Remedies Available under Section 242 of Companies Act, 2013
Section 242 of the Companies Act, 2013 lays out the actions that the National Company Law Tribunal (NCLT) can take upon finding validity in an application filed under Section 241. When oppression or mismanagement is confirmed, the NCLT can order remedies to rectify the situation. These remedies are aimed at reinstating fairness, transparency, and proper management within the company. For example, the NCLT may impose regulations on how the company’s affairs are conducted to prevent further instances of oppression or mismanagement. This could involve implementing new rules, processes, or oversight mechanisms to ensure that decisions are made in the best interests of all stakeholders.
Moreover, under Section 242, the NCLT has the authority to mandate the purchase of shares or interests held by any members of the company. This remedy allows the tribunal to address situations where certain shareholders or members have been unfairly treated or disadvantaged due to oppressive actions or mismanagement within the company. By ordering the purchase of shares, the NCLT can provide relief to aggrieved parties and facilitate a fair resolution to the dispute. Overall, Section 242 of the Companies Act, 2013 grants the NCLT the power to take necessary actions to remedy cases of oppression and mismanagement, thereby upholding corporate governance standards and safeguarding the interests of shareholders and stakeholders.
Oppression & Mismanagement : Meaning, Rights & Remedies
The Companies Act, 2013 is a law in India that regulates how companies function. It replaced an older law from 1956 and introduced several changes to improve corporate operations. This law covers various aspects of running a company, such as its formation, financial management, and the rights and responsibilities of shareholders and directors. It also establishes guidelines for activities like mergers, acquisitions, and corporate governance, to ensure transparency and accountability in business practices. The Companies Act, 2013 is significant because it helps create a fair and stable business environment, safeguarding the interests of investors and the public. It is enforced by government bodies like the Ministry of Corporate Affairs and the National Company Law Tribunal.
Geeky Takeaways:
- Companies Act, 2013, promotes transparency and accountability through stricter corporate governance norms.
- The Act empowers shareholders with enhanced rights, including approval for related-party transactions and minority shareholder protections.
- Companies face stricter regulatory oversight, with the Registrar of Companies and other authorities having more powers to investigate and penalize non-compliance.
- The Act mandates corporate social responsibility (CSR) activities for certain companies, emphasizing a commitment to community and environmental well-being.
Table of Content
- Section 241: Oppression and Mismanagement
- Right to Apply under Section 241 of Companies Act, 2013
- Remedies Available under Section 242 of Companies Act, 2013
- Landmark Ruling: Aruna Oswal vs. Pankaj Oswal & Others
- Conclusion
- Oppression and Mismanagement: Companies Act, 2013- FAQ’s