History of Companies Act

The history of Indian Company Law began with the Companies Act 1850, which was modelled on the British Companies Act 1844. Between 1850 and 1882, the Companies Act was amended many times and the Act of 1882 replaced all the previous laws and remained in force till 1912 though amended many times. The Indian Companies Act 1913 was based on British Companies Act 1908. Subsequent amendments were made in 1914, 1915, 1920, 1926, 1930, 1932,and 1936. The amendment in 1936 was based on the lines of the British Companies Act of 1929 and became operative from 15th Jan, 1937.

After Independence it was found that companies Law should again be amended and hence on the recommendations of the Bhabha Committee report , chaired by Mr. C.H. Bhabha , the President of India gave his assent on 18th Jan 1955 and it came into effect from 1st April 1956. The Companies Act, 1956 has undergone changes by amendments in 1960, 1962, 1963, 1964, 1965, 1966, 1967, 1969, 1971, 1977, 1985, 1988, 1996, 1999, 2000, 2002 (Amendment), 2002 (Second Amendment), and 2006. The Companies Act, 1956 was also amended by enactment of Depositories Act, 1996. Based on the recommendations of Shastri Committee, the Companies (Amendment) Act, 1960 introduced several new provisions relating to various aspects of company management which were overlooked in the 1956 Act.

Liberalised Foreign Direct Investment policies after 1991 are tempting foreign investors who are looking towards India as an attractive investment destination. Moreover , the financial development of any nation depends on strong investor protection and good governance. The debacles at the National And International level compelled the government to think whether the existing Indian Companies 1956 is sufficient enough to protect and preserve the interest of the home as well as the foreign investors. This thinking process made the government think about a change in the existing companies 1956.

Also Read : Precedent: As a Source of Law – Aishwarya Sandeep

The recently enacted Companies Act, 2013 is landmark legislation with far-reaching consequences on all companies incorporated in India. The New Companies Act, 2013 is replacing old Companies Act, 1956. The New Companies Act, 2013 makes comprehensive provisions to govern all listed and unlisted companies in the country. The New Companies Act, 2013 corresponded with Companies Act, 1956 ,consist of 29 Chapters, 470 Sections and 7 Schedules. The Act in a comprehensive form purports to deal with relevant themes such as investor protection, inclusive agenda, fraud mitigation, internal control, director responsibility and efficient restructuring. The Act is also quite outward looking and in several areas attempts to harmonize with international requirements. Indian companies will have to closely examine these developments to develop a clear strategy at ensuring compliance per the new requirements.

Objectives of the Companies Act 2013

Following are the objectives of the Companies Act 2013 –

  • To develop the economy by encouraging entrepreneurship
  • Creating flexibility and simplicity in the formation and maintenance of companies.
  • To encourage transparency and high standards of corporate governance.
  • To recognize new concepts and procedures to facilitate ease of doing business while protecting interests of all the stakeholders.
  • To enforce strict action against fraud
  • To set up institutional structure in the form of various authorities, bodies and panels.
  • To cater to the need for more effective and time bound approvals and compliance requirements.

Aishwarya Says:

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