Company Administration -Unit 1 Corporate Law

About Company Administration. Unit 1 of Corporate Law Paper

1. Administration of Company Law Unit 1 1

2. Administrative Authorities Central Government – Head Quarters in New Delhi Functions through Seven Regional Directors (RDs), Twenty Two RoCs and one Central Registration Centre at Manesar . National Company Law Tribunal (NCLT) National Company Law Appellate Tribunal (NCLAT) Special Courts Official Liquidators NFRA – National Financial Reporting Authority (Independent regulator to ensure the quality of Audits, Audit firms, etc.) SFIO – Serious Fraud Investigation Office (Multi Disciplinary Investigating Agency, wherein experts from diverse fields work together to unravel corporate frauds) IICA – Indian Institute of Corporate Affairs (Think tank and capacity building institute; it is entrusted with the power to conduct exam for Independent Director) 2

3. Central Government Central Government acts through Ministry of Corporate Affairs (MCA) http:// mca.gov.in/MinistryV2/homepage.html Central Government is the APEX Body to administer Company Law in the country. It is vested with extensive and wide powers in respect of several matters relating to Company Law. Central Government is empowered to: Delegate its powers and functions Accord approval Condone delay in certain cases Exempt class( es ) of companies from the provisions of Companies Act Amend rules or provisions of Companies Act 3

4. NCLT (Tribunal) The Central Government has constituted National Company Law Tribunal (NCLT) under section 408 of the Companies Act, 2013 w.e.f . 01st June 2016. In the first phase the Ministry of Corporate Affairs have set up eleven Benches, one Principal Bench at New Delhi and one each Regional Benches at New Delhi, Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati , Jaipur , Hyderabad, Kolkata and Mumbai. Subsequently more benches at Cuttack, Jaipur, Kochi ,Amravati, and Indore have been setup.  https:// nclt.gov.in/content/national-company-law-tribunal-benches 4

5. NCLT (Tribunal) NCLT – Quasi Judicial Body to look into company related matters Single window to redress all company related matters and grievances. Powers taken from Company Law Board (CLB), Board of Industrial and Financial Reconstruction (BIFR) and High Courts. Introduced through Companies (Second Amendment) Act, 2002. H owever, was constituted and became operational wef 1 st June 2016. Its principal Bench is in New Delhi and has 15 Regional Benches. It has the powers of Civil Court. 5

6. NCLAT (Appellate Tribunal) Composed of Chairperson and such number of Technical and Judicial members not exceeding 11. Appeal against the orders of NCLT and NFRA (National Financial Reporting Authority) can be made to NCLAT within 45 days of order. Appeal against the order of NCLAT can be made to Supreme Court within 60 days of the order. NCLT and NCLAT – Endeavor to dispose off the appeals, petitions and applications within 3 months of presentations, and in any event within a further period of 90 days. 6

7. Formation of NCLT NCLT PRESIDENT AND MEMBERS https :// nclt.gov.in/content/national-company-law-tribunal-honble-president-and-judicial-members 7

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9. Benches of NCLT Section 419 provides for the creation of Benches to enable the Tribunal to exercise its powers and to discharge its functions efficiently. 9

10. NCLAT 10

11. Special Courts The provisions related to Special Courts were provided under Chapter XXVIII, Sections 435 to 438 and 440 of the Companies Act, 2013 . The purpose of Special Courts is to provide speedy trial of offences under the Companies Act, 2013. Although, the option of approaching the regular courts for trial of offences under Companies Act was available to complainants but for the want of expertise and special attention required for these offences, it was necessary to establish the Special Courts . The quantum of monetary impact on economy involved in corporate cases and the expertise required to deal with these cases swiftly, undoubtedly substantiates the need and importance of designation and establishment of Special Courts. 11

12. Genesis of Special Courts The special court shall consist of a single judge holding office as Session Judge or Additional Session Judge for offence providing for imprisonment of two years or more and Metropolitan Magistrate or a Judicial Magistrate of the First Class, in any other case who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working. Section 60 of the Companies (Amendment) Act, 2020 has given exception to Section 452 from the applicability of provisions related to Special Courts. The excluded section provides for Punishment for wrongful withholding of property by the officer or employee of a company. 12

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14. Regional Directors The seven Regional Directors (RD) are in-charge of the respective regions, each region comprising a number of States and Union Territories. They supervise the working of the offices of the Registrars of Companies and the Official Liquidators working in their regions. They also maintain liaison with the respective State Governments and the Central Government in matters relating to the administration of the Companies Act and LLP Act. Certain powers of the Central Government under the Act have been delegated to the Regional Directors. They have also been declared as heads of Department. There is also an Inspection unit attached to the office of every Regional Director for carrying out the inspection of the books of accounts of Companies under Section 209A of the Companies Act . http:// mca.gov.in/MinistryV2/regionaldirectors.html 14

15. Registrar of Companies Registrars of Companies (ROC) appointed under Section 609 of the Companies Act covering the various States and Union Territories are vested with the primary duty of registering companies and LLPs floated in the respective states and the Union Territories and ensuring that such companies and LLPs comply with statutory requirements under the Act. These offices function as registry of records, relating to the companies registered with them, which are available for inspection by members of public on payment of the prescribed fee. The Central Government exercises administrative control over these offices through the respective Regional Directors . http:// mca.gov.in/MinistryV2/registrarofcompanies.html 15

16. Official Liquidator For the purposes of winding up of a company by the Tribunal, the Tribunal at the time of the passing of the order of winding up, shall appoint an Official Liquidator or a liquidator from the panel maintained. (Section 275) The provisional liquidator or the Company Liquidator, as the case may be, shall be appointed from a panel maintained by the Central Government consisting of the names of chartered accountants, advocates, company secretaries, cost accountants or firms or bodies corporate having such chartered accountants, advocates, company secretaries, cost accountants and such other professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten years’ experience in company matters. Where a provisional liquidator is appointed by the Tribunal, the Tribunal may limit and restrict his powers by the order appointing him or it or by a subsequent order, but otherwise he shall have the same powers as a liquidator. The Central Government may remove the name of any person or firm or body corporate from the panel maintained on the grounds of misconduct, fraud , misfeasance, breach of duties or professional incompetence: Provided that the Central Government before removing him or it from the panel shall give him or it a reasonable opportunity of being heard. The terms and conditions of appointment of a provisional liquidator or Company Liquidator and the fee payable to him or it shall be specified by the Tribunal on the basis of task required to be performed, experience, qualification of such liquidator and size of the company. http:// mca.gov.in/MinistryV2/officialliquidators.html 16