RULES OF LAW

In today's securities market, investor confidence is paramount, and an efficient grievance redressal mechanism is essential to ensure that investors have faith in the system. According to Regulation 13 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a listed entity shall ensure that adequate steps are taken for the expeditious redressal of investor complaints. The listed entity shall also register on the SCORES platform or another electronic platform mandated by the Board to handle investor complaints electronically. The entity shall file a statement with the recognized stock exchange(s) on a quarterly basis, indicating the number of investor complaints pending, received, disposed of, and unresolved during the quarter. An efficient grievance redressal mechanism is vital for investor confidence. Investors must feel that their concerns and complaints are heard and addressed in a timely and effective manner. The pr...

  In the world of securities and exchange, the appointment of a qualified compliance officer is not only a regulatory obligation but a crucial step towards ensuring the letter and spirit of the law. As per Regulation 6 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, every listed entity is required to appoint a qualified company secretary as the compliance officer. The compliance officer is tasked with various responsibilities that range from ensuring conformity with regulatory provisions, co-ordination with the board, stock exchanges and depositories, to monitoring the grievance redressal division. From a legal perspective, the role of the compliance officer in a listed entity cannot be overstated. The compliance officer ensures that the correct procedures have been followed, which leads to the accuracy, authenticity, and comprehensiveness of information, statements, and reports filed by the listed entity under ...

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...

As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a listed entity is required to appoint a share transfer agent or manage the share transfer facility in-house. This ensures that the transfer of securities is carried out in an efficient and transparent manner. If the listed entity manages the share transfer facility in-house and the total number of holders of securities exceeds one lakh, the entity must either register with the Board as a Category II share transfer agent or appoint a Registrar to an issue and share transfer agent registered with the Board. This ensures that the entity is able to manage the share transfer facility effectively and efficiently. The listed entity must ensure that all activities related to the share transfer facility are maintained either in-house or by a Registrar to an issue and share transfer agent registered with the Board. This ensures that the transfer of securities is carried out in a secure and transparent manne...

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-...

The Company’s Memorandum of association represents its charter as it defines the objects for which it has been setup. In Cotman Vs. Brougham (1918)AC 514, it was observed that “the purpose of memorandum is to enable the shareholders, creditors and those dealing with the company to know what is its permitted range of enterprise”. The Memorandum of association sets out the boundaries beyond which the company cannot traverse. Any action of a company which is beyond the memorandum is ultra virus and void and incapable of being ratified. Where there is no connection or nexus between the power exercised and the attainment of an object, the exercise of such power shall be deemed to be ultra virus. Section 4(1) of the Companies Act 2013   provides the relevant information that a Memorandum of association shall provide, which includes, in sub-clause (a) the name of the company; in sub-clause (b) the State in which the registered office of the company is to be situated; in sub-Clause (c)...

In civil   appeal no. 2776 OF 2022 in the matter of MAHIMA DATLA VERSUS DR. RENUKA DATLA & ORS. Supreme Court of India held that Duomatic Principle is applicable even in the Indian context. Strict adherence to a statutory requirement may be dispensed with if it is demonstrated any act that the members of a company can do by formal resolution in a general meeting is done with the consent of all the members of the Company. Although this Principle is only applicable in those cases wherein bona fide transactions are involved in case of fraud this principal is a clear exception. The Duomatic Principle can be briefly stated as “anything the members of a company can do by formal resolution in a general meeting, they can also do informally, if all of them assent to it.” This Principle was derived from the decision In Re: Duomatic Ltd., [1969] 2 Ch. 365, wherein Buckley, J. held as under: “where it can be shown that all shareholders who have a right to attend and vote at a general m...