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.