Corporate Law or Company Law is a branch of law that deals with companies or corporations’ formation and working, i.e., legal entities set up for business purposes.
Under the Corporate law, we study The Companies Act, 2013, which specifically provides for business conduct by the companies.
It is a legal field that governs mergers, acquisitions, and the rights and duties of shareholders.
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The reason for NCLT:
National Company Law Tribunal has been established under the Constitution of India. It is vested with the governing power over the companies formed under the Act of 2013. It denotes the National Company Law Tribunal, which is a quasi-judicial body formed on June 1, 2016. The Tribunal has been set up for adjudicating disputes of civil nature arising under the Companies Act.
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Before the formation of NCLT, various authorities (e.g., Company law Board, Board of Industrial and Financial Reconstruction) dealt with issues of companies. With the establishment of National Company Law Tribunal, the jurisdiction of these separate bodies has been consolidated. A single body is now taking care of various issues related to companies like winding up, mergers, compromise, and reconstruction. It has helped check the delay in the decision of cases and has brought uniformity in such decisions. The main aim behind setting up a separate court of law like NCLT has been to shorten, simplify, and accelerate the proceedings in company matters.
Vast powers are given to NCLT. It is like a court of law and can order penalties and compensation.
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In addition to this, it has been empowered to adjudicate insolvency matters under The Insolvency and Bankruptcy Code, 2016, concerning companies. A significant benefit now lies to the homebuyers as per the amendment in this code. If a developer fails to deliver the house’s possession on time or neglects to refund the money, a homebuyer can approach NCLT for initiating IRP against the said developer.
Areas of working of NCLT in Corporate Law:
It deals with the following cases –
- Management and oppression of a company.
- Commission of frauds and improprieties by companies with their depositors and shareholders by drying out their investment.
- Wrongful registration of a company. It has the power to deregister such a company.
- Company’s affairs that are prejudicial to the public interest or interest of the company itself. It has the power to investigate the matters of such a company.
It has been empowered to:
- Change the financial year of the Companies.
- Call for the General and extraordinary meetings of the company.
- Change the liability of the members from limited to unlimited.
It has the authority to dispose of the cases pending before the earlier authorities.
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NCLT, like a court of law, also permits class-action, i.e., one person or a class of people file a suit for the benefit of many others. The petition is filed by one person or a group of persons representing other similarly situated persons’ interests.
Under Corporate Law, NCLT has become more significant as in today’s world, companies’ issues relating to reconstruction, mergers, etc., and grievances of depositors have become very common.