For 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.