Good Morning Institute of Cost Accountants of India

Good Morning ! Institute of Cost Accountants of India Trivandrum Chapter May 28, 2016 CS Bilu Balakrishnan ACIArb, FCS Deputy General Manager (Corporate Legal) & Company Secretary KELTRON

Disclaimer & Safe Harbour The views expressed in the session is personal and shall not be interpreted as the views of the Institute(s) or Organizations I am associated with; Please refer to the Act/Rules/Circular/Notification before forming a final opinion on the interpretations made by me.

Existing System (I) Company Law Board (CLB): Oppression & Mismanagement Registered Office Shifting Out-side the state Condonation of Delay Compounding of Offence Operates through Benches – 4 Regions

Existing System (II) Board for Industrial & Financial Reconstruction (BIFR): Declaring a company as “Sick” Revival of Sick Company High Court (HC): Reduction of Capital Merger / Amalgamation Winding Up & Liquidation

What is NCLT ? NATIONAL COMPANY LAW TRIBUNAL IS A SINGLE WINDOW INSTITUTION FOR CORPORATE JUSTICE. WILL ACT THROUGH BENCHES ALL OVER INDIA. A SEPARATE QUASI JUDICIAL BODY FOR COMPANY LAW MATTERS.

Why NCLT ? Now, different and separate forums for company law matters. Company Law Board, BIFR, High Court We require a specialized forum, exclusively dealing with company law matters, like Income Tax Tribunals, Industrial Tribunals, Securities Appellate Tribunals, The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) etc.

A constitution bench of the Supreme Court of India in its recent judgment in Madras Bar Association vs. Union of India and Another (Judgment dated May 14, 2015 in Writ Petition (C) No. 1072 of 2013) has paved the way for the establishment of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) under the provisions of the Companies Act, 2013. The NCLT and the NCLAT will act as a comprehensive and overarching quasi-judicial body which will adjudicate all disputes relating to companies in India.

Introduction National Company Law Tribunal (NCLT) is a proposed quasi-judicial body in India that will govern the companies in India. It will be established under the Companies Act, 2013 and is a successor body of the Company Law Board The principal bench of NCLT is expected to be established in New Delhi.

Introduction (Cont. ) NCLT will handle cases relating to oppression and mismanagement, revival of sick companies (now handled by Board for Industrial and Financial Reconstruction (BIFR)) and will also exercise powers related to winding up and mergers of companies. .

Introduction (Cont. ) The creation of a single forum (NCLT) which is dedicated to corporate matters is a welcome move, and removes the problem of multiple regulators. NCLT = CLB + BIFR + HIGH COURT (Winding Up & Mergers)

Powers of NCLT The NCLT 1. Most of the powers of the Company Law Board under the Companies Act, 1956. 2. All the powers of BIFR for revival and rehabilitation of sick industrial companies; 3. Power of High Court in the matters of mergers, demergers, amalgamations, winding up, etc. ; 4. Power to wind up companies; 5. Power to Review its own orders.

Jurisdiction Supreme Court (Only On Question of Law) National Company Law Appellate Tribunal (NCLAT) NCLT

Composition of NCLT: The President shall be a person who is or has been a Judge of a high Court for five years; The President shall be appointed by the Central Government after consulting the Chief Justice of India; Have such number of Judicial and Technical Members.

Existing CLB offices to be converted in NCLT

Notified Section relating to NCLT 407 Definition 408 Constitution of National Company Law Tribunal 409 Qualification of President and Members of Tribunal 410 Constitution of Appellate Tribunal 411 Qualification of Chairperson and Members of Appellate Tribunal 412 Selection of Members of Tribunal and Appellate Tribunal 413 Term of office of President, Chairperson and other Members 414 Salary, allowance and other terms and conditions of service of Members

Present Status: 283 Sections of the Companies Act, 2013 have already been commenced. Remaining sections related to functioning of NCLT/NCLAT and certain other authorities are yet to be notified. In view of the Supreme Court order dated 14 th May, 2015, the process for constitution of NCLT/NCLAT has been undertaken and these bodies are likely to be set up shortly. MCA has released Draft “National Company Law Tribunal Rules, 2015” seeking public comments.

Present Status (Cont. ): MCA has released: Draft “National Company Law Tribunal Rules, 2015” Draft “Companies (Compromises, Arrangements and Amalgamations) Rules, 2016” Draft “Companies (Prevention of Oppression and Mismanagement) Rules, 2016” Public Comments Invited. These Rules may be notified soon, and there from NCLT will be a reality.

Scope for COST ACCOUNTANTS Section 409(3) of Companies Act 2013: A Cost Accountant Practising for at least 15 years can be appointed as a Technical Member of NCLT. Section 432 of Companies Act 2013: A Cost Accountant who is in practise can appear before the NCLT or NCALT. [Form No. NCT 12] Rule 31 - Empanelment of Cost Accountants: to assist in proceedings before the Tribunal or Appellate Tribunal.

Crucial Sections Section 425 of Companies Act 2013: Power to punish for contempt under The Contempt of Courts Act, 1971. Section 430 of Companies Act 2013: Civil court not to have jurisdiction. No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine.

Challenges Ahead: • Procedural Aspects • Art of Advocacy • Court Craft • Competition

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