Companies Act 2013 has posed many challenges before the professionals. One such challenge is posed by few brand new sections introduced in the law and few process added first time in the history of India Inc.
Information is every where and interactive social networks have created more opportunities for professional to share and exchange information and experience’s with fellow professionals. On one hand it is proving as a quickest source but it is also creating lot of confusions.
Professionals are trained to use their interpretation skills and expected to be far better than normal human being. I am getting an impression that social information exchange joints are killing the professionals and their professional skills. They are forgetting their inherent skills of interpretation and believing on the experiences of others.
New law has reduced the distance between seniors & juniors. However this will happen only if professional use his inherent skill of interpretations. We have to read the provisions again and again to understand it properly. Actually a simple technique can be adopted by asking a question to yourself as to Why this provision is introduced and what is the application of it?
Decoding of law is a common sense. The movement you catch the pulse of the provision you can decode it. Hence use your own methods and arrive at a conclusion, apply the law to various situations and create your firm opinion and stick to it. Be Bold & provide your advise . Justify your stance with legal supportings. While decoding, don’t allow your imotions and feelings to oeverpower you. don’t be patriotic.
Section 74 has created a classic confusion among many professionals. They are interpreting it on a footing that new law has placed many restrictions on acceptance of deposits by the companies. Many are interpreting it to place themselves on a safe harbour and advising clients to file DPT 4 before June 2014 end and then refund entire monies before March 2015. Many are consulting Babu’s and based on their conveniences advising clients.
If professional understand the very puropose of Section 74, things would be easy to advise. In my view this section is brought into the statute book only to clear the unregulated public deposits held by the Companies under the old law, which was in existiance till 31.3.2014. It never intend to regulate or challenge the earlier acceptance actions done by the Companies for exempted deposits.
The scheme of this section requires the companies to disclose irregularities if any in acceptance of monies which are not exempted Deposits. It provides one year window to the companies to repay such irregular amounts by all companies. It also requires a Company who is holding public deposits to align itself to new law and prove that it is an “Eligible Company”. if company fails to prove itself as Eligible under the new law to accept Public Deposits, it has to repay the entire Public Deposits by end of March 2015.
Government intend to minimize the incidences of acceptance of deposits by the companies, since it has potentiality to defraud the depositors.
If by over enthusiasm or out of abundant caution if any professional advises the company even to include Non Deposits (exempted under the old law and rules) in this process of confession and repayment, then I believe they are inviting more troubles for them and for the client company. This is happening by stretching an imagination and by interpreting the word “deposit” by applying the Deposit Rule of 2014. No where the language of the section suggests this. Rather at the very beginning of the section, it has cleared mentioned that it intends to applies to “Deposits” accepted before the commencement of this act i.e. before 31st of march 2014.
In this scenario Professional bodies are expected to play their role of providing guidance to the members on the vital issues like this. They need to proactively approach the regulator and can seek the clarification and accordingly guide the members. There is a need to create a common opinion on any issue across the glob. This approach will protect the professionals from undue exposure. Classic example of this is recent guidance provided by ICAI to its members on reporting of internal financial controls of the company.
All involved in the process are expected to exhibit professional boldness to tackle situation like this.
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