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India: Amended Companies Law for better management

January 29, 2019
VOL IV
ISSUE No. 05
Jan 29, 2019

 


 

India: Amended Companies Law for better management

India is a growing economy where development is attributable to number of factors such as availability of land, labour, raw materials, cost effective incentivizing schemes promoting commercial development in the country. With a view to carry out business operations, the entrepreneurs may opt for any of the available corporate vehicles such as proprietorship, partnership, limited liability partnership, etc. One of such medium to transact business is via setting up of a company.

Legal Light

The Government enforced the Companies Act, 2013 (hereinafter referred to as the “Act”) in order to monitor the affairs of the companies in India. The Act states the provisions regarding incorporation, obligations, liabilities, management of a company thereby ascertaining proper regulation thereof.

Ordinance enforced

The Government promulgated the Companies Amendment (Ordinance), 2018 (hereinafter referred to as the “Ordinance”) on November 2, 2018 after receiving the assent from the President of India.[1] The said ordinance has been brought into effect with the twin objectives of promotion of ease of doing business within the country along with better corporate compliance. Some of the aspects aimed at being covered under the said ordinance are;

  • Reduction of burden: Shifting of jurisdiction of 16 types of corporate offences from the special courts to in-house adjudication, which is expected to reduce the case load of Special Courts by over 60%, thereby enabling them to concentrate on serious corporate offences.
  • Easing penal provisions: The penalty for small companies and one-person companies has been reduced to half of that applicable to normal companies.
  • E-adjudication: Instituting a transparent and technology driven in-house adjudication mechanism on an online platform and publication of the orders on the website.
  • Strong regulation: Strengthening in-house adjudication mechanism by necessitating a concomitant order for making good the default at the time of levying penalty, to achieve the ultimate aim of achieving better compliance.
  • Unclogging of NCLT: To administer the legal affairs in respect to a company, the Government has provided the National Company Law Tribunal (also referred to as the “NCLT”) established for resolution of civil as well as criminal disputes thereto. Minimizing the burden on NCLT shall aid its focus on serious corporate offenses. Some of the measures taken to de-clog NCLT are:
  1. enlarging the pecuniary jurisdiction of Regional Director by enhancing the limit up to INR 25,00,000 as against earlier limit of INR 5,00,000 under Section 441 of the Act;
  2. vesting in the Central Government the power to approve the alteration in the financial year of a company under section 2(41); and
  3. vesting the Central Government, the power to approve cases of conversion of public companies into private companies.
  • Curbing Shell companies: Shell companies are the non-trading entities incorporated under the multiple layers of subsidiary companies which be used as device to effectuate illegal transactions such as tax evasion, money laundering etc. Declaration of commencement of business provision has been re-introduced to better tackle the menace of shell companies.
  • Better Corporate Management: Recommendations related to corporate compliance and corporate governance include greater disclosures with respect to public deposits; greater accountability to filing documents related to creation, modification and satisfaction of charges; non-maintenance of registered office to trigger de-registration process; and holding of directorships, beyond permissible limits to trigger disqualification of such directors.

Fostering better compliance for effective management of the company’s affairs, the Government has promulgated the ordinance of modifications in the prevalent company law provisions.

[1] http://pib.nic.in/newsite/PrintRelease.aspx?relid=184579

 


 

India: Govt. seeks tracing of fake WhatsApp messages

www.india.gov.in

The advent of technological advancements in the modern-day world has been a blessing in disguise. With the internet now being the key source of solution for all the problems, it has transferred the present-day life over the virtual platform. Addicted to this modern practice, people find answers to all their needs over the online medium including information, communication, records, commercial transactions, banking, grievances redressal and FIR reporting, etc.

Innovative Communication

Increasing digitalization has modified the system of communication. Integrating the people across the world, separated by geographical barriers on a medium that eliminates the necessity of physical presence, has been one of the greatest achievements of mankind. Individuals are now connected with others through emails, chats, messages, internet audio/ video calls, etc. transmitted through electronic impulses.

Unified Interface of WhatsApp

While many online portals are available catering to the major needs of communication of the people, on the most popular web-based App in this domain is ‘WhatsApp’. The Facebook owned WhatsApp, not only allows people to communicate with each other by sending/ receiving text messages, internet-based audio/ video calls but also permits sharing of media in the form of pictures, videos, documents all on a single App. The said App can also be operated from desktops.

Challenges before WhatsApp

The easy accessibility of internet and WhatsApp has become a new device for the anti-social elements to carry out the acts of cyber-terrorism through such modes spread with the intent to threaten the unity, integrity, security or sovereignty of the country or to strike terror in the people cause widespread fear. False and incorrect news or information create a sense of distrust among the citizens of the nation. The spread of rumours often leads to civil commotion and distress amongst the citizens thus hampering the peace in the country.

Controlling mechanism

The Government has ordered WhatsApp to formulate stringent strategies to trace the origins of incendiary messages in circulation using technological innovations when the social media giant resisted to determine the message source on account being violative of its privacy policy. However, as a measure to prevent sharing of rumours or unadvisable information, WhatsApp has capped the number of recipients of chat message to 5 to curb mass spamming.[1]

In furtherance to tackle the menace of fake and inappropriate information through its media, WhatsApp has appointed a grievance officer to address the concerns and complaints associated thereto.[2] It enables the users to seek help through mobile App or by contacting the said officer on email, signed with electronic signature or queries sent through postal services.

The Government on October 31, 2018 conveyed to the management of WhatsApp that the messaging App was required to trace the origin of the messages being transferred through its platform.[3] In the said regards the Government clarified that it did not seek to decrypt the messages but required WhatsApp to look into the location and identity of the senders of messages causing provocation for which the App has agreed for. It was stated that the measures are being taken to ensure that WhatsApp does not become a source of circulation of improper and incorrect spam messages.

With the objective of creating a safe online environment and preventing the use of much used messaging App for the fulfilment of nefarious activities, the Government has required WhatsApp for the source identification to curb such malpractices.

[1]https://economictimes.indiatimes.com/tech/internet/onus-of-keeping-social-media-safe-may-shift-from-users-to-facebook-whatsapp-telecom-secy/articleshow/65907922.cms

[2]https://economictimes.indiatimes.com/tech/internet/whatsapp-appoints-grievance-officer-for-india/articleshow/65921588.cms

[3] https://economictimes.indiatimes.com/tech/software/not-seeking-decryption-but-location-identity-of-those-sending-provocative-msgs-government-to-whatsapp/articleshow/66449214.cms

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