INDIAN UPDATE – INDIA’S NEW COMPANY LAW – KEY CHANGES IN THE REGIME
Executive Summary: The Companies Act, 2013 has been highly anticipated and will bring sweeping changes to the extant company law regime. This article covers a general overview of some of the key changes brought about by the 2013 Act. Topics covered include:
- New and changed key concepts of control, a promoter, a subsidiary company, associate and related party. Introduces a new form of corporate entity—a One Person Company.
- Introduces the concept of fraud in relation to affairs of a company.
- Creates a National Company Law Tribunal as well as a National Company Law Appellate Tribunal and vests it with the jurisdiction of High Courts and other judicial authorities.
- Imposes certain restrictions and liabilities on companies, promoters and the management with regard to funds raised from the public.
- Withdrawal of exemptions to private companies, holding and subsidiary companies from effecting inter-corporate transactions.
- Excessive regulation of private companies similar to public companies.
- Prohibits forward dealings and insider trading by directors and KMPs of unlisted companies.
- Prohibits companies from making investments through more than 2 layers of investment companies i.e. companies whose principal business is acquisition of securities.
- Significant changes in the corporate governance sphere, particularly in relation to provisions applicable to listed companies, directors’ duties and liabilities, independent directors, corporate social responsibility and board and shareholder meetings.
- Changes to the auditors regime.
- Empowered the central government to establish Special Courts for the speedy trial of offences.
- Changes in the court restructuring process.