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Cyber Law in India

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Madaan & Co.
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The Indian Cyber law requires compliance by companies / corporations Doing Business in India

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The Indian Information Technology Act was passed in 2000 ("IT Act"). However most of the companies are still unaware of the strict provisions of the law. The increasing use of Information and Communication Technology has given rise to serious compliance concerns, which if ignored may attract various civil and criminal sanctions.

All the companies who are related cyber business are required to comply with the requirements of the law. 

IT  is mandatory to set up corporate compliance programs including cyber law compliance program. If  you company does not have the compliance program, then contact us to help you set up one for you.

In addition, all the Multinational Companies Doing Business in India and having cyber involvement are required to comply with  the corporate and other laws of India including cyber law compliance.

The cyber law mandates all companies to have an information technology security policy. This documents the architecture of the network, the roles and responsibility of employees, security parameters and authorization required for data access, among other things. Other compliances that are required include relate to retention and authentication of electronic records and security of data.

In some instances the directors and members of a company can be personally held liable. The following provisions of the Indian Companies Act, 1956 provide that the Members or the Directors/officers of a company will be personally liable if:

  1. A company carries on business for more than six months after the number of its members has been reduced below seven in the case of a public company and two in the case of a private company. Every person who was a member of the company during the time when it carried on business after those six months and who was aware of this fact, shall be severally liable for all debts contracted after six months,

  2. The application money of those applicants to whom no shares has been allotted is not repaid within 130 days of the date of issue of the prospectus, then the Directors shall be jointly and severally liable to repay that money with the prescribed interest ,

  3. an officer of the company or any other person acts on its behalf and enters into a contract or signs a negotiable instrument without fully writing the name of the company, then such officer or person shall be personally liable,

  4. The court refuses to treat the subsidiary company as a separate entity and instead treat it as only a branch of the holding company,

  5. In the course of winding up of the company, it appears that the business of the company has been carried on with intent to defraud the creditors of the company or any other person or for any fraudulent purpose, al those who were aware of such fraud shall be personally liable without any limitation of liability.

Moreover,  Indian Information Technology Act of 2000 provides for further personal liabilities. For example, Section 85(1) of the IT Act provides that where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made there under is a Company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the company, shall be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

The proviso to section 85 (1) provides that such person will not be liable for punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

Section 85(2) of the IT Act provides that where a contravention of any of the provisions of this Act or of any rule, direction or order made there under has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

The explanation to section 85 provides that the expressions “company” means any body corporate and includes a firm or other association of individuals and the expression "director", in relation to a firm, means a partner in the firm.

All the Indian companies and all foreign companies doing business in India, either directly or indirectly, should comply with this law.

Madaan & Co. helps in setting up such programs and other corporate compliance programs for Companies Doing Business in India. 

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Contact us for:
  • All legal services regarding Doing Business in India

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  • Setting up Outsourcing in India

  • Dispute Resolution

Our lawyers include those admitted to bar in the United States of America.  They have undertaken legal maters in the USA, India and Europe. They understand the multi-cultural  and the multi-jurisdictional aspects of international business in this age of globalization. They include those educated at Harvard Law School, Harvard University in the USA and premier universities in India. They believe in high moral and legal ethics.

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