Legislation UpdatesRules & Regulations

As a measure which directly benefits Startups & Innovators in the country, especially those who are supplying products & services on e-commerce platforms, and in order to bring in more unincorporated businesses into the organized corporate sector, the incorporation of One Person Companies (OPCs) is being incentivized by amending the Companies (Incorporation) Rules to allow OPCs to grow without any restrictions on paid-up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non-Resident Indians (NRIs) to incorporate OPCs in India.

In addition, the fast track process for mergers under the Companies Act, 2013 has also been now extended to also include mergers of Startups with other Startups and with Small companies, so that the process of mergers & amalgamations is completed faster for such companies.

The amendments to the Rules governing OPCs will cover the following, w.e.f  01st April 2021 (click here for NOTIFICATION 1NOTIFICATION 2):

    1. Previously NRIs were not allowed to incorporate OPCs. Now any natural person, who is an Indian citizen, whether resident in India or otherwise would be allowed to form an OPC.
    2. For being considered as a resident in India, the residency period has been proposed to be reduced to 120 days from 182 days for NRIs.
    3. Rule relating to voluntary conversion unless OPC has completed two years from the date of incorporated is proposed to be omitted and with effect from 01-04-2021, Conversion of One Person Company into a Public company or a Private company shall be permitted anytime. A One Person company may be converted into a Private or Public Company other than a company registered under section 8 of the Act, after increasing the minimum number of members and directors to two or minimum of seven members and three directors as the case may be,
    4. Similarly the limitation of Paid-up capital & turnover presently applicable for OPCs (paid up share capital of fifty lakhs rupees and average annual turnover during the relevant period of two crore rupees) is being done away with so that there are no restrictions on the growth of OPCs in terms of their paid up capital & turnover.
    5. Rationalization of e-forms applicable for OPCs by omitting e-Form No.INC-5 and modification of e-form INC-6 (application for conversion from OPC to a Private company or a Public company and also Private company to OPC or )
    6. Amendment notification issued on 01-02-2021.

Ministry of Corporate Affairs

[Press Release dt. 03-02-2021]

[Source: PIB]

Case BriefsHigh Courts

Orissa High Court: A Division Bench of S. Panda and S. K. Panigrahi JJ., dismissed the petition and called upon the relevant legal stakeholders to ensure that a uniform and well-defined parameter is adopted so that the meritorious candidates do not suffer.

The facts of the case are such that the petitioner has challenged the inaction of opposite party 1 in not considering the application of the petitioner for admission into 5 years BBA LLB (Hons.) Course under NRIs (Non-Resident Indian Sponsored) category for the academic year commencing 2020.

Counsel for the petitioners submitted that when she applied for CLAT (Common Law Admission Test) examination and wanted to apply through NRI quota but selected GENERAL CATEGORY for the same, however, due to COVID outbreak she wasn’t able to modify the quota due to technical glitch on the last date i.e. 15-08-2020. It was further submitted that the petitioner’s name was not found in the merit list where the candidates with a lower rank than that of the petitioner were in the merit list as against NRI/NRIs category.

Counsel for the respondents submitted the petitioner herein has not applied under NRI/NRIs category for the CLAT 2020 Application in spite of several extensions granted to the students by the CLAT Consortium. It was further submitted that there is always the possibility of server down, internet glitch etc. and therefore, it has been advised by the CLAT conducting authority that candidates must apply well before the last date because there tends to be a heavy rush on the use of internet on the last date.

The Court observed that The Opposite Party 1 is bound by the CLAT Rules and Notification. If the petitioner fails to figure in the CLAT 2020 NRI/NRIs category, the Opposite Party 1 cannot change the category of the candidate. Since the petitioner has not applied under NRI/NRIs category in the CLAT 2020 Application, due to the said fact the OP 1 had to reject the candidate’s application.

Court held that changing the category, at this juncture when the admissions are over, would disturb the entire process and jeopardize the interest of so many students.

The Court before disposing off the petition relied on the judgment P. A. Inamdar v. State of Maharashtra, (2005) 6 SCC 537 and observed:

“NRIs category is an affront to the meritorious candidates who toiled day night to secure seats in NLUs through CLAT. The candidates belonging to the category of NRI/NRIs, who are very low ranked in the merit list often gets seat in the NLUs whereas the general candidates having secured better marks also lag behind the NRIS students and get disappointed. This is like the reservation for the elite class and this dubious category of quota is unconstitutional.”[Ishika Pattnaik v. National Law University of Odisha,  2020 SCC OnLine Ori 762, decided on 20-10-2020]


Arunima Bose, Editorial Assistant has put this story together

Cabinet DecisionsLegislation Updates

The Union Cabinet chaired by Prime Minister Narendra Modi has approved the introduction of Registration of Marriage of Non-Resident Indian (NRI) Bill, 2019, for creating more accountability and offering more protection against exploitation of Indian citizens, mostly women by their NRI spouses.

Details:

The Bill provides for amendment of the legal framework to act as a deterrent to the erring NRI spouses and creating more accountability and offer protection against exploitation of Indian Citizens married to NRIs.

Once the Bill is passed, marriages performed by NRIs would be registered in India or Indian Missions & Posts abroad, and necessary changes would be carried out in the:

  1. Passports Act, 1967; and
  2. Code of Criminal Procedure 1973 by insertion of Section 86A.

Major Impact:

Serving Judicial summons for Court proceedings in India is a major problem, which would be taken care of by this Bill by amending the Code of Criminal Procedure, 1973. Thus, the Bill would offer great protection to Indian citizens married to NRIs and serve as a deterrent to NRIs against harassment of their spouses. This Bill would benefit Indian women married to NRIs worldwide.

[Source: PIB]

Cabinet

Legislation UpdatesNotifications

The Integrated Nodal Agency (INA), decided to issue one more Look-out-Circular (LoC). The Ministry has already issued 6 LoCs since April 2018, after examining the complaints received regarding NRI matrimonial disputes. The INA meets regularly to discuss issues related to NRI matrimonial disputes and chart the way forward.

In criminal matters involving NRI’s, LoC could be issued by the INA in cognizable offences, when the overseas husband is deliberately evading arrest or not appearing in the trial court despite non-bailable warrants and other coercive measures or there is a likelihood that he will leave the country to evade trial or arrest. The LoC will be issued after having the case scrutinised by NCW.

Ministry of Women and Child Development

Punjab and Haryana High Court
Case BriefsHigh Courts

Punjab and Haryana High Court: The High Court of Punjab and Haryana decided on the matter arising before it from a civil suit pending before the Court of Civil Judge (Junior Division), Samrala, the issue whether Sucha Singh (petitioner witness), who was residing at USA, can be allowed to be examined by way of Video Conferencing.

The Court vide order dated 16.10.2015 passed in CR 6571 of 2014 allowed the same stating that the witness can be confronted with the documents with close proximity to the camera. Petitioner was given liberty to choose a public authority where such facility was available and inform the Court. Alternatively, the petitioner was given option to identify the Indian Consulate in the nearest place from his residence and produce the Court order to secure the permission for hearing. The petitioner was to make himself available during the court working hours in India and give a date which is mutually convenient to the Court and the Consulate or the Public Office.

The Court was of the view that the evidence of the petitioner was very material and therefore his evidence was required to be recorded. However, noticing the difference of time between India and USA, the Court was of the opinion that approaching the Public Authority at night time to allow video conferencing facility was unfeasible. The Court opined that as video conferencing is now available through many applications like Facetime, Whatsapp, Skype etc. there is no necessity of approaching the nearest Consulate.

The Court allowed examination of the petitioner by way of video conferencing through Mobile or Computer on an application, and the time and date of the same would be communicated to the trail court. The witness is to be identified by the opposite party or any other person nominated by them. The Court further ordered supply of photocopy of any document which is sought to be put to the witness in advance to the opposite party and witness himself, so that he may answer on the said document. [Sucha Singh v. Ajmer Singh, 2018 SCC OnLine P&H 637, order dated 17-05-2018]

Hot Off The PressNews

Supreme Court: In the petition seeking E-voting rights for the NRIs, the Central Government told the Court that it was willing to amend the Representation of the People Act, 1951 in order to give the option of E-voting to NRIs. The Court has given 2 weeks time to the Centre to respond as to what changes will be made in the Act.

On 15.07.2017, the bench of J.S. Khehar, CJ and Dr. D. Y. Chandrachud asked the Central Government to apprise it within a week as to whether it is going to amend the election law or rules for enabling non-resident Indians (NRIs) to vote in elections in India by way of E-voting.

Source: ANI