Transfer of Proceedings from Courts to NCLT: The Calcutta High Court’s View

A question that has often come up since the Companies Act, 2013 (the 2013 Act) came into force is how will proceedings ongoing before the High Courts be transferred to the National Companies Law Tribunal (NCLT)? Section 434(1)(c) of the 2013 Act deals with transfer of “all proceedings” under the Companies Act, 1956[1] to the NCLT. For winding up proceedings, this provision states that only such proceedings relating to winding up, which are at a certain stage as prescribed by central Government, are to be transferred to the NCLT. Another part of this provision, meanwhile, deals with cases other than winding up proceedings, which may not be transferred to the NCLT.[2] A reading of all the various provisions leads to the conclusion that not all proceedings under the 1956 Act pending before the District Courts and High Courts are to be transferred to the NCLT. Continue Reading Transfer of Proceedings from Courts to NCLT: The Calcutta High Court’s View

Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 are substantive provisions for regulating private placements by Indian companies. These provisions are, of course, in addition to applicable regulations prescribed by the Securities and Exchange Board of India (“SEBI”) for listed companies. Recently, both Section 42 and Rule 14 have undergone amendments by way of the Companies (Amendment) Act, 2017 and the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018, respectively (the “Recent Amendments”). Continue Reading Recent Amendments to the Private Placement Guidelines – Revamp or Cosmetic?

Share transfer restrictions come in various shapes and sizes and in so far as they relate to shares of public companies, their validity has been a topic of hot debate. In several cases, Indian courts have considered and opined on the legality of contractual restrictions on the transfer of shares of public companies. The position in this regard now appears to be much clearer than before with changes also being introduced in the Companies Act, 2013 (CA 2013). However, one aspect of this debate that has hitherto gained lesser traction is the ability of a public company to refuse registration of share transfers pursuant to section 58(4) of the CA 2013.

Section 58(2) of CA 2013 states that the securities of any member in a public company are freely transferable, while under section 58(4) of CA 2013, it is open to the public company to refuse registration of the transfer of securities for a ‘sufficient cause’. To that extent, section 58(4) of CA 2013 can be read as a limited restriction on the free transfer permitted under section 58(2) of CA 2013. However, the statute does not provide any guidance on what would constitute ‘sufficient cause’ and leaves it open to the company itself to ascertain the same. Continue Reading Share Transfers: Can the Company Say No?