MCA likely to tighten fund raising norms by unlisted companies
PrintListen to this Article
Taking a leaf out of the Sahara case, the Corporate Affairs Ministry is contemplating to tighten fund raising norms from the public by unlisted companies.
The Ministry, according to an official, is of the view that an unlisted company should not be allowed to raise funds either through private placement of shares or deposits from more than 49 persons in a year.
The government is proposing to impose these restrictions by introducing new rules in the Companies Act, 1956, he said, adding, the changes would also help in clarifying the existing provisions in the Company Law.
According to Section 67 (3) of the Companies Act, if a company decides to allot shares to 50 people or more, it would become obligatory for it to apply for listing.
“The timeframe is not mentioned. It is not clear whether to interpret it as 50 people or more at a time, or 50 people or more in a year. So, that leads to a lot of misinterpretation and sometimes also misuse by companies.
“After the Sahara case, we want to tighten the norms to ensure there is no loophole,” the official said.
The Supreme Court in August had directed two Sahara firms to refund about Rs 24,000 crore to the investors within three months with an annual interest of 15 per cent, after finding violations of regulatory norms in raising funds from the public.
The money was raised through issue of an instrument called ‘Optionally Fully Convertible Debentures’ (OFCDs).
Following the court order, the Sahara group had assured its depositors and investors that their money was safe and there would be no delay in payment commitment to them.
If the two companies failed to refund the amount, Sebi could attach their properties as well as freeze bank accounts. Sebi has also been asked to investigate the issue. (PTI)
Category : Corporate Law | Comments : 0 | Hits : 417
Ashneer Grover, former managing director of BharatPe, has moved the National Company Law Tribunal (NCLT), Delhi, alleging opression and mismanagement at the company. The case came up for hearing on December 6, wherein his lawyer sought additional time to address the tribunal on maintainability. The case will be heard next on January 11. According to the plea, reviewed by Moneycontrol, Grover has filed the plea against BharatPe holding company Resilient Innovations and 11 of its directors i...
Over 96,000 companies have wound up their operations in the past five years, according to the Ministry of Corporate Affairs. Businesses opt for winding up for various reasons, including financial unviability. From April 1, 2018 to March 31, 2023, as many as 96,261 companies exited voluntarily, invoking a section in the Companies Act, according to a report in the Mint. According to the data from the ministry, under the Insolvency and Bankruptcy Code (IBC), final resolution orders have be...
Three board members of Ed tech company Byju’s resigned on Thursday, June 22. According to reports, Peak XV Partners' GV Ravishankar, Prosus' Russell Dreisenstock and Chan Zuckerberg Initiative's Vivian Wu have stepped down from their responsibilities from the board. The company spokespersons have denied reports dismissing them as speculative. Meanwhile, The Ken has reported that Byju’s auditor’s Deloitte Haskins & Sells had also stepped down with immedi...
The Enforcement Directorate has accused Amway India Enterprises of running a multi-level marketing scam, while attaching its assets worth Rs 757 crore on Monday, including its factory in Tamil Nadu’s Dindigul district and bank balances of Rs 346 crore. The agency said its money trail against Amway revealed that the company had collected Rs 27,562 crore from its business operations from 2002-03 to 2021-22. Out of this, Amway paid a commission of Rs 7,588 crore to its distributors and m...
The Insolvency and Bankruptcy Board of India (IBBI) has issued a fresh set of rules to fast track voluntary liquidation by companies under the Insolvency and Bankruptcy Code (IBC). The amendments to the IBBI (voluntary liquidation process) regulations notified on Tuesday sharply cuts short the time allowed to complete various procedures, showed an official order. As per the new regulations, the timeline for preparation of list of stakeholders by liquidators has been shortened to 15 day...
Comments