Monthly Archives: March 2014

Maintenance And Inspection Of Document In Electronic Form Under Indian Companies Act 2013 And Its Rules

Maintenance And Inspection Of Document In Electronic Form Under Indian Companies Act 2013 And Its RulesThe Indian Companies Act, 2013 (PDF) has prescribed additional and stringent obligations upon companies to not only maintain various document sin electronic form but to also ensure their cyber security. In short, techno legal compliances have been prescribed by the Companies Act, 2013 with penalty for non compliance.

Section 120 of the Companies Act, 2013 provides that without prejudice to any other provisions of this Act, any document, record, register, minutes, etc.,—

(a) required to be kept by a company; or

(b) allowed to be inspected or copies to be given to any person by a company under this Act, may be kept or inspected or copies given, as the case may be, in electronic form in such form and manner as may be prescribed.

Section 397 of the Act prescribes that notwithstanding anything contained in any other law for the time being in force, any document reproducing or derived from returns and documents filed by a company with the Registrar on paper or in electronic form or stored on any electronic data storage device or computer readable media by the Registrar, and authenticated by the Registrar or any other officer empowered by the Central Government in such manner as may be prescribed, shall be deemed to be a document for the purposes of this Act and the rules made thereunder and shall be admissible in any proceedings thereunder without further proof or production of the original as evidence of any contents of the original or of any fact stated therein of which direct evidence is admissible.

Section 398(1) of the Act prescribes that notwithstanding anything to the contrary contained in this Act, and without prejudice to the provisions contained in section 6 of the Information Technology Act, 2000, the Central Government may make rules so as to require from such date as may be prescribed in the rules that—

(a) such applications, balance sheet, prospectus, return, declaration, memorandum, articles, particulars of charges, or any other particulars or document as may be required to be filed or delivered under this Act or the rules made thereunder, shall be filed in the electronic form and authenticated in such manner as may be prescribed;

(b) such document, notice, any communication or intimation, as may be required to be served or delivered under this Act, in the electronic form and authenticated in such manner as may be prescribed;

(c) such applications, balance sheet, prospectus, return, register, memorandum, articles, particulars of charges, or any other particulars or document and return filed under this Act or rules made thereunder shall be maintained by the Registrar in the electronic form and registered or authenticated, as the case may be, in such manner as may be prescribed;

(d) such inspection of the memorandum, articles, register, index, balance sheet, return or any other particulars or document maintained in the electronic form, as is otherwise available for inspection under this Act or the rules made thereunder, may be made by any person through the electronic form in such manner as may be prescribed;

(e) such fees, charges or other sums payable under this Act or the rules made thereunder shall be paid through the electronic form and in such manner as may be prescribed; and

(f) the Registrar shall register change of registered office, alteration of memorandum or articles, prospectus, issue certificate of incorporation, register such document, issue such certificate, record the notice, receive such communication as may be required to be registered or issued or recorded or received, as the case may be, under this Act or the rules made thereunder or perform duties or discharge functions or exercise powers under this Act or the rules made thereunder or do any act which is by this Act directed to be performed or discharged or exercised or done by the Registrar in the electronic form in such manner as may be prescribed.

Explanation.— For the removal of doubts, it is hereby clarified that the rules made under this section shall not relate to imposition of fines or other pecuniary penalties or demand or payment of fees or contravention of any of the provisions of this Act or punishment therefor.

(2) The Central Government may, by notification, frame a scheme to carry out the provisions of sub-section (1) through the electronic form.

Section 400 of the Act provides that the Central Government may also provide in the rules made under section 398 and section 399 that the electronic form for the purposes specified in these sections shall be exclusive, or in the alternative or in addition to the physical form, therefor.

Section 401 of the Act provides that the Central Government may provide such value added services through the electronic form and levy such fee thereon as may be prescribed.

Section 402 of the Act provides that all the provisions of the Information Technology Act, 2000 relating to the electronic records, including the manner and format in which the electronic records shall be filed, in so far as they are not inconsistent with this Act, shall apply in relation to the records in electronic form specified under section 398.

The Companies (Management and Administration) Rules, 2014 (PDF) also deal with management and inspection of documents in electronic form. Rule 27 (1) provides that every listed company or a company having not less than one thousand shareholders, debenture holders and other security holders, shall maintain its records, as required to be maintained under the Act or rules made there under, in electronic form.

The Explanation to Rule 27 (1) provides that for the purposes of this sub-rule, it is hereby clarified that in case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date of notification of provisions of section 120 of the Act.

Rule 27 (2) provides that the records in electronic form shall be maintained in such manner as the Board of directors of the company may think fit,

The proviso to Rule 27 (2) provides that -

(a) the records are maintained in the same formats and in accordance with all other requirements as provided in the Act or the rules made there under;

(b) the information as required under the provisions of the Act or the rules made there under should be adequately recorded for future reference;

(c) the records must be capable of being readable, retrievable and reproducible in printed form;

(d) the records are capable of being dated and signed digitally wherever it is required under the provisions of the Act or the rules made there under;

(e) the records, once dated and signed digitally, shall not be capable of being edited or altered;

(f) the records shall be capable of being updated, according to the provisions of the Act or the rules made there under, and the date of updating shall be capable of being recorded on every updating.

The Explanation to Rule 27 (2) provides that for the purpose of this rule, the term “records” means any register, index, agreement, memorandum, minutes or any other document required by the Act or the rules made there under to be kept by a company.

Rule 28 deals with security of records maintained in electronic form. Rule 28(1) provides that the Managing Director, Company Secretary or any other director or officer of the company as the Board may decide shall be responsible for the maintenance and security of electronic records.

Rule 28(2) provides that the person who is responsible for the maintenance and security of electronic records shall-

(a) provide adequate protection against unauthorized access, alteration or tampering of records;

(b) ensure against loss of the records as a result of damage to, or failure of the media on which the records are maintained;

(c) ensure that the signatory of electronic records does not repudiate the signed record as not genuine;

(d) ensure that computer systems, software and hardware are adequately secured and validated to ensure their accuracy, reliability and consistent intended performance;

(e) ensure that the computer systems can discern invalid and altered records;

(f) ensure that records are accurate, accessible, and capable of being reproduced for reference later;

(g) ensure that the records are at all times capable of being retrieved to a readable and printable form;

(h) ensure that records are kept in a non-rewriteable and non-erasable format like pdf. version or some other version which cannot be altered or tampered;

(i) ensure that at least one backup, taken at a periodicity of not exceeding one day, are kept of the updated records kept in electronic form, every backup is authenticated and dated and such backups shall be securely kept at such places as may be decided by the Board;

(j) limit the access to the records to the managing director, company secretary or any other director or officer or persons performing work of the company as may be authorized by the Board in this behalf;

(k) ensure that any reproduction of non-electronic original records in electronic form is complete, authentic, true and legible when retrieved;

(l) arrange and index the records in a way that permits easy location, access and retrieval of any particular record; and

(m) take necessary steps to ensure security, integrity and confidentiality of records.

Rule 29 deals with inspection and making of copies of records maintained in electronic form. It provides that  where a company maintains its records in electronic form, any duty imposed by the Act or rules made there under to make those records available for inspection or to provide copies of the whole or a part of those records, shall be construed as a duty to make the records available for inspection in electronic form or to provide copies of those records containing a clear reproduction of the whole or part thereof, as the case may be on payment of not exceeding ten rupees per page.

Rule 30 provides that if any default is made in compliance with any of the provisions of this rule, the company and every officers or such other person who is in default shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which such contravention continues.

Calling Of Extraordinary General Meeting By Requistionists Under Companies Act 2013 Rules

Calling Of Extraordinary General Meeting By Requistionists Under Companies Act 2013 RulesSection 100(4) of the Indian Companies Act, 2013 (PDF) provides that if the Board does not, within twenty-one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requisition, the meeting may be called and held by the requisitonists themselves within a period of three months from the date of the requisition. The notices of meeting can be sent through electronic mode under the new company law of India and even voting can be done electronically.

Rule 20 of the Companies (Management and Administration) Rules, 2014 (PDF) deals with the issue at hand. Rule 20(1) provides that members may requisition convening of an extraordinary general meeting in accordance with sub-section (4) of section 100, by providing such requisition in writing or through electronic mode at least clear twenty-one days prior to the proposed date of such extraordinary general meeting.

Rule 20(2) provides that the notice shall specify the place, date, day and hour of the meeting and shall contain the business to be transacted at the meeting.

Explanation.- For the purposes of this sub-rule, it is here by clarified that requisitonists should convene meeting at Registered office or in the same city or town where Registered office is  situated and such meeting should be convened on working day.

Rule 20(3) provides that if the resolution is to be proposed as a special resolution, the notice shall be given as required by sub-section (2) of section114.

Rule 20(4) provides that the notice shall be signed by all the requisitonists or by a requisitionist’s duly authorised in writing by all other requisitionists on their behalf or by sending an electronic request attaching therewith a scanned copy of such duly signed requisition.

Rule 20(5) provides that no explanatory statement as required under section 102 need be annexed to the notice of an extraordinary general meeting convened by the requisitionists and the requisitionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.

Rule 20(6) provides that the notice of the meeting shall be given to those members whose names appear in the Register of members of the company within three days on which the

Requisitionists deposit with the Company a valid requisition for calling an extraordinary general meeting.

Rule 20(7) provides that where the meeting is not convened, the requisitionists shall have a right to receive list of members together with their registered address and number of shares held and the company concerned is bound to give a list of members together with their registered address made as on twenty first day from the date of receipt of valid requisition together with such changes, if any, before the expiry of the forty-five days from the date of receipt of a valid requisition.

Rule 20(8) provides that the notice of the meeting shall be given by speed post or registered post or through electronic mode. Any accidental omission to give notice to, or the non-receipt of such notice by, any member shall not invalidate the proceedings of the meeting.

Electronic Voting Under The Indian Companies Act 2013

Electronic Voting Under The Indian Companies Act 2013Electronic voting is a revolutionary concept whose time has come. E-voting is already being explored at the elections in India. Now e-voting has been approved by the Indian Companies Act, 2013 (PDF) as well. However, security issues of e-voting in India are still big concern for Indian government and corporate stakeholders. Nevertheless with the notification of the Companies Act 2013 and the Companies (Management and Administration) Rules, 2014 (PDF), companies in India would be required to provide the option of electronic voting in certain cases. Even notices of meeting can be sent through electronic mode under the new company law of India.

According to Rule 20(1) every listed company or a company having not less than one thousand shareholders, shall provide to its members facility to exercise their right to vote at general meetings by electronic means.

Rule 20(2) provides that a member may exercise his right to vote at any general meeting by electronic means and company may pass any resolution by electronic voting system in accordance with the provisions of this rule.

The Explanation to Rule 20(2) provides that for the purposes of this rule.-

(i) the expressions “voting by electronic means” or “electronic voting system” means a “secured system” based process of display of electronic ballots, recording of votes of the members and the number of votes polled in favour or against, such that the entire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate ‘cyber security’;

(ii) the expression “secured system” means computer hardware, software, and procedure that –

(a) are reasonably secure from unauthorized access and misuse;

(b) provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d) adhere to generally accepted security procedures.

(iii). the expression “Cyber security” means protecting information, equipment, devices, computer, computer resource, communication device and information stored therein from unauthorised access, use, disclosures, disruption, modification or destruction.

Rule 20(3) provides that a company which opts to provide the facility to its members to exercise their votes at any general meeting by electronic voting system shall follow the following procedure, namely;

(i) the notices of the meeting shall be sent to all the members, auditors of the company, or directors either -

(a) by registered post or speed post ; or

(b) through electronic means like registered e-mail id;

(c) through courier service;

(ii) the notice shall also be placed on the website of the company, if any and of the agency forthwith after it is sent to the members;

(iii) the notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means;

(iv) the notice shall clearly indicate the process and manner for voting by electronic means and the time schedule including the time period during which the votes may be cast and shall also provide the login ID and create a facility for generating password and for keeping security and casting of vote in a secure manner;

(v) the company shall cause an advertisement to be published, not less than five days before the date of beginning of the voting period, at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, about having sent the notice of the meeting and specifying therein, inter alia, the following matters, namely:-

(a) statement that the business may be transacted by electronic voting;

(b) the date of completion of sending of notices;

(c) the date and time of commencement of voting through electronic means;

(d) the date and time of end of voting through electronic means;

(e) the statement that voting shall not be allowed beyond the said date and time;

(f) website address of the company and agency, if any, where notice of the meeting is displayed; and

(g) contact details of the person responsible to address the grievances connected with the electronic voting;

(vi) the e-voting shall remain open for not less than one day and not more than three days

provided that in all such cases, such voting period shall be completed three days prior to the date of the general meeting;

(vii) during the e-voting period, shareholders of the company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically provided that once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently.

(viii) at the end of the voting period, the portal where votes are cast shall forthwith be blocked.

(ix) the Board of directors shall appoint one scrutinizer, who may be chartered Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an advocate, but not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinize the e-voting process in a fair and transparent manner. The scrutinizer so appointed may take assistance of a person who is not in employment of the company and who is well-versed with the e-voting system;

(x) the scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority;

(xi) the scrutinizer shall, within a period of not exceeding three working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the company and make a scrutinizer’s report of the votes cast in favour or against, if any, forthwith to the Chairman;

(xii) the scrutinizer shall maintain a register either manually or electronically to record the assent or dissent, received, mentioning the particulars of name, address, folio number or client ID of the shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights;

(xiii) the register and all other papers relating to electronic voting shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the register and other related papers to the company.

(xiv) the results declared along with the scrutinizer’s report shall be placed on the website of the company and on the website of the agency within two days of passing of the resolution at the relevant general meeting of members;

(xv) subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members.

Notice Of The Meeting Under The Rules Of The Indian Companies Act 2013

Notice Of The Meeting Under The Rules Of The Indian Companies Act 2013Sending of notices regarding company’s affairs by company, board or directors or any other interested stakeholder is of utmost importance. The Indian Companies Act, 2013 (PDF) and the Companies (Management and Administration) Rules, 2014 (PDF) deal with this issue. As the corresponding provisions of the Companies Act 2013 and the Rules have been notified by Indian government, companies in India are required to comply with these provisions.

Rule 18(1) provides that a company may give notice through electronic mode. The Explanation to Rule 18(1) provides that for the purpose of this rule, the expression “electronic mode” shall mean any communication sent by a company through its authorized and secured computer programme which is capable of producing confirmation and keeping record of such communication addressed to the person entitled to receive such communication at the last electronic mail address provided by the member.

Rule 18(2) provides that a notice may be sent through e-mail as a text or as an attachment to e-mail or as a notification providing electronic link or Uniform Resource Locator for accessing such notice.

Rule 18(3) (i) provides that the e-mail shall be addressed to the person entitled to receive such e-mail as per the records of the company or as provided by the depository. The proviso to Rule 18(3) (i) provides that the company shall provide an advance opportunity atleast once in a financial year, to the member to register his e-mail address and changes therein and such request may be made by only those members who have not got their email id recorded or to update a fresh email id and not from the members whose e-mail ids are already registered.

Rule 18(3) (ii) provides that the subject line in e-mail shall state the name of the company, notice of the type of meeting, place and the date on which the meeting is scheduled.

Rule 18(3) (iii) provides that if notice is sent in the form of a non-editable attachment to e-mail, such attachment shall be in the Portable Document Format or in a non-editable format together with a “link or instructions” for recipient for downloading relevant version of the software.

Rule 18(3) (iv) provides that when notice or notifications of availability of notice are sent by e-mail, the company should ensure that it uses a system which produces confirmation of the total number of recipients e-mailed and a record of each recipient to whom the notice has been sent and copy of such record and any notices of any failed transmissions and subsequent re-sending shall be retained by or on behalf of the company as “proof of sending”.

Rule 18(3) (v) provides that the company’s obligation shall be satisfied when it transmits the e-mail and the company shall not be held responsible for a failure in transmission beyond its control.

Rule 18(3) (vi) provides that if a member entitled to receive notice fails to provide or update relevant e-mail address to the company, or to the depository participant as the case may be, the company shall not be in default for not delivering notice via e-mail.

Rule 18(3) (vii) provides that the company may send e-mail through in-house facility or its registrar and transfer agent or authorise any third party agency providing bulk e-mail facility.

Rule 18(3) (viii) provides that the notice made available on the electronic link or Uniform Resource Locator has to be readable, and the recipient should be able to obtain and retain copies and the company shall give the complete Uniform Resource Locator or address of the website and full details of how to access the document or information.

Rule 18(3) (ix) provides that the notice of the general meeting of the company shall be simultaneously placed on the website of the company if any and on the website as may be notified by the Central Government. The Explanation to Rule 18(3) (ix) provides that for the purpose of this rule, it is hereby declared that the extra ordinary general meeting shall be held at a place within India.

Regulatory Compliances Under Indian Companies Act 2013: A Techno Legal Perspective

Regulatory Compliances Under Indian Companies Act 2013 A Techno Legal PerspectiveFor too long the Indian Companies Act, 1956 governed the corporate culture and regulatory regime for companies operating in India. The need to enact a contemporary law was long felt but for many decades this need was not transformed into a modern corporate law of India. Finally, the Indian Companies Act, 2013 (PDF) was enacted and its enforcement was planned to be made in a phased manner.

The Ministry of Corporate Affairs (MCA) has already notified some sections and rules of the Indian Companies Act, 2013. Interested stakeholders may see the consolidated notifications of Indian Companies Act, 2013 and the corresponding rules for a better and detailed insight. The companies and individuals associated with them are required to comply with the new compliance and regulatory requirements with effect from 01-04-2014.

We at Perry4Law believe that this is a big challenge for the companies and these individuals as most of these compliance requirements are new and require non traditional approach. It is not easy to migrate from the 1956 Act to the 2013 Act so easily. The times have changed especially due to the techno legal compliances requirements that Indian companies cannot ignored anymore. These include cyber law due diligence (PDF) and cyber security due diligence.

Corporate frauds investigation in India would also increase as the Serious Frauds Investigation office (SFIO) has been given wide powers under the 2013 Act. MCA has also issued some Rules under Chapter XIV of Indian Companies Act, 2013 pertaining to Inspection, Inquiry and Investigation by Indian Authorities and SFIO. Perry4Law has also provided its suggestions (PDF) on these rules.

Corporate espionage cases would require the companies to manage complicated e-discovery and cyber forensics compliances issues in the future. For instance, Target Corporation is facing numerous litigations in different jurisdictions due to cyber breach that it failed to address properly. International legal issues of cyber attacks would also be required to be kept in mind by Indian companies under the new corporate environment. Clearly the cyber and technology law compliances in India would be a big challenge for Indian companies to manage as that cannot be ignored by Indian companies anymore.

With the present techno legal framework and its non compliance by Indian and foreign companies, the cyber litigations against foreign websites would increase in India in the near future. Even the foreign investors in e-commerce and technology ventures of India are required to follow cyber law due diligence requirements. Very soon mandatory cyber security breach notifications would be enforced in India as well. Further, cyber security breaches in India would also raise complicated cyber security issues for the companies as most of them are not complying with techno legal requirements of Indian laws and regulations.

Ministry Of Corporate Affairs (MCA) Notified Rules For 11 Chapters Of Indian Companies Act 2013

Ministry Of Corporate Affairs (MCA) Notified Rules For 11 Chapters Of Indian Companies Act 2013The enactment of Indian Companies Act, 2013 (PDF) was a significant step to improve the corporate culture in India. However, its implementation and enforcement was due. Ministry of corporate affairs (MCA) initially notified nearly 98 sections of Indian Companies Act, 2013 in the first phase.

Subsequently, MCA notified 183 sections to streamline Indian corporate environment. Companies in India would now be required to comply with these notified provisions of Indian Companies Act, 2013 from April 1st 2014 as MCA has issued a notification (PDF) in this regard that has brought into force many provisions.

MCA has also notified Rules for 11 chapters of the Companies Act, 2013. These include Rules for specifications and definitions, incorporation of companies, prospectus and allotment of securities, shares and debentures, registration of charges, management and administration, declaration and payment of dividend, accounts, appointment and qualification of directors, board meetings and powers, and corporate social responsibility.

As these Sections and Rules would become operational from 1st April 2014 there would be lots of regulatory compliance issues that would be involved. Similarly, it is not easy to migrate from the 1956 Act to the 2013 Act so easily. The times have changed especially due to the techno legal requirements that Indian companies cannot ignored anymore. These include cyber law due diligence (PDF) and cyber security due diligence.

Indian Companies Act 2013 And Indian Companies Act Rules 2014 And Their Notifications

Indian Companies Act 2013 And Indian Companies Act Rules 2014 And Their NotificationsFor the larger interest of all stakeholders, Perry4Law is providing the documents (PDFs) and weblinks of the relevant provisions of Indian Companies Act, 2013 that have been notified by Ministry of corporate Affairs (MCA). These include notification of Rules under the Indian Companies Act, 2013 and other notifications made by Indian Government/MCA from time to time. These also include our own Suggestions to Indian Government/MCA and other Government Departments as well as those suggestions that Indian and Foreign Companies may find useful.

Indian Companies Act, 2013 (PDF)

MCA Notification Dated 26-03-2014 (PDF) Regarding 183 Sections of Indian Companies Act 2013

Table Containing Provisions Of Companies Act, 2013 As Notified Up To Date And Corresponding Provisions Thereof Under Companies Act, 1956 (PDF)

Roll Out Plan Of Various Forms Under The Companies Act, 2013 And Continuance Of Forms Under The Provisions Of Companies Act, 1956 (PDF)

Companies 2nd (Removal of Difficulties) Order, 2014 (PDF)

Companies (Appointment and Qualification of Directors) Rules, 2014 (PDF)

Companies (Corporate Social Responsibility Policy) Rules, 2014 (PDF)

Companies (Incorporation) Rules 2014 (PDF)

Companies (Share Capital and Debentures) Rules, 2014 (PDF)

Companies (Accounts) Rules, 2014 (PDF)

Companies (Declaration and Payment of Dividend) Rules, 2014 (PDF)

Companies (Management and Administration) Rules, 2014 (PDF)

Companies (Meetings of Board and its Powers) Rules, 2014 (PDF)

Companies (Prospectus and Allotment of Securities) Rules, 2014 (PDF)

Companies (Registration of Charges) Rules, 2014 (PDF)

Companies (Specification Of Definitions Details) Rules, 2014 (PDF)

Companies (Adjudication of Penalties) Rules, 2014 (PDF)

Companies (Miscellaneous) Rules, 2014 (PDF)

Nidhi Rules, 2014 (PDF)

Companies (Acceptance of Deposits) Rules, 2014 (PDF)

Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (PDF)

Companies (Audit and Auditors) Rules, 2014 (PDF)

Companies (Authorised to Registered) Rules, 2014 (PDF)

Companies (Registration of Foreign Companies) Rules, 2014 (PDF)

Companies (Registration Offices and Fees) Rules, 2014 (PDF)

Companies (Inspection, Investigation and Inquiry) Rules, 2014 (PDF) (Finally Notified)

Rules under Chapter XIV of Indian Companies Act, 2013 pertaining to Inspection, Inquiry and Investigation (PDF) (As Proposed)

Suggestions Regarding Rules Pertaining to Inspection, Inquiry and Investigation (SFIO) by Perry4Law (PDF)

Cyber Law Due Diligence Requirements For Indian And Foreign Companies (PDF)

We hope the stakeholders would find these links useful. We would also update this list from time to time. Please bookmark this page so that you can have updated information about Indian Companies Act, 2013 and Rules/Notifications made thereunder.

Serious Fraud Investigating Office (SFIO) Would Prosecute Vaishnavi Group For Various Legal Violations

Serious Fraud Investigating Office (SFIO) Would Prosecute Vaishnavi Group For Various Legal ViolationsCorporate governance in India is all set to be streamlined. The starting point was the enactment of Indian Companies Act, 2013 (PDF) to improve the corporate culture in India. Corporate frauds investigation in India was also strengthened by the Companies Act, 2013.The powers of Serious Fraud Investigation Office (SFIO) were also enhanced so that they can effectively deal with corporate frauds and crimes in India.

To further refine the corporate environment of India, Ministry of Corporate Affairs (MCA) has also notified 183 sections of Indian Companies Act, 2013 that would change the way companies have to regulate their business in India and abroad. The corporate world of India would now be required to comply with the notified provisions (PDF) of Indian Companies Act, 2013 from April 1st 2014.

MCA has already issued some Rules under Chapter XIV of Indian Companies Act, 2013 pertaining to Inspection, Inquiry and Investigation by Indian Authorities and Serious Frauds Investigation Office (SFIO). The Suggestions Regarding Rules Pertaining to Inspection, Inquiry and Investigation (SFIO) by Perry4Law (PDF) has already been provided by us in this regard. Now even the Central Government permission is not required by Central Bureau of Investigation (CBI) to prosecute senior bureaucrats for corruption cases monitored by Supreme Court of India.

SFIO has on Wednesday informed Supreme Court of India that it would prosecute various Vaishnavi group companies owned by controversial former corporate lobbyist Niira Radia for alleged violation of the Companies Act. In an affidavit filed before the court, SFIO said that MCA has granted sanction and filing of prosecution against the companies, that once catered to high-profile clients like Tatas, Unitech and Reliance Industries, is under process. The agency also stated that on the direction of MCA it has also sent its reports to CBI and Income Tax department for taking action on their part.

The apex court was also informed that the SFIO was in the process of lodging a former complaint with ICAI (Institute of Chartered Accountants of India) and ICSI (Institute of Company Secretaries of India) for initiating disciplinary action against the concerned auditors and company secretaries respectively, as per MCA’s direction.

Ministry Of Corporate Affairs Notifies 183 Sections Of Indian Companies Act 2013

Ministry Of Corporate Affairs Notifies 183 Sections Of Indian Companies Act 2013The corporate environment in India is fast changing and companies have to adjust their way of functioning according o the changing regulatory landscape. Companies operating in India are now required to comply with many unique techno legal compliances that were not conceivable few years back. These include cyber law and cyber security compliances as well and the companies in India cannot ignore the cyber due diligence anymore.

The Securities and Exchange Board of India (SEBI) has announced that it would release corporate governance rules for the listed entities in India. Further, the Parliament of India passed the Indian Companies Act, 2013 (PDF) to improve the corporate culture in India. Powers of Serious Fraud Investigation Office (SFIO) were also enhanced so that they can effectively deal with corporate frauds and crimes in India. Now the Indian Government has notified 183 sections of Indian Companies Act, 2013 that would change the way companies have to regulate their business in India and abroad.

The Ministry of Corporate Affairs (MCA) has already issued some Rules under Chapter XIV of Indian Companies Act, 2013 pertaining to Inspection, Inquiry and Investigation by Indian Authorities and Serious Frauds Investigation Office (SFIO). The Suggestions Regarding Rules Pertaining to Inspection, Inquiry and Investigation (SFIO) by Perry4Law (PDF) has already been provided by us in this regard. Now even the Central Government permission is not required by Central Bureau of Investigation (CBI) to prosecute senior bureaucrats for corruption cases monitored by Supreme Court of India.

There is no escape from the reality that white collar crimes and financial frauds are increasing in India. Further, IT and cyber frauds in Indian companies are increasing. By their very nature these high profile crimes affect corporate sector. Indian companies are also facing increased corporate frauds, financial frauds, white color crimes and technological frauds.

With the present techno legal framework and its non compliance by Indian and foreign companies, the cyber litigations against foreign websites would increase in India in the near future. Even the foreign investors in e-commerce and technology ventures of India are required to follow cyber law due diligence requirements (PDF). The legal mood is very clear and cyber due diligence cannot be ignored by Indian companies anymore. Very soon mandatory cyber security breach notifications would be enforced in India as well. Further, cyber security breaches in India would also raise complicated cyber security issues for the companies as most of them are not complying with techno legal requirements of Indian laws and regulations.

Corruption among corporate world has also necessitated use of e-discovery and cyber law due diligence by and against Indian companies. For instance, Indian and foreign corruption and technology related due diligences in India has gained importance. Similarly, corporate frauds investigations in India are increasingly using e-discovery and cyber forensics methodologies to solve corporate frauds and crimes. Although e-discovery legal issues are still ignored in India yet the companies doing business in India would be required to comply with e-discovery requirements. Now the corporate world of India would be required to comply with the notified provisions of Indian Companies Act, 2013 as well from April 1st 2014 as MCA has issued a notification (PDF) in this regard that has brought into force many provisions.

These include auditor rotation, one-person company and mandatory secretarial audit. This is in addition to the nearly 98 sections that were notified in the first phase. With the latest move, the company law will be substantially operalitionalised from 1st April 2014. The rules for the provisions are also expected in the next few days. The areas which are yet to be notified are compromise and arrangement, oppression and mismanagement, winding up, sick companies, special courts, national company law tribunal, national financial reporting authority and investor education and protection fund.

Food, Health, Cosmetics, Drugs, Medicines And Nutraceutical Laws, Rules And Regulations In India

Food, Health, Cosmetics, Drugs, Medicines And Nutraceutical Laws, Rules And Regulations In IndiaThis is the alphabetic arrangement of various Indian laws pertaining to food, health, cosmetics, drugs, medicines, nutraceuticals, etc. Perry4Law hopes that our readers would find them useful.

(1) Clinic Establishment:

Clinical Establishments (Central Government) Rules 2012 (PDF)

Clinical Establishments (Registration And Regulation) Act 2010 (PDF)

Notification Of The Clinics Establishments Act 2010 (PDF)

Application for Provisional Registration of Clinical Establishment (PDF)

(2) Drugs And Cosmetics:

Drugs And Cosmetics Act 1940 (PDF)

Drugs And Cosmetics Rules 1945 Of India (PDF)

Drugs And Cosmetics (Amendment) Act 2013 (PDF)

Drugs And Cosmetics (5th Amendment) Rules 2013 (PDF)

(3) Food Safety:

Food Safety and Standards Act 2006 (PDF)

Food Safety And Standards (Contaminants, Toxins And Residues) Regulations 2011 (PDF)

Food Safety And Standards (Food Products Standards And Food Additives) Regulations 2011 (PDF)

Food Safety And Standards (Food Product Standards And Food Additives) Regulation 2011 (Part II) (PDF)

Food Safety And Standards (Laboratory And Sample Analysis) Regulations 2011 (PDF)

Food Safety And Standards (Licensing And Registration Of Food Businesses) Regulations 2011 (PDF)

Food Safety And Standards (Packaging And Labelling) (Amendment) Regulations 2011 (PDF)

Food Safety And Standards (Packaging And Labelling) Regulations 2011 (PDF)

Food Safety And Standards (Prohibition And Restrictions On Sales) Regulations 2011 (PDF)

(4) Medical Council And Pharmacy:

Indian Medicine Central Council Act 1970 (PDF)

The Indian Pharmacy Act 1948 (PDF)

(5) Narcotic Drugs And Psychotropic Substances:

Narcotic Drugs And Psychotropic Substances Act 1985 (PDF)

Narcotic Drugs And Psychotropic Substances (Regulation Of Controlled Substances) Order 1993 (PDF)

Prevention Of Illicit Traffic In Narcotic Drugs And Psychotropic Substances Act 1988 (PDF)

(6) Food Adulteration:

Prevention of Food Adulteration Act 1954 And The Prevention Of Food Adulteration Rules 1955 (PDF)

(7) Electronic Medical Records:

Recommendations On Electronic Medical Records Standards In India (PDF)

(8) HIPAA:

Health Insurance Portability And Accountability Act Of 1996 (PDF) (United States).

Commerce And Industry Ministry Of India Favours 100 Per Cent FDI In B2C E-Commerce Sector

Commerce And Industry Ministry Of India Favours 100 Per Cent FDI In B2C E-Commerce SectorThe business structuring of e-commerce in India is not an easy task. The stakeholders have to comply with techno legal requirements in order to successfully run e-commerce businesses in India. Further, there are many techno legal e-commerce compliances in India that are presently not complied with a majority of e-commerce players of India.

Even the foreign investors are not taking these irregularities and non compliances seriously and they are investing in the hope that in the later years they would regularise these irregularities. However, not all irregularities are capable of being rectified as many of them are civilly and criminally punishable under Indian laws. As on date e-commerce due diligence in India is neglected by investors and financial institutions.

As per the Consolidated FDI Policy of India 2013 by Department of Industrial Policy and Promotion (DIPP) (PDF), the foreign direct investment (FDI) in e-commerce activities in India is allowed upto 100% through automatic route. E-commerce activities refer to the activity of buying and selling by a company through the e-commerce platform. Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.

As per the present FDI policy, FDI in Single Brand product retail trading is allowed upto 100% through government approval route and is allowed upto 51% in multi brand retail trading through government approval. This is subject to compliance with additional requirements as prescribed by the policy.

Recently a Discussion Paper on E-Commerce in India by Department of Industrial Policy and Promotion (DIPP) 2014 (PDF) was released. The objective was to seek inputs and suggestions of FDI and e-commerce stakeholders. Now the commerce and industry ministry is in favour of allowing 100 per cent FDI in the e-commerce sector and a decision on liberalising the sector may be announced after the approval of the Election Commission, which has declared general elections beginning April 7.

After the Election Commission announced the schedule for the Lok Sabha election, model code of conduct has come into place, which bars the caretaker government to refrain from taking any policy decision which may disturb the level-playing field. The Election Commission has also issued guidelines for media coverage under Section 126 of RP Act, 1951.

Tesco has already entered into Indian market in this field. UK-based Tesco is the only company to have entered the sector with an investment of $110 million, more than one year after the government allowed 51 per cent FDI in the sector in September 2012. Two foreign retailers, Carrefour and Aeon, have also expressed interest in setting shops in the country with Indian partners. French-multinational retailer Carrefour is understood to be in talks with Bharti enterprises, which broke up with US-based Walmart last year, to enter the Indian multi-brand retail space. Carrefour has been present in India since 2010 in wholesale cash and carry segment and has five stores across the country.