Editor’s note: We often have confusion about the basics of Business Laws. New laws have come into being and continuous amendments are taking place in various laws regulating the business environment in the country. In this post. Mr. Jaydeep Mehta clears common doubts about the working of corporate entities.Mr. Jaydeep Mehta, Designated Partner, Lexstreet Advisors LLP, Advocates & Solicitors. He has done BCom, LL.M. He may be reached at email@example.com.
What are the major things involved in Legal compliances of various rules, regulations & By-laws prescribed by the statutory authorities?
Legal Compliance has become a very crucial aspect of every Public / Private Limited companies as well as for LLPs as no-compliance attracts heavy penalties, which ultimately results in financial loss to the organization. The most important and crucial aspect of legal compliance is to study and analyze various laws in depth. Different laws are applicable to different aspects depending upon the sector of the industry. There are different industries like Pharmaceutical industry, the Insurance industry, Telecom industry, Media & entertainment industry, Information Technology, Sports, Engineering, Chemicals, Stock booking etc. There are specific statutes which are applicable to only specific industry. For example, The Drugs &Cosmectics Act, 1940, The Pharmacy Act, 1948, The Narcotic Drugs & Psychotropic Substances Act, 1985 are specific statutes which are applicable to pharmaceutical & drug manufacturing companies. Similarly, certain specific statutes like The Cable Television Networks ( Regulations) Act,1995, The Cable Television Network Rules, 1994, The Indian Telegraph Act, 1885, TRAI Act, 1997 etc are applicable to only Media & Entertainment industry and so on.
In addition to the specific statutes applicable to specific industries / sector, there are very important statutes like Companies Act, various SEBI Rules& Regulations, Foreign Exchange Management Act & its subordinate rules ®ulations, Export-import policy, FDI Policy, Intellectual Property Right laws, Stock Exchange Rules& Regulations, Income Tax Act, Civil Procedure Code, Code of CriminalProcedure, IPC etc. which are applicable to all the industries irrespective of the specific sector into which the company is engaged in.
For timely compliance, the checklist of periodical compliances to be complied with should be prepared so that before the due date, various returns to be filed with MCA, Income Tax dept, etc can be complied with timely.
What are the procedural formalities in handling IPOs Issues?
The Procedure is quite lengthy. In brief, it includes appointing various agencies i.e. Merchant Banker /Investment Banker, Legal advisors to the issue, Registrar to the Issue, Bankers to the Issue, Stock Brokers, strict compliance of SEBI ( Issue of Capital and DisclosureRequirement) Regulations, 2009, designing of application forms as per SEBI Guidelines, preparing and filing of Draft Reg Herring Prospectus with SEBI / Stock Exchanges, getting SEBI approval, collecting applications from various
Banks across India, reconciling applications and amount with each branch
of banks, finalizing allotment of shares etc.
Do you feel adoption of information and communication technologies had an impact on the working of Indian legal system?
Yes. Adoption of information and communication technologies has created a big impact on the working of Indian legal system as a whole.
Now, the lawyers, applicants, respondents, the general public and other stakeholders can easily see the status of the case online, various judgments of various courts online, through the portal ww.ecourts.gov.in. Moreover, every high court have its own separate website. Similarly, the Supreme Court has a separate website. Information about past and present judges, Judgements of various cases can be easily accessed through websites. Now, summons can also be served via email. There are many advantages. These are just a few of them.
The Companies law was amended in 2013. Whether the new law has made the procedures and fast.?
The new law has definitely made things easier. However, at the same time, approx 29 subordinate regulations have also been introduced which has made
implementation, analyzing and interpretation of CA, 2013 more complicated, which requires thorough study and understanding of the CA, 2013 and subordinate regulations.
Which area/aspect of corporate law in your opinion needs amendment?
Strict compliance of laws must be adhered to for better corporate governance. Considering recent incidences, Role of independent directors must be looked into minutely. Role of Statutory & Internal auditors must be observed carefully. Constitution of IFRA is a step in right direction.
Is there any different working for a Corporate entity and a statutory body?
There is a vast difference. Corporate entities are working in a professional way whereas statutory body being owned and controlled by Govt, do not function as effectively and profitably compared to the private sector.
What do we understand by Share Registry operations?
As per SEBI Regulations, every company is required to outsource its Share department activities like dematerialization of shares and other securities, transfer and transmission of securities, dividend processing ad payment to shareholders, public issue process, Rights issue process, handling invetors’ complaints, compliance of Stock Exchange and SEBI Regulations etc to outside agency i.e. Registrar to the Issue & Share Transfer Agency registered with SEBI. These activities are known Share Registry operations.
Image from here.