Tag: Companies Act

Related party transactions have once again found themselves the subject of public scrutiny due to occurrences at InterGlobe Aviation Limited ("Interglobe"), which runs and operates the low-cost airline Indigo. Interglobe has been facing stormy weather following a dispute between its promoters, Rakesh Gangwal and Rahul Bhatia. Since mid-2018 the feud between both promoters has snowballed into a very public feud. While there are several contentious issues on which the promoters disagree, one of the main reasons for their public fallout has been over related party transactions. In 2018, Rakesh Gangwal flagged and alleged that Interglobe has entered into related party transactions with several companies associated with Rahul Bhatia, a charge that the latter insists is mala fide. ...

In January 2009, India witnessed one of its biggest corporate scandals - the ‘Satyam scandal’ also referred to as ‘India’s Enron’. Satyam Computers Services Limited ("SCSL") was under the microscope for fraudulent activity and misrepresentation of its accounts to its board, stock exchanges, regulators, investors and all other stakeholders. Thereafter, shareholders of SCSL, approximately 300,000 were unsuccessful in claiming damages worth millions due to the absence of the provision for filing a class action suit under the Companies Act, 1956.American investors on the other hand were able to claim their part of damages in the US courts through a class action suit against SCSL....

On 21^st February, 2019, the Ministry of Corporate Affairs (MCA) notified the Companies (Incorporation) Amendment Rules, 2019 ("Amendment Rules") directing every company incorporated on or before 31^st December, 2017 to file E-form INC – 22 A to verify their registered office. This move of the government along with other newly introduced stringent compliances such as director KYCs, is with the aim to tighten the noose around dummy entities....

The Companies (Amendment) Ordinance 2018 ("2018 Ordinance"), issued on November 2, 2018 brought about significant changes to certain provisions of the Companies Act, 2013 ("Act"). The 2018 Ordinance was passed by the Lok Sabha, though could not be taken up by the Rajya Sabha and which was due to expire on January 21, 2019. In order to give continuity to the amendments introduced by the 2018 Ordinance, it was re-promulgated on January 12, 2019 by another ordinance i.e. the Companies Amendment Ordinance 2019 ("Ordinance") on January 12, 2019 with its provisions effective from November 2, 2018....

On 13th June 2018, the Ministry of Corporate Affairs notified Section 90 of the Companies Act, 2013 ("Act") and the Companies (Significant Beneficial Owners) Rules, 2018 ("SBO Rules"). Both aim to make transparent a company’s ownership by tracing the identity of the individuals who ultimately control the company....