imprisonment. Clarification was issued that section 185 would not restrict guarantees by holding companies for loan taken by subsidiaries as allowed under previous law until section 186 takes effect.
The document discusses underwriting of shares and debentures, including what underwriting is, types of underwriting agreements, underwriting commission provisions, and journal entries related to underwriting. It provides learning objectives, definitions, examples, and explanations of various underwriting concepts such as conditional underwriting, firm underwriting, marked and unmarked applications, and how to determine underwriter liability. Worked examples are included to illustrate underwriting calculations.
This ppt was presented at WIRC Annual Regional Conference, 2016 held at Indore. In this presentation, discussion was held mainly in context of how Company Secretaries have contributed to the growth of startups since ages and also dealt with Startup India initiative of the Govt. of India and Key aspects of CSR in context of company secretaries.
The document discusses key provisions around inter-corporate loans, investments, guarantees and securities under the Companies Act.
1. It defines terms like "loan", "investment", and "free reserves".
2. It sets limits on the board's powers to approve loans/investments of 60% of paid-up capital and free reserves or 100% of free reserves without shareholder approval.
3. Shareholder approval by special resolution is needed for exceeding these limits. Notice to shareholders must provide details of the proposal, body corporate involved, funding sources, etc. No blanket approvals are allowed.
4. An exception exists for guarantees, where the board can exceed limits without
Companies act, 2013 related party transactionsRama Krishna
The document discusses key aspects of related party transactions under the Companies Act 2013. It provides definitions of related parties and related party transactions. It covers the rules around loans to directors and other persons. It also discusses the provisions around inter-corporate loans and investments including approval requirements, limits, exceptions and penalties. Key highlights include expanded definition of related parties, prohibition on loans to directors except in certain cases, limits on inter-corporate investments up to 60% of net worth without shareholder approval and maintaining a register of loans and investments.
An Overview of the Companies Amendment Act, 2017SAS Partners
The much awaited Companies (Amendment) Act, 2017 has seen the light of the day with the receipt of President’s assent on January 03, 2018. The Act is all set to address a wide number of practical difficulties which have been faced by various stakeholders.
The document summarizes major corporate law changes that occurred in India in 2015, including amendments to the Companies Act, Negotiable Instruments Act, Arbitration and Conciliation Act, Insurance Act, and the Black Money Act. Key changes were reducing minimum capital requirements for companies, allowing companies to directly commence business without a certificate, making common seals optional, passing related party transactions as ordinary resolutions, and preventing public access to board resolutions. For the Negotiable Instruments Act, jurisdiction for cheque bouncing cases was clarified. The Arbitration Act introduced provisions around arbitrator appointment and disclosures, timelines for awards, and challenge and execution of awards. The Insurance Act allowed 49% FDI and introduced consumer protections. The Black
New Companies Act, 2013- implications on banksHarshul Shah
The document discusses various provisions of the Companies Act that apply to banking companies. It states that the Companies Act applies to banking companies except where inconsistent with the Banking Regulation Act. It also discusses restrictions on companies providing loans for share purchases, prohibitions on share buybacks during loan defaults, and prohibitions on accepting deposits from the public, which do not apply to banking companies. The financial statements of banking companies are not required to be in the form provided in Schedule III of the Companies Act, but in the form required under the Banking Regulation Act.
This document provides an overview of deemed dividend under section 2(22)(e) of the Indian Income Tax Act of 1961. It discusses the legislative history, defines key terms like loan and advance, and outlines the scope and applicability of section 2(22)(e). Specifically, it notes that section 2(22)(e) treats certain payments made by closely held companies to shareholders as deemed dividends, including loans or advances unless lending is a substantial part of the company's business. It also discusses the types of companies and shareholders that fall under this section, as well as certain exclusions.
This article takes the viewer through the Accounting Aspects related to Insurance under IFRS and the Income Tax requirements in India. It also touches upon the Direct Tax Code and its impact on Insurance based deductions.
1. The document discusses key concepts relating to maintenance of capital in company law, including reduction of share capital, redemption of preference shares, financial assistance for acquiring shares, share buybacks, dividends, and the solvency test.
2. It summarizes landmark court cases that established principles for protecting shareholder and creditor interests during capital maintenance operations.
3. The document also outlines the procedures and legal requirements for various capital maintenance activities under the Companies Act 2016 and relevant case law. It traces the evolution of the law on financial assistance through amendments to the Act.
The document discusses the provisions around deemed dividend under section 2(22)(e) of the Income Tax Act. It provides details on the 7 conditions that must be satisfied for a payment to be considered a deemed dividend, including that it must be a loan or advance from a non-public company to a shareholder holding 10% or more voting rights. It also discusses what types of payments and companies are covered, exceptions, treatment of repayments, and what profits are included in accumulated profits.
The document discusses the key provisions around acceptance of deposits and issue of securities by companies under the Companies Act, 2013. It provides 10 exclusions for what does not constitute a 'deposit' according to the Act. It also outlines the conditions stipulated under Section 73 for a company to accept deposits from members, including issuing a circular, maintaining a deposit repayment reserve account, and obtaining credit ratings. Specific additional conditions are provided for eligible companies to restrict the amount of deposits accepted.
This document discusses borrowing powers under company law. It notes that trading companies have an implied power to borrow, while non-trading companies must be expressly authorized to borrow in their memorandum and articles of association. It also discusses unauthorized or "ultra vires" borrowings, noting that borrowings beyond a company's authorized amount are void, though lenders may have remedies against directors or seek to recover funds. Examples of cases related to ultra vires borrowings are provided. Finally, it briefly outlines different types of borrowings and forms of security that can be provided for borrowings.
The document summarizes new rules notified in India that permit cross-border mergers through a scheme sanctioned by the National Company Law Tribunal. Key points:
- Section 234 of the Companies Act 2013 and new Rule 25A allow an Indian company to merge with a foreign company or vice versa, as long as the foreign company is from a recognized jurisdiction.
- Mergers require compliance with Sections 230-232 of the Act, RBI approval, valuation of both companies by qualified valuers, and regulations on foreign investments into India if an Indian company merges with a foreign one.
- If an Indian company merges into a foreign one, regulations on overseas investments will apply to the resultant foreign company.
Section 186 of the Companies Act 2013 governs loans, investments, guarantees and security provided by companies. It places limits on such activities and requires prior approval if certain thresholds are exceeded. Companies must disclose full particulars of such transactions in their financial statements and maintain a register containing details of loans, guarantees, security and acquisitions. Certain exceptions apply for banks, insurance companies, housing finance companies and those principally engaged in financing or infrastructure activities. Contravention of this section may result in fines for the company and imprisonment for officers in default.
The Life Insurance Corporation Act of 1956 established the Life Insurance Corporation of India as a statutory body to carry on life insurance business in India. Some key points:
- The Act was passed by Parliament in 1956 and came into effect on July 1, 1956. It established LIC as a body corporate with perpetual succession.
- LIC has exclusive privilege to carry on life insurance business in India. It must establish zonal offices in major cities and can form committees to oversee investments and operations.
- LIC is governed by a board of directors appointed by the central government. It must have its accounts audited annually and submit reports to Parliament. Any surplus funds are allocated to policyholders.
- The
Companies Act 2013 : Loans, Advances and Related Party Transactions (Sec. 185...Chintan N. Patel
The document discusses loans, investments and related party transactions under the Companies Act 2013.
It summarizes the key provisions around loans to directors (Section 185), loans and investments by companies (Section 186), and related party transactions (Section 188).
Section 185 prohibits a company from providing loans to its directors or entities related to directors. Section 186 specifies limits and procedures around loans and investments by companies. It requires prior approval by special resolution for certain loans and investments exceeding thresholds. Section 188 requires prior approval of related party transactions if they exceed specified limits and are not at arm's length.
Lebanese Code of Commerce - Guide to Amendments - 2019Frederic Chemaly
This table compares between the articles of the Lebanese Code of Commerce as they currently are and the amendments introduced by law no. 126. Where applicable, only the changes are reflected, and not the full articles.
Prepared by Frederic Chemaly | frederic@ccny.co | mob: +961 70384466
Section 185,186,188 of companies act, 2013arpit1314
The document discusses related party transactions, loans to directors, and loans/investments by companies under the Companies Act 2013. It defines related parties and key managerial personnel. It outlines the limits and approval processes for related party transactions involving sale/purchase of goods, property transactions, service contracts, and appointments. It also discusses the provisions around loans to directors and other persons in whom a director is interested, and the penalties for non-compliance. Finally, it covers the limits, approvals and disclosures required for loans and investments made by companies.
Section 185 of the Companies Act 2013 prohibits public companies from making loans or providing guarantees to their directors and other related parties like firms/companies where the director has an interest. It allows for some exceptions including loans as part of employment terms or approved by shareholders. Contravention can attract fines and imprisonment. Clarification was issued that section 185 would not restrict guarantees by holding companies for loan taken by subsidiaries as allowed under previous law until section 186 takes effect.
The document discusses underwriting of shares and debentures, including what underwriting is, types of underwriting agreements, underwriting commission provisions, and journal entries related to underwriting. It provides learning objectives, definitions, examples, and explanations of various underwriting concepts such as conditional underwriting, firm underwriting, marked and unmarked applications, and how to determine underwriter liability. Worked examples are included to illustrate underwriting calculations.
This ppt was presented at WIRC Annual Regional Conference, 2016 held at Indore. In this presentation, discussion was held mainly in context of how Company Secretaries have contributed to the growth of startups since ages and also dealt with Startup India initiative of the Govt. of India and Key aspects of CSR in context of company secretaries.
The document discusses key provisions around inter-corporate loans, investments, guarantees and securities under the Companies Act.
1. It defines terms like "loan", "investment", and "free reserves".
2. It sets limits on the board's powers to approve loans/investments of 60% of paid-up capital and free reserves or 100% of free reserves without shareholder approval.
3. Shareholder approval by special resolution is needed for exceeding these limits. Notice to shareholders must provide details of the proposal, body corporate involved, funding sources, etc. No blanket approvals are allowed.
4. An exception exists for guarantees, where the board can exceed limits without
Companies act, 2013 related party transactionsRama Krishna
The document discusses key aspects of related party transactions under the Companies Act 2013. It provides definitions of related parties and related party transactions. It covers the rules around loans to directors and other persons. It also discusses the provisions around inter-corporate loans and investments including approval requirements, limits, exceptions and penalties. Key highlights include expanded definition of related parties, prohibition on loans to directors except in certain cases, limits on inter-corporate investments up to 60% of net worth without shareholder approval and maintaining a register of loans and investments.
An Overview of the Companies Amendment Act, 2017SAS Partners
The much awaited Companies (Amendment) Act, 2017 has seen the light of the day with the receipt of President’s assent on January 03, 2018. The Act is all set to address a wide number of practical difficulties which have been faced by various stakeholders.
The document summarizes major corporate law changes that occurred in India in 2015, including amendments to the Companies Act, Negotiable Instruments Act, Arbitration and Conciliation Act, Insurance Act, and the Black Money Act. Key changes were reducing minimum capital requirements for companies, allowing companies to directly commence business without a certificate, making common seals optional, passing related party transactions as ordinary resolutions, and preventing public access to board resolutions. For the Negotiable Instruments Act, jurisdiction for cheque bouncing cases was clarified. The Arbitration Act introduced provisions around arbitrator appointment and disclosures, timelines for awards, and challenge and execution of awards. The Insurance Act allowed 49% FDI and introduced consumer protections. The Black
The document summarizes major corporate law changes that occurred in India in 2015, including amendments to the Companies Act, Negotiable Instruments Act, Arbitration and Conciliation Act, Insurance Act, and the Black Money Act. Key changes were reducing minimum capital requirements for companies, allowing companies to directly commence business without certification, making common seals optional, passing related party transactions as ordinary resolutions, and preventing public access to board resolutions. For the Negotiable Instruments Act, jurisdiction for cheque bouncing cases was clarified. The Arbitration Act introduced provisions around arbitrator appointment and disclosures, timelines for awards, and challenge and execution of awards. The Insurance Act allowed 49% foreign investment and increased consumer protections.
The document summarizes key changes introduced in the new Indian Companies Act of 2013. Some of the major changes include introducing the concepts of one person companies and small companies, making CSR spending mandatory for large companies, increasing the maximum number of directors to 15, requiring auditor rotation after 5 years, and mandating that at least one third of directors of listed public companies be independent. The new law also aims to provide more minority shareholder protections through entrenchment provisions and class action lawsuits. While modernizing company law, the new act has also increased regulatory requirements for companies around related party transactions, loans to directors, and corporate social responsibility.
The document summarizes some of the key changes introduced in the Indian Companies Act 2013 as compared to the previous Companies Act 1956. Some of the major changes include:
1) Introduction of new types of companies like One Person Company and dormant companies. The definition of private company was also changed.
2) Mandating consolidated financial statements, appointment of independent directors and internal auditors in certain companies.
3) Streamlining of processes around mergers and acquisitions, corporate social responsibility requirements, and class action suits.
4) Changes in memorandum of association, incorporation process, issue of shares, conduct of meetings and other compliance requirements.
Recent development in the companies act 2013KhushiVijay5
The document discusses several key amendments made to the Companies Act through recent ordinances. Some key changes include allowing companies more flexibility in holding annual general meetings, increasing the timeframe to update a registered office, removing imprisonment as punishment for certain offenses and instead imposing financial penalties, relaxing rules around director loans and remuneration, and delegating more powers from the NCLT to regional authorities to help de-clog the system. The changes aim to make compliance easier for companies while still promoting transparency and investor protection.
The document discusses key amendments to the Companies Act of 2013 compared to the previous Companies Act of 1956. Some of the major changes include: allowing one person companies; requiring at least one woman director for certain public companies; making consolidated financial statements mandatory; revising the definition of subsidiary and associate companies; and requiring a uniform financial year of April 1 to March 31 for all companies. The amendments aim to address changes in business practices and promote healthy development of companies in India.
The document summarizes key highlights of the Companies Bill 2013 that was passed by the Rajya Sabha in August 2013. Some of the key changes introduced include a uniform financial year for all companies from April to March, allowing private companies to have up to 200 members, introducing one person companies, simplifying the object clause, and expanding the types of securities governed by the bill. The bill also eases rules around buybacks, deposits, auditing and rotations, and introduces concepts like women directors and corporate social responsibility.
Companies Act, 2013 - Major changes, Implications and Actions Points on Priva...Prashant Kumar
The document provides an overview of the key changes and implications of the Companies Act 2013. Some of the major changes introduced include allowing one person companies, increasing the limit of members in a private company to 200, mandating corporate social responsibility spending, and increasing governance norms around boards and auditors. The document also summarizes the changes affecting private companies in areas like annual returns, board meetings, financial statements, and auditor appointments. Companies will need to take immediate action to amend their constitutional documents and ensure compliance with the new requirements.
Companies act, 2013 major changes and implications on private companiesPrashant Kumar
The document summarizes some of the major changes introduced by the Companies Act 2013 in India. Key changes include the introduction of new types of companies like One Person Company and Small Company. The number of members allowed in a private company has been increased. Corporate Social Responsibility spending of 2% of profits is now mandatory for large companies. Consolidated financial statements are now required for companies with subsidiaries. Key managerial personnel is now a defined term referring to top management positions like MD, CEO, CS, CFO. Class action suits and registered valuers have been introduced.
The document discusses key provisions of the Companies (Amendment) Act 2015 and the Companies Act 2013 regarding companies in India. Some of the key points covered include:
- The Companies (Amendment) Act 2015 removed the minimum paid up share capital requirement and made the common seal optional for companies. It also introduced penalties for accepting deposits without following proper regulations.
- A company is defined as one incorporated under the Companies Act or previous company laws. The memorandum of association outlines the company's name, objectives, and capital structure while the articles of association contain internal management rules.
- There are different types of companies like public, private, unlimited companies, etc. based on share capital and liability. Appointing at
Mergers_ Tool to Survive the Second Wave of Covid19 3.pdfmyLawyerAdvise
One of the main objectives of an entity is GOING CONCERN. Many business organisations shut down as a result of covid due to lack of resources in operating their routine transactions. The most suitable solution for small scale businesses post covid is merger. Mergers will lead to expansion of resources, retention of employment, fund rotation, adequate balance of demand and supply etc. As the firms emerge from the pandemic, mergers would be the best way to come out of the financial stress for small businesses. It will help leaders gain economies of scale or at least the potential to run more efficiently. Once the economy recovers and accelerates out of recession, the small businesses can take advantage of the environment to execute its strategic acquisition agenda and to position the business to exceed industry-average growth. Mergers are a great way to lock down your business and create job opportunities, allowing customers to access your products and services. It will be a mutually beneficial situation
The document summarizes key changes introduced in the Companies Bill 2013 as compared to the existing Companies Act 1956. Some important changes include increasing the maximum number of directors and directorships allowed, introducing provisions for one person companies, CSR requirements for large companies, mandatory appointment of women directors and independent directors, tightened disclosure requirements, and making secretarial standards statutory. The bill aims to facilitate ease of doing business while strengthening corporate governance.
This document summarizes key issues under the Corporate Social Responsibility provisions in the Indian Companies Act of 2013. It discusses six main issues: 1) ambiguity around foreign companies having branches in India being required to conduct CSR, 2) exclusion of normal business activities from CSR, 3) burden on small companies, 4) non-penalty "comply or explain" approach to non-compliance, 5) uncertainty around tax deductibility of CSR expenses, and 6) ambiguity regarding implementing agencies for CSR activities. The document provides analysis of each issue through examples and discussion of related legal considerations.
Icai chennai - unlisted public companies - 16.06.2014oswinfo
This document provides information on various provisions related to unlisted public companies under the Companies Act, 2013. It discusses definitions of public company and financial year. It summarizes requirements for public companies such as minimum number of directors, appointment of key managerial personnel, rotation of auditors, constitution of audit committee and its functions, establishment of vigil mechanism, and appointment of woman director and independent directors.
If you have recently formed a Private Limited company and started your business, you must get yourself familiar with few important compliances by Companies Act 2013.
Normally, we tend to leave such things to our legal experts but its always good know the basics.
We have listed down 5 such Compliances for Private Limited Companies that are easy to miss out but can attract hefty penalty.
Compromises, Arrangements & Amalgamations with special reference to Protectio...Corporate Professionals
A presentation ‘Compromises, Arrangements & Amalgamations with Special reference to Protection of Minority & Dissenting Shareholders under Companies Act, 2013 ‘ given by Mr. Chander Sawhney at IICA
The document discusses various provisions of the Companies Act relating to inter-corporate loans and investments, acceptance of deposits, responsibilities for maintaining books of accounts, contents that must be included in annual reports and director's reports, appointment and powers of managing directors, and other managerial remuneration provisions. Key points covered include limits on inter-corporate loans, repayment of deposits, penal interest rates for delayed repayment, persons responsible for books of accounts, information that must be disclosed in annual reports, and qualifications and disqualifications for the role of managing director.
Similar to Key Legal Developments of 2018 in India (20)
Legal Obligations of Technology Service Providers as IntermediariesEquiCorp Associates
A database of millions of customers including their contact details are found freely accessible online and are available for sale at a very nominal price at various online social media platforms has brought a serious and basic question in focus- who all can be held responsible and accountable for such unauthorize and illegal acts?
Prima facie, the person who is selling the database is responsible under the eyes of law, but do the technology services providers or the platform where such database is been listed, owes any obligation to the customers and can be held responsible for unauthorized acts by a third party on their platform?
The intermediaries play a very important role in the enforcement of various provisions under the IT Act. In any technology services, there are multiple players involved in provision of services such as setting up web page or website, ISP providing internet connectivity, service provider for registration of domain name and hosting the domain, different service provider for uploading the web pages etc
Failure to accomplish returns and events like ponzi schemes, dubious high return schemes etc. have sharply focused attention once again on fiduciary duties investment advisers owe to the retail & small investors.
In 2013, to regulate the provision of investment advisory services, SEBI (Investment Advisers) Regulations 2013 (“IA Regulations”) was enacted where every person who acts as an investment adviser to register itself under the IA Regulations unless the person is exempted from the registrations under the IA Regulations which includes but not limited to insurance agents, registered stock brokers etc.
Investment Advisers are the fiduciaries and decision-making authority, on behalf and for the benefit of their customers i.e. beneficiaries, and are subject to highest standard of care. The fiduciary relations involve transfer of discretionary power and investment of funds on behalf of the customers.
EquiCorp-Decoding Supreme Court Judgement on Aadhaar & Its Impact on Your Bus...EquiCorp Associates
On September 26, 2018, a 5 judge bench of Supreme Court upheld the validity of Aadhaar, however impose certain restriction and struck down Section 57 of the Aadhaar Act which allowed private entities to use the 12 digit number to validate the identities of customers.
1. The Supreme Court ruling discontinuing the mandatory use of Aadhaar may force the corporates to going back to old ways for customer verification and may impact on the financial viability of the business models especially for startups in financial & technology services.
The FinTech sector has grown rapidly in last few years and is on track of ever evolving track. Prior to 2008 financial crisis, the traditional banking sector was the only playground available for financial needs. The financial crisis collapsed the traditional banking & financial mechanism and paved the way for more secure and updated financial transaction which led to emergence of FinTech, which has altered the economic viability of traditional banking sector participants to originate loans, translating into contraction of the credit supply for individuals and SMEs.
Today, financial markets & services are flooded with technology driven innovation, whereby new non-depository institutions- referred to as peer-to-peer financing, loan based crowdfunding platform, marketplace lenders (MPL) - providing loans of various types and duration to end users through online and mobile channels. Some of these companies lend from their own corpus/balancesheet, while some serve as brokers between investors and borrowers, commonly referred to as “Platform Lenders”.
Payments has been the frontrunner in the large scale consumer adoption of Fintech in India, aided by the spread of smartphones and mobile internet at affordable price points. Most FinTech players started out by identifying a niche/use case for building a customer base ( e.g. Paytm for online payments, Ola Money for cab payments, Airtel Money for phone bills etc.) and then expanding onto other services.
Indian regulatory authorities including RBI, SEBI & IRDA have adopted an accommodative stance towards an emerging Fintech sector without bringing in prohibitive guidelines to over regulate the sector. Despite catching up with the rapidly evolving eco system, Indian regulators have adopted a consultative approach and have been proactively foreseeing the need for adequate regulations, especially in the areas concerning public funds i.e. peer-to-peer lending, crowd funding and alternative currencies.
With the submission of SriKrishna Committee report on data protection, the final countdown for India’s own Data Protection Regime has finally begun. A detailed legal framework on data protection is to be implemented in the coming days.
Purpose of Data Protection Bill 2018- To protect the autonomy of individuals in relation with their personal data, to specify where the flow and usage of personal data is appropriate, to create a relationship of trust between persons and entities processing their personal data, to specify the rights of individuals whose personal data are processed, to create a framework for implementing organizational and technical measures in processing personal data, to lay down norms for cross-border transfer of personal data, to ensure the accountability of entities processing personal data, to provide remedies for unauthorized and harmful processing, and to establish a Data Protection Authority for overseeing processing activities.
Post Employment Restrictive Covenants- How Much Enforceable?EquiCorp Associates
The legislations governing several aspects of the employer-employee relationship are so complicated and ambiguous, that they yield in litigation rather than to provide clear way out. Moreover, the most important bone of contention w.r.t. protection of confidential information, non-disclosure and non-solicitation have not yet been addressed through legislation in India, thus warranting recourse to judicial interpretation and common law.
In an attempt to protect their interests, trade secrets, confidential information, every employer execute employment agreement and impose post employment restrictive covenants pertaining to manner in which the employees are required to serve the notice period, comply with the exit formality, non-solicitation, non-compete and others before finally exit from the employer.
However, to enforce post employment restrictive covenants had become a challenging task for the employers. In this article, we seek to provide an overview of the steps to be adopted by the employer and how to address a conflict situation with its employees and to enforce post employment covenants.
Taxation of Damages- "Damages paid for Breach of Contract to attract GST"EquiCorp Associates
Authority for Advance Rulings (AAR) has ruled that payments in respect to non-performance of a contract would be liable for Goods & Service Tax (GST). This view is based on the provisions under the erstwhile Service Tax Law, “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act” was a declared service under Section 66E(e) of Finance Act, 1994. Similar provision has been incorporated in Central Goods and Services Tax Act, 2017 (CGST Act) also under Schedule II. Under GST law, the taxable event is supply which has been defined widely and includes all forms of supply for a consideration which is made in course of or in furtherance of business. The act of tolerance or agreeing to refrain from an act is treated as supply of service under the CGST Act. As per these provisions there should be an agreement between the parties to either refrain from doing an act, or to tolerate an act/situation or to do an act.
Fund Raising, an art, not mastered by all the founders. About 90% of the startup fails to convert their business plan into investor consent. What are the steps followed by remaining 10% who succeed in closing the deal? What are the “Does & Don’t’” to be followed by a Startup- to raise fund from investors? What are the measures/precautions to be followed by startup to be picked by investors? Many a times, investor may agree preliminary, however, at a later stage they refused to move ahead, even the additional concessions offered do not motivate the investors. There are several questions which a founder had to face but failed to knock the right opportunity.
For a very long time, many companies especially in semi-urban and rural areas are accepting deposits in their firm’s name and also promising two to three times returns in two to four years without taking any legal permissions. These schemes are running on the false promise of doling out high returns to the gullible investors. To prevent all fraudulent/ ponzi schemes, the Government of India had introduced- “Banning of Unregulated Deposit Schemes & Protection of Depositor’s Bill 2018”.
There are several regulated public deposit companies which can be legally operated such as Collective Investment Schemes, Nidhi Companies, Multi-state Credit Co-operative Societies, NBFCs etc. and can be engaged in collection of public deposit.
General Data Protection Regulations (GDPR) & Impact on Your Business EquiCorp Associates
At present, companies’ world over are in the process of assessing the impact of EU General Data Protection Regulations (“GDPR”) will have on their businesses. High administrative fines in case of non-compliances with GDPR provisions are a driving force behind these concerns as they can lead to loss of business for various countries such as India. GDPR will be applicable from May 25th, 2018. GDPR is an omnibus regulation by which the EU intends to strengthen and unify data protection thereby enabling EU citizens to have more control of their personal data
The business world has been abuzz about blockchain technology across many industries, ranging from finance to healthcare. Blockchain appears to have significant potential to add a new element to the revered double-entry accounting method on which the accounting industry is based. Bitcoin/cryptocurrency is one of the application of broader blockchain technology or ‘the blockchain’.
Blockchain is an online register or a ledger of digitally recorded transactions which is encrypted in the form of blocks where each block is connected by a network of computers which store these blocks, together forming the Blockchain. Bitcoin was the first blockchain technology created in 2009, as a kind of virtual currency database, where all the transactions could be stored without any banks or governments involved. And at present, several corporates, startups, government and other agencies are looking for similar databases-often independent of virtual/crypto currency to solve some of the most intractable issues facing society. Many sectors such as finance, mobile app, healthcare, real estate, fintech, regulatory, insurance and others have a huge market potential for blockchain technology.
A Structured Overview of Corporate Insolvency Regime in IndiaEquiCorp Associates
With the recent changes in the legal landscape of India, the Insolvency & Bankruptcy Code, 2016 (“Code”) is the biggest and major legal reforms in the recent times, which has curtailed the earlier extensive process of debt recovery and insolvency. The Code has repealed around eleven laws and provides a comprehensive and time bound mechanism to either put a distressed entity on a firm revival path or timely liquidation of assets.
The Adjudication Authority for companies shall be National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) and Supreme Court shall be the highest order of appeal or having jurisdiction to grant any stay or injunction in respect of matters within the domain of the NCLT and NCLAT.
Doing Business of Cryptocurrency w.r.t. India Legal PerspectiveEquiCorp Associates
Cryptocurrency has been called as the greatest technological breakthroughs since the Internet. However, a parallel warning from the Reserve Bank of India as a caution against bitcoin and other cryptocurrency, with no guidelines or order to prohibit cryptocurrency may puzzled you to ponder over –Is it legal to do business of cryptocurrency in India? There may be several questions which you may encounter w.r.t. applicable laws of India, as there are no specific guidelines issued by any Government Authority including Reserve Bank of India or Ministry of Finance.
The main stream adoption of cryptocurrency is becoming a reality despite sceptics who compare the boom to the 1636 tulip mania. The issue is not whether cryptocurrency will survive, but rather how it will evolve. The article aims to clarify certain major aspects which may be encountered for- “Doing Business of Cryptocurrency w.r.t. Indian Legal Perspective” under the evolving legal structure.
With the rise in opportunity, the investors are exploring opportunity for investment in India and for the same every Investor must explore- “Doing Business in India”.
Being the second largest by population and third largest in terms of economy by the purchasing power, India is among the fastest growing economies in the world, India had become the priority choice for investment.
Microfinance Institutions (MFIs) has proven to be an important liberating force in societies where grassroot people in particular have to struggle against repressive social and economic conditions, who are otherwise excluded from the formal channel of credit.
There are many innovative initiatives have been undertaken by Indian MFIs over the past five to seven years and they have expanded manifold to provide financial services to low-income clients with the objectives of providing financial services to large numbers of low-income clients, and ensuring long-term sustainability.
Poor people cannot access banking services due to their meagre income and inability to handle banking procedures and documentation. It is through micro-finance that a wide range of financial services such as deposits, loans, payment services, money transfers and insurance can be provided to the poor and low-income households and their micro-enterprises.
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956/2013 and is engaged in the business of loans and advances, deposits, acquisition of shares stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. To register NBFC in India, the Company must have approval from Reserve Bank of India.
The document discusses various aspects of raising funds for startups through private equity investments. It explains that private equity involves investors acquiring preferred stock in startups in return for funding. Key aspects that are discussed include liquidation preferences, which determine how proceeds are distributed in an exit event, and anti-dilution rights, which protect investors' stake from being diluted in future funding rounds. It outlines the roles that legal experts can play in assisting startups with fund raising activities like conducting due diligence, developing legal agreements and documentation, and advising on investment structures and financing arrangements.
The Reserve Bank of India has proposed major reforms in banking sector with issue of guidelines for setting up “Small and Payment Banks” which will cater to marginalized sections of the Society, including migrant laborers, for collecting deposits and remitting funds.
These banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation. The payments banks will offer a limited range of products such as acceptance of demand deposits and remittances of funds. They will have a widespread network of access points particularly in remote areas, either through their own branch network or through Business Correspondents (BCs)/agents or through networks provided by others.
With the recent crackdown on Sahara, PACL etc. by SEBI and closure of their business after the Saradha scam have collapsed the trust of small investors and proven to be the tip of the iceberg for deposit taking companies such as Nidhi Companies, Multi-state Credit Co-operative Societies, NBFCs etc. engaged in collection of public deposit. Shall our government ban all these kinds of deposit taking companies from our financial system? What should be the business structure of the deposit taking companies? What are the different aspects which deposit taking companies should be aware before commencing their venture? Does failure to comply with legal compliance can make your business as a ponzi scheme? What are different types of deposit taking companies and their respective regulators along with their licenses/approvals and registration?
With the new investment vehicle, Real Estate Investment Trusts (REITs) coming into effect, what will be the impact on real estate sector? Does the real estate sector striving for cash influx will able to boost up the cash strapped industry a new route to tap capital with the approval of setting up of Real Estate Investment Trusts(REITs) by SEBI, market regulator.
REIT is an investment pool, which finds alternative means of financing real estate through an initial public offering (IPO), which is then used to buy, develop, manage and sell assets in real estate. This pool of real estate generates income through renting, leasing and selling of property and distributes it directly to the REIT holder on a regular basis.
A major benefit of REITs is that they do not have to pay tax on the income received by them, as 90% of the income is distributed to the shareholders. Smaller real estate investors are offered certain important qualities through the modem REITs, which previously were never accessible and available to them before.
Guide on the use of Artificial Intelligence-based tools by lawyers and law fi...Massimo Talia
This guide aims to provide information on how lawyers will be able to use the opportunities provided by AI tools and how such tools could help the business processes of small firms. Its objective is to provide lawyers with some background to understand what they can and cannot realistically expect from these products. This guide aims to give a reference point for small law practices in the EU
against which they can evaluate those classes of AI applications that are probably the most relevant for them.
Matthew Professional CV experienced Government LiaisonMattGardner52
As an experienced Government Liaison, I have demonstrated expertise in Corporate Governance. My skill set includes senior-level management in Contract Management, Legal Support, and Diplomatic Relations. I have also gained proficiency as a Corporate Liaison, utilizing my strong background in accounting, finance, and legal, with a Bachelor's degree (B.A.) from California State University. My Administrative Skills further strengthen my ability to contribute to the growth and success of any organization.
This document briefly explains the June compliance calendar 2024 with income tax returns, PF, ESI, and important due dates, forms to be filled out, periods, and who should file them?.
सुप्रीम कोर्ट ने यह भी माना था कि मजिस्ट्रेट का यह कर्तव्य है कि वह सुनिश्चित करे कि अधिकारी पीएमएलए के तहत निर्धारित प्रक्रिया के साथ-साथ संवैधानिक सुरक्षा उपायों का भी उचित रूप से पालन करें।
Sangyun Lee, 'Why Korea's Merger Control Occasionally Fails: A Public Choice ...Sangyun Lee
Presentation slides for a session held on June 4, 2024, at Kyoto University. This presentation is based on the presenter’s recent paper, coauthored with Hwang Lee, Professor, Korea University, with the same title, published in the Journal of Business Administration & Law, Volume 34, No. 2 (April 2024). The paper, written in Korean, is available at <https://shorturl.at/GCWcI>.
Defending Weapons Offence Charges: Role of Mississauga Criminal Defence LawyersHarpreetSaini48
Discover how Mississauga criminal defence lawyers defend clients facing weapon offence charges with expert legal guidance and courtroom representation.
To know more visit: https://www.saini-law.com/
Receivership and liquidation Accounts
Being a Paper Presented at Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN) on Friday, August 18, 2023.
What are the common challenges faced by women lawyers working in the legal pr...lawyersonia
The legal profession, which has historically been male-dominated, has experienced a significant increase in the number of women entering the field over the past few decades. Despite this progress, women lawyers continue to encounter various challenges as they strive for top positions.
Genocide in International Criminal Law.pptxMasoudZamani13
Excited to share insights from my recent presentation on genocide! 💡 In light of ongoing debates, it's crucial to delve into the nuances of this grave crime.
1. KEY LEGAL DEVELOPMENTS OF 2018 JANUARY 2019
The year 2018 has witnessed significant
legal developments. Our Newsletter,
which is a summary of key legal
developments in the last 12 months,
covers some of the major changes
brought in 2018. The changes are vast &
therefore, we focus on some of the key
changes, which broadly impact the
corporates for their “Way of Doing
Business in India”.
This Newsletter identifies the key legal developments &
issues, we expect to be on the legal agenda of the
corporates for the year 2019.
2. Sector Update
Investment in India
1. Single Master Form: On June 7, 2018, the Reserve Bank of India (the "RBI") issued a circular RBI/2017-18/194 A.P.
(DIR Series) Circular No. 30 (the "Circular"), introducing a single master form (the "SMF") to integrate the existing
reporting norms for various types of foreign investment in India with an objective- To subsume all foreign investments
related reporting requirements, irrespective of the mode or instrument through which the foreign investment is made.
All Indian entities which do not comply with this pre-requisite will not be permitted to receive any foreign investment
(including indirect foreign investment) going forward and will be declared non-compliant with FEMA.
2. Cross Border Mergers: The Reserve Bank of India has notified The Foreign Exchange Management ( Cross Border
Merger) Regulations, 2018 (“Regulations”) w.e.f. March 20th
, 2018. With notification of S.234 of the Companies Act,
2013, both inbound and outbound mergers are been permitted, as earlier only inbound merger was permitted under
Companies Act, 1956. Government has also amended the Companies ( Compromise, Arrangement and
Amalgamations) Rules, 2016 and inserted Rule 25 A which deals with cross border mergers. The notification of these
Regulations along with amendments in the Companies Act, 2013 has opened door for cross border mergers in India.
This will now give flexibility and options for MNCs in structuring their merger deals involving Indian companies as
India has allowed outbound mergers. The provision of automatic approval of RBI subject to compliance with requisite
conditions will save time and fasten the restructuring process which will in turn help in achieving the commercial
objectives. Outbound merger which has now permitted can also be seen as a better option for MNCs to exit India
instead of going for liquidation of its Indian JV/WOS. Such exit also such MNCs to continue to treat the Indian office
as its branch office if it so desires.
3. Sector Update
Company Matters
1. Commencement of Business- At present, there is no minimum paid up capital requirements for incorporating the
private as well as public companies in India. Also, it is now mandatory for every company having share capital to file
a declaration that the subscribers have paid the value of shares subscribed by them within 180 days from the date of
incorporation along with a verification of its registered office. No company is now permitted to commence its business
or exercise its borrowing powers without complying with this requirement.
2. Significant Beneficial Ownership- With the implementation of Section 90 of the Companies Act, 2013, the Central
Government has also issued new Companies (Significant Beneficial Owners) Rules, 2018 ("SBO Rules") to implement
the provisions of Section 90. The SBO Rules define the expression 'Significant Beneficial Owner' to mean every
individual, who acting alone or together with one or more persons or trust, including a trust and persons resident
outside India, holds beneficial interest, of at least 10%, in shares of a company or the right to exercise, or the actual
exercising of significant influence or control as defined in Section 2(27) of the Companies Act, 2013, but whose name
is not entered in register of members of a company as the holder of such shares. SBO Rules have been made applicable
even to cases where the shareholders/members of the Indian company are persons other than individuals and natural
persons. The term 'Beneficial Interest' in a share has been defined to include the right or entitlement of a person
(without being a registered owner of such a share) to (i) exercise or cause to be exercised any or all the rights attached
to the share; or (ii) receive or participate in any dividend or other distribution in respect of such a share. Further, the
definition provides that such rights may arise out of any contract, arrangement or otherwise and may be exercised by
such a person directly or indirectly, either alone or together with any other person.
4. Sector Update
Company Matters
3. Maternity Leaves for female employees- The maternity leave to eligible female employees under the Maternity Benefit
Act, 1961 has been extended from 12 weeks to 26 weeks. The Act is applicable on establishments having 10 or more
employees. Also, the Ministry of Labour & Employment is working on an incentive scheme wherein 7 weeks’ wages
would be reimbursed to employers who employ women workers with wage ceiling upto Rs.15,000/- and provide the
maternity benefit of 26 weeks paid leaves, subject to certain conditions.
4. Daycare Facilities- In establishments where 50 or more employees are employed, employers must provide daycare
facilities for employees' children.
5. Remuneration of Independent Directors- Earlier any person having any pecuniary relationship with the company
cannot be appointed as Independent Director which has been revised that an independent director cannot have any
pecuniary relationship with the company other than (i) remuneration payable to such person, and (ii) transactions
with the company, which do not exceed 10% of his total income.
6. Corporate Social Responsibility- With the recent amendments to the provisions governing Corporate Social
Responsibility (CSR) which is mandatory for prescribed classes of companies to spend at least 2% of their 3-year
annual average net profit on social activities. Prior to the amendment, if the company fails to spend the requisite
amount, it can specify the reason for the same and no further action was requisite. However, with the amendment, the
amount which are to be allocated towards CSR activities, but which remain unutilized in a given financial year is
required to be transferred a special account called “Unspent CSR Account” to be opened by the company with any
scheduled bank and the amount therein will have to spent by the company within a period of 3 financial years from the
date of such transfer.
5. UpdateSector
Company Matters
7. Changes in Penal Provisions of the Companies Act, 2013:
Non- compliance with provisions relating to issue of shares at discount would amount only to a penalty, instead
of imposition of fine, imprisonment or both;
Furnishing false/incorrect information at the time of creating charge would be liable to action for fraud under
Section 477 of the Companies Act, 2013;
Failure to file an annual return would result in a penalty instead of a fine or imprisonment.
8. Additional Ground for disqualification for appointment of Director- Under S.164 of the Companies Act, 2013,
provides the conditions for the disqualifications for a person to be appointed as director:
a. The person is of unsound mind;
b. He/she is an undischarged insolvent and
c. And order disqualifying him/her for appointment as a director has been passed by a court or tribunal and
the order is in force.
Further under S.165, a director is not permitted to hold office for more than 20 companies for private limited
companies ( 10 companies for public limited companies) at the same time. With the amendment, the additional ground
to be inserted in S.164 is - if the person holds office as director, including any alternate directorship, in more than 20
companies for private limited companies ( 10 companies for public limited companies) at the same time, that person
would be ineligible to be appointed as a director of a company.
9. With the amendment to the Companies (Prospectus & Allotment of Securities) Rules 2014 effective from
October 2nd
, 2018, it makes mandatory for every unlisted public company to (i) issue the securities only in
dematerialized form and (ii) facilitate the dematerialization of all its existing securities.
6. Sector Update
Specific Relief
With effective from August 1st
, 2018, the civil dispute resolution under Specific Relief Act, 1963 has been changed. Some of the
major changes which will impact your business are highlighted below:
i. Courts must grant specific performance of a contract when claimed by a party unless such remedy is barred under
the limited grounds contained in the statute.
ii. If a contract is broken due to non-performance of a promise by a party, the party suffering the breach has the
option of substituting performance through a third party or through its own agency.
iii. A suit filed under the Specific Relief Act must be disposed of by the court within 12 months from the date of service
of summons to the defendant. Such period can be extended by 6 months after recording written reasons by the
court.
No injunction can be granted by the court in relation to an infrastructure project if such injunction would cause delay or
impediment in the progress or completion of the infrastructure project.
E-Pharmacies
A Delhi High Court has put a stay on the online sale of medicines by e-pharmacies. And, in subsequent development, at
first a Single Judge Bench of Madras High Court put a ban on sale of medicines by e-pharmacies, however, the same was
revoked by a Double Judge Bench of Madras High Court which leads to allow the sale of medicines by e-pharmacies and
Central Government has been asked to frame the rules for the operations of e-pharmacies. Central Government has
already issued draft rules for operation of e-pharmacies, where it is a requisite to acquire only one license to operate in
the country and they cannot sell tranquillisers, psychotropic drugs, narcotics and habit-forming drugs. However, the two
different rulings on the same issue by two different High Court has created a confusion which would be clear once the
rules for e-pharmacies are in place by the Central Government.
7. Sector Update
Data Protection
1. EU’s General Data Protection Regulation (GDPR) effective from May 25, 2018 to impact companies
doing business in Europe, which includes the corporates from India doing business in Europe. The
liability is 4% of annual global revenue or € 20 millions, whichever is greater. For a detailed note, which
is available on our website at Knowledge Centre, please click on the following link:
http://www.equicorplegal.com/uploads/knowledge/5653EquiCorp%20Newsletter-
%20GDPR%20and%20Impact%20on%20Your%20Business.pdf
2. Following on the lines of EU’s GDPR, India has also proposed its own Data Protection Bill, 2018
prepared by the SriKrishna Committee- to protect the autonomy of individuals in relation with their
personal data, to specify where the flow and usage ofpersonal data is appropriate, to create a relationship
of trust between persons and entities processing their personal data, to specify the rights of individuals
whose personal data are processed, to create a framework for implementing organizational and technical
measures in processing personal data, to lay down norms for cross-border transfer of personal data, to
ensure the accountability of entities processing personal data, to provide remedies for unauthorized and
harmful processing, and to establish a Data Protection Authority for overseeing processing activities.
For a detailed note, which is available on our website at Knowledge Centre, please click on the following
link:
http://www.equicorplegal.com/uploads/knowledge/755EquiCorp-
%20India's%20Data%20Protection%20Law%202018-%20Future%20Road%20Ahead.pdf
8. Sector Update
E- Commerce
1. E-commerce players to get GST registration for each state in India of their operations.
2. With effective from October 1st
, 2018, E-commerce players shall be liable to:
i. Tax Deducted at Source (TDS) at the rate of 1% from the payment made or credited to supplier of
taxable goods or services or both, where the total value of such supply, under a contract, exceeds INR
2,50,000/-;
ii. Tax Collected at Source (TCS) at such rate not exceeding 1%, of the net value of taxable supplies
made through it by other suppliers where the consideration with respect to such supplies is to be
collected by the operator. However, no TCS liability would accrue in respect of the E- commerce
entities based outside India.
3. W.e.f February 1st
, 2019, the FDI policy for e-commerce shall be revised and it shall impact the way of
doing business of Ecommerce in India, which mainly covers:
i. Related entity can no longer sell on an ecommerce platform;
ii. Ecommerce platform cannot discriminate among vendors including giving favourable treatment
to big vendors;
iii. Single Vendors cannot sell more than 25% to one ecommerce portal;
The new revised norms in FDI for ecommerce could impact-exclusive launches or sale of products; cashback/ big
& deep discounts; faster delivery at sites.
The purpose of the revised norms to ensure: - level playing field for brick & mortar retail; smaller domestic
ecommerce players can compete with big Ecommerce giants; smaller sellers on ecommerce platforms to get equal
treatment with big sellers/vendors.