Corporate governance is crucial for the smooth and efficient functioning of a business, and the driving force behind this governance is the board of directors (referred to as “the Board”). However, the Board faces numerous challenges when making executive decisions, particularly when it comes to balancing the interests of various stakeholders in the company.

An experienced VC or PE investor can bring significant benefit to the board of an investee company and help avert governance issues by appointing a nominee director to a company’s board along with negotiated control and voting rights. Nominee directors play a vital role in ensuring the company’s decisions are in the shareholders’ best interest. They bridge the gap between investor and company interests, allowing investors to participate in decision-making and protect their interests.

India, as a member of the Financial Action Task Force (“FATF”), is actively participating in developing and promoting policies against money laundering, terrorist financing, and the financing of weapons of mass destruction. In line with FATF's objectives, member countries review each other's anti-money laundering legislations. India is actively prioritizing compliance with FATF Recommendations as its upcoming mutual evaluation is tentatively scheduled for the end of this year. Particularly, Recommendation 22 urges member countries to include lawyers, notaries, independent legal professionals, and accountants involved in the activities mentioned below in Notification dated May 3, 2023 as “Reporting Entities”. Recommendation 22[1] also addresses the treatment of trusts and company service providers as reporting entities.

Accurate reporting of financial statements is a pivotal responsibility of a startup and its founders. But the low tide of funding has exposed the dark underbelly of the startup ecosystem in India and often promoter greed and investor appetite for higher valuation are leading to governance failures and bringing companies down.

With a new chairperson in Madhabi Puri Buch, the Securities and Exchange Board of India (“SEBI”) has introduced several regulatory changes. It has, over the course of the past year, tightened the regulatory framework and upgraded decades-old laws. These include regulations on buybacks, the role of mutual fund trustees, alternative investment funds, real estate investment trusts and the investor grievance redressal mechanism.

The Recommended Governance Framework for Start-ups is designed to establish a culture of accountability, transparency, and ethical behaviour at all levels of start-ups, thus enabling a self-regulating world class start-up ecosystem.

The Registrar of the Companies (“RoC”) is empowered to strike down the names of the companies in accordance with the provisions of Section 248(1) of the Companies Act, 2013 (“Act”) read with The Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016 (“Strike Down Rules”). Recently, the RoC has been cracking down on the companies which have been violating the provisions of the Act or have been acting as shell companies, and accordingly striking off the names of such defaulting companies from the register of the companies.

Money laundering is a global menace that undermines the integrity of financial systems and perpetuates criminal activities. In response and India's commitment to combat this illicit practice, the Prevention of Money Laundering Act, 2002 (PMLA) was enacted. This comprehensive legislation aims to address the offense of legitimizing income or profits derived from illegal sources.

If you are interested in setting up a business in India and have questions about forming a Company or LLP, this booklet provides basic answers to common queries. It is intended to serve as a broad guide to help you make informed decisions about starting and running your business in India. However, please note that the information provided here is generic in nature and should not be construed as legal advice on any specific queries. Indian laws and regulations are subject to change, so it is recommended that you seek professional advice and guidance to ensure compliance with all applicable laws and regulations.

Globally, startups have evolved into the catalyst for economic recovery, reorientation, and growth driven by innovation. As India Inc. is pushing the needle towards achieving the trillion-dollar digital economy goal and has evolved as a hotspot for varied startups, it is imperative for companies to understand the importance of “Environmental, Social, and Governance” or “ESG” in start-ups. The business world is rife with stories of how promoters have lost their management positions due to one terrible incident, which forms the basis of an internal investigation and uncovers a series of incidents pointing to inappropriate behavior. ESG issues are becoming increasingly important for start-ups, as investors, customers, and employees demand more accountability and transparency from companies.

Chartered Accountants (CAs) are professionals who are entrusted with the task of ensuring compliance with financial regulations and safeguarding the interests of stakeholders. They are universally considered to play a crucial role in upholding financial integrity. To ensure that a company complies not only with applicable laws but also with the corporate governance framework, corporate professionals such as CAs act as watchdogs on behalf of the regulators. As such, they are expected to uphold the highest standards of ethical behaviour and ensure adherence to not only the letter but also the spirit of the law.

A preference share is a type of security that combines characteristics of both equity and debt. Like ordinary shares, preference shares allow holders to receive income in the form of dividends. However, they are also redeemable after a specified period, similar to debentures.luation requirements play a crucial role in the functioning of financial markets across different regulatory regimes. The regulations governing valuation help to maintain the integrity and stability of financial markets, ensuring that investors are protected from fraudulent or misleading practices. While the specifics of valuation requirements may differ across various jurisdictions and regulatory bodies, the underlying principles and objectives remain the same. Investors and financial professionals must stay up-to-date with the latest developments in valuation regulations to make informed decisions and ensure compliance with applicable laws and standards. Ultimately, adherence to sound valuation practices benefits all stakeholders, helping to foster greater transparency, trust, and confidence in financial markets.

Valuation requirements play a crucial role in the functioning of financial markets across different regulatory regimes. The regulations governing valuation help to maintain the integrity and stability of financial markets, ensuring that investors are protected from fraudulent or misleading practices. While the specifics of valuation requirements may differ across various jurisdictions and regulatory bodies, the underlying principles and objectives remain the same. Investors and financial professionals must stay up-to-date with the latest developments in valuation regulations to make informed decisions and ensure compliance with applicable laws and standards. Ultimately, adherence to sound valuation practices benefits all stakeholders, helping to foster greater transparency, trust, and confidence in financial markets.

To begin with, compliance with laws and regulations is essential for businesses to operate smoothly and to ensure their legitimacy. This is particularly important in India, where the Companies Act, 2013 (“CA 2013” / “Act”) introduced a significant change in the legal and regulatory framework for companies. Compliance with these laws is crucial as even the smallest mistake (what we call as “nano” compliances) can lead to significant consequences.

Recently, the RoC, NCT of Delhi and Haryana, passed an order for violation of section 42 of the Act pertaining to private placement of securities. A threshold limit has been set out in the Act that an offer or invitation to subscribe securities under private placement shall not be made to persons exceeding 50 or such other higher number as prescribed by the rules, that is, 200. The same can be substantiated by the Sahara case Further, the Act also states that no company issuing securities through private placement should release any public advertisements or use any media, marketing, or distribution channels or agents to inform the general public about such issues.

The Ministry of Finance (Department of Economic Affairs) and the Reserve Bank of India (“RBI”) respectively released the Foreign Exchange Management (Overseas Investment) Rules, 20221 (“OI Rules”) and the Foreign Exchange Management (Overseas Investment) Regulations, 20222 (“OI Regulations”). In addition to the introduction of the OI Rules and OI Regulations, the RBI has also issued the Foreign Exchange Management (Overseas Investment) Directions, 20223 (“OI Directions”) which are to be read in conjunction with OI rules and the OI Regulations. (collectively the OI Rules, OI Regulations and the OI Directions read as the “OI Framework”).

The Reserve Bank of India (“RBI”) vide A.P. (DIR Series) Circular No. 16 dated September 30, 20221 (“RBI Circular”) has revised the late submission fee (“LSF”) computation matrix for reporting delays under the Foreign Exchange Management Act, 1999 (“FEMA”), in order to bring uniformity in imposition of LSF across functions.

Since the starting of economic liberalization in India in 1991, India has emerged as a top destination for investments globally. In terms of its economic growth, India is one of the world’s largest and fastest growing economy. While COVID-19 disrupted the growth path in 2020, India is expected to roar back to annual growth of more than 7% each year in coming five years

Conceptually, a foreign investor has an option to make investment in India either directly or indirectly through an Indian entity (i.e. a company or LLP) owned or controlled by it. Direct investment by foreign investor in India is known as foreign direct investment (‘FDI’), and where the investments are routed through an entity set up in India, it becomes an indirect foreign investment (popularly known as - downstream investment). For the foreign investors already having presence in India and intend to diversify investments or expand operations through acquisitions, downstream investment could be a better proposition considering that investment and acquisitions undertaken through the Indian subsidiary(ies) attracts relatively lesser compliances, as compared to the FDI. Downstream investment can also be used as an efficient tool for deploying surplus funds of Indian subsidiary to achieve investment goals of foreign investor in India.

The Ministry of Finance (Department of Economic Affairs) and the Reserve Bank of India (“RBI”) respectively released the Foreign Exchange Management (Overseas Investment) Rules, 2022 (“OI Rules”)1 and the Foreign Exchange Management (Overseas Investment) Regulations, 2022 (“OI Regulations”)2. In addition to the introduction of the OI Rules and OI Regulations, the RBI has also issued the Foreign Exchange Management (Overseas Investment) Directions, 2022 (“OI Directions”)3 which are to be read in conjunction with OI rules and the OI Regulations. (collectively the OI Rules, OI Regulations and the OI Directions read as the “OI Framework”).

In exercise of the powers conferred under Section 135 and sub-sections (1) and (2) of Section 469 of the Companies Act, 2013 (“Act”), the Central Government recently amended The Companies (Corporate Social Responsibility Policy) Rules, 20141 through the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2022.2 (“Amended CSR Rules”)

The Ministry of Corporate Affairs (“MCA”) recently introduced a slew of amendments which endeavors to implement additional measures to ensure more robust

The Government of India through Press Note 3 (2020 Series) dated April 17, 2020 (“Press Note 3”) had amended its Foreign Direct Investment Policy to state that any investment by an entity of a country, which shares ‘land border’ with India, or where the ‘beneficial owner’ of an investment into India is situated in or is a citizen of any such country, can be made only upon seeking prior approval of the Government of India (“GOI”). Press Note 3 also provided that an approval from the GOI is required for direct or indirect transfers of ownership of any existing or future foreign direct investment in an Indian entity, resulting in a change in the ‘beneficial ownership’ falling within the above-mentioned geographic restrictions.

The Ministry of Corporate Affairs (“MCA”) with a view to enhance Ease of Doing Business and to work towards its endeavor for Complete virtualization of Board approval process has omitted Rule 4 of the Companies (Meetings of Board and Its Powers) Rules, 2014 which restricted the Board to deliberate the below mentioned agendas through a Video Conferencing meeting (“VC Meeting”) which meant below agenda could only be discussed at a physically convened meeting.

Every company / LLP / liaison office / branch office is required to file various forms, returns and documents with the Registrar of Companies / Reserve Bank of India. We have provided a gist of standard statutory filings for FY 2021-2022 along with timelines below for quick reference.

The global COVID-19 pandemic has hit entire country and as of this writing, the number of cases is rising every day in India. Everyone is now well acquainted with the economic downturn and how COVID 19 has impacted our lives. While India and others have been working around the clock to flatten the curve, corporates and business are facing different challenges during this crisis—some are reaching new levels of growth with new opportunity, while others are struggling to survive.

Government introduced the Companies (Amendment) Bill, 2020 (“the Bill”) in the Lok Sabha on March 17, 2020 to further amend certain provisions of the Companies Act, 2013 (“the Act”). Since the notification of the Act in 2013, it has been amended time to time by the Government including

All applicable sections of the Companies Act, 2013 related to holding general meetings (except those specific to AGM). Rules 18 to 23 of the Companies (Management and Administration) Rules, 2014. and any other rule as may be applicable.

This principle shall not apply to shareholders holding 2% or more shareholding, promoters, institutional investors, directors, key managerial personnel and the Chairperson of the various committees as may be applicable to the companies.

The term ‘Corporate Governance’ became a buzzword in early 2000’s due to introduction of series of legal and regulatory reforms by the Indian government to instil and to improve the level of responsibility, accountability, board practices and transparency in conduct of business by the large corporates where the public interest in involved.

In wake of worldwide outbreak of Covid-19, MCA with the right intent has issued a clarification on holding of AGM through VC or any OAVM mode via General Circular No. 20/2020.