RULES OF LAW

The Insolvency and Bankruptcy Code, 2016 is single unified  umbrella of insolvency law which consolidates and amends the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy board of India, and for matters connected therewith or incidental thereto. Before the Insolvency and Bankruptcy Code, 2016 there was no single law in India that dealt with insolvency and bankruptcy. Provisions relating to insolvency and bankruptcy for companies could be found in the in the Sick Industrial Companies (Special Provisions) Act, 1985, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993, the Securitisation and Reconstruct...

The first and most elementary rule of construction is that the words of a statue must prima facie be given their ordinary meaning. Ordinary words must be given their ordinary meanings and technical meanings, unless absurdity would result. This is called the golden rule of interpretation. This rule is also called “literal rule of Construction”. The intention of the Legislature is primarily to be gathered from the language used in the statute, thus paying attention to what has been said as also to what has not been said. When the words used are not ambiguous, literal meaning has to be applied. Effect should be given to the plain words, not because there is any charm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the Legislature. Intention of the legislature and not the words is paramount. Even where the words of statutes appear to be prima facie clear and unambiguous it may sometimes be possible that the pl...

Government of India took a step ahead in the aim of Ease of doing business in India as MCA has amended Companies (Incorporation) Rules, 2014 and inserted the provisions for Simplified Proforma For Incorporating Companies Electronically (SPICe) by adding Rule 38 to Companies (Incorporation) Rules, 2014 with effect from 2 nd October 2016.  Newly added Rule 38 to Companies (Incorporation) Rules, 2014 provides as follow: “38. Simplified Proforma for Incorporating Company Electronically (SPICe) 1) The simplified integrated process for incorporation of a company in Form No. INC-32 alongwith e-Memorandum of Association in Form No. INC-33 and e-Articles of Association in Form No. INC-34. 2) The provisions of sub-rule (2) to sub-rule (13) of rule 36 shall apply mutatis mutandis for incorporation under this rule. Provided that for the purposes of references to form numbers INC-29, INC-30 and INC-31 in rule 36 with Form No. INC-32, Form no. INC-33 and Form No. INC-...

Central Government has amended the Companies (Share Capital and Debentures) Rules, 2014 to carry out the necessary changes in regard to Issuance of bonds to overseas investors by Indian Companies via Notification dated 12 th August, 2016. In the rule 18 of Companies (Share Capital and Debentures) Rules, 2014 sub-rule 11 has been added stating: “(11) Nothing contained in this rule shall apply to rupee denominated bonds issued exclusively to overseas investors in terms of A.P. (DIR Series) Circular No. 17 dated September 29, 2015 of the Reserve Bank of India.” MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, 12th August, 2016 G.S.R. 791(E).— In exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Share Capital and Debentures) Rules, 2014, namely:— 1.         ...

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