INDIA Law and Practice Contributed by: Raj Ramachandran, Kartik Jain, Mannat Nirola and Anmol Mahajan, JSA Advocates & Solicitors
Additionally, private companies are required to make filings with the RoC in relation to various corporate actions and changes, including: • appointments, resignations or changes in the par - ticulars of directors and key managerial personnel; • changes to the company’s registered office; • amendments to the memorandum of association or articles of association; • increases, reductions or other changes to the com - pany’s share capital; • allotment of shares; • appointment or reappointment of statutory audi - tors; • creation, modification or satisfaction of charges over company assets; • mergers, demergers and other corporate restruc - turing transactions; and • changes to the company’s name or other constitu - tional matters. Private companies must also maintain statutory regis - ters and records, including registers of members and directors, records of related-party transactions and such other records as may be prescribed under the Companies Act. Companies are further required to identify and main - tain records of individuals who qualify as significant beneficial owners and to make the prescribed filings with the RoC. Companies must take reasonable steps to identify such beneficial owners and obtain the req - uisite declarations from them. Failure to comply with the applicable filing, reporting and disclosure requirements may result in monetary penalties for the company and, in certain cases, for the officers in default. 3.4 Management Structures India has adopted a board-centric management struc - ture, under which the board of directors is responsi - ble for the overall management of the company and the formulation of key strategic decisions. The board is authorised to exercise the prescribed powers on behalf of the company through resolutions passed at duly convened board meetings. It must be noted that certain matters also require shareholder approval in
addition to board approval. While shareholders retain ownership rights and exercise control through general meetings, they do not participate in the day-to-day management of the company. Conversely, an LLP does not have a board structure. Instead, it is managed by its partners in accordance with the LLP Act and the LLP agreement, which typi - cally governs management rights, the decision-mak - ing framework, profit sharing and the allocation of responsibilities among the partners. The partners are responsible for ensuring compliance with the applica - ble statutory requirements. Partnership firms as governed by the Indian Partner - ship Act and sole proprietorships do not have a statu - torily prescribed management structure. A partnership firm is managed by its partners in accordance with the partnership deed, while a sole proprietorship is man - aged directly by the proprietor. 3.5 Directors’, Officers’ and Shareholders’ Liability Directors and officers of Indian companies owe statu - tory and fiduciary duties to the company under the Companies Act. These duties include acting in good faith to promote the objects of the company; acting in accordance with the company’s articles of associa - tion; exercising their powers with due and reasonable care, skill and diligence; acting in the best interests of the company and all the stakeholders; and avoiding situations involving conflicts of interest or improper personal gain. Directors may incur civil and, in cer - tain circumstances, criminal liability for breach of their duties, non-compliance with the Act, fraud, misstate - ments in public disclosures, failure to comply with regulatory requirements, or violations of other appli - cable laws. As a general rule, a company is a separate legal entity and its shareholders, directors and officers are not liable for the company’s debts and obligations solely by reason of their position. Directors and officers may, however, incur personal liability where specifically imposed by statute, where they have consented to, participated in or had knowledge of a contravention or where regarded as officers in default under the Act.
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