Companies Act

Crackdown on shell companies MCA amends the Companies Incorporation Rules to provide for additional physical verification of registered offices

Background:

The Ministry of Corporate Affairs (“MCA”), vide notification dated August 18, 2022, notified the Companies (Incorporation) Third Amendment Rules, 2022, which further amended the Companies (Incorporation) Rules, 2014 (“Companies Incorporation Rules”), through the introduction of Rule 25B. This amendment sets out the process to be followed by the Registrar of Companies (“ROC”) to carry out physical verification of a registered office of a company.[1]Continue Reading Crackdown on shell companies: MCA amends the Companies Incorporation Rules to provide for additional physical verification of registered offices

The Supreme Court clarifies the law and lays down the guidelines

INTRODUCTION

 The Supreme Court of India has in its recent landmark judgment in Satender Kumar Antil[1] laid down guidelines on the grant of bail to an accused and while doing so, it has reiterated aspects of personal liberty and constitutional guarantees available to an accused under criminal jurisprudence. The Court observed that while its discussion and findings are meant to operate as guidelines, each case pertaining to a bail application is to be decided on its own merits.[2] This article seeks to analyse these guidelines and evaluate their consequences and operation in practice.Continue Reading Bail or Jail – The Supreme Court clarifies the law and lays down the guidelines

security clearance

Background:

The Ministry of Corporate Affairs (“MCA”), vide notification dated June 1, 2022, notified the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 (“2022 Amendment Rules”), which amended the Companies (Appointment and Qualification of Directors) Rules, 2014 (“Appointment and Qualification Rules”).[1] This amendment states the security clearance requirements needed to hold directorship position in an Indian company, if an individual is a national of a country which shares land border with India.Continue Reading Raising the wall higher: This time no directorship without security clearance

ESOP Has SEBI Put an End to ‘Sell All’ Method of Cashless Exercise

Employee stock options are frequently used as an employee incentivisation and retention tool, given the benefit accrued over time. An ESOP-wrapped compensation is attractive because the gains from the shares acquired on exercise of employee stock options are much higher than the exercise price paid for the options. While the maximum or minimum price payable on exercise of the options is not prescribed by the law – which only lays down the requirement for the price to be accounting-standard compliant –  the price typically ranges from the face value of the share to the fair market value of the share.Continue Reading ESOP: Has SEBI Put an End to ‘Sell All’ Method of Cashless Exercise?

Information Rights of a Company Director

Background

The fiduciary duties of the directors of a company under the Companies Act, 2013 (“Act”) have been well-recognised in multiple landmark judgments, and in Section 166 of the Act.  Under Section 166(3), a director is required to exercise his duties with reasonable care, skill and diligence, and exercise “independent judgement”.Continue Reading Information Rights of a Company Director- Does our company law need a relook in the post-pandemic world?

Benami Act

Introduction

Coinciding with the demonetisation of currencies by the Government of India in 2016, the Benami Transactions (Prohibition) Act, 1988, was substantially amended and renamed as the Prohibition of Benami Property Transactions Act, 1988 (“Benami Act”). The Benami Act was brought into effect from November 01, 2016. It was a well-timed move to ensure that demonetisation doesn’t become a futile exercise.Continue Reading Declarations of beneficial interest under the Companies Act vis-à-vis the Benami Act: No immunity and no “Ganga Snan”!

IS THE AUDIT PROFESSION AT CROSS-ROADS

Introduction

Recent amendments to the statutory framework under the Companies Act, 2013 (“the Act”), have cast focus on the ever-expanding statutory duties of the auditors of a company. The purpose of an audit is to enhance the degree of confidence of users of the financial statements. In this regard, Section 129 of the Act provides that the financial statements prepared by a company should comply with three prime conditions:
Continue Reading Gatekeepers of Governance – The Statutory Auditor

Supreme Court on Section 482 CrPC - Have the inherent powers of High Courts been diluted

Recently, in Neeharika Infrastructure Private Limited v. State of Maharashtra[1] (“Neeharika Infrastructure”) a three-judge bench of the Supreme Court (“SC”) pronounced a detailed judgment on the powers of the High Court (“HC”), while adjudicating a petition for quashing of the FIR – filed under Section 482 of the Criminal Procedure Code, 1973 (“Section 482 CrPC”) and Article 226 of the Constitution of India.Continue Reading Supreme Court on Section 482 CrPC – Have the inherent powers of High Courts been diluted?

 

Computation of ‘net profits’ for Managerial Remuneration – Has this provision outlived its utility

Introduction

Section 198 of the Companies Act, 2013 (‘2013 Act’), prescribes a special method for computation of ‘net profits’ of a company in a financial year — which has different rules for arriving at net profit than the one prescribed under Accounting Standards.

The special methodology for computation of net profits prescribed under Section 198 is used for two purposes – (i) for determining managerial remuneration under Section 197 and Schedule V; and (ii) for determining the minimum CSR amount to be spent by the company in a financial year, under Section 135(5) of the 2013 Act.
Continue Reading Computation of ‘net profits’ for Managerial Remuneration – Has this provision outlived its utility?