RULES OF LAW

The Companies Act, 2013 provides for various legal mechanisms that can be used by companies to restructure their operations, consolidate their assets, and achieve economies of scale. Two commonly used mechanisms are compromise and arrangement. Compromise and arrangement refer to a legal process under which a company can restructure its debt or equity capital, or both, in a manner that is acceptable to its shareholders and creditors. This process involves negotiations between the company and its stakeholders, followed by a court-approved plan of compromise and arrangement. The term “compromise” is not defined under Companies Act, 2013 and it has no legal meaning. Generally, Compromise presupposes a dispute. Compromise is an expression which implies the existence of a dispute such as relating to rights, which it seeks to settle. There can be no compromise unless there is some dispute e.g. as to the power to enforce rights or as to what those rights are. Arrangement contemplates all...

Supreme Court Civil Appeal No 527 of 2023 Securities and Exchange Board of India Versus V. Shankar filed by the Securities and Exchange Board of India under Section 15Z of the Securities and Exchange Board of India Act 1992 arises from a judgment dated 1 November 2022 of the Securities Appellate Tribunal. The Securities Appellate Tribunal, while allowing the appeal by the respondent, set aside an order dated 22 March 2022 of the Whole Time Member under Section 15HA of the SEBI Act by which a penalty of Rs Ten lakhs was imposed on the respondent for violating of Sections 68 and 77A of the Companies Act 1956 and Regulations 3(a), ( b), (c), (d), 4(1), 4(2)(f), (k) and (r) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations 2003 read with Sections 12A (a), (b) and (c) of the SEBI Act. The respondent was a Company Secretary of Deccan Chronicle Holdings Limited for two years, 2009-10 and 2010-...

Ministry of Corporate affairs has issued circular No. 09/2016 dated 03.08.2016 to provide Clarification in regard to applicability of provisions of Chapter III of the Companies Act, 2013 to Issuance of bonds to overseas investors by Indian Companies and clarified that matter relating to issue of rupee denominated bonds to overseas investors is being regulated by RBI as part of ECB Policy framework and stated unless otherwise provided in the circular/ directions/ regulations issued by Reserve Bank of India, provisions of Chapter III of the Act and rule 18 of Companies (Share Capital and Debenture) Rules, 2014 would not apply to issue of rupee denominated bonds made exclusively to persons resident outside India in accordance with applicable sectoral regulatory provisions and in this regard necessary changes are being made by the Ministry in Companies (Share Capital and Debenture) Rules, 2014. Following is the Circular issued by the Ministry of Corporate Affairs: General Circula...

As per Section 179(3) of the Companies Act, 2013 read with rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 read with Companies (Meetings of Board and its Powers) Amendment Rules, 2015 following are the powers which shall be exercised by the Board of Directors on the behalf of the Company by means of resolutions passed at meetings of the Board: to make calls on shareholders in respect of money unpaid on their shares; to authorise buy-back of securities under section 68; to issue securities, including debentures, whether in or outside India; to borrow monies; to invest the funds of the company; to grant loans or give guarantee or provide security in respect of loans; to approve financial statement and the Board’s report; to diversify the business of the company; to approve amalgamation, merger or reconstruction; to take over a company or acquire a controlling or substantial stake in another company; to make political contributions; to appoint or remo...

In continuation of MCA General Circular 1 of 2016 dated 12.01.2016, MCA has issued General Circular No. 05/2016 and clarified that Companies while undertaking Corporate Social responsibility activities under the provisions of the Companies Act, 2013, shall not contravene any other prevailing laws of land including Cigarettes and Other Tobacco Products Act (COTPA), 2003.   http://www.mca.gov.in/Ministry/pdf/General_circular05_16052016.pdf

In exercise of the powers conferred by sub-section (1) of section 458 of the Companies Act, 2013 Central Government has delegated the power to appoint inspectors for inspection of books and papers of a Company under Section (5) of Section 206 to the regional directors. http://www.mca.gov.in/Ministry/pdf/General_notification_04052016.pdf  

Central Government has notified the following amendments to the Schedule III of Companies act, 2013 via notification dated 06/04/2016: 1) In the Companies Act, 2013 (hereinafter referred to as the principal Act) in Schedule III, Central government has inserted the following for the heading "General instructions for preparation of Balance Sheet and Statements of Profit and Loss of a Company": “Division I Financial Statements for a company whose Financial Statements are required to comply with the Companies (Accounting Standards) Rules, 2006. GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET AND STATEMENT OF PROFIT AND LOSS OF A COMPANY” 2) And In the principal Act, in Schedule III , at the end, the following has been inserted: “Division II Financial Statements for a company whose financial statements are drawn up in compliance of the Companies (Indian Accounting Standards) Rules, 2015. GENERAL INSTRUCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS...