#BulletinBoard – July 02, 2019 (Unless ex-personnel, unrelated parties have no obligations to furnish any information under IBC: NCLT and more)
Unless an ex-personnel, unrelated parties have no obligations to furnish any information under IBC: NCLT
The National Company Law Tribunal, in the case of M/S Educomp Infrastructure and School Management Limited and others (“Educomp”) v. Mr. Vinod Kumar Dandona (“Vinod”) , passed an order whereby, unless a party is an ex-personnel of the corporate debtor, parties not related to the corporate debtor (Educomp in the present matter), are under no obligation to furnish any information to the Interim Resolution Professional under the Insolvency and Bankruptcy Code, 2016 (“IBC”).
The NCLT observed that, although Section 19 of the IBC mandates that ex-personnel of the corporate debtor (for example, former employees or directors of a company) to fully co-operate with the corporate debtor, this obligation does not extend to unrelated parties.
In the present case, a corporate insolvency resolution process was initiated against Educomp. In order to determine the true value of Educomp, the Interim Resolution Professional (“IRP”) approached parties with whom Educomp has executed agreements with, like schools and societies about details of their arrangements with Educomp. Vinod approached the NCLT claiming that this was an abuse of power by the IRP. The NCLT held that although unrelated parties can furnish information to the IRP, they are not under any obligation to do so.
The judgement of the NCLT provides clarity on the position of Section 19 of the IBC. Section 19 merely states that all personnel shall cooperate with the IRP but does not specifically mention as to whether unrelated parties will be covered under the definition.
By stating that unrelated parties are not under any obligation to furnish any information to the IRP, the NCLT has ensured that the IRP cannot arbitrarily approach parties and mandate such parties to furnish information about the corporate debtor.
Government of India launches new portal for registering complaints against misleading advertisements
The Government of India (“GoI”) has set up an online portal called “Grievance Against Misleading Advertisements (GAMA)” whereby consumers can file complaints regarding any misleading advertisements.
Initially, consumers can file complaints with GAMA for misleading advertisements in the food, agriculture, education, real estate, transport, and finance service sectors.
While the motive behind the launch of the portal is laudable, not clearly defining what exactly would amount to a “misleading” may make it difficult for the government to determine if any advertisement that is complained of is “misleading”. Another important fact to be borne in mind is that India does not have a single statute to regulate advertisements, and advertisements in certain sectors are regulated by the sector regulator, for e.g., for the food sector, it is the Food Safety and Standards Authority of India which can regulate advertisements related to food. This might also have the effect of having multiple authorities for advertisements which have a sectoral regulator.
Quick Update: MCA amends the Companies (Significant Beneficial Owners) Rules, 2018
The Ministry of Corporate Affairs (“MCA”) has amended the Companies (Significant Beneficial Owners) Rules, 2018 (“SBO Rules”) whereby the MCA has amended Form BEN-2 whereby details of members who have indirect control of the company will need to inserted into Form BEN-2.
You can read more about the SBO Rules in our Bulletin Board dated June 15, 2019, which you can find here.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.