Supreme Court on the admissibility of electronic evidence under Section 65B of the Evidence Act.

The recent instances of leakage of Whatsapp chats obtained during the course of investigation and their admissibility as evidence in a criminal trial has brought the issue of electronic evidence to the forefront. These Whatsapp chats have been leaked in the public domain at the investigation stage itself, even before the commencement of the trial. Considering these recent developments, the legal framework for electronic evidence merits further scrutiny.

Under the Indian Evidence Act, 1872, Section 65B prescribes a distinct framework that governs the admissibility of electronic evidence. There have been multiple litigations over the scope and ambit of Section 65B, with divergent views taken by the Apex Court.
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RECLASSIFICATION OF PROMOTERS BY SEBI

The Securities and Exchange Board of India (SEBI) came out with its consultative paper on “promoter reclassification/ promoter group entities and disclosure of the promoter group entities in the shareholding pattern[1] to seek public comments on November 23, 2020.

The topic of promoter reclassification has been a talking point since 2015, wherein the power to reclassify promoters laid in the hands of the company, rather than the promoter. Therefore, it was observed by SEBI that the process provided too wide a net to alter the tag of a “promoter”. Hence, in 2018, SEBI revamped the procedure and came out with the now inserted Regulation 31A of Listing Obligations and Disclosure Requirements Regulations, 2015.
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SEBI Changes to Scheme Circular - Is it a case of over-prescription

SEBI has been continuously streamlining the regulatory architecture governing schemes of arrangements under Sections 230-232 of the Companies Act, 2013 (“Companies Act”) and Regulations 11, 37 and 94 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”) involving listed companies with the introduction of the SEBI Circular dated March 17, 2017 (“SEBI Scheme Circular”). SEBI vide its Circular dated November 3, 2020 (“Amendment Circular”), has introduced further changes to the SEBI Scheme Circular. The Amendment Circular is brought into effect for all schemes of arrangement submitted to the Stock Exchanges on or after November 17, 2020. Changes introduced under the Amendment Circular are as follows:
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Vicarious Liability of Non-Executive Directors - A Case for Reform of Law

Context:

The vicarious liability provisions have been evolving ever since the evolution of law of torts. “Offence by companies” is a standard vicarious liability provision in most statutes, which is often used to fasten the liability on directors for the acts and omissions of the company. These vicarious liability provisions are borrowed from colonial-era laws and incorporated in our domestic legislations. As a rule, there is no concept of vicarious liability in criminal law. Such provisions imposing liability on directors for acts/ omissions of the company are present in most statutes.

The vicarious liability provisions have a standard language providing that the person-in-charge of and responsible for the conduct of the business of the company at the time of the commission of the offence, as well as other officers are liable for that offence. However, those provisions do not make a distinction between Managing Directors (“MDs”)/ Executive Directors (“EDs”) and Non-Executive Directors (“NEDs”)/ Independent Directors (“IDs”).
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Striking off Name of a Company - The Jurisdictional Issue

Jurisdiction is not given for the sake of the judge, but for that of the litigant

– Blaise Pascal

Recently the Delhi High Court in Money Market Services (India) Private Ltd. v. Union of India held that an order passed by Registrar of Companies (ROC) striking off the name of a Company can be challenged by way of writ petition only before the High Court, which has territorial jurisdiction over the said ROC.[1]
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ESOPS as Managerial Remuneration - Do Regulators Need to Revisit Regulatory Architecture

Employee Stock Option Plans (ESOPs) are a well-recognised method of compensating employees and attracting and retaining the best talent. Compensation in the form of equity shares helps in creating a sense of ownership in the mind of employees. Benefit schemes for employees, including ESOPs, have gained popularity, especially in technology start-ups that have limited financial resources in the initial years, but want to attract the best talent. ESOPs are the option or a right, but not an obligation, which is offered by a company to its employees to purchase its shares at a pre-determined price in the future. ESOPs align the interest of the employees with long term interest of the companies and play a vital role in retaining employees at the growing stage of the company.

Section 2(37) of the Companies Act, 2013 (“Act”), defines ‘employees’ stock option’ as the option given to directors, officers or employees of a company or of its holding company or subsidiary company or companies, if any, which gives such directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the company at a future date at a pre-determined price. The Act expressly prohibits ESOPs for Independent Directors[1] as the law makers believe that it compromises the ‘independence’ of such Independent Directors. Section 62(1)(b) of the Act provides for the approval of shareholders by a special resolution. Rule 12 of the Companies (Share Capital & Debentures) Rules, 2014, lays down the legal framework for issuance of ESOPs for unlisted companies. Listed companies having ESOP plans are required to comply with the SEBI (Share Based Employee Benefits) Regulations, 2014 (“ESOP Regulations”).
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The SEBI Board in its meeting held on June 25, 2020, has approved  providing listed companies with a time-bound temporary option of undertaking preferential allotments at a possibly more investment-friendly pricing, by choosing to utilise the higher of the two weeks or the 12 weeks formula price (i.e. based on the average of the weekly high and low of the volume weighted average price quoted on the stock exchange – the pricing formula) instead of the existing norm of higher of the two weeks or the 26 weeks formula price. Given the current market conditions, which has seen a significant stock price drop since the second half of March, 2020, this option is bound to result in lower and arguably more favourable pricing for potential investments.


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Introduction

The EdTech sector is seeing significant investments and expenditure by governments, schools, universities, students and professionals globally. By 2030, it is expected that global EdTech expenditure will grow to USD 10 trillion[1]. The growing popularity of online learning, further necessitated due to the nationwide lockdown, has provided a major push to the sector in India, which is expected to grow at a CAGR of 52% to become a USD 2 billion industry by 2021[2]. The key growth drivers propelling EdTech in India are the ability to serve a large audience at significantly lower costs compared to traditional in-classroom learning, significant growth in internet and smartphone penetration across India, steady rise in disposable income of the Indian households, and a large consumer base with over 37% of India’s around 1.35 billion population falling in the 5-24 age bracket.


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The most valuable commodity I know of is information.

– Gordon Gekko, Wall Street

Over the past few weeks, the Securities and Exchange Board of India (SEBI) has passed three orders[1] (SEBI Orders) in the infamous ‘WhatsApp leak’ saga that has been in the news since November 2017[2]. Holding the impugned perpetrators guilty of violating insider trading regulations, the regulator has taken significant steps in pushing the boundaries of the concepts of insider, UPSI and insider trading.


Continue Reading SEBI and WhatsApp leaks: Every link in the chain matters

The provisions of the Companies Act, 2013 (the Act), and the rules framed thereunder, mandate companies to file requisite documents, including annual returns and financial statements, with the concerned Registrar of Companies (RoC) of their jurisdiction. Non-adherence to such provisions and non-filing of the requisite documents is an offence, exposing non-complaint companies and its directors to severe penal consequences, including fines and prosecution.

However, the records of the Ministry of Corporate Affairs (MCA) and the National Company Law Tribunals (NCLT) would clearly reveal that a lot of companies have been non-compliant with their filings. This non-compliance has been a menace to all the stakeholders involved, including, inter alia, (i) the companies and directors who have to face penal consequences for such non-compliances; (ii) the MCA and its administration who are engaged in the process of updating the records; (iii) the public/ shareholders who do not get access to the records of the companies; and (iv) the NCLT and the office of Regional Directors, which are burdened with compounding cases.


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