Review of the new UK Intellectual Property Act 2014

The Act will come into force between October 2014 and the end of 2015. It specially deals with product design, 3D Printing, fashion design, furniture or jewelry design. The Design Right protects the internal or external shape: two-dimensional designs or surface patterns; or configuration of an original design. This right will give protection for a period equal to the earlier of: 10 years from the first marketing of articles produced from the design; or 15 years from the date of creation of the design. It should be noted however, that during the last 5 years of this protection period the design is subject to a license of right entitling a third party to be granted a license to make and sell products copying the design. Typically design right protects commercially produced designs and not ‘artistic’ designs which will generally attract copyright protection.

The Act helps to speed the granting of patents by allowing the UK Intellectual Property to send patent information to other global offices. The goal is to reduce paperwork and to speed up the process for which patents are granted. This is a major help to business’s hoping for quick turnarounds on their patents. The law contains multiple provisions on how to solve patent design disputes.

The law synchronizes UK law with that of EU law in regards to IP law. This will provide consistency that will aid all businesses that do business in the EU. The laws regarding unregistered design right have been greatly simplified so as to clarify which aspects of the design are covered. These measures will also help bring a timely resolution to conflicts as to avoid long drawn out litigation. Although it will take a couple of years to see what impact these changes have, it is still promising that the UK was able to pass this law and hopefully it serves as a building block to provide further protection for companies. This comes at a time when the United States Congress could not come to an agreement for a new IP Bill. Hopefully, seeing a major world leader pass significant IP legislation will inspire Congress to also pass new IP legislation. The purpose of the new design law are to; simplify design law and allow the intellectual property framework to better support innovation; improve the enforcement of designs and understanding the design rights of others, and improve the processes associated with the design framework.

The law provide various changes like the initial ownership position in respect of registered designs is also changed, as for unregistered designs i.e. the designer will be the initial owner unless otherwise agreed, rather than the commissioner. The Act expands the exception from copyright infringement already available to registered UK designs to registered community designs, i.e. so that an authorised user of a UK or registered community design cannot be sued for infringement of associated copyright. Applicant does not need to be the owner of the design: The Act removes the requirement for the applicant of a registered design application to be the proprietor of the design. The Act makes intentional copying of a registered design a criminal offence. This applies to acts which take place in the course of business and the penalties for such an offence are now a fine or prison sentence. Again, this brings the penalties into line with sanctions for trademarks and copyright infringement. The Act gives Trading Standards officers similar powers of enforcement for design offences as those already available to them in respect of copyright and trademarks.

The Act grants power for the Secretary of State to implement the Geneva Act of the Hague Agreement in the UK, this means that international registration procedures will be available for UK registered designs. At present UK designers can only access the Hague registration process via the EU community design registration. New good faith exception to infringement: The Act introduces a right of prior use, allowing a third party who has acted in good faith to continue to use a registered design which is subsequently registered by another. The aim of this amendment is to provide an entitlement to limited exploitation in respect of uses already made.

One fundamental change to existing law is that the Act changes the deemed first owner of unregistered designs so that unless otherwise agreed, the designer will be the owner of the designs and not the person who commissioned the designs. Historically the first owner has been the commissioner. This amendment will bring design law into line with UK copyright law. The Act clarifies the definition of design so that to be original a design must not be commonplace in a ‘qualifying country’ rather than in the ‘relevant design field’, which caused confusion as to its geographical coverage. The definition of Unregistered Design Right has been amended to limit the protection for trivial features of a design. The Act has amended the provisions related to qualifying persons who can claim unregistered design right so that those who are economically active in the EU and other Qualifying Countries (as set out in the CDPA) have protection.

The Act extends the exceptions for infringing unregistered designs, so that acts done privately for no commercial purpose or for teaching will not infringe unregistered design rights. A similar exception applies for acts done for experimental purposes, this is to encourage innovation. The Act aligns the financial liability provisions for innocent infringement with those provisions under the Community Design Rights legislation. The Act allows a new route of appeal against Intellectual Property Office (IPO) decisions via an Appointed Person instead of appealing via the courts, such root already exist for trade mark appeals. This amendment is intended to allow appeals be cheaper and less time consuming. The Act clarifies that proceedings for an offence committed against a partnership must be brought against the partnership. The Act has added a new exemption to the Freedom of Information Act for information obtained in the course of or derived from a continuing programme of research, a report of which is intended for future publication, where disclosure would prejudice the report.

The Act provides for a voluntary non-binding opinion service to be introduced by the IPO which is similar to the opinions service which currently exists in respect of patents. There is an obligation on the secretary of state to report on the IPO’s activities each year to show how innovation and growth have been supported in the UK. The Act provides for automatic extension of certain copyright provisions of the CDPA to materials of, and works first published in other countries i.e. it recognizes certain foreign works.

It is expected that the Act will benefit many UK businesses and design professionals and make obtaining international registrations easier. If you are a designer or design company you should be aware of the implications of the new Act to your business. If you are commissioning a design, it is important to ensure that you have an appropriate agreement in place with the designer to ensure that the design rights are owned by you. It is advised that the right holders should review their standard terms and conditions and, where necessary, amend them to ensure that appropriate provisions are included. With £16 billion being contributed to the UK economy by intellectual property investment each year, you can see why modernising UK intellectual property law for the digital age is an important object of the UK Government. Whether the new Act achieves its objectives only time will tell us.


1. Effects of New UK IP Law- Tyler King-

2. Laura Harper (


Crime and Digital Forensics: Lessons for Mobile Users and Investigating Agencies

As mobile devices rise in popularity and sophistication, so does their use among people conducting illegal activities. For that reason, evidence from mobile devices is becoming increasingly important to law enforcement in fighting crime. In addition to no warrant being required to request a tower dump containing the mobile phone data of thousands of people to track down one or more criminals involved in a crime, privacy advocates also question what is being done to the data collected once an investigation is complete. In fact, digital evidence from a mobile phone led international police to the terrorists responsible for the Madrid train bombings that killed at least 190 people in 2004.

Digital forensics is a branch of science encompassing the recovery and investigation of material found in digital devices, including computers, cell phones, and digital cameras. Every time someone uses a cell phone, a signal is sent out that pinpoints where the user is. Cell towers and the GPS features in some smartphones track where a phone is at any moment. Cell phone carriers can provide authorities with a cell phone’s location via proper court documents.

By exporting information from multiple digital devices (such as call logs from multiple cellular phones or e-mails from computers) and importing that data into an analytical software package, investigators using data-mining techniques can diagram and visualize a criminal enterprise or a timeline of events. This graphical representation can make it easier for investigators to understand the complex relationships in a criminal enterprise or for a jury to understand criminal activity and the possible connections among offenders in a courtroom presentation.

The law enforcement agencies require basic knowledge of tools for collecting and analyzing digital evidence from mobile phones. They are also required the efficiency of assessment of the current knowledge level in the field like Identification of tools available to collect digital evidence from mobile devices; Identification of all the cell phones in use that may become evidence in an investigation and a determination of how many can be forensically acquired and analyzed with the existing cell phone forensic solutions; Identification of the gaps in the number of cell phones in use and the existing cell phone forensic solutions for future technology development project.

Now mobile network operators receive occasional requests from law-enforcement agencies to provide communications information from a specific tower. These requests usually cover short periods and the information provided is only metadata. Metadata is information about the time, duration and destination of calls but not their content. Metadata can also include location data about a mobile phone, even when it’s not on a call. To successfully collect and analyze evidence from mobile devices, law enforcement needs tools that can recover system files, operating system information, applications, deleted files and unallocated space. Some available tools capture the logical image (what users can see without using special tools), which is only a portion of the phone’s data storage capacity. However, law enforcement needs more tools that capture the entire physical image including deleted files, messages, photos and call logs. Often, the deleted data is extremely valuable to the investigation and provides more comprehensive evidence for prosecution.

The law-enforcement agencies can also use a technique known as a "tower dump", which gives police data about the identity, activity and location of any phone that connects to targeted cell towers over a set span of time, generally an hour or two. A typical dump covers multiple towers, and mobile providers, and can net information about thousands of mobile phones. The dumps are usually used in circumstances when police have few leads and can be a useful, powerful tool in tracking down criminals. But privacy advocates say that while they may be helpful to police, they also target thousands of innocent people and don’t have any judicial oversight. A request for non-content information on the use of a particular tower during a specified period of time may be lawful under certain circumstances. What we need is transparency as to what’s being done and who is doing it. But we need a well-defined law regarding this type of data. Considering thousands of users are affected by tower dumps, they should count for the number of those who are affected. Around 330,000 requests for metadata were made by law-enforcement agencies in 2012-13, according to the latest report published by the Attorney-General’s Department of Australia.

Cell phones contain call history, contacts, text messages, web browser history, email, a Global Positioning System (GPS), and other location information that police and law enforcement agencies find valuable. Evidence from cell phones can help investigators piece together motives and events and provide new leads. Now Smartphones and cell phones have become a regular part of criminal investigations because they are now owned by most people and provide information about a person’s whereabouts and a person’s contacts.

Tracking subjects via their mobile devices has been utilized for many years and has become very much a part of many, if not all, investigations. Cell phone records can identify calls made and received. You also can obtain the cellular towers that were used in the conversation, SMS (short message service), or data communication. The cell phone records hold latitude and longitude information and can be used as a historical reference to where the mobile device was at a particular time. In addition to collecting cell phone communication records, police also encourage citizens to use their mobile devices to report crimes and send in tips. Police often reach out to the public and make it clear to them when they need help in an investigation.

People can send their digital photos and videos of crimes in progress to call centers in some cities. New technology allows sent images to be directly added to the record of a related call, and be forwarded to emergency responders on their way to the scene. An example of such technology is CrimePush, a multiplatform smartphone app that allows users to report crimes quickly and efficiently. It also gives users the ability to send multiple, GPS-tagged distress messages to designated emergency contacts. High-profile incidents throughout the world have proven how valuable mobile phone images can be to crime investigations.

The London bombings in July 2005 marked a turning point in news coverage and the role of camera phone images. Witnesses to the attacks used their cell phone cameras to record their experiences in the aftermath. Not only did it signal a new era of citizen journalism, but police in London were able to use the cell phone photos as clues to find the terrorists behind the bombings. Just this April, 2014 investigators of the Boston Marathon bombings collected photos and video from cell phones and surveillance cameras to aid their investigation. Seconds after the bombs exploded at the marathon, Jacksonville Beach, Fla., businessman and marathon runner David Green pulled out his smartphone and took a photo of the chaos developing. He then put his phone away and helped the injured. After officials released a surveillance video of the two bombing suspects, Green realized he had a picture of suspect Dzhokhar A. Tsarnaev walking away from the scene. Editors of The Associated Press were able to establish the authenticity of Green’s photo and established an exclusive arrangement for distribution of the photograph. In addition to photos and video, text messages are proving to be helpful in investigations. Text messages are more discreet and safer in some circumstances, such as kidnappings or burglaries. Many police departments throughout the country have text-a-tip programs that allow people to send anonymous text messages from their cell phones. In order to provide people with a confidential means of communication, text messages are sent to a separate third-party server where identifying information is removed and assigned an encrypted alias to ensure callers’ anonymity. Identifying a phone from its radio frequency fingerprint is certainly not far-fetched. It is similar to identifying a digital camera where the image metadata does not provide a serial number. From underlying imperfections in the lens, which are detectable in the image, the source camera can be identified.

To keep from being tracked and getting caught, criminals use evasion tactics such as modifying the built-in ID code in their cell phone or swapping out SIM cards, making it impossible for law enforcement to track the criminals down by relying solely on cell phone signals. German engineers found, however, that the radio hardware in a cellphone — a collection of components like power amplifiers, oscillators, and signal mixers — all introduce radio signal inaccuracies. When these inaccuracies, or errors, are taken together, as seen in the digital signal sent to a cell tower, the result can be read as a unique digital signal –a digital fingerprint. These digital fingerprints do not change even if the built-in ID code has been modified, or the SIM card has been swapped out. Law enforcement agencies may soon have a new tool at their disposal — a device that which distinguishes between cell phones based on their digital signal. This new technology was developed by engineers at the Technische Universität Dresden in Germany.

A TU Dresden release reports that law enforcement officials can track criminals as they talk on their cell phones using triangulation of cell towers. To keep from being tracked and getting caught, however, criminals began using new evasion tactics such as modifying the built-in ID code in their cell phone or swapping out SIM cards – making it difficult, if not impossible, for law enforcement to track criminals down by relying solely on cell phone signals. The technology developed by the TU Dresden engineers would allow law enforcement to overcome the criminals’’ evasion tactics.

Identity theft, stalking, fraud, pornography, illegal electronic surveillance, and theft of intellectual property are just some of the examples of crimes committed every day on mobile devices. A mobile device is simply a portable computing device, so any crime that can be perpetuated on a computer can be committed via a mobile device. The portability of mobile devices makes it difficult, but not impossible, to identify the source of an electronic crime. If a user is using a public wi-fi, a ‘burner’ prepaid phone, cloud storage, or any other anonymizing agent, difficulties in identification is compounded not only in 2G phones — but also defects are present in every radio device and even 3G and 4G phones. Law enforcement agencies will continue to be challenged to obtain the tools and the training to perform competent digital forensics investigations and keep pace with criminal activity.

Serious criminals are extremely adept in using single-use phones and dumping SIM cards so new capabilities should be developed to help law enforcement. As the radio hardware in a cellphone consists of a collection of components like power amplifiers, oscillators and signal mixers that can all introduce radio signal inaccuracies.

When these errors are taken together, as seen in the digital signal sent to a cell tower, the result can be read as a unique digital signal –a digital fingerprint. Thus, whatever criminals do to their cell phone — short replacing the internal components of one phone with those of another phone — the phone will continue to emit a unique signal which can be read by a device and used to separate the particular phone out from all the other cell phones. This allows the police to locate the phone, and the criminal using it, by triangulating cell towers.

Source: Law-enforcement technology Locating criminals by tracking their cell phones’ digital fingerprints Published 5 August 2013.

Potential Synergy between India and Poland in Energy Sector

Potential Synergy between India and Poland in Energy Sector

India and Poland have had a dynamic political, defense and trade cooperation in the past there should be greater academic interactions between both the countries. India and Poland shared vibrant historical and cultural relations. The Erasmus Mundus programme is important in this regard. After Russia’s collapse, Poland has emerged the largest trade and investment partner of India in the Central Eastern Europe. In recent years, India’s investment in Poland has significantly grown, approximately $3 billion, while Poland’s touched a record investment of $100 million, which is expected to double in a couple of years. But there are technical issues like the Polish government cannot sell those PSUs, where government has more than 51 per cent stakes. However, is important to underline that the Mittals have purchased most of the iron and steel mills in Poland, which became bankrupt particularly after the collapse of the former USSR.

There is great importance of soft power, like research and academic collaboration between India and Poland. Major Indian companies investing in Poland are: ArcelorMittal, Videocon, Escorts, Strides Arcolab, Reliance Industries, Ranbaxy, Essel Propack, KPIT Cummins, Zensar Technologies Ltd, Infosys and Wipro, Jindal Stainless, Berger Paints India, UFLEX Glenmark Pharmaceuticals, Flemingo Duty Free, Rishabh Instruments etc. The Polish companies that operate in India include Torunskie Zaklady Materialow Opatrunkowych (TZMO) in Dindigul (manufacturing hygiene sanitary products) Can-Pack Poland in Aurangabad (manufacturing metal packaging), Inglot (cosmetic products), Geofyzika (seismic surveys for oil companies) In recent years, the scope of service sector has also substantially increased Poland is recognized for its green technologies, while India on the other hand is known for its growing coal consumption in the world. As a result, there is a great possibility of synergy between the two countries in sustainable development and reducing the carbon footprints. Besides, Poland has long and successful history in coal mining sector; hence can supply India good quality coal, state-of-the-art mining and safety equipment.

A strategic partnership between India and Poland would be useful in enhancing India-Poland relations. There is an immense potential for cooperation in energy, particular coal and coal mining between India and Poland. The intellectual discourse and cultural interactions between India and Poland have been widening and trade had substantially increased in recent years. India and Poland have organized an energy summit and trade fair for increasing interactions among the business community.

The potential of India-Poland relations still remained untapped. But the good thing is that there is no lack of will to enhance India-Poland relations. Both the countries have been engaged in the multilateral negotiations. India and Poland have taken initiatives such as establishing India-Central Europe Business Forum and organizing trade fairs, for enhancing their economic and commercial relations. India and Poland have common perceptions on many global issues. But still there are challenges for India-Poland relations like lack of direct flights, small Indian Diaspora in Poland, limited political interactions at the highest level and less coverage of India by Polish media and vice-versa. The Govt. of India should take urgent measures to overcome the said challenges to materialize the real benefits.

Source: 1. Zakir Hussain

Energy Emergency in Ukraine

Russia, Ukraine’s main supplier of gas as well as natural gas for Europe via Ukraine, cut off supplies to the ex-Soviet republic on June 16 in a dispute over unpaid bills. Ukraine’s parliament gave preliminary approval on Friday to a draft law that would allow the Kyiv government to exert tighter control over the energy sector in the face of dwindling natural gas supplies after Russia cut off exports last month. The parliament also approved, in a first reading, a bill that would allow consortiums with European or U.S. companies to operate Ukraine’s aging gas distribution system and storage facilities.

There is fear over possible retaliation from Russia if it were not given the same access to Ukraine’s gas infrastructure as would be offered U.S. and European firms. Russia is trying to tighten as many screws as possible on Ukraine.

Gazprom CEO Alexei Miller said last week it was "extremely likely" that Ukraine would start illegally sucking Europe-bound gas from the transit pipeline in the fall. However, deputy head of Ukraine’s Naftogaz company Alexander Todiichuk said earlier Wednesday that Ukraine had enough gas in its underground storage facilities to last until November. Kiev currently charges Moscow about $3 per 1,000 cubic metres of gas per 100 km of transit.

Prime Minister Arseny Yatseniuk told parliament, urging it to give his government the right to declare a state of emergency" in the energy sector as the Ukraine is on the brink (of energy collapse. It is quite evident that it is a retaliatory trade measures against Ukraine over its signature last month of a free trade deal with the European Union.

Now Ukraine has cut the gas consumption by approximately 6 billion cubic meters for the season that is 20 percent to get through the incoming winter season. Government may sell gas domestically at a fixed price and force Ukrainian energy companies producing gas from domestic wells to send half their supplies into Ukraine’s storage facilities. After the winter the companies would have access to the gas and be able to sell it to customers of their choosing.

Naftogaz said it was willing to resume talks with Gazprom on gas transit. The company was seeking to change the existing gas transit pricing which ties transportation fees to the cost of the fuel components, inflation in Europe and Russian gas price for Ukraine.

The Ukraine Govt. has sought cooperation from European or U.S. companies in operating the Soviet-era gas pipeline system; this would bring structural modernization essential for Ukraine. The new law opens ways to Ukraine to become an energy player. The proposed legislation appeared to apply to private gas companies as well as the state gas and Oil Company. The draft laws are expected to go to parliament for a second reading at the end of July or in August. Parliament initially rejected the government’s energy proposals, but resumed discussion and took a vote on the two draft laws on 4th July, 2014 after speaker Oleksander Turchynov warned that without them many homes could be left without heating in winter.

Russian energy giant Gazprom has estimated that Ukraine owed it $4.46 billion. On June 16 2014, Gazprom switched to the prepayment regime for gas supplies to Ukraine following failure of talks mediated by European Union Energy Commissioner Guenther Oettinger.

Ukraine, whose gas transit network already operates below capacity, is also seeking to prescribe in the contract a minimum annual volume of gas it transports to Europe from Russia.

According to Russian estimations, Ukraine has accumulated 14.2 billion cubic metres of natural gas in its gas holders. The country needs at least 18.5 billion cubic metres of gas to survive the fall and winter and to ensure smooth gas transit to Europe. Now There is a question of survival for Ukraine. Russia had previously offered to buy into Ukraine’s gas distribution system in return for cheaper gas. The draft laws on possible "state of emergency" powers would give the government the right to dictate to gas companies to whom they should supply gas and for how much, irrespective of supply obligations under existing contracts.


1. VOA News;



In Search of an Effective Energy Policy

As per the second round of Kyoto Protocol on climate change the countries of the world have decided to reduce the Co2 by 18 %. President Obama is now must be congratulated for his recent commitment which was announced on 2nd June 2014. President Obama announced the USA’s national goal of a 30% reduction of CO2 emissions from electrical generation utilities by 2030. The recent announcement of Mr. Obama has created a new debate in the world regarding effective energy policy. As per the current scenario of state by state approach to regulation in the energy sector has been a patch work quilt of minor success with little innovation. Every potential country now needs an effective national energy policy that could drive and reward innovation in particular states. For example, a national policy that encourages energy efficiency in our buildings through innovative and simple tax law changes could provide enormous returns of reducing energy costs as a percentage of GNP. Any country cannot move forward as a country without leadership in its own state. The recent announcement by the Obama Administration of the proposed federal Clean Power Plan is a step in the right direction.

The strained relationships between advocates of renewable energy, energy efficiency and the utilities need to be repaired. Creative thinking to find “win-win” strategies would help. Examples include allowing utilities to obtain a rate of return on investing in customer renewable energy and energy efficiency projects. It is pertinent to mention the statement made by a famous English energy economist, Mr. Fritz Schumacher in 1964 about the importance of developing sound energy policy: “There is no substitute for energy. The whole edifice of modern life is built upon it. Although energy can be bought and sold like any other commodity, it is not ‘just another commodity,’ but the precondition of all commodities, a basic factor equally with air, water and earth.

In the 1980’s, the Alaskan pipeline opened up 2.1 million gallons per day of petroleum and served to blunt the national security concerns presented by reductions in oil imports caused by the Iran/Iraq war. The approval of the Keystone pipeline is critical to secure sources of petroleum from a friendly neighbor to the north; thereby substantially reducing the national security threat presented by USA’s reliance on oil in the in the politically unstable Middle East. Given the fact that a significant share of the world’s GNP is now generated in developing economies and significant sources of oil are located in politically unstable areas, the globalization of energy is the new strategic threat for the 21st century.

The failure of our political leaders to develop a sound energy policy is troubling given these disturbing world-wide energy trends. Installing renewable energy projects is quite complex and intimidating for interested parties. It would be useful if standard programs could be arranged that take advantage of economies of scale for installation in neighborhoods. An example is the Solar Group Buy Program offered by the City of Milwaukee. This state should award a tax credit in the amount of the avoided tax in tipping fees for landfills if waste material is used to generate electricity in Wisconsin. Waste to energy projects using digester and pyrolysis technologies that convert waste to energy should be accorded tax credits in the amount of the tax assessed against land filling material if this waste material, used in these energy projects would otherwise be land filled.

In a way similar to how the oil depletion allowance stimulates oil production through a reduced tax, a Waste Depletion Allowance would stimulate energy projection using waste as a source for energy production. Clean Power Plan involves trading in carbon offsets to meet carbon caps. Market-based principles for encouraging pollution reduction in clean energy production have been successful. If a company can make money by reducing its pollution more than is required by law, the more efficient pollution reducer should be able to trade the increase reduction to another emitter who will pay for it as an offset against its emission requirements. The VOC trading program for ozone nonattainment and SO2 reductions in the electrical generation segments are good examples of successful, market-based programs that work.

More regulatory innovation should take place to encourage market-based trading solutions of this type which would encourage the development of clean energy sources. The proposed strategy for trading carbon offsets in the Clean Power Plan is a step in the right direction. In his seminal book on energy titled "The Prize," Daniel Yergin highlights the following current trends which, without an effective energy policy to contain them, will result in turmoil in the energy markets: the developing world surge in demand, the ‘internationalization’ of energy companies, climate change and energy insecurity.

In the face of these trends, our political leaders must act now to develop a sound energy policy. The development of that policy is critically important not only for our economic, but also for our political security. It is much less expensive to encourage efficiency than to build new supply capacity. Programs should be designed to incentivize the utilities to promote energy efficiency rather than just returns on capital intensive base load projects. The regulators need to find a system in the rate based approach to utility regulation to incentivize investor owned utilities to invest in research and development. Unlike other industries, the “cost plus” model for rate regulation does not provide an incentive to innovate. The boiler and turbine technology used for base load generation has been around for almost a century.

Innovation in the green technology and utility sector could be a “game-changer” for promoting clean tech in the industry. The Clean Power Plan’s proposed requirements for a 30% reduction in carbon emissions may also drive much-needed technology innovation in the industry. Now the leaders are required to plan a proper strategy and to achieve the much coveted goal of 30 % Co2 reduction from the emission. Only a policy on paper will be useless unless we have a commitment to achieve the target by an effective policy & execution of relevant regulations.

Source: byArt Harrington

Companies Act 2013- Lessons for Indian Corporate Sector

The Indian corporate sector is very positive since the Modi Govt. has assumed power in the center. But to maintain the positivism the Govt. has to some policy decision without delay. The current working of 2013 Companies Act and its impact on corporate world has brought some new lessons for corporate India. The views expressed by various CEOs, CFOs, company secretaries, finance and accounting professionals provide thought-provoking insights which may be useful for Indian Corporate world. We know that the 2013 Act has introduced several onerous requirements, but the companies were not provided sufficient time to prepare. As the majority of the sections and the related rules were notified during the last week of March 2014 and have an applicability date of 1 April 2014. Moreover, a considerable number of interpretative issues and concerns continue to arise from implementation of the new Act.

The new Act empowers and strengthens shareholders’ democracy. Duties/responsibilities and liabilities of directors (including independent directors) and auditors have been significantly enhanced. Now the private companies will be subjected to several onerous requirements such as preparation of consolidated financial statements, internal financial control reporting, auditor rotation and approval of related party transactions, which were hitherto not applicable to such companies. The Act also has significantly enhanced disclosures to bring greater transparency in corporate reporting and self-governance. On many matters, requirement to obtain the Central Government’s approval has been replaced with the approval by shareholders. The Act further introduced several new concepts such as corporate social responsibility, requirement for woman director, rotation of auditors, class action suits, etc. The Modi Govt. should address the genuine concerns to keep the Indian corporate sector on track.

Recently the Earnest & Young has done a survey which has highlighted some of the very crucial points as follows: Regarding the enforcement of only 283 sections out of total 470 sections, has mixed views. The 47% participants were of the view that it would have been better to implement all the sections of the 2013 Act at one go. Immediate application of notified sections leaves companies without any time to prepare for the new requirement. Overwhelming majority (85%) participants were of the view that they need minimum three months to one year time to prepare for new requirements.

Most of the participants were agreed with the auditor’s reporting on fraud directly to the Central Government, an overwhelming majority (80%) felt that there should be materiality limit for such reporting. Reporting of immaterial frauds to the Government may impose significant additional cost and burden on all parties and yet achieve nothing. 68% participants were not in favor of applying any or all of the onerous requirements, e.g., preparation of CFS, internal financial control reporting, auditor rotation and approval of related party transactions, etc., to a private company. 44% participants felt that some of these requirements can apply to a private company, while 32% participants were of the view that all these requirements should apply to private companies. Out of companies who have decided to spend 2% amount on CSR activities, 52% companies have also identified activities or projects on which they will spend the prescribed amount. 48% companies have still not identified these activities or projects.

From participants representing companies with non-31 March year-end, 41% have already decided to comply with 31 March year-end requirement. There is an almost equal number, which has not decided its approach yet. 22% participants want to retain their current financial year (i.e., year-end other than 31 March) and would seek tribunal/ MCA approval for the same. 87% survey participants felt that minority protection will increase, if all related party transactions not meeting exemption criteria are approved by special resolution of disinterested shareholders. However, out of these participants, 26% participants felt that it may impede business activity and 17% participants were concerned that it will significantly impede business activity. Out of companies covered under CSR requirement, 55% have already decided to spend 2% amount of CSR activities. Approx. 34% companies are waiting for practices to emerge before they take a call on this matter.

Keeping in mind the said reflections the govt. should take immediate measures in notifying the remaining sections of the Companies act 2013 and overview the working of the notified sections to avoid the worrisome situation.

Source:, Earnest & Young Survey 2014.