An Independent Director’s personal
assets can be attached as per 212 of
Companies Amendment Act 2020
assets can be attached as per 212 of
Companies Amendment Act 2020
The scope of the section 212 of
Companies Amendment Act 2019 has been expanded and the Central Government may file an application before
the NCLT for holding any director personally liable without any limitation of
liability.
Companies Amendment Act 2019 has been expanded and the Central Government may file an application before
the NCLT for holding any director personally liable without any limitation of
liability.
The move by MCA to freeze assets
of the independent directors of defaulting companies among other stringent
measures have also led to concerns and growing exodus of independent directors .
of the independent directors of defaulting companies among other stringent
measures have also led to concerns and growing exodus of independent directors .
When the law does not safeguard
the rights of Independent directors , they have to be very careful . An
Independent Director has to attend atleast six board or committee meetings in a
year , he has to spend more time towards that company.
the rights of Independent directors , they have to be very careful . An
Independent Director has to attend atleast six board or committee meetings in a
year , he has to spend more time towards that company.
An independent director cannot
be held liable for the actions of a promoter director or the management if they
collude with each other and hide facts to IDs. IDs are not given the kind to
rights to safeguard corporate governance and to take action and or are they
encouraged to dissent by most promoters. In reality , the compensation paid to
IDs are very low as compared to the risks they are facing.
be held liable for the actions of a promoter director or the management if they
collude with each other and hide facts to IDs. IDs are not given the kind to
rights to safeguard corporate governance and to take action and or are they
encouraged to dissent by most promoters. In reality , the compensation paid to
IDs are very low as compared to the risks they are facing.
If some thing goes wrong in the
company , the accountability and responsibility is very awesome . However , today the law has improved
amendments for IDs. The IDs are accountable for matters only brought to his attention.
In the last line of defenses , he is accountable only after credit rating
agencies , international auditors are also likely to be questioned.
company , the accountability and responsibility is very awesome . However , today the law has improved
amendments for IDs. The IDs are accountable for matters only brought to his attention.
In the last line of defenses , he is accountable only after credit rating
agencies , international auditors are also likely to be questioned.
As per section 212 of CA
Amendment 2019 , in case if there is any fraud , the government can approach the NCLT against any director
holding them personally liable without
any limitation of liability and seek to attach their personal assets.
Amendment 2019 , in case if there is any fraud , the government can approach the NCLT against any director
holding them personally liable without
any limitation of liability and seek to attach their personal assets.
In the last three years , Courts are ordering
the attachment of personal properties of independent directors . If at all ,
all qualified professionals can be convinced to come on board as IDs , it will
be no surprise if they ensure that assets in their name are few.
the attachment of personal properties of independent directors . If at all ,
all qualified professionals can be convinced to come on board as IDs , it will
be no surprise if they ensure that assets in their name are few.
NCLT in the Punjab National Bank
Vs Nirav Modi and Mehul Choksi , allowed the MCAs plea to attach the assets of
the independent directors on the board.
NCLAT also upheld the verdict of NCLT.
However , Supreme Court had stayed the above verdict.
Vs Nirav Modi and Mehul Choksi , allowed the MCAs plea to attach the assets of
the independent directors on the board.
NCLAT also upheld the verdict of NCLT.
However , Supreme Court had stayed the above verdict.
Likewise, in IL&FS case ,
MCA expanded the ambit of its investigation to include independent directors.
MCA expanded the ambit of its investigation to include independent directors.
Now , due to section 212 of CA
2019 Amendment , IDs have to ringfence their assets by way of transferring it
in family trust. IDs are now looking at
tightening directors and officers (D&0) liability Insurance to safeguard
them and their assets from all and every possible claim made while serving on
board of a company,
2019 Amendment , IDs have to ringfence their assets by way of transferring it
in family trust. IDs are now looking at
tightening directors and officers (D&0) liability Insurance to safeguard
them and their assets from all and every possible claim made while serving on
board of a company,
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