Long wait is over

At last, NCLT is constituted and is effective from this June. Our long lasting wait is over and we are having the fruit on hand to taste now. Hope all the practical complexities in relation to CLB, BIFR and High Court matters are solved in a single place with simplest procedures without any bias. As it is NCLT season, this time, we will have a look at its constitution and scope of services; a Practicing Company Secretary (PCS) enjoys under the tribunal. Also our usual Legal Terms and News Bites that contains notification and updates of MCA, SEBI, RBI and IT Department will follow in its usual section.

Saranya Deivasigamani,
CEO

All about NCLT

It has been more than 14 years that we first heard about National Company Law Tribunal [NCLT] & National Company Law Appellate Tribunal [NCLAT]. But now by MCA Notification dated 1st June, 2016 in exercise of the powers conferred by section 408 of the Companies Act, 2013 (18 of 2013), the Central Government hereby constitutes the National Company Law Tribunal to exercise and discharge the powers and functions as are, or may be, conferred on it by or under the said Act with effect from the 1st day of June, 2016. The Companies (Second Amendment) Act, 2002 provides for the setting up of a National Company Law Tribunal and Appellate Tribunal to replace the existing Company Law Board and Board for Industrial and Financial Reconstruction. The setting up of NCLT as a specialised institution for corporate justice is based on the recommendations of the Justice Eradi Committee on Law Relating to Insolvency and Winding up of Companies. NCLT can be called as Mega Tribunal. Because NCLT will consolidate the corporate jurisdiction of the followings:

Company Law Board.
The Board for Industrial and Financial Reconstruction
The Appellate Authority for Industrial and Financial Reconstruction
Jurisdiction and powers relating to winding up restructuring and other such provisions, vested in the High Courts.

Powers of NCLT

The proposed NCLT will have judicial and technical experts who will handle all matters presently being handled by CLB, Company Court and Board of Industrial and Financial Reconstruction (BIFR) with much wider jurisdiction regarding the scope of the subjects. Other powers:

Most of the powers of the Company Law Board under the Companies Act, 1956.
All the powers of BIFR for revival and rehabilitation of sick industrial companies;
Power of High Court in the matters of mergers, demergers, amalgamations, winding up, etc.;
Power to order repayment of deposits accepted by Non-Banking Financial Companies as provided in section 45QA of the Reserve Bank of India Act, 1934;
Power to wind up companies;
Power to Review its own orders.

Administration of NCLT and NCLAT

Section 415 to Section 433 (both inclusive) has also come into force. These sections deal with the administration of NCLT and NCLAT.
Sec 415. Acting President and Chairperson of Tribunal or Appellate Tribunal.
Sec 416. The resignation of Members.
Sec 417. Removal of Members.
Sec 418. The staff of Tribunal and Appellate Tribunal.
Sec 419. Benches of Tribunal.
Sec 420. Orders of Tribunal.
Sec 421. Appeal from Orders of Tribunal.
Sec 422. Expeditious disposal by Tribunal and Appellate Tribunal.
Sec 423. Appeal to Supreme Court.
Sec 424. Procedure before Tribunal and Appellate Tribunal.
Sec 425. Power to punish for contempt.
Sec 426. Delegation of powers.
Sec 427. President, Members, officers, etc., to be public servants.
Sec 428. Protection of action taken in good faith.
Sec 429. Power to seek the assistance of Chief Metropolitan Magistrate, etc.
Sec 430. Civil court not to have jurisdiction.
Sec 431. Vacancy in Tribunal or Appellate Tribunal not to invalidate acts or proceedings.
Sec 432. Right to legal representation.
Sec 433. Limitation.

Constitution of NCLT and NCLAT:

NCLT & NCLAT Consist:

There are two classes of members to the National Company Law Tribunal; Judicial Members and Technical Members.
The Tribunal shall be headed by the President while the Appellate Tribunal by Chairperson.
NCLAT not exceeding eleven members for hearing appeals against the orders of the Tribunal
National Company Law Appellate Tribunal, constituting of a Chairperson and not exceeding eleven members for hearing appeals against the orders of the Tribunal.

Qualification: (President/Member of NCLT)

President	Judicial Member	Technical Member
Is/has been Judge of High Court ≥ five years	Is/has been Judge of High Court (any period)	Has Member of Indian Corporate Law Service /Indian Legal Service ≥ 15 years (out of 15 years at least three years to be in the pay scale of Joint Secretary to GOI or equivalent post)
	Is/has been District Judge at least five years	Is/has been Practising Chartered Accountant at least15 years
	Has been Advocate of court held a judicial office or as member of a tribunal at least ten years	Is/has been Practicing Cost Accountant at least 15 years
		Is/has been Practising Company Secretary at least 15 years
		Person with proven ability, integrity and standing to have special knowledge and experience ≥ 15 years (in below mentioned specified areas)
		Presiding Officer of Labour Court/ Tribunal/ National Tribunal (under Industrial Disputes Act, 1947) at least five years

Eligibility NCLT

In the case of President shall hold office until he attains the age of 67 years.
In case of Member age at least, 50 years shall hold office until he attains age of 65 years

Eligibility NCLAT

In the case of President shall hold office until he attains the age of 70 years.
In case of Member age at least, 50 years shall hold office until he attains age of 67 years

Scope of services for Practicing Company Secretaries (PCS) under NCLT:

The establishment of NCLT/NCLAT shall offer various opportunities to Practicing Company Secretaries as they have been authorised to appear before the Tribunal/ Appellate Tribunal. Therefore, Practicing Company Secretaries would for the first time be eligible to appear for matters which were hitherto dealt with by the High Court viz. mergers, amalgamations under Section 391-394 and winding up proceedings under the Companies Act, 1956. Areas opened up for company secretaries in practice under NCLT are briefly stated hereunder: PCS as Member of NCLT: A Practicing Company Secretary can be appointed as a Technical Member of NCLT, provided he has 15 years working experience as a secretary in whole-time practice. Appearance before National Company Law Appellate: Tribunal As stated earlier a Practicing Company Secretary has been authorised to appear before National Company Law Appellate Tribunal. Insolvency Process: Currently, the law does not support effective participation of professionals and experts in the Insolvency process. There is no shortage of quality professionals in India. Disciplines of chartered accountancy, company secretaryship, cost and works accountancy, law, etc. can act as feeder streams, providing high-quality professionals for this new activity. In fact, private professionals can play a meaningful role in all aspects of the process. Thus, in view of vast opportunities emerging with the establishment of NCLT, the PCS should standardise their competencies with the global benchmarks to provide value added services in assisting the Tribunal in dispensation of justice and speedier disposal of matters like merger, amalgamation, restructuring, revival and rehabilitation of sick companies and winding up of companies.

Legal Term

T.R.O.

Noun: Legal slang for temporary restraining order.

MCA Updates

The Central Government has notified the constitution of National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) on 1st June, 2016. The Company Law Board (CLB) stands dissolved with the constitution of these bodies.
Forms NDH-2, FC-3, MSC-3, INC-24, INC-3, CHG-8, CHG-9 and SH-9 were recently revised on MCA21 Company Forms.
LLP Forms Form 2A, Form 4, Form 4A, Form 5, Form 23, Form 31 and Form 32 were recently revised on MCA21 LLP Forms

SEBI Updates

Section 30 of SEBI read with Regulation 6A of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, and Section 25 of the Depositories Act, 1996 (22 of 1996), the Board hereby makes the following Regulations to further amend the SEBI (Depositories and Participants) Regulations, 1996, has been modified.

RBI Updates

Amendments made in Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015 .
Amendments made in Foreign Exchange Management Act, 1999 (FEMA) Foreign Exchange (Compounding Proceedings) Rules, 2000 (the Rules) – Compounding of Contraventions under FEMA, 1999.
Export Data Processing and Monitoring System (EDPMS) – Additional modules for caution listing of exporters, reporting of advance remittance for exports and migration of old XOS data
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventh Amendment) Regulations, 2016

Income Tax Updates

In Income Tax Rules, 1962, in rule 29B, in rule 31 A, and 8D,- (I) for sub-rule (2), has been modified.