Clasis Law In-House Community India Legal Updates

14th Floor, Gopal Das Bhawan, 28, Barakhamba Road, New Delhi 110 001India
Tel: (91) 11 4213 0000 / Fax: (91) 11 4213 0099
Email:    Web:

V14i9_Jur_IndiaThe Companies Act of India is the primary legislation governing the functioning of companies established in India during their lifecycle. The secretarial compliances refers to a list of periodic and event-based compliances dictated by the Act to be adhered to by companies incorporated in India. Failure to adhere to these compliances can become a costly exercise for a company that can be avoided.

The Act casts an obligation on the directors, company secretary and other senior officers of a company to comply with the various provisions of the Act, such as convening of periodic board and shareholders meetings, manner and modes in which the meetings are to be convened, manner of maintaining statutory records of the company, making event based and periodic filings in prescribed e-forms with the Ministry of Corporate Affairs (MCA), appointment of various officers and directors on breach of specified thresholds under the Act, all times having a registered office.

Any contravention of the provisions of the Act attracts penalties, which have been categorically prescribed by the Act, on the company concerned and its officers in default. The penalties may be either civil or criminal in nature or both. For instance, failure to maintain a statutory register namely; register of member may attract penalty of Rs50,000 (US$780), which may extend to Rs300,000 and with a further continuing penalty of Rs1,000 for the tenure during which the default continues or failure to properly prepare and sign the board’s report entails a penalty of Rs50,000, which may extend to Rs2,500,000 on the company and the concerned officers of the company would be liable to a penalty varying from Rs50,000 to Rs500,000 or imprisonment of maximum three years or both. Similarly, the Act prescribes penalties for each of the non-compliances which may have severe ramifications on the company and its officers. The strictness with which the courts view the responsibility and the sacredness of the trust reposed in the directors and its authorised persons has been emphasised in many cases.

Actions by the authorities
It has recently been observed that the authorities have become more vigilant towards secretarial compliances and are initiating prosecution of companies and the officers of companies who are in default on the basis of the information available with them. There have been instances where companies and their concerned officers have been penalised heavily by the authorities on account of violation of the provisions of the Act. The authorities are not taking a lenient view even in case of non-compliances which are not of grave nature and have been penalising them strictly with the fine as prescribed under the Act. Recently, the MCA has issued notices to about a quarter million companies in India who are not carrying on any business or operations over the past two financial years and have failed to obtain dormant status from the Registrar of Companies. As per norms, the names of these companies would be struck off and the entities would be dissolved after providing them an opportunity of hearing. Since, the Indian government is focussed towards developing a regime of self-governance; the aforesaid steps are being taken to develop a compliance-based approach in the functioning of companies in India.

Considering, the increased focus of authorities on compliance under the Act and the extent of liabilities which a company or its directors/officers may incur on account of contravention of the provisions of the Act, it has become imperative on the part of the companies and their directors/officers to focus on corporate compliances in true letter and spirit. Adopting a post-mortem approach by companies in dealing with the corporate compliances may prove fatal for their financial as well as regulatory health.

The need and importance of corporate compliances can best be conveyed with the following quotation from Benjamin Franklin: “A little neglect may breed great mischief — for the want of a nail, the shoe was lost; for the want of a shoe, the horse was lost; for the want of a horse, the rider was lost; and for want of a rider, the battle was lost.”

Related Articles by Firm
India going all out to woo foreign companies moving out of China
A silver lining of the Covid-19 crisis is the potential of becoming an attractive alternative to China.
Doing business and ease of doing business in India
VIDEO BRIEFING: The government has taken numerous steps to give an impetus to foreign investment, but a lot remains to be done.
MCA introduces e-form DIR-3-KYC for directors with approved DINS
This compliance exercise seems to be a checkpoint for only genuine individuals acting as directors in a legitimate capacity.
A wide net of ineligibilities for being a resolution applicant
Almost two years after the Bankruptcy Law Reforms Committee submitted its report, the Insolvency and Bankruptcy Code is still a work in progress.
Insolvency in India: Section 29A…
A wide net of ineligibities for being a Resolution Applicant ...
DISHA — India’s probable response to the law on protection of digital health data
Sensitisation and protection of people’s right to privacy and security of their data are the bedrock of DISHA.
The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017
This much-awaited piece of legislation brings clarity to various deadlocks in Indian jurisprudence.
Metro projects likely to drive India's infrastructure sector
Metro Rail projects in India have picked up pace and are likely to catalyse substantial opportunities over the next few years.
Handling disciplinary proceedings by employers
Breach of an employment contract by an employee often results in disciplinary action leading up to termination in cases of serious misconduct.
Clasis Law Newsletter
The latest legal news from India, including recent court judgments, changes to corporate/commercial law and updates on projects and IP.
Initial Coin Offerings: Another brainteaser in the virtual currency bandwagon
The position of virtual currencies and ICOs in India remains murky.
The impact of General Data Protection Regulations on Indian companies
Extraterritorial applicability of GDPR makes it clear that these regulations will be applicable regardless of whether the processing takes place in EU or not.
ONGC vs Sime Darby consortium
An unsuccessful party cannot possibly apply for interim relief in aid of what it lost before the arbitral tribunal.
The Fugitive Economic Offenders Bill 2018
The bill aims to provide an effective, expeditious and constitutionally permissible deterrent to ensure that such actions are curbed.
Understanding The Maharashtra Shops And Establishments Rules 2018
The Act regulates the employer–employee relationship and service conditions such as hours of work, payment of wages, overtime, leave, holidays, etc.
Supreme Court gives clarity on Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015
In Board of Control for Cricket in India vs Kochi Cricket, the Supreme Court has clarified some issues surrounding the Act.
Delhi High Court resolves uncertainty between two conflicting clauses in contracts
The settled principle of contra proferentem has been re-affirmed by the Court in a case involving Delhi Metro Rail and Voestalpine.
India: Supreme Court update
Supreme Court refers the question to determine the liability of the consignee or steamer agent in respect of ground rent charges to be paid to the port trust to a larger bench ...
Corporate Social Responsibility
There is a growing realization among the corporates that business growth along with positive community/social impact is now an expected goal ...
India: Execution Proceedings for Enforcement of Arbitral Award
Recent Supreme Court judgement resolves certain issues and requirements ...
India: Impact of the Companies (Amendment) Act, 2017
With the assent of the President on January 3, 2018, the much-awaited Companies (Amendment) Act, 2017 (Amendment Act), which provides for simpler provisions but stringent penalties, has finally seen the light of the day ...
Voluntary Liquidation in India
Winding up under Insolvency and Bankruptcy Code, 2016 ...
Strike Off of Companies in India
Over the years, many companies have been lagging behind in filing of annual documents such as annual returns, financial statements etc ...
India: Valuation by Registered Valuer
“Price is what you pay, Value is what you get” ...
India: Amendments Under Master Directions on Issuance and Operation of Prepaid Payment by RBI
Digital wallets such as PayTM, along with debit and credit cards, are expected to reduce (if not completely replace) the use of paper currency …
India: Institutional Arbitration – Need of the Hour
The need to promote and encourage institutional arbitration for commercial disputes in India ...
India: Supreme Court settles the law: Major relief for foreign operational creditors
Clasis Law recently represented Macquarie Bank in two civil appeals before the Supreme Court of India ...
India: Consumer Protection
NCDRC’s ruling on ‘Voluntary Consumer Association’ under the Consumer Protection Act, 1986 ...
India: Foreign Exchange Management Regulation
Significant changes for transfer or issue of security to a person resident outside India ...
India: Directors' duties and liabilities under the Companies Act, 2013
Directors must be aware of their role, responsibilities and duties towards the company and its shareholders ...
India Update for December 2017
This edition brings to our readers a featured article titled “The Tourism and Hospitality Sector 2017 — The Year Gone By!!”
India: RBI issues Directions on Peer to Peer Lending Platform
Online lending transactions are in their nascent stage in India and given the increase in peer-to-peer (P2P) lending through e-commerce marketplace it is of extreme importance to regulate such transactions ...
INDIA: Right to privacy and data protection in India
The concept of data protection and privacy has not been addressed in any exclusive comprehensive legislation in India ...
India: Protection against groundless threats under Indian IP laws
Rapidly growing awareness of intellectual property (IP) rights and a well-structured statutory regime protecting IP has allowed rights owners to assert and enjoy the limited monopolies conferred on them ...
India update from Clasis Law
Including briefings on the national food processing policy, projects and energy, and intellectual property.
RBI intervenes in patching up of Tata and DoCoMo’s joint venture
Background to the joint venture: Tata DoCoMo, an Indian mobile network operator, was set up as a joint venture between Tata Teleservices (TTSL) and NTT DoCoMo in November 2008...
Regulatory challenges for Vodafone Idea merger
Vodafone India is in discussions with Idea Cellular for an all-share merger. It appears that the intense competition the Indian telecom industry is facing due to freebies offered by the new entrant, Reliance Jio, has ...
India Update, inc: Regulatory challenges for Vodafone Idea merger
This months India newsletter from Clasis Law includes an article on the “Regulatory challenges for Vodafone Idea merger”, plus updates in Projects, Energy, IP and Banking & Finance ...
Investment conditions and restrictions for venture capital funds
Venture capital funds (VCFs) are contributing considerably to India’s economic growth. The amount of investment directed to venture capital has grown in recent years due to the pro-business environment and ...
India’s bid to become a hub for international commercial arbitration
As one of the world’s fastest-growing economies, India is a party to many international commercial arbitrations and the government is making efforts ...
Brands – Role and liability of celebrity endorsers
The marketing and advertising industry has grown as an organised industry using innovative ideas that are designed to ...
Related Articles
IHC Magazine: April 2024 issue featuring Firms of the Year 2023 Results
As we round off the first quarter of this year, we are proud to showcase our IHC Firms of the Year for 2023. These firms have been selected by our IHC community in recognition of their invaluable contribution to their clients’ ...
Related Articles by Jurisdiction
India's The Arbitration and Conciliation (Amendment) Ordinance, 2015 makes major changes to the Arbitration & Conciliation Act, 1996
The Arbitration and Conciliation (Amendment) Ordinance 2015 gives the necessary impetus for ease of conducting arbitration in India and enables speedy settlement of commercial disputes.
Compulsory licensing of patents in India: a human rights issue as well!
The compulsory licensing regime in India has always been embroiled in controversy, more so when it involves compulsory ...
Latest Articles