The National Company Law Tribunal (known as “NCLT”) is the regulating body that has been authorized to deal with matters of companies under Companies legislation and Insolvency Code. The matters including the inter-se dispute between the management of a company, approval for the transaction between companies for compromise or merger or other forms of acquisition, winding up matters, etc. are considered by the NCLT.
Currently, there is a total of 11 benches of which each such NCLT bench is chaired by the presiding judge with a judicial member and a technical member. The qualifications, term, appointment –re-appointment, remuneration, and other matters are prescribed under NCLT Rules.
The NCLT is the single forum for companies to report and resolve matters that have been authorized under Section 408 of Companies Act, 2013 read with NCLT Rules with advantages of savings in time, simplified procedure and defined jurisdictions. The NCLT has the power under the Companies Act as follows:
- To protect the interests of members/stakeholders of a particular class through the class action suit.
- To hear on matters related to shares i.e., transfer or transmission of securities.
- The power to declare the liability of a member to be unlimited.
- To direct the revision of financial statements and re-opening of financial statements based on directors requests
- To initiate the inquiry or the investigation in the matters specified as per section 206 and the relevant rules.
- To approve the conversion of public limited company to private limited company based on member’s consent and compliance of orders of the regulatory authorities.
- The power to alter the Financial Year of the company in cases where the company or body corporate is holding company or subsidiary of a company incorporated outside India has to follow different Financial year as a requirement to comply with foreign compliances.
- To extend the members’ liability in certain events where the exiting members of the company are below the minimum required the number of members. In the case of a private limited company, public limited company or one-person company, the requirement is 2 members, 3 members or 1 member, as the case may be.
- To direct the company to conduct the annual general meeting of the company, if approached by any of the stakeholders.
- Such other powers as may be prescribed from time to time under various laws, rules, and regulations.
Highlights of NCLT (Amendment) Rules, 2020
As per Section 230(12) of the Act read with National Company Law Tribunal (Amendment) Rules, 2020 which brought the amendment to National Company Law Tribunal Rules, 2016 (“NCLT Rules”) enumerates the procedure for application of an aggrieved party to approach the NCLT in cases of the takeover of the company which summarizes as follows:
- Section 230(12) of the Act has been notified with effect from 03.02.2020 simultaneously the rules are notified to ensure that the aggrieved person/minority shareholder(s) for resolution of a grievance relating to takeover offer directly from Tribunal.
- The amendment in NCLT rules has brought the changes related to filing for grievances in case of a takeover of unlisted companies.
- The aggrieved person can file the petition under Rule 80A (new rule inserted). Such an application shall be in Form NCLT – 1 with the prescribed fee. The application fee for non listed entities is Rs. 5000/-.
- Such application shall be filed by an aggrieved person with the following list of documents:
- Affidavit verifying the petition.
- Memorandum of Appearance with a copy of the Board’s Resolution or the executed Vakalatnama, as the case may be.
- The documents in support of grievance against the takeover.
- Any other relevant document.
The scope of Form NCLT 1 has been widened the form is already in use for various circumstances and therefore, the aggrieved is can also file his grievance in such prescribed form with prescribed fee and if find suitable upon hearing, such takeover can be canceled.
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Also Read: Central KYC Registry in India