The Indian Cyber law requires compliance
by companies / corporations Doing Business in India
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.
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
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:
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,
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 ,
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
The court refuses to treat
the subsidiary company as a separate entity and instead treat it
as only a branch of the holding company,
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.
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
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
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
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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Business in India
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