Company Law
Companies Act in India owes its origin to the English Company law. The first legislative enactment for in this regard was passed in the year 1850 and was based on the English Companies Act, 1844. This Act was replaced by the Joint Stock Companies Act of 1857. This Act was replaced by the Companies Act of 1866. The Act of 1866 was intended to consolidate and amend the law relating to the incorporation, regulation and winding up of trading companies and other associations. It was replaced by The Indian Companies Act, 1913. After independence the Indian Companies Act 1913 was reviewed by a committee and based on the recommendation of the Bhabha Committee the Act was modified and Indian Companies Act of 1956 was passed. The Companies Act of 1956 came into force from 1st April, 1956.
The branch of law deals with all the aspects related to the functioning of a company. It prescribes the rules and the manner in which a company is to be incorporated the filing of articles of association and memorandum of association etc. The Act explains at length all the rules and regulations which a Company must follow in India. Rules with regard to the kind of name to the number of board of directors which a company must necessarily have are all dealt by this branch of law.
Company Law regulates the formation, financing, functioning and winding up of companies. The Act empowers Central Government to inspect the books of accounts of a company, to order investigation into the affairs of a company and many such powers are vested with the Central Government. The objective of these inspections is to determine whether the companies are working in accordance with the Act. The Registrar of Companies (ROC) manages the work of incorporation of new companies and the administration of running companies.
The Company Law or the Act further ensures that the Companies maintain a minimum standard in the management of the company, further duty is imposed on the management of the company to ensure that the interests of the shareholders are taken care of, there are provisions in the Act which vouch for greater participation of the shareholders in the management of the company, the Act makes it mandatory for the companies to disclose their profit and loss accounts annually, there are provisions in the Act which prescribes that the Companies adopt proper standard of accounting and auditing. The Company law further has many provisions for investigation of the company affairs if the Company functions in any manner which is oppressive to the minority shareholders or is prejudicial to the interests of the Company.
Company is a separate legal entity distinct from the members who incorporated it and the functioning of the same is governed by the Indian Companies Act 1956. Company law governs the very manner in which a company functions. It lays down the manner in which a company is to be incorporated, the capital required for a company, the formalities with regard to filing the articles of association and memorandum of association, the powers and duties of the board of directors, the rules governing the meetings of a company, the procedure for dissolution of a company and all the aspects with regard to the functioning of a Company. The legislation effects all the Companies incorporated in India.
Indian Companies Act 1956
The Act lays down the norms governing companies in India.
Indian Contract Act 1872
The Act lays down the rules governing contracts in the country.
