Yukta Nidhi[1]
This article is based on the evolution, history and development that took place in company. In simple words, how it implemented in India and what were the difficulties faced by law makers at that time to implemented this law in India. We will find the definition of company law in section 2(20) of the Companies Act, 2013. In this article I have also explained the various factors due to which it took a lot of times to implement this law in India and the recent amendments which have been made under the Companies Act 1956.
Page Contents
Introduction
The concept of company law is not new. Infact it came into existence in 4 B.C. This concept changed with time. This act came to India by British Parliament. Indians were not ready to accept this because they were on the opinion that this will affect their economy in bad manner but still it was established because people were governed by English Rule. I am going to talk about the evolution of Company Law in India and how people reacted over it. Furthermore, what are the changes that took place from 1850 till today.
Meaning: Company
We have an Indian Company Act of 2013 which defines Company as” a legal person or a legal entity that has special features specified under the law” It mainly help the state to meets with its economic ends and it can be considered as a social, economic and legal entity of a state. It is basically an organisation which has great importance in today’s economic system of India.
Evolution of Company Law In India
In 1850, Company Law was introduced with the Companies Act of 1850 by Joint Stock Company Act of 1844. Company Law was amended many times between 1852 to 1883 because there was a lot of conflict on its implementation in India. Main reason behind this conflict was the difference among the views of different people residing here and their worst thinking about English Laws. At that point of time India was not advance people and their way of living was not as good as that of English people. This Joint Stock Companies Act of 1844 for the first time provide that an organisation might be incorporated by registering without obtaining a charter or sanction of the registrar of this act was created by this act but the power of financial obligation was denied for the registrar in this act. But later in 1955, the British Parliament with the majority passed the indebtedness act which provide some liabilities over the members of the company who were registered and by this the earlier act of 1844 get suspended when this new act of 1856 come into existence. This act helped a lot of companies to develop their economic base. Many companies were established at that era and a lot of economic development took place which makes England economically strong. Basically, a smart mode of making companies memorandum has been introduced by this act which joined a lot of companies all together.
Amendments in Companies Act
Later in 1862 this act was again amended by adding some of the provisions in it and the title “Companies Act” was given. With the implementation of this new amendments two new documents were introduced: namely the memorandum of association and article of an association. These two documents were the basis of the indebtedness’ company. Not only this some more changes were found that is the liability which is limited by the guarantee to of a company. And if the head of the organization want to make alterations within the object clause of the memorandum, he is been prohibited from doing so. Thus, by these points we can easily understand that the basic structure of the company has been already formed with the help of the new provision and company law was indirectly shaping its body parts. In 1990, the liability of the administrators of the organisation was made compulsory audit of the company. Before 1908, people were only known about the public companies but the concept of private company was introduced in 1980. In 1908 and 1929 the two continuous acts were passed to consolidate the previous acts. Under Lord Cohen support the principal act operative report and the committee for its proper working was made in the companies act of 1948.
By this act inter alia, another new formation in company law was introduced and is properly known as exempt private company and this act was also important for the general public accountability in a firm. Not only this, the legislation of 1948 extended the protection of the majority defined in section 210 of this act and therefore gives power to the board of trade to order an investigation on company affairs defined in section 64(a) to Section 175 of Companies Act. By this for the first time the shareholders of the company get a right to remove the director before the period expiration of his company.
The Companies Act, 1956 was introduced to consolidate and amend the provision laws. This act come into force on 1st of April, 1956. This act was formed by Bhabha committee popularly known as company law committee, which submitted their report over it in March 1952. This act was the lengthiest piece of legislation ever found in Indian parliament. All the amendments were made one-by-one and consists of 15 schedule and 658 sections. This act provides the legal framework for companies in India and was mammoth legislation.
As, we already know that this act of 1956 has been undergone a lot of changes and been amended 24 times since today. The basic reason behind this was the continuous growth of corporate sector and their implementation in our country. Earlier people were not aware about the basics of this act. But with time, they realise the importance of changes need to make in this act for the proper functioning of the company and to maintain the formal relation between employees we need to make certain changes in the amendments for the proper growth of economy of our nation.
Importance of Companies Act, 2013
As we already know that company law has been amended many times but the changes which took place in 2013 under company’s act has great importance and the reasons are:
Firstly, the number of members in the private company as a shareholder were increased from fifty to two hundred. Secondly, the concept of One Person Company was introduced. In this, the company is incorporated by a single person and that single person is also the nominee of that company. Thirdly, one of the most important change which took place in this act was of the changes related to the rights of renunciation lastly, section 135 of this act was amended which deal with the corporate social responsibility as well as company law tribunal and company law appellate tribunal. Basically, this act of 2013 modernized the whole concept of company law. As a result, companies act of 2013 only consists of twenty-nine chapters and four hundred seventy sections whereas the earlier acts had six hundred fifty-eight sections and seven schedules.
Recent Developments in This Pandemic in Companies Act, 2013
All the companies of India are managed by the Ministry of Corporate Affairs and is working under Companies Act of 2013. In pandemic the Ministry of Corporate Affairs companies amended the 2013 act by 2020 act by inserting a provision rule 2(1) (e) of this act, which explain that any company which is already engaged in research and development of vaccine required in covid-19 and medical devices needed in their normal course of business, they are forced to disclose their activity on the research to CSR separately in the annual report included in the board report. The MCA has amended this act to help and enable company management to comply with the provisions of this act in this crucial and difficult time.
Furthermore, the steps taken by MCA has proven beneficial to investors and companies. While MCA has implemented the conduct of board as AGMs through electronic communications so that people did not get affected by the pandemic. We can also say that it would be safe to assume that conducting meetings via such methods will become the new norms in future.
Conclusion
At last, I would like to conclude my topic “company law: evolution & its development” by saying that, though this concept of company law was introduced by English Parliament and is there in the world since 4 B.C. but when it reaches to India it was converted in a way by lawmakers so that it can help each and every person who is working in a company or a firm. And its continuous amendments are showing the faster development and the increasing interest of the people in the Indian economy.
REFERENCE: –
1) “Ministry of Corporate Affairs”. Government of India. Retrieved 16 December 2017.
2) Black’s Law Dictionary, 8th edition (2004), ISBN 0-314-15199-0.
3) https://taxguru.in/company-law/extension-time-filing-notice-appointment-cost-auditor.html
5) Notified sections of Companies Act, 2013.
6) Explanatory notes to the Companies Act 2006.
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[1] 3rd law student at Symbiosis Law School, Nagpur.
Thanks for new initiatives and article writing skills. Original one and that too in third year. It gladdens my heart to see emerging authors. Credit also goes to taxguru which is origin of everything new in intellectual revolution.Wish you a great career and also writer domain to be operated by you.
Congratulations