National Company Law Tribunal and Corporate Law related legal issues
A quasi-judicial organisation called the National Company Law Tribunal is responsible for policing and resolving civil business disputes. The National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) were constituted in accordance with the Companies Act, 2013, and were given authority by Article 245 of the Indian Constitution. The NCLT is also the adjudicating body for the insolvency resolution process of corporations and limited liability partnerships under the Insolvency and Bankruptcy Code, 2016, which was passed in 2016.
The following areas of dispute are covered under NCLT’s authority:
Class Action: These lawsuits are brought in response to fraud. Any firm that is registered in accordance with the Indian Companies Act that defrauds or steals money from investors is subject to legal action in the NCLT.
Transfer of Shares: If a firm fails to properly register a transfer of shares or refuses to transfer shares, the person who suffered a loss may file a complaint with the NCLT within two months to seek redress.
Mismanagement and oppression: The NCLT enables individuals to seek redress for any mistreatment suffered in the past or present at the hands of a business. The NCLT will investigate the company’s affairs to ensure justice if someone discovers that a company’s operations are prejudiced and intended to benefit only a few parties or individuals while being repressive toward others.
Compounding of Offense: The NCLT now has ownership of the provisions for compounding under the 2013 Companies Act rather than the Company Law Board. All compounding situations that exceed the specified dollar amount require NCLT approval.
Deregistration of Companies: The NCLT has the authority to deregister and dissolve companies that have obtained registration through dishonest or illegal means. If it believes it essential, NCLT may also look into any irregularities in the way a company was registered.
Revision of Financial Statements: Several times, violations of the Companies Act of 1956’s record-keeping provisions were discovered. To guarantee that such an act now falls under the scope of NCLT, sections 447 and 448 have been introduced to the Companies Act of 2013.
Deposits: Agitated depositors have the option to file class actions to seek compensation for the company’s conduct or inactions that infringed upon their rights. The NCLT now has the aforementioned authorities.
Investigation: The NCLT has a number of investigative authorities. The tribunal’s most significant authority includes the following:
Power to order investigation: Any person who is able to persuade the tribunal that such a scenario exists for commencing investigative proceedings is granted the authority to ask for an inquiry into the operations of a company under the 2013 Company Act, which only requires 100 members to do so. Anywhere in the world may be the subject of an investigation that the NCLT has ordered.
Power to impose restrictions on securities: Previously, only shares were subject to the restriction. The tribunal can now impose limitations on any firm security.
Power to investigate the ownership of a company: The tribunal has the power to investigate matters relating to the ownership of any company.
Asset-freezing authority: The tribunal has the authority to freeze the company’s assets, which are then unavailable for use while the matter is being investigated.
Conversion of a Public Company into a Private Company: This conversion requires NCLT approval. The tribunal has the ability to put restrictions on when approval will be given.
Change in Financial Year: The NCLT has the authority to alter the fiscal year for Indian-registered businesses.
Tribunal Convened General Meetings: The NCLT has the authority to call a general meeting (AGM or EGOM).
The National Company Law Appellate Tribunal will hear appeals of NCLT decisions (NCLAT). Further appeals of NCLAT decisions may be made to the Honourable Supreme Court of India.
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