Corporate Amicus- Issue No. 138

The first article discusses a recent decision of the Registrar of Companies, relating to Section 42 of the Companies Act, 2013 (private placement of shares). The Adjudicating Officer has observed that the provision requires that the company should adhere to the limit of 200 persons not just on the number of persons who ultimately subscribe to the securities of the company, but also that this limit cannot be exceeded at the time of making an offer or invitation to offer. It was also held that the role played by an intermediary platform in the present case could not be relegated to mere ‘generation of interest in the company’. The author ( Noorul Hassan Hassan) opines that the provisions dealing with fundraising by startups could do with a fresh look.

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The Digital India Act (DIA) is set to replace the Information Technology Act, of 2000 on account of a transformed internet landscape today, with significant internet penetration, multiple intermediaries operating across the internet, and complex forms of user harm. The second article discusses a glimpse into the DIA, as presented recently by the Minister of State for Electronics & Information Technology. The authors ( Sameer Avasarala and Prashant Phillips ) discuss how the DIA lays importance on the open internet, protection of online safety and trust of internet users, and recognizes that the nature of intermediaries and roles played by them have transformed significantly and are functionally different.

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Notifications and circulars cover the MCA Circular on the filing of various Forms due to migration from V2 version to V3 version in MCA 21 portal from 22 February 2023 to 31 March 2023; Master Circular for Foreign Venture Capital Investors; Master Circular for Portfolio Managers; SEBI (Foreign Portfolio Investors) (Amendment) Regulations, 2023; and amendment to SEBI (Buy-back of Securities) Regulations, 2018. The part also covers the extension in the enforcement of Food Safety and Standards (Advertising and Claims) Second Amendment Regulations, 2022.

Ratio decidendi covers an NCLT Kolkata decision holding that dissenting secured creditors cannot be treated higher than other creditors under Section 53 of the Insolvency and Bankruptcy Code, 2016 just because they enjoy security interest. It also covers an NCLT Ahmedabad decision holding that Operational Creditors cannot claim a higher amount when Financial Creditors are not paid in full in the Resolution Plan. Telangana High Court has held that arbitration under Section 42 of the SEZ Act, 2005 shall override any contractual agreement between the parties.

News Nuggets cover various decisions of the High Court, NCLT etc. Some of these are listed below.

• Negotiable instruments – The person authorized by the company to sign a cheque is not the ‘drawer’
• The Assignee of an agreement is entitled to invoke the arbitration clause of the agreement not signed by it.
• Applications under Sections 7 and 9 of IBC are not ‘suit’ – Restrictions under Section 69(2) of the Partnership Act are not applicable.
• The right of homebuyers to raise a claim before a Resolution Professional would not cease to exist when Resolution Plan is still pending adjudication.
• Moratorium – Explanation to 14(1)(d) of IBC does not include within its ambit lease premium and lease rent amount

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