Money laundering is the process of converting illegally obtained profits into legitimate money for the purpose of pushing it into the economy and spending it, disguising its illegal origin. Illegal means include criminal activities like arms sale, smuggling, organized crime, etc. the PMLA defines Money Laundering as “any process or activity connected with proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property”. Since such money is used for illegal arms trade or organized crimes, in turn having effects on global peace, the international community also attempts to tackle this menace. India is a signatory to UN Conventions like International Convention for the Suppression of the Financing of Terrorism (1999), UN Convention against Transnational Organized Crime (2000), and UN Convention against Corruption (2003). PMLA was enacted to achieve the purpose of the Conventions, and prevent money laundering and financing of cross border terrorism.
KEY FEATURES OF THE ACT:
- Offence includes attempting, indulging or assisting any activity connected with proceeds of crime like its possession, acquisition, concealment, or use.
- “Proceeds of Crime” include any property derived or obtained as a result of any criminal activity, whether directly or indirectly.
- Offences are added as Schedules A and C to the Act, where Part A enumerates offences under the IPC, Narcotic Drugs and Psychotropic Substances Act, Explosive Substances Act, etc. Part C deals with trans-border crimes and money laundering across international boundaries.
- The occurrence of any of the Scheduled Offence (called the Predicate Offence) is a pre-requisite for initiating an investigation under the Act.
- Predicate Offences are investigated by agencies like the Police, Customs, SEBI, CBI, NCB, etc. Officers of the Directorate of Enforcement have been given powers to investigate cases of Money Laundering.
- Actions that may be taken against a person or property involved in money laundering are attachment/seizure/freezing of property; imprisonment of 3-7 years with fine; imprisonment up to 10 years if the offence committed is under NDPS Act; and the prosecution/conviction of any juridical person is not contingent on that of any individual.
- The Investigating Officers have powers like provisional attachment of property directly/indirectly procured through criminal activities; survey; search and seizure; personal search; arrest; and summoning persons and records.
- The persons being searched under the Act, or arrested under the Act have certain rights like he may ask to be taken to a Gazetted officer superior in Rank to the Officer requiring the search, within 24 hours; and in case of arrest, he must be informed of the reasons for arrest and be produced before the Judicial Magistrate in 24 hours.
- There is a presumption of interconnected transactions, whereby if the activity in question involves two or more interconnected transactions, and one or more of these is proved to be involved in money laundering, then for adjudication/confiscation/trial, the rest can also be presumed to be so; unless proved otherwise.
- The burden of proof rests on the accused to establish his innocence when he is accused of having committed an offence under section 3.
- The specified Authorities under the Act have the power to attach or freeze suspected property under circumstances given under the Act; the attachment of property can be done only on the basis of reasons to believe (stated in writing), that the person is in possession of proceeds of any crime, and it is likely to be concealed or transferred in a manner that might frustrate the proceedings against the person.
- The maximum period up to which such a provisional attachment could stand is 180 days, unless the Adjudicating Authority finds and passes Order within the time frame, that the property is involved in Money Laundering.
- The property may be confiscated if the Authority finds out that the property was indeed involved in money laundering.
- The Act provides for an Appellate Tribunal, to which an appeal may be filed within 45 days by an aggrieved party, after an Order is passed against him by the Adjudicating Body. High Court is the higher appellate authority above the Tribunal.
- Offence of Cross-Border implication, where a person outside the territory of India commits a crime there (also a crime under Schedules A or C), and transfers the proceeds to India; or vice versa.
- Banking Companies, Financial Institutions, intermediaries, or persons carrying out specified businesses are “reporting Entities” under the Act, and they are under a duty to record and maintain information regarding transactions, and furnish it to the Authorities as stipulated under the Act.
- Monetary penalty may be imposed on the reporting Authorities for default.
- Certain Sessions Courts have been designated as Special Courts under the Act for the purpose of trying offences under S.4.
- The Central Govt can enter into Agreements with other countries for the purpose of enforcing provisions of the Act, or exchange of information for preventing offences, or for investigation.
- The mechanism of providing assistance or collecting evidence under such arrangement is given in the Act
- The Act provides for punishment of vexatious search, giving false information, etc.
- PMLA has overriding effect over other legislations in force, in case of a conflict.
MAJOR CASE LAWS
- Pareena Swaroop v Union of India
- Gautam Kundu v Manoj Kumar (Asst Director of Enforcement, Eastern Region)
WHAT IS IoT?
Internet of Things is a network of interconnected devices that communicate information amongst each other using data and sensors, and work in a coordinated manner to create a technologically enabled ecosystem of various devices. For example, the wearable devices that monitor a person’s vitals; GPS system built within a car that tell the AC at home that the person will be home soon; intelligent home security systems that lock and unlock the house on its own; etc. Such technology is being created and marketed by many service providers, and we have discussed its legal challenges in a previous post. Let us now have a look at the legal trend being followed by various jurisdictions to adapt to the technological advancements.
THE EUROPEAN UNION
The European Commission (EC) has been coordinating with the industry, member States, and third-party States to exploit the true potential of IoT for development. The various steps adopted by the EC are:
- Alliance for Internet of Things Innovation (AIOTI) launched in 2015 to enable the EC to work closely with the players in the IoT industry to create an innovative and technology-driven IoT system.
- Digital Single Market (DSM) Strategy adopted, to promote interoperability of the component devices
- Introduced a “Digitising European Industry (DEI)” initiative and published a published a staff working document “Advancing the Internet of Things in Europe” to create a thriving IoT system, human centred IoT approach, and a single market for IoT.
- EU Data Protection Directive 95/46 that gave data processors some defence against individual claims, now made more stringent under EU Data Protection Regulation.
- EU Privacy Directives also apply to the IoT industry.
THE UNITED STATES
The Federal Govt has adopted non-binding guidance to the players in the industry, necessitating the companies to do it the right way.
- Federal Trade Commission (FTC) released a report on “The Internet of Things; privacy and security in a connected World”, outlining steps to ensure privacy and security.
- Federal laws regarding privacy and data protection also apply to IoT domain, and the law relating to cyberspace would also have a major impact.
IoT comes within the domain of the Ministry of Communication and Information Technology, under the Department of Electronics and IT. It is notable that IoT comes as an added boon at the time of introduction of Digital India programme to ‘transform India into digital empowered society and knowledge economy’. The Govt released a Draft Policy on Internet of Things in 2015, with the objectives of creating an IoT industry in India of USD 15 billion by 2020; to undertake Research & development for all the assisting technologies; to undertake capacity development (Human & Technology) for IoT specific skillsets for domestic and international markets; and to develop IoT products specific to Indian needs in the domains of agriculture, health, water quality, natural disasters, etc. The Policy covers:
- Vertical Pillars: The primary aims sought to be achieved in time, divided into
- Domain-Specific Applications (Smart City, Smart Water, Smart Environment, Smart Health, Smart Waste Management, Smart Agriculture, Smart Safety, etc.)
- Incubation and Capacity Building: To build Institutional capacity by promoting experimentations and applications.
- Standardization: To promote globally acceptable standards relating to technology, process, interoperability and services.
- Innovation, Research and Development: To fund and promote R&D in specific related fields by identifying core members in each field, initiating cloud based open source projects, and create test labs for integration.
- Incentives and Engagement: To promote incentives to support companies in the IoT domain, encouraging exports, and participating in IoT Forums such as those of IEEE.
- Horizontal Supports: The subsidiary support system essential to help the IoT framework to function well.
- Human Resource Development: To create an Education and Awareness Programme on IoT, also introducing it into University Curriculum.
- Governance: The new technology requires a new structure of governance to ensure compliance, and the Govt purports to achieve it through a multifaceted framework:
- Legal: New legal provisions would need to be created, and the existing ones amended, to effectively manage the new systems created wherein machines will decide and intermediary human control will be minimum.
- Advisory Committee: To set up a high-level advisory committee with representatives from Govt, industry and academia.
- Governance Committees: To set up High-Level Governance Committees for different application domains.
- Programme Management Unit: To set up Management Units to support in identification, operationalization, implementation, performance tracking, periodic reviews, etc. of initiatives.
It may be noted that IoT is evolving and developing, and its full practical impact on the market and society will be felt only one the ripples reach far and wide. The law and regulatory framework will thus have to stay equally potent in corresponding evolution. The Govts across the world are currently attempting to utilise the benefits of IoT to attain better developmental goals, at the same time not jeopardizing privacy, security, and data protection concerns.
ELECTRONIC SIGNATURE – WHAT IT IS
An E-Signature is an encoded signature embedded on an electronic document, instead of printing it out and putting a physical signature on it. It symbolises the person’s intent to affix his sign on the said document. An e-signature is different from a digital signature, which is a mode of encrypting an electronic document with a public key and a private key to ensure confidentiality and authenticity. E-signatures do not use complicated encryptions, but only affix a digital form of signature indicating authentication of the document by the signing party.
ADVANTAGES OF USING E-SIGNATURES ON CONTRACTS
- Time Saving: The whole point of making e-contracts instead of offline contracts is to enable parties to communicate easily and save time spent in documentation. But if a real signature is to be affixed on the paper, it would require a print out, signature, and then scanning/faxing to send it to the other person; thus ruining the time saved in the primary electronic transactions. E-signature helps to overcome this hurdle, as the parties can affix the signature online and send it back right away. It is also easier to negotiate and amend terms in the final contract before signing.
- Security: E-Signatures are created either with the help of online E-Sign services or using the company’s own website. These ensure confidentiality of the document, and prevents loss that may occur in actual transit. Online E-Sign services usually use high-security servers and encryptions to prevent outsider invasion into the databases.
- Easier to close deals: From the view point of a business, the earlier the customer signs and submits the deal, the better. Absence of paperwork enable companies to close deals easily by not letting long-drawn time frames instil second thoughts in the customers’ minds, negating all the canvassing by sales personnel.
- Flexibility and Mobility: Enables you to work on contracts and deals from anywhere and at any time; a contract can be signed even while you are in transit or at places with no immediate availability of stationary and print services. It allows mobility to business personnel assigned with the responsibility to close deals, and they can manage multiple contracts simultaneously without the risk of mixing up papers.
- Cost Reduction: Lesser paperwork implies lesser amount of stationary and office supplies, and it does away with the need of storage space for registers and documents physically signed. The overall transaction is carried out through electronic means and there is no cost incurred in printing, posting, etc.
- Convenience of Customers: Apart from the benefits directly accruing to the business, it also enables the customer to sign the document easily without much fuss, and makes it convenient for them to transact with the company. It in turn contributes to increased customer satisfaction, and enhances brand loyalty and goodwill.
- Environment Factor: In addition to the business-financial benefits, not to forget that more and more e-transactions are encouraged today to reduce paperwork and conserve paper. While you are opting for e-contracts and e-signatures, you are doing your part for a better world.
LEGAL AND STATUTORY FRAMEWORK (INDIAN KANOON)
- Indian Contract Act: An agreement reached at by two competent parties, satisfying the requirements under the Act, is a valid contract, and it does not mandate a physical signature. The contract may be oral, written, or electronic.
- Information technology Act: Specifically states that enforceability of a contract cannot be denied merely due to it being in an electronic form. E-contracts with e-signatures are as good as offline contracts.
- Indian Evidence Act: Electronic records are admissible as evidence.
For people new to the technology and its possibilities, it sounds just like the thing out of a sci-fi movie, or one of the ideas borrowed from George Orwell’s famous Novel “1984”. The concept is certainly path-breaking, to say the least, but at the same time it instils a fear akin to the one outlined in 1984; and technology is growing at an exponential rate such that someday man would be reduced to a submissive slave of “intelligent” technology – we have intelligent houses, cars, electronic appliances, and even toilets. These are a few examples of what is currently gaining popularity as the Internet of Things – a collection of everyday physical objects that are interconnected through the internet to create a larger network system, sending and receiving data among each other to function in harmony. For eg, there are wearable gadgets that monitor your vitals like pulse; and smart security systems that lock the house automatically at a pre-set time; or machine to machine communication where you can have your car’s controls accessed via your mobile phone, and so on. IoT is taking up a vital pace in the market, and many big players are entering the domain, given its tremendous potential of growth and profits. It integrates several technologies and communication systems, and overlaps various industries like home appliances, medical services, automotive industry, etc. It also raises several legal concerns and challenges at the same time. Jurisdictions across the globe are attempting to frame new regulations and amend the existing ones to adapt to the developments.
LEGAL CHALLENGES RAISED BY IoT:
- Privacy and Security: With massive quantities of data flowing between databases, and sensitive information being shared between devices, a profile of the person gets created automatically and is exposed to the risk of privacy encroachments. Information obtained by such interconnected systems get disseminated without seeking express consent of the person at each stage, and it is difficult to curb this if the whole process is to work in a coordinated manner, as the connection and sharing of information is the pre-requisite of such automation.
- Data Protection: The free flow of data makes it prone to being intercepted and transferred to other databases, and if the in-built security systems are hacked, the personal information may pass on to any outsider. The current Information Technology Law regime addresses data protection through the need for informed consent, and reasonable security compliances that data handlers must follow.
- Intellectual Property Rights: The functioning of IoT systems rely heavily on interconnection, requiring that the products and technology developed by different companies and industries must pool their innovations and work on an integrated platform. This blurs the boundaries of IPR protected technologies, and creates issues as to what extent of rights each party is entitled to.
- Data Ownership: When seamless integration of data from various technologies and devices takes place, the question as to who owns the end product (information) created, is an intriguing question. Where a wearable gadget like watch senses the pulse/body temperature and directs the AC to adjust the room temperature to a comfortable level; or where the navigation system in a car could predict to the home appliances when the person would be arriving home, the ownership of the data generated regarding that person (his travel route, time, habits, etc.) become a question of concern. Does the person own the data (because it relates to him) or do the devices (because they created it)?
- Jurisdiction: The IT world has its own jurisdictional issues, as it cannot be attributed to any limited geographical area; and the advent of IoT only creates a more complex scenario. The jurisdiction in cyberspace is determined on the basis of several considerations like minimum contacts, long-arm statutes, agreements between parties, etc. Since IoT involves the interconnection of various technologies and services of different companies which may be within different jurisdictions individually, the fixing of a common jurisdiction for IoT related disputes would involve various considerations.
- Deciding Liability: If a consumer dispute arises on an IoT issue, or any injury is caused to a party, it becomes difficult to precisely state which aspect of the interconnected devices malfunctioned, and who is to be held liable. The flow of information is continuous, and it is sometimes not practicable to pin-point where the flaw occurred.
THINGS TO KEEP IN MIND IF YOU ARE INTO IoT DOMAIN
- Go through laws of a country carefully before expanding into their market; pay attention to laws and regulations on Consumer Protection, Contracts, IPRs, IT Laws, Criminal liability relating to such matters, etc.
- When entering into collaborative projects with other companies, make sure you liability is limited and not open to expansive interpretation by Courts; also write the Contract with clear terms and conditions as to rights and obligations of each party in the collaboration.
- While introducing the service in the market, train suppliers and retail sellers to educate customers about the nature of the information that will flow through the device; and how to limit the access to personal information.
- Put in place efficient and 24×7 customer care services to address grievances and answer queries.
- Make sure that your contracts with the customers contain all details as to the extent of information that will be accessed and communicated by the device, and that it is accepted by the customer while purchasing the product. Use clear terms and conditions to ensure that customers give an “informed consent”.
- Use high-efficiency data protection systems to ensure that hackers and third parties don’t compromise your devices to steal information.
- Engage lawyers to ensure compliance with laws, and consult with the regulatory Authorities, if in doubt regarding any Regulation. Legalresolved lawyers can help you in comprehending those legal challenges and provide you a strategy to Overcome them
- Introduce internal grievance redressal mechanisms in company; or include arbitration clauses within the contract with customers, to avoid litigations in Court to the best possible extent.
STATUTES TO KEEP IN MIND (INDIAN KANOON)
- Indian Contract Act
- Information Technology Act
- Patents Act
- Internet of Things Policy, 2015, by Govt of India
The above list is far from being conclusive, and only gives a brief view on the legal implications of IoT; the law is still only developing to the needs created by the rapid growth of technology. Legal Policies are created, revised, and amended from time to time, and one must always look up at all concerned legislations and regulations, to have a comprehensive knowledge on the matter.
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SAVING CONTRACTS ONLINE: WHAT IT MEANS
The technological advancement of this era has transformed a great portion of human transactions into online form from actual physical form. Letters have given way to mail and chat messages, library references have given way to online information services, shopping is done at the click of a finger; and in the fast-moving world, Govt regulations and services have also largely been made available through technological interface. Many Govt applications can now be submitted online, like PAN, Aadhar, Passport, Electoral ID, etc. and most of the Govt agencies have online query/complaint/grievance registration systems, and a large number of electronic records are stored in e-format.
Similarly, it is quite legal to enter into contracts online, and they create just as much rights and obligations as offline contracts, and are enforceable in a Court of law, provided that the legal requirements are met with. Since most of the communications between people, sometimes separated by distances of half the world, take place online without them meeting each other in person, it is palpable that a large proportion of business/employment/sale/other contracts are entered into online. Offer, acceptance, and legal formalities essential for a contract can be entered into online, and an e-contract is valid subject to the provisions of the Indian Contract and the Information Technology Act. It is also possible to enter into the contract offline, and save all the documents online in digital format, which comes with several advantages to the parties. Contract management is now largely undertaken by several companies using cloud computing systems and online data management interfaces.
THE PROS OF SAVING CONTRACTS ONLINE
- Time Saving: The process of finding documents online is much easier as it used search engines, and you can find any document in a matter of seconds, using key words, dates, party names, etc. It is a stark contrast to the traditional documentation system where a person has to fish through many registers and papers to identify a document. A mammoth task gets done in a click. Also, uploading it into a central system of a Contract Management Service instead of individual data systems helps to make sure it is not lost or misplaced.
- Security & Confidentiality: While hard copies of files would have to stacked in locked drawers to maintain secrecy of the matter, it is much easier to simply upload the data into an online system with in-built safety mechanisms that give access only to authorized personnel; using authentication mechanisms like passwords or pin numbers. To cover the risk of forgetting the password, you may use back-up mechanisms like answering a pre-determined question, or linking it with your Mail ID to retrieve the password.
- Flexibility and Ease of Access: Data saved on online platforms can be accessed easily from anywhere and at any time, enabling flexibility to work from any place using the resources and information as and when needed. This facilitates employees to avail work-from-home or for multiple persons at remote locations to work simultaneously in a group.
- Mobility: Data including contracts, stored online can be moved from a storage location to any other location with much practical ease. Copying and transferring online material is much easy, and in case of a need for change of storage location from one drive to another, or sending a copy to another person for contract review, it can be done quite easily.
- Easier Inspection: The contracts and related documents of a company may become liable to inspection by Regulatory Authorities at any time, and proper documentation and storage would help save a lot of time and confusion; availability at a central depository would do away with the rush to consolidate contractual documents and details from various storage locations. It also helps in internal and external audits.
- Reduces Cost: Storage in online spaces like Cloud or Dropbox or even Google Drive is free of cost, and saves the cost that would accrue to the management if they were to store it on papers in registers kept in draws. The number of contracts entered into by companies would require a lot of office stationary if all these were to be stored in hardcopy. Also, online storage services do not involve the expenses of setting up individual servers at companies for data storage; the servers would come with maintenance costs in addition to the cost of setting up.
RELEVANT STATUTES (INDIAN KANOON)
- Information Technology Act
- Indian Contract Act
THE COMPANY LAW BOARD
The CLB was a quasi-judicial body that exercised jurisdiction over matters stipulated in the old Companies Act of 1956, especially with respect to dispute resolutions. It had its Principal Bench in New Delhi, and regional benches in New Delhi, Kolkata, Mumbai and Chennai. The CLB Regulations of 1991 laid down the procedures for filing of petitions, counter affidavits, calling for information, taking evidence, etc. in addition to matters such as composition of the Board, powers of the Secretary and Registrar, etc. The CLB has now been replaced by the National Company Law Tribunal and the Appellate Tribunal, and all matters and disputes relating to the new Companies Act (2013) now lie within the jurisdiction of the NCLT and the NCLAT.
SOME MAJOR PROVISIONS OF THE CLB REGULATIONS, 1991
- The Bench consists of a Chairman, who in turn has the power to decide on the number of members and the matters to be heard in the Principal/Regional Benches.
- The Annexures to the Act specify the geographical jurisdiction of the Regional Benches, and the language and sitting hours of the Bench.
- The Regulations mandate that every petition must be in writing, also prescribes the format.
- The petition has to be made on the Form annexed with the Regulation, and must be presented at the Bench. A copy has to be sent to the respondents as well, before being submitted to the Bench.
- The petition must be accompanied by an Affidavit as per the provisions, and if all documents are in order and without defect, the same would be accepted by the Registrar at the Office. In case of defect, a chance to rectify may be given to the applicant.
- The petition must contain details of the company such as the name of the company, date of incorporation, address of its registered office, authorized capital, details of shares, etc. and must state in details the grounds for the petition, and the relief sought.
- If an interlocutory application is filed, it has to be in Form II of Annexure II of the Regulations.
- The application must be accompanied with an index page, a brief synopsis and a brief of date of events.
- The party may appear in person or through an authorized representative or lawyer. The Regulations stipulate in detail, the manner of serving notice to the other party.
- The Respondents must file a reply to the Bench, indicating the admission, denial or explanation of the plaintiff’s averments. The petitioner may file a counter reply to the facts stated by the respondent. The Bench may also seek further information from either of the parties.
- The Regulations detail that the Petition may be dismissed/ decided ex parte if either party fail to appear on the designated date; and also that such Order may be set aside if the defaulting party shows sufficient cause before the Bench within the given time.
- The Order of the Bench is to be in writing, and the decision must be based on majority of opinion.
- The Secretary is the principal officer of the Board, and has powers such as custody of the records of the Principal Bench, custody of the Official seal of the Board, right to collect information, etc.
- The Bench Officer also has powers and duties like receiving petitions and applications, dispose matters relating to service of notices, etc.
- The Bench is deemed to be a Court for the purposes of prosecution and punishment for wilful disobedience of Orders.
THE CURRENT POSITION
The Ministry of Corporate Affairs has replaced the CLB with the NCLT and NCLAT with effect from 1-6-2016, under the new Companies Act of 2013. 11 (eleven) Benches of the NCLT have been constituted by the Central Government, two in New Delhi, and one each at Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai. The NCLT and the NCLAT are bound by their own Rules and Regulations.
STATUTORY REFERENCES (INDIAN KANOON)
- Companies Act, 1956 (old)
- Companies Act, 2013 (present)
It is the primary legislation relating to the incorporation, composition, functioning, and compliance requirements of companies in India. The previous Companies Act of 1956 had to undergo numerous amendments over the past several decades, especially after the post-liberalization era that came after the 1990s. The Central Govt subsequently enacted the new Companies Act in 2013, to replace the old one and with an object to consolidate and amend the relating to companies. It is the primary legislation that you have to refer to, if you are planning to incorporate a company in India.
A SUMMARY OF THE KEY PROVISIONS
- The Act has 29 Chapters, divided into 464 Sections, and 7 Schedules.
- A company comes into being by way of its incorporation, and it has to follow the requirements and mandates under the Act, such as the application to be made to the Registrar of Companies (RoC), the creation of the Memorandum of Association and Articles of Association, the issue of certificate of Incorporation by the RoC, setting up of a Registered Office, etc. before it can commence its business.
- Once it is all set to commence business, the company now has to raise capital, and the Act provides for this to be done by offering its securities either to the public, or through private placements. The general public are entitled to purchase shares of a Public Ltd Co. only, and a Pvt Ltd Co. cannot offer its securities to the public. The Act lays down strict provisions regarding the manner and eligibility to make an offer to the public, such as a number of detailed disclosure to be made in the Prospectus, the regulatory requirements to be satisfied to make such issue, etc. (also refer ICDR Regulations, 2009). On the other hand, a Private Placement is an offer of securities to certain specified persons only, without making it open for the general public, and the regulatory controls are less stringent here.
- The raising of capital can be done by issuing either Shares or Debentures of the company. A Share in a company gives a certain membership status to the purchasers, and they pay money in return for the Shares. Shares are further divided into Equity Shares and Preference Shares, and the equity shareholders get dividends out of the profits made by the company, and not any fixed amount of payment; while preference shareholders get a fixed dividend from time to time. Debentures are instruments wherein a creditor lends money to the company, and receives in return, a Certificate acknowledging the debt, and on the stipulated time, the debt will be paid back with interest. The Act provides for the different requirements and procedures under each of these.
- The Company may also accept deposits from its members, or take a loan from a credit by creating a charge on the assets of the company, in accordance with the provisions of the Act.
- The mode of management of the company, including the requirement to file Annual Returns, need to file declaration of any beneficial interest of any member in any Shares, maintenance of Records, Voting Rights and its procedure, kinds of Resolutions passed in meetings, etc. are also enumerated in the Act.
- The manner in which dividends are to be declared and paid to the shareholders.
- The mandates regarding maintenance of accounts of the company; and the appointment of auditors and manner of audit are given in the Act.
- The company must have a Board of Directors, and their appointment, qualifications, duties, and prohibitions are enumerated in the Act. The Board of Directors must hold meetings from time to time, and pass resolutions on certain matters; the Cat provides for the powers of Directors, Related Party Transactions, etc. The appointment and remuneration of managerial personnel is also provided in the Act.
- A company is liable to be under an inspection of document or an inquiry/investigation by the authorities.
- After having dealt with the manner of functioning of companies too, the Act lays down detailed Chapters on the winding up (voluntary or by Tribunal); compromise/arrangement/amalgamation with another company; revival and rehabilitation of sick companies, etc.
- Special provisions regarding Govt companies and Companies incorporated outside India. The Act also provides for the setting up of NCLT, Appellate Tribunal, and Special Courts.
HIGHLIGHTS OF THE 2013 ACT
- Maintenance of documents in electric form allowed
- Corporate Social Responsibility made mandatory
- One Person Company allowed
- Independent Directors and Women Directors made mandatory in some cases
- Whistle-Blower policy facilitated; ethical corporate behaviour promoted
- Better protection to minority shareholders – Exit option made available
- NCLT established to hear company related matters; replaced the Company Law Board
RELATED STATUTORY REFERENCES (for company compliances) (INDIAN KANOON)
- ICDR, 2009 by SEBI
- SEBI ACT
- LODR by SEBI
- Depositories Act
- SAST Regulations, 2011 by SEBI