Tag Archives: Sharda Balaji

Results of the Second Intercollegiate Competition on Data Protection – The New Frontier

The results of the “Second Intercollegiate Competition on Data Protection – The New Frontier” are out.

The Essay competition was devised with the intent of apprising law students with the regulatory developments in the field of data protection. We are glad to have received an overwhelmingly positive response to this initiative.

The winners of the Competition are:

1. Gayatri Puthran – Jindal Global Law School
2. Shashank Saurabh – National University of Study and Research in Law
3. Anisha Singh – Chanakya National Law University
We would like to congratulate all the winners and wish them all the very best.
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COMPANY SECRETARIES – THE PROFESSION AND BEYOND

Introduction

The word ‘secretary’ has originated from the Latin word ‘secretarius’ which means a person who is entrusted with a secret. In the corporate world, a Company Secretary is a person whom every Board member value and when correlated with the literal meaning of the word ‘secretary’, it reflects the confidentiality of the role and the trust that is placed on that position. The trust is built through their competence and it is their honesty, integrity, authenticity, accountability fused with skills, knowledge, experience and performance that make them stand out of the crowd.

Despite having an array of roles in different areas, it is a common belief that the role of Company Secretaries is confined to Company Law alone. However, over the years it has been observed that Company Secretaries have ventured into areas beyond Company Law and have emerged as experts in taxation, financial market services, mergers & amalgamations, etc. Hence, we as professionals should explore beyond our comfort zone and be the experts that we are.

Analysing the Role of Company Secretaries

The role of a Company Secretary is not the typical stereotype of a man or woman who assists a board chair or executive director. The role has evolved from just being a support person to being the ‘trusted advisors’ and the ‘go to experts’ because Company Secretaries understand the law. Company Secretaries have transitioned to one of the key governance positions within a corporation and can help align the Company’s policies, the management functions, various regulatory compliances and the mutual ethics and trust in a Company to achieve corporate growth.

It has been very rightly said that “the profession of Company Secretaries has an important part to play in the introduction of professionalism in the area of corporate management” by Shri P Shiv Shankar, former Minister of Law, Justice and Company Affairs. The Company Secretaries possess the fundamental and distinctive characteristics or qualities of being remarkable professionals that corporates seek. They develop a law-abiding culture and a sustainable framework for the Company wherein a constant watch prevails over the company’s activities. With corporate governance being very prominent in recent times, the role of Company Secretaries has increased multiple folds in achieving the same and also maintain harmony among its stakeholders with respect to compliance simultaneously.

Thus, it is imperative that we discuss the role of Company Secretaries beyond the boundaries of Company Law. Company Secretaries have ventured into areas relating to corporate restructuring, taxation services, capital market related activities, foreign collaborations and joint ventures, international trade and WTO services, labour and industrial laws, intellectual property laws etc. They independently handle such activities and have emerged as experts in these areas.

The one such area that Company Secretaries have mastered now over the years is the field of taxation. Company secretaries are the one who are capable of understanding the dynamics of law and taxation system. Company Secretaries are termed to be masters of law; whether it is in indirect tax laws or the GST law, they were already recognized under the various tax laws and in VAT profiles by various State Governments. It has been often seen that Company Secretaries in Practice, along with providing secretarial compliance services are now tax advisors for corporates too. The advent of the reforms in the tax laws in the country are a welcoming change for professionals as it has expanded the ambit of practice of Company Secretaries particularly. After GST implementation the work area of professionals become wide and they can provide a single window solution to their client. It’s a new tax and a new opportunity. For better administration of new tax regime in the country, it is required to have more and more competent and equipped professionals to facilitate regulators to ensure compliance of various statues and thus help in achieving this ambitious task. The Company Secretaries, who practice in almost all the branches of law and have a strong accounting background, are competent professionals to handle the regulatory compliance under the proposed GST laws. They are skilled professionals who understand legal, financial and compliance dimensions of business entity comprehensively.

It has been also seen that Company Secretaries are speaking on public forums on topics related to Foreign Direct Investment (FDI), Cross-border mergers, Banking regulations, International Trade, Corporate Communications, Public relations, etc. In the Indian corporate set-up, ensuring governance has become a mandate owing to the introduction of various acts, tax reforms and policies by the Government. Also, the role of a Company Secretary becomes very limited when it comes to unlisted and private companies. They are often entrusted with finance and legal work to fill in their working hours. Hence, keeping the practice areas confined to Company Law will result in the stunted professional growth of Company Secretaries. It is important that Company Secretaries are updated about the various economic reforms brought about in the country and broaden their scope of work into different sectors. There has to be a constant effort in staying relevant.

A guide to the Board of Directors of the Company

Apart from being an expert in their own field, it is the ethics and the values that make Company Secretaries distinct as a professional. Being diligent in what they do and responsible for their act makes the company achieve its goals. It is their responsibility to ensure that the company and its directors operate within the law. In simple terms, they are the professionals who act as power boosters for the companies to encourage their plans and ensures its smooth accomplishment with complying all applicable laws in the field. Beyond their normal course of duties, company secretaries provide advice and counsel to the board of directors, company’s shareholders and serve as confidantes.

Company Secretaries are the officers of the company who align various management functions with company policies, ensures compliance of all applicable laws and endeavours to develop mutual trust between various stakeholders for sustainable growth of the company. In addition to providing advice and guidance, they are called upon to create and manage relationships between the different players in the corporate governance system. But how do they act as the guide to the Board? Few attributes that Company Secretaries possess which make the Board of Directors of a Company bank on them, are listed below:

  • Possessing crisp and thorough knowledge of the business environment in which the organization operates as well as of the laws, rules, and regulations that govern its activities.
  • Identifying what and advising why certain corporate governance best practices should be adopted by the organization. This may be as a result of compliance with laws, regulations, standards and codes or because the practices make good operational sense for the organization.
  • Implementing within the organization those best practices through the creation and maintenance of cultures and relationships.
  • Being flexible, creative and detailed, not losing sight of perspective and giving the board and managers a “heads up” about new developments.
  • Having a holistic view of the governance framework and ensuring that this framework and any supporting policies and procedures are clearly implemented by the Company.
  • Being articulate about the decision to be taken and what impact it would have on implementation.

Organizations need to put in place structures, policies, and procedures that comply with best practice. This on its own is compliance and doesn’t create good governance. For good governance to be present, the people who work in the organization need to apply or practice these structures, policies, and procedures to create a culture within the organization that enables them to work effectively. This, in turn, leads to the organization being successful. For example, compliance is putting in place a code of ethics; governance is about creating an ethical culture.

A good Company Secretary should be able to assist the organization with identifying what should make up the correct infrastructure for each organization. In addition, and some would say more importantly, once the correct infrastructure has been identified, the Company Secretary should be able to assist the organization with the creation of the culture and the relationships required to ensure that the infrastructure is implemented, managed, and maintained effectively for the success of the organization. Hence, as professionals, it is a constant endeavour to develop themselves to be better at their job and have the knowledge to be able to guide not only the Board of Directors of a Company but also each individual who help run the show.

Whatever type of organization the Company Secretary works for, he or she usually plays a valuable role as a “bridge” for information, communication, advice, and arbitration between the board and management and the organization and its stakeholders, including its shareholders. The Company Secretary can, among other things, help management understand the requirements of the board, help the board understand the challenges faced by management in meeting the requirements of the board, and help the organization manage stakeholder relations.

In the light of economic developments in recent years stakeholders of companies, are increasingly concerned with the conduct of the affairs of the company and therefore it is essential that best practice is adhered to at all times and evidence is available to demonstrate the same. Thus, Company Secretaries have to ensure that the decisions taken by the Board and the management are transparent and the society is benefited from those decisions ultimately. Thus, Company Secretaries are the professionals, who are responsible for the Company’s actions. The onus of educating the Directors about the law, the ethical aspect of abiding the law and finally taking the decisions legally and ethically, is on the Company Secretaries. They are the watchdogs of a Company who are constantly updated about the changes in legislation and educating the Directors and management of the Company about such changes. Simply put, Company Secretaries should have a proactive approach rather than a reactive one.

Skills to be a Professional

It is apparent that Company Secretaries are required to have a thorough knowledge of the law. That is how they are the experts in what they do. But it should also be noted that merely having the knowledge is not enough as professionals. There are certain soft skills that they should possess to shape them as one of the best professionals in the country. Few have been listed below:

  1. Reliability: A person should be consistent in his or her job, for the organisation to rely on their advice. Being confident and delivering accurate results every time is a sign of consistency. The professional should be dependable because someone else’s work will be impacted by his or her actions.
  2. Quality Work: Delivering quality work every single time is what is expected of a Company Secretary. This includes accuracy and in-depth knowledge about their field of work as well as providing practical support to the Board.
  3. Depth of knowledge: The profession of a Company Secretary requires them to be constantly updated about the changes in laws. Increasing their knowledge makes them the expert in what they do. It is a constant learning process.
  4. Accountability: Being a professional it is their duty to be accountable for their work. They are entrusted with responsibilities and thus are expected to take up ownership for their job.
  5. Leadership: Being accountable is the path to leadership. It is a quality that a professional should possess to excel in their job.
  6. Integrity: Professionals are known by their integrity. Keeping moral principles intact and being ethical are the key factors of being country’s one of the best professionals.
  7. Diligence: A professional should show diligence in his/her work. One should make utmost effort to execute their responsibilities with care because that is what they are expect of. They should be thorough in their job.
  8. Communication: Company Secretaries serve as a link between the Company, the Board of Directors and other stakeholders. Hence, communication is important to ensure that the gap is bridged between the Company and its stakeholders.
  9. Time Management: Timeliness might seem simple, but it is one of the most important qualities in a professional.
  10. Flexibility: The law is changing every day and as professionals Company Secretaries should also be adapt the change. This profession requires flexibility and the willingness to change.
  11. Confidentiality: The information acquired by Company Secretaries during the course of their employment in an organisation is strictly confidential. It is of utmost importance that he or she does not disclose it or misuse it in any manner whatsoever.
  12. Independent: The professional should possess skills to independently handle the work responsibility they are entrusted with.

It is a great deal of responsibility that Company Secretaries carry on their shoulders. Thus, it is imperative that they as professionals grow constantly. There always exists a burden on these professionals to keep themselves updated and motivated to learn and also nurture their skills as they are among the most valued professionals in terms of importance and impact.

Concluding Thoughts

As a professional, Company Secretaries handle multiple roles. The are one of the Key Managerial Personnel of the Company who carries a huge responsibility on their shoulders and have immense responsibility towards the nation. They contribute in several areas such as Direct and Indirect Taxation, Corporate governance, Arbitration & Conciliation, Corporate Communication & Public Relations, Human Resources, Corporate Laws, Corporate Administration, Foreign Exchange matters, Board and shareholders meetings, Corporate Compliance Management, Stock exchanges and Listing agreement, Mergers and Amalgamations, Arbitrations and Reconciliation and many more. With each passing day, this profession is commanding respect not only in the corporate sector but is well regarded by other professionals as well as by governmental authorities and agencies concerned with corporate governance in India.

Company Secretaries possess the power to influence the nations’ corporate governance framework, so to abide the law in letter and spirit by all the professionals would become a boon for the country and give rise to well-governed business boosting the economic sector, helping the nation towards rapid economic growth. Seeing the factual and today’s scenario there is a lot of scope for Company Secretaries in India and the possibility of future growth is high as the demand of corporate governance is rising. Thus, the role of Company Secretaries shall increase multiple folds owing to the compliance requirements getting stricter in the years to come.

Author: Alivia Das Senior Associate, NovoJuris Legal

This article was first published in the ICSI Charted Secretary Journal – March 2019 issue.

Regulatory Update: MCA amends Incorporation Rules in relation to Shifting of Registered Office and Incorporation fee for companies

As part of Government’s efforts to make India a startup hub and continuous efforts of ease of doing business in India, the Ministry of Corporate Affairs (the MCA) has issued notification dated 6 March 2019. With this notification following changes will come into effect:

Sl No Category Before Amendment After Amendment Effect of this amendment
1. Shifting of Registered Office from One State to Another The Companies desirous to shift their Registered office from one state to another state shall advertise the notice of shifting the registered office in a vernacular newspaper in the principal vernacular language in the district and in the English language in an English newspaper with the widest circulation in the State in which the registered office of the company is situated.

 

 

 

 

The Companies desirous to shift their Registered office from one state to another state can advertise the notice of shifting the registered office in a vernacular newspaper in the principal vernacular language in the district and in the English language in an English newspaper with the wide circulation in the State in which the registered office of the company is situated.

 

 

This will remove the confusion among the stakeholders with respect to publication of notice in the newspaper and they can choose the newspapers with minimum circulation as well.

 

Prior to amendment if any Company choose to publish in 2nd widest circulation newspaper, then the application would be rejected and this entails to start shifting process a fresh and this would take additional 3-5 months to complete.

 

With this relaxation, companies can choose among various newspapers which has wide circulation.

2. Fee on Incorporation of a Company The companies incorporated with a nominal capital of less than or equal to rupees ten lakhs, fee on INC-32 (SPICe) shall not be applicable. The companies incorporated with a nominal capital of less than or equal to rupees fifteen lakhs, fee on INC-32 (SPICe) shall not be applicable with effect from 18 March 2019. Earlier the Companies with initial authorised capital up to INR 10 lakh was exempted from any MCA fee on Incorporation and only stamp duty was applicable.

 

Now the exemption limit has been increased to INR 15 lakh. Therefore, Companies to be incorporated with nominal capital up to 15 lakh is exempted from MCA fee and stamp duty shall continue to be applicable.

 

Source: http://egazette.nic.in/WriteReadData/2019/199251.pdf

Draft E-commerce Policy: The dawn of a new beginning

Data is the basic building block of everything we are trying to do in this age of Industry 4.0. Data is a valuable resource for any individual, corporation or the Government. Data can be used for analytical, statistical, business, security purposes among various other things. Keeping ‘data’ central to the idea of governing the e-Commerce industry in India the Department for Promotion of Industry and Internal Trade on February 23, 2019, published the ‘Draft e-Commerce Policy’ (“Draft Policy”).

The overall objective of the Draft Policy is to prepare and enable stakeholders to fully benefit from the opportunities that would arise from progressive digitalization of the domestic digital economy. The Draft Policy focuses on data protection, the State’s paternalistic attitude towards the use of the citizen’s data and cross border transactions. The Draft Policy intends to regulate some things beyond e-commerce i.e. it proposes to regulate technologies like AI, IoT, Cloud computing and Cloud-as-a-Service etc. On a holistic level, it is understood that these technologies empower e-commerce industry currently and are integral to its growth and therefore the Government intends to bring these technologies under the purview of the Draft Policy. The Draft Policy is a mix of visionary thought process, advanced technological solutions, putting in place digital infrastructure to support India’s digital economy etc.

DATA

The Draft Policy resonates the idea and intent of the legislature that is formulated under the Data Protection Bill, 2018 as far as the rights over data of an individual is concerned. The collective idea of the Draft Policy is to streamline the protection of personal data and empowerment of the users/consumers with respect to the data they generate and own. Though the question to be assessed here is whether this is the real intent of the Draft Policy?

The Draft Policy recognises the rights of an individual over its data by stating that “An Individual owns the right to his data” and therefore the use of an individual’s personal data shall be made only upon seeking his/her express consent. It further states that the data of a group is a collective data and therefore a collective property of that particular group; it extends this rationale to state that “Thus, the data that is generated in India belongs to Indians, as do the derivatives there from”. But the Draft Policy ends up categorising data of Indians as a collective resource and therefore a “national resource”.

The abovementioned intent of the Draft Policy is fair and strives to achieve the greater good of the country, but at what stake? If personal data belongs to an individual then this objective appears that the State wants to interfere with the personal rights of a person. The Draft Policy clearly states that “All such data stored abroad shall not be made available to other business entities outside India, for any purpose, even with the customer’s consent”, what follows this point in the Draft Policy, restricts sharing of data with any third party in a foreign country even if the individual has consented to such sharing of the data.

The intent behind such restriction is that currently, India lacks stringent laws regarding cross-border flow of data. If there are no strict restrictions on cross-border flow of data Indian stakeholders will merely be engaged in back end processing of data for the EU / US based e-commerce entities without having the ability to create any high-value digital products. While the Government considers data as a national resource and compares it with coal, telecom spectrums etc. it ignores the fact that the inherent nature of personal data is that it belongs to an individual and not to the State, unlike coal.

The obvious reason as to why the State is taking such a stance is to eliminate issues related to consent asymmetry. But is this paternalistic attitude warranted?

If the Government is worried about foreign countries using our national resource i.e. data to their advantage it should put in place stringent data privacy and protection laws in India taking inferences from other countries.

DATA INFRASTRUCTURE

The Draft Policy takes forward the digital India initiative and intends put in place secure and digital infrastructure and encourage the development of data –storage facilities/ infrastructure including data centres, server farms, towers, tower stations, equipment, optical wires, signal transceivers, antenna etc.

The Government will add the above-mentioned infrastructure facilities in the  ‘Harmonized Master List’. This will enable regulation of the listed infrastructure in a more streamlined manner. Whereas the infrastructure will be put in place by various implementing agencies, while financing agencies may identify these as infrastructure that they may intend to support. This will facilitate achieving last mile connectivity across urban and rural India.

The Government by developing such data/digital infrastructure wishes to support India’s fast-growing digital economy and create employment.

EASE OF REGULATION

Given the interdisciplinary nature of e-commerce, it is important for the Government to tackle various regulatory challenges. The Draft Policy suggests formulating a Standing Group of Secretaries on e-Commerce (SGoS), which shall be an important body for tackling various legal issues emerging from various statutes such and Information Technology Act, 2000 and rules thereunder, the Competition Act, 2002 and the Consumer Protection Act, 1986.

Additionally, the Draft Policy states that “All e-Commerce websites and application available for downloading in India must have a registered business entity in India as the importer on record or the entity through which all sales in India are transacted”.

SIGNIFICANT HIGHLIGHTS OF THE DRAFT POLICY

  • The Government intends to continue charging custom tariffs on any digital goods being traded electronically (imposing custom duties on electronic transmissions). Whereas the Government is strict on its stance of not accepting the permanent moratorium on custom tariffs for goods (including digital goods) traded electronically as proposed by the WTO.
  • The Draft Policy states that there should technological standards put in place for emerging technologies like IoT, AI etc.
  • The Draft Policy introduces a term, namely ‘Infant Industry’ under which small scale entities facing entry barriers to enter the market will be integrated with market keeping data as a central to this integration. This will also help strengthen platforms like ‘e-lala’ and ‘Tribes India’.
  • The Government intends to establish technology wings in each Government department.
  • The Government intends to streamline the process of importing goods in India and harmonise the functions of various administrative bodies involved in the process of import of goods in India.
  • A body of industry stakeholders will be created that shall identify ‘rogue websites’. These rogue websites will be added to ‘Infringing Website List’ (IWL). IWL will enable the ISPs to remove or disable these websites. It will also enable payment gateways to curtail the flow of payments to or from such rogue websites. Search engines will be able to efficiently remove such rogue websites identified in the IWL.
  • There shall be no trade mark infringement and customers at large shall not be deceived by using deceptively similar trademarks. In case an e-Commerce entity receives a complaint about a counterfeit/fake product which is manufactured with intent to deceive the customers. The e-Commerce entity shall convey such misuse of the trademark within 12 hours from receiving the complaint to the trade mark owner. Whereas in case any prohibited goods/products have been sold on any e-commerce platform the entity operating such e-Commerce platform shall delist such products within 24 hours from receiving such complaint.
  • Any non-compliant e-Commerce entity will be not be given access to operate in India.
  • All e-Commerce sites/apps available to Indian consumers shall display prices in INR and must have MRPs on all packaged products, physical products and invoices generated.
  • In the view of misuse of ‘gifting’ route, as an interim measure, all such parcels shall be banned, with exception of life-saving drugs.
  • Details of sellers shall be available for all the products sold online.
  • Sellers shall provide undertaking regarding genuineness of any product sold online.
  • In case of a counterfeit product is sold to a consumer, the primary onus to resolve such an issue will be of the seller but the intermediaries shall return the money paid to them by the customer and the marketplace shall seize to host such products on their platforms.
  • The intermediaries shall curtail piracy on their platforms.
  • An integrated system that connects Customs, RBI and India Post to be developed to better track imports.
  • The Draft Policy also intends to simplify the processes involved in export of goods by doing away with redundant requirements such as the need to procure Bank Realisation Certification

Once the final e-Commerce policy is enacted what will be interesting to see is whether Government opts for ease of governance or ease of doing business.

Overall this Draft Policy is a positive step towards making India one of the most prominent digital economies in the world, especially considering the strict stance the Government has taken during the WTO negotiations by not accepting the permanent moratorium on waiving custom duties on digital goods sold through electronic transmission. The Government intends to boost the local and home grown e-Commerce business entities and to provide a level playing field for MSMEs by retaining the rights to impose tariffs on electronic transmission through e-Commerce. Certain issues regarding data/personal data of an individual still needs a deep intellectual thinking, integrated with a practical approach from the Government before implementing a sector-wide policy, especially keeping in mind that at the end of the day personal data belongs to an individual and the use of such personal data shall be the decision of the respective individuals and not of the State.

Author: Manas Ingle, Associate, NovoJuris Legal