India: KBase - The Quarterly From NovoJuris, September 2019

Last Updated: 7 October 2019
Article by NovoJuris Legal

Valuation of shares: Choosing the Valuer

Valuation in early stage companies should be market driven, as in, there is an investor willing to invest and a company which is primed to grow. The discussion between them should be the guiding factor.

However, this point is highly regulated and the valuation has to be proven to the satisfaction of the tax officers. Such discretionary powers are causing heart-burn.

Due to the many changes, there is confusion of which valuation method to use, who to take the valuation certificate from, etc. Read more..

Product Liability vis-a-vis the new Consumer Protection Act, 2019

In India, we do not have one specific statute which covers the legal framework for product liability claims.

Product Liability prior to the Consumer Protection Act, 2019

Prior to the Consumer Protection Act, 2019 ("New Act") there was no specific product liability theory in India. In the absence of a statutory law, courts were guided by the principles of justice, equity and good conscience and more than often guided by the provisions of English Law. The often cited case of Donoghue v. Stevenson lay down the position where one owes a duty of care to another, and if such duty of care is breached, there is negligence irrespective of whether any contractual relationship exists between the parties or not.

Before we proceed with understanding the concept of product liability as mentioned in the New Act, we make it evident that there were certain laws in India which protected the interests of the consumers against faulty products. Read more..

Economic Downturn: Double impact for MSMEs

The newspaper articles are talking about an impending economic downturn. The automobile industry is witnessing it already and so are many other sectors feeling the heat. A downturn means not only a reduction in revenues and squeezed profits, but also an issue of not receiving payments on time. Tax rates and rebates are certainly helpful.

Under Companies Act, if a company has not paid any Micro Small and Medium Enterprises (MSME) for more than 45 days, then the company has to inform the Registrar of Companies of the outstanding dues. This is one small step to address the giant issue of non-receipt of money.

There are several benefits that an MSME can avail and this post touches upon some of them. Read more

Highlights of the Companies Amendment Act, 2019

The Ministry of Corporate Affairs has amended the Companies Act 2013 vide the Companies (Amendment) Act, 2019 (the "Amendment Act") notified on 31 July 2019. The Amendment Act takes into account the amendments that were already notified in the Companies (Amendment) Ordinance, 2018, which came into force on 2 November, 2018.

The major changes under the Amendment Act are broadly aimed at:

  • to improve the existing prosecution system by imposition of stricter penalties, under various sections, on the companies as well as the officers in default. Although this will increase the monetary burden on the company but will gradually help to reduce non-compliances. Read more

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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