This fortnight has been quite tumultuous for people in power and position. Somebody in a powerful position stepped down voluntarily (or so it seemed). A few others enjoying power were routed out by the public. In yet another country a person in power is fighting hard to implement an exit decision that is facing huge resistance from its citizens. You know what these instances are. Elsewhere we have men and women who crave neither for power nor for position, just doing their duty. Not afraid to embrace death, if need be. Away from their families. Oblivious to day and night. Braving harsh weather conditions. With no fixed working hours. Unafraid to face the enemy. These are our armed forces who pay with their lives for our freedom and safety. I dedicate this issue in their honour as India celebrated 7th December as Armed Forces Flag Day, to collect the funds from people all around the country for the wellbeing of the staff of the Indian Armed Forces.
While we have fearless, young men and women guarding our borders, we have experienced ones guarding governance in the interests of stakeholders – Directors of corporates. It is true many of them have looted banks, defrauded investors, cheated employees, robbed the government, defied the courts, schemed and fled. In some cases it is heartening to note that the long arm of law is soon catching up with them. All this is reported, discussed, deciphered, dissected & decried. And rightfully so. However what doesn’t get reported is the plight of the other board members who are unknowingly caught in the ‘fire’ and find themselves facing regulatory wrath by way of notices, tax demands, hearings, investigation, interrogation and sometimes arrest warrants too.
Recently I got SoS calls from 2 chartered accountants seeking help and guidance for their client directors who have unwittingly been trapped as above for their fault of signing up as directors of certain unscrupulous boards. Obviously lack of due diligence on their part about the company and its founders. More importantly being punished for not speaking up and asking the right questions. Merely trusting. These directors are facing non-bailable warrants in respect of non-compliances even when they were not wholetime directors, simply because the actual offenders, the founder directors have fled. Well, there are laws, there are lawyers and there are courts to mete out justice but at what cost to the directors ? Rules were there before also. The difference is today these rules are being enforced and acted upon strictly. Being a board member of a company – even if it is a startup, unlisted private limited company – is not a fancy position at all. It carries huge responsibilities and liabilities which can catch up any time. Sometimes the regulators are wrongly slapping notices even after a director has resigned from the Board, haunting them for years. It is advisable to make sure that the entry and exit from boards are properly documented and the regulator (ROC) is correctly kept informed. Directors Beware !
Interestingly while we are talking about humans as directors and their saga during and post their board tenures, Mr. Guruprasad, a CA & CS with multiple other qualifications opens our eyes to the possibility of humanoids / robots sitting on corporate boards and taking part in decisions. Interesting and intriguing sci-fi kind of tech developments ! He says it is not too far into the future. Well, while laws have to be rewritten thanks to technology, it is a wake up call to Company Secretaries as well. Quo vadis ?? (Latin for “Where are you going”).
Along with a few updates from MCA, IBC, IT & GST, the third article on “Steps in Mediation”, written very lucidly by Ms. Saradha Kumar, Lawyer and ADR practitioner is a must read in this 202nd issue of Samhita. For any previous issues of Samhita and the readers feedback, please visit https://sharadasc.wpengine.com/resource-center/
Happy Reading
