Major Functions of NCLT

1. Registration of Companies: The Companies Act 2013 has authorized questioning of the legitimacy of companies due to specific procedural errors that happened during the incorporation and registration processes. NCLT has been vested with the right to cancel the registration of a company or to dissolve any company if such errors are found during an investigation. The NCLT could even change the liability or charge for members from limited to unlimited. With the introduction of these powers under the Companies Act, the NCLT can de-register any company in specific situations when the NCLT thinks that the registration certificate has been obtained by wrongful or illegal means under Section 7(7) of the Companies Act, 2013.

2. Transfer of Shares: NCLT has the authority to hear grievances in the matters related to the rejection of companies in the transfer of shares and securities under Sections 58–59 of the Companies Act 2013, which were under the ambit of the Company Law Board. Earlier, under the Companies Act 1956, the grievances for rejection of transmission or transfer were limited only to shares and debentures. However, after the establishment of NCLT, the act now covers all the securities that are issued by any company.

3. Deposits: Chapter V of the Companies Act of 2013 deals with deposits, and the Company Law Board was the prime authority for taking up the cases under said chapter V. After the introduction of NCLT, powers under Chapter V of the Companies Act have been vested with them. It is worth noting that provisions regarding the deposits under the Companies Act, 2013 were notified before the establishment of the tribunal. Unsatisfied depositors now have a remedy in class action suits for seeking remedy for the omissions and acts on the part of the company that impact their rights as depositors in the NCLT.

4. Power to Investigate: An investigation of the affairs of the company can be ordered when the Tribunal receives an application of 100 members (previously, an application of 200 members was needed). Furthermore, if a person isn’t related to a company and can persuade NCLT about the presence of certain conditions requiring an order of investigation, then NCLT has the power to order such an investigation. NCLT has the authority to order investigations within India or anywhere in the world. Under the Companies Act 2013, several provisions are drafted for offering and seeking help from other courts and investigation agencies in foreign countries to facilitate such investigations. (Section 213)

5. Freezing Assets of a Company: Section 221 of the Companies Act 2013 empowers the NCLT to freeze the assets of a company. The NCLT is empowered to freeze the assets of a company that were used at any later stage when any such company comes under the investigation or scrutiny of the NCLT. Such an investigation could also be ordered at the request of others under specific conditions as prescribed under the Companies Act 2013.

6. Converting a Public Limited Company into a Private Limited Company: Sections 13 to 18 of the Companies Act 2013, read with Rule 41 of the Companies (Incorporation) Rule of 2014, establish that when a company converts from a public limited company into a private limited company, the approval of NCLT is required to approve such a conversion. The tribunal is also vested with the right to impose such terms and conditions as mentioned under Section 459 of the Companies Act of 2013.