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How will SEBI’s New Mandate affect Sustainability Reporting in India? Academike Explainer

Sustainability Reporting in India

In the past few years, sustainability reporting in India has become an essential aspect of subsistence for companies that seek business opportunities. Further, the latest circular by the Securities and Exchange Board of India reignited the debate on the implication of the new sustainability reporting format, which will apply to 1000 listed companies by marker-capitalisation. Debarati Pal and Dipendu Das analyse the circular and explain the impact and history of sustainability reporting in India. 

Investors’ protection

Investors are often known as shareholders or members of the company. They contribute to the equity capital, have the voting rights in every matter and are entitled to get dividend. Protection of investors means safeguard and enforcement of the rights and claims of a person in his role as an investor. The same being of utmost importance, has been analysed in detail by the author in the following paper.

PIMR Indore Admission

Lifting Of Corporate Veil

The fundamental attribute of corporate personality, from which all other consequences flow if that the corporation is a legal entity distinct from its members.This doctrine has been established for business efficacy, necessity and convenience. In the doctrine of ‘Lifting the Corporate Veil’, the law goes behind the mask or veil of incorporation in order to determine the real person behind the mask of a company. It is one of the most widely used doctrines to decide when a shareholder or shareholders will be held liable for obligations of the corporation and continues to be the most litigated and most discussed doctrines in all of corporate law. Therefore, a study of the same through the lens of leading case laws and judgements as done by the authors would be highly beneficial.

Corporate Debt Restructuring- Strategies under Indian Legal Regime

Corporate Debt Restructuring (CDR) mechanism is a voluntary non statutory mechanism under which financial institutions and banks come together to restructure the debt of companies facing financial difficulties due to internal or external factors, in order to provide timely support to such companies. The intention behind the mechanism is to revive such companies and also safeguard the interests of the lending institutions and other stakeholders. The CDR mechanism is available to companies who enjoy credit facilities from more than one lending institution. The mechanism allows such institutions, to restructure the debt in a speedy and transparent manner for the benefit of al

While it has proved to be fruitful in many cases, still there is a lot of scope for improvement. Various issues arise such as foreign lender’s reluctance to be a part of the CDR process along with Indian banks, because they feel that the process is more favourable to Indian lenders and could be misused by sertain entities. The analysis shows that many restructured cases turn into bad assets over a period of time. A thrust area which needs a further look-in is the post-restructuring phase which demands heavy monitoring.

Directors of a Company – Appointment and Legal Relationship

Directors of a company are individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues. They act on the basis of resolutions made at directors’ meetings, and derive their powers from the corporate legislation and from the company’s AOA.

The success of the company depends, to a very large extent, upon the competence and integrity of its directors. As the company’s agents, they can bind the company with valid contracts entered into with third-parties such as buyers, lenders, and suppliers. They are the trustees for the firm and whether appointed validly or not, they are individually and collectively liable for the acts and/or negligence of the firm. Unlike stockholders, directors cannot vote by proxy and, unlike employees, they cannot absolve themselves of their responsibility for the delegated duties. It is, therefore, necessary that management of companies should be in proper hands. The appointment of directors is accordingly strictly regulated by the act. There are now special provisions for preventing management by undesirable persons.

One Person Company

In a one person company, only one person is required who can be a shareholder as well as the Director. The concept opens up spectacular possibilities for sole proprietors and entrepreneurs who can now take the advantages of limited liability and corporatization. The biggest difference between a sole proprietor and a One Person Company would be that in case of a One Person Company, the liability is limited to only the business assets. However, in case of a proprietorship, the liability is unlimited and the creditors can even take hold of the personal assets like your house, personal bank accounts, jewelry etc. which can be used to settle the business liabilities. There are various advantages of starting an OPC. One Person Company gets freedom from complying with many requirements as normally applicable to other private limited Companies. Certain sections like Section 96, 98 and sections 100 to 111 are not applicable for a One Person Company. OPC is indeed a harbinger of progress and industrial growth. It provides a perfect mixture of the unique characteristics of a company while performing with the independence and freedom of a sole proprietorship. This is a concept that is expected to give a big impetus to Corporatization in the country.

Weaknesses of Corporate Governance in India

In recent years, the relations between the ownership and management have become the basis of Modern Corporation. While corporate governance essentially lays down the framework for creating long term trust between companies and the external providers of capital, it would be wrong to think that its importance lies solely in better access of finance. The key aspects of good corporate governance include transparency of corporate structures and operations, the accountability of managers and the boards to shareholders; and corporate responsibility towards stakeholders. While companies around the world are realizing that better corporate governance adds considerable value to their operational performance, India still needs to improve its standard of the same and cover up for the weaknesses.

Lifting The Corporate Veil

The principle of veil of incorporation is a legal concept that separates the personality of a corporation from the personalities of its shareholders and protects them from being personally liable for the company’s debts and other obligations. While a company is a separate legal entity, the fact that it can only act through human agents that compose it, cannot be neglected. Since an artificial person is not capable of doing anything illegal or fraudulent, the façade of corporate personality might have to be removed to identify the persons who are really guilty. This is known as lifting of the corporate veil. Besides the statutory provisions for lifting the corporate veil, courts also do lift the corporate veil to see the real state of affairs. However, even though the legislature and the courts have in many cases now allowed the corporate veil to be lifted, it should be noted that the principle of veil of incorporation is still the rule and the instances of lifting or piercing the veil are the exceptions to this rule.

Piercing of Corporate Veil

By Samridhi Arora, Amity University Editor’s Note: Corporate Veil is the principle in corporate law which states that company and its shareholders are two different identities


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