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The Companies Act, 2013 is a landmark legislation with a far reaching impact on all companies incorporated in India. The act is more outward looking and has been developed with a motive to keep in align with the international requirements. It is expected to set the tone for a more modern legislation which enables growth and prospects in the corporate sector in India.

The Act has been developed to enhance self regulation, improve corporate governance norms, ease of doing business, raise level of transparency, protect the interest of the investors (particularly the small one).


The new Companies act, 2013 was partially made effective w.e.f. 12th September, 2013. The Companies Bill was passed by the Lok Sabha (the lower house of the parliament) on 18th December, 2012 and by the Rajya Sabha (the upper house of the parliament) on 8th August, 2013. It received assent of President of India on 29th August, 2013. On 30th August, 2013 “Ministry of Law and Justice” published the Companies Act, 2013 in the official gazette
The Companies act, 2013 makes comprehensive provisions to govern all listed and unlisted companies in the country. The act contains 29 Chapters divided into 470 Sections and Schedules along with 95 Definitions.
However the new law also makes extensive reference to sub-ordinate legislation in the form of rules, notifications and circulars etc. which form an integral part of the new law governing companies in India.

Objective behind New Companies Act:

The reason behind the introduction of companies act, 2013 are as follows:

  • Concept of OPC introduced with a motive of ease of doing business
  • Penalties increased
  • Act made concise (470 sections 29 chapters and 7 schedules)
  • Corporate governance concept introduced to make directors more accountable and transparent
  • Whistle blower mechanism

Drawbacks of Companies Act, 2013:

  • Some of the drawbacks of companies act, 2013 are as follows:
  • Amendments still keep on coming
  • Some sections of the New Companies Act, 2013 is still not implemented
  • Definition of relative became narrower


The New Companies Act, 2013 is a positive and welcoming step towards modernising India’s Company law and places India on par with corporate legislation elsewhere in the globe. The Act is a progressive and forward looking which promises improved corporate governance norms, enhanced disclosures and transparency, facilitation of responsible entrepreneurship, increased accountability of company managements and auditors and strict enforcement processes. It goes long way in protecting the interest of shareholders and removes administrative burden in several areas.

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May 2024