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NCLT

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NCLT

Notes on

Uploaded by

reshona17
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© © All Rights Reserved
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NCLT

The National Company Law Tribunal (NCLT) is a quasi-judicial body in India that
adjudicates issues related to companies. Established under the Companies Act, 2013, the
NCLT plays a crucial role in the resolution of corporate disputes and the enforcement of
company law.
The NCLT was set up on the basis of the recommendations of the Justice Eradi Committee.
The National Companies Law Tribunal was formed under Section 408 of the Companies Act
2013. It has different benches in different places to make it easier for people to access
it. Composition of the National Company Law Tribunal consists of a President and such
number of other Judicial and Technical Members as may be prescribed.
The various objectives of NCLT are as follows:
1. Consolidation and Simplification of Dispute Resolution
2. Effective Adjudication of Corporate Disputes
3. Promotion of Ease of Doing Business
4. Efficient Insolvency Resolution
5. Protection of Stakeholder Interests
6. Promotion of Corporate Restructuring and Growth
Here are its primary roles and functions:
 Registration of Companies & Deregistration: Under the Companies Act 2013, the
NCLT has the authority to question the legitimacy of companies due to procedural errors
during incorporation and registration. It can take actions ranging from cancelling a
company’s registration to dissolving it.
 Transfer of Shares: The NCLT is empowered to address grievances about rejecting share
and securities transfers (Sections 58-59 of the Act). Once under the Company Law Board,
this authority now covers all securities issued by any company, expanding from the
limited scope under the Companies Act of 1956.
 Deposits: Chapter V of the Companies Act 2013, dealing with deposits, was initially
overseen by the Company Law Board but now falls under the purview of the NCLT. This
chapter provides a remedy for depositors through class action suits for company
omissions and acts affecting their rights.
 Power to Investigate: The Companies Act of 2013 grants the NCLT the power to order
investigations into a company’s affairs. While 200 members were previously required to
apply to an inquiry, the threshold has been reduced to 100 members. The NCLT can also
order an investigation based on the request of a person unrelated to the company, and the
investigation may extend beyond India with provisions for international cooperation.
 Freezing Assets of a Company: The NCLT holds the authority to freeze a company’s
assets for future use during an investigation and to order an investigation upon request
under specific conditions.
 Converting a Public Limited Company into a Private Limited Company: Sections
13-18 of the Companies Act 2013, along with rules, govern the conversion of a public
limited company to a private limited company. Such conversions require confirmation
from the NCLT, which can impose conditions or restrictions and grant approvals subject
to these conditions (Section 459 of the Act).
 Sick Companies: The NCLT facilitates the rehabilitation and revival of sick companies.
It can order restructuring or take other measures to revive financially troubled companies.
 Winding Up: The tribunal handles the winding-up process of companies, ensuring that
the winding-up is conducted in an orderly and lawful manner.
 Investigations and Inspections: The NCLT has the power to order investigations into the
affairs of a company if there are allegations of fraud or other malpractice.
 Inspection of Records: The tribunal can order the inspection of company records and
accounts to ensure compliance with the law.
 Shareholder Grievances: The NCLT addresses complaints and grievances of
shareholders, ensuring that their rights are protected.
 Director Disputes: Disputes between directors or between the company and its directors
can be resolved by the tribunal.
 Oppression and Mismanagement: The NCLT adjudicates complaints of oppression and
mismanagement in a company. It can grant relief to aggrieved shareholders and pass
orders to remedy the situation.
 Class Action Suits: Shareholders and depositors can file class action suits against the
company, directors, auditors, or any other party responsible for misleading or unlawful
practices.

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