MCA notifies the Companies (Incorporation) Fifth Amendment Rules, 2019
The Ministry of Corporate Affairs (“MCA”) through a notification has notified the Companies (Incorporation) Fifth Amendment Rules, 2019, (“Amendment Rules”) whereby Rule 8 of the Companies (Incorporation) Rules, 2014 has been amended to provide that a name applied for by a company shall be deemed to resemble the name of an existing company too nearly, if the names are found to be the same after comparing the applied-for name with the name of an existing company and disregarding the 12 matters enumerated in Rule 8(2).
Further, the Amendment Rules establish the parameters which would deem a name to be undesirable for the purpose of incorporation, under Rule 8A which enumerates 19 such parameters.
Also, the Amendment Rules provide for Rule 8B which enumerates 27 words and expressions which would require the approval of the Government before they can be used in the name of a company in English or in any other language depicting the same meaning.
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The MCA’s latest notification is focused mainly towards establishing new rules regarding permissible company names in the Country. In the process of incorporation of a new company, a unique name of the company must be reserved with the MCA.
Therefore, it is imperative for all businesses to take note of the matters and rules enumerated in the Amendment Rules before they apply for incorporation to avoid any hassles with regards to getting an approval for a company’s name.
MCA issues clarification on e-Form ADT-1 filed through GNL-2 under the Companies Act
The Ministry of Corporate Affairs (“MCA”) through a notification, has issued a clarification pertaining to the filing of e-Form ADT-1 through e-Form GNL-2. E-Form ADT-1 is filed by a company to intimate the registrar of companies about the appointment of an auditor after the completion of its annual general meeting as mandated in Section 139 of the Companies Act, 2013 (“Companies Act”). E-Form GNL-2 is filed by a company or a liquidator for filing documents with the registrar of companies when no other e-Form has been prescribed for the documents to be filed under the Companies Act.
The MCA has stated that companies which had filed e-Form ADT-1 through GNL-2 as an attachment by selecting “others” during the period from April 1, 2014 to October 20, 2014 may file e-Form ADT-1 till June 15, 2019 for appointment of auditor for the period up to March 31, 2019 without any fee as the fee had been paid for filing GNL-2 for the same purpose. However, fee and additional fee shall be applicable per Companies (Registration of Office and Fees) Rules, 2014 for any filings made after June 15, 2019.
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This notification has been issued by the MCA in continuation of its General Circular No. 09/2014 dated April 25, 2014, pursuant to which the MCA had received several representations from various stakeholders seeking relaxation in the filing fee for e-Form ADT-1, particularly for e-Form ADT-1 filed through GNL-2 during the period from April 1, 2014 to October 20, 2014 for the appointment of auditor for the period from April 1, 2014 to March 31, 2019 as e-Form ADT-1 was not available during the said period.
The notification is a welcome move from the MCA who has made an initiative to listen to the grief of relevant stakeholders. Therefore, all entities are advised to avail this one-time opportunity and file e-Form ADT-1 without fee as stated above well in time.
Internet broadcasting organisations not entitled to the benefits of a Statutory License under Section 31-D of the Copyright Act
The High Court of Bombay, in the case of Tips Industries Limited v. Wynk Music Limited & Another, passed a judgment, in which it held that the internet streaming services are not covered under the ambit of Section 31-D of the Copyright Act, 1957 (“Act”) and that the said provision only applies to radio and television broadcasting.
The provision in question, Section 31-D, was added to the Act by the Copyright (Amendment) Act, 2012 (“Amendment Act”). Among other things, the said section states that a statutory license may be granted to any broadcasting organisation desirous of communicating any sound recording to the public, if such broadcasting organisation pays the royalty rates to the copyright owners at rates fixed by the Intellectual Property Law Board.
In this case, Tips Music Ltd. (“Tips”) had filed a copyright infringement suit against Wynk Music Ltd. (“Wynk”), which is an online music streaming application, alleging that even after the expiry of license granted to Wynk, it was storing the song records of Tips in its online music library and making it available for Wynk users to listen and download for free.
Among other things, Wynk’s defense relied on the application of Section 31-D, whereby Wynk contented that it was simply “communicating to the public” and its services qualified as “broadcasting” under the provision and did not amount to commercial rental or sale. Further, Wynk contended that online streaming is covered under the phrase “any broadcasting organisation” as provided within Section 31-D.
On the other hand, Tips contended that the application of Section 31-D is limited to radio and television broadcasting and therefore, Wynk would neither qualify as a broadcasting organisation, nor be entitled to the benefits of Section 31-D.
The Bombay HC while accepting Tips’ contention held that Section 31-D is a statutory exception to the general rule that copyrighted work is the exclusive property of its owner and thus should be construed narrowly in conformity with the specific intention behind its enactment, for which it referred to the objects and reason of the Amendment Act to observe that the standing committee intended to imply that broadcast referred only to radio and television broadcast, and understanding which is substantiated by the language provided under Rules 29 and 31 of the Copyright Rules, 2013.
Additionally, the Court also rejected an Office Memorandum (“Memorandum”) issued by Department of Industrial Policy and Promotion on behalf of Government of India which had stated that “the provisions of Section 31-D of the Copyright Act, 1957 are not restricted to radio and television broadcasting only but cover internet broadcasting also”, with regards to which the Court stated it was not bound by the Memorandum and further held that the Central Government lacks the power to make statutory interpretations and the same cannot supersede the interpretation provided in the Act or the Rules.
The Court also opined that legislature specifically intended for a statutory license to broadcast under Section 31-D to be distinct from a right to commercial rental and held that the services offered by Wynk amounted to commercial rental and sale, by observing that Wynk charged a monthly subscription fees for its services and its download services were not covered by the “non-profit library or non-profit educational purpose” exception to the definition of ”commercial rental” provided under the Act. Additionally, the Court ruled that the term ‘broadcast’ as used in Section 31-D of the Act is a specie of “communication to the public” which does not include issuing physical copies or legitimate digital downloading of music or video recording by payment as provided in the 227th Report of the Rajya Sabha Parliamentary Standing Committee.
Furthermore, Wynk contented that the use of Tips’ repertoire by Wynk’s customers was limited to private use which would amount to fair use under Section 52 of the Act, therefore, the same should not deemed to be infringement of copyright in any case. However, Tips argued that the use of the music by Wynk commercially competed with Tips’ exploitation of the said music and provided a substitute for the probable purchase of the same from Tips. Also, Tips submitted that Wynk took an excessive amount of copyrighted work, which consequently negates any plea of fair dealing.
The Court on this issue held that Section 52 does not cover the activities of Wynk, and ruled that the defence of fair use would have been available in a given case to an individual user and Wynk’s activities cannot be termed as personal, private, or research.
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The Court’s ruling in this case can have long-lasting implications on the future of online streaming services in India, many of which are global giants who have entered the Indian markets fairly recently. This ruling is especially noteworthy as it completely contradicts the interpretation accorded to it by the Central Government in its Memorandum.
It is also a highly contentious area with contradictory interests of the different players in the industry, as while the ruling as it is now could act a serious disadvantage to online streaming services, the same has been ‘welcomed’ by the Indian Music Industry, who president Mr. Blais Fernandes has stated that they are encouraged by the judgment.
Therefore, it would be interesting to see what the future holds for the judgement, and while the same could see its fate challenged in the Supreme Court of India, it would also be prudent to keep an eye on whether the Government brings in an official amendment into the language of the Act to explicitly include internet broadcasting services.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.