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Corporate Regulation and

Administration
History of Companies Act in
world
1319 Company of Merchants of the Staple of England
1407 Company of Merchant Adventurers of London
1553 Company of Merchant Adventurers to New Lands
1555 Muscovy Company
1577 Spanish Company
1579 Eastland Company
1581 Turkey Company
1588 Morocco Company
Joint-stock companies were similar to modern corporations that sell
stock to investors in order to pool resources like capital, or money,
together for new product development, research, etc. All of this was
done with the goal to make a profit and reward investors with increased
share prices of their stock. Joint-stock companies were used by English
merchants in the 17th century (which is the 1600s) to pool capital and
share the risks associated with trading voyages to Asia and Africa.
1600 East India Company
1604 New River Company
1605 Levant Company
1606 Virginia Company
1609 French Company
1610 London and Bristol Company
1616 Somers Isles Company
1629 Massachusetts Bay Company
1629 Providence Island Company
16641674 Royal West Indian Company
1670 Hudson's Bay Company
1672 Royal African Company
1693 Greenland Company
Company legislation in India
1600:- (East India company)
1606:-Joint Stock Company established- Granted a charter by King
James I in 1606, the Virginia Company was a joint-stock company
created to establish settlements in the New World.
1844:-The Joint Stock Companies Act (Act of the Parliament of the
United Kingdom that expanded access to the incorporation of joint-
stock companies. Before the Act, incorporation was possible only by
royal charter or private act and was limited owing to Parliament's
jealous protection of the privileges and advantages thereby granted.
As a result, many businesses came to be operated as unincorporated
associations with possibly thousands of members)
1850:- Joint Stock Company Act- the first law on 'registration of joint
stock companies' was enacted in India which was based on the
English Companies Act of 1844 known as the Joint Stock Companies
Act, 1844.
1855:- The Limited Liability Act 1855 was an Act of the Parliament of
the United Kingdom that first allowed limited liability for corporations
that could be established by the general public in the UK
1856:- English Companies Act- The Joint Stock Companies Act 1856
was a consolidating statute, recognised as the founding piece of
modern United Kingdom company law legislation
1857:- concept of Limited Liability- The principle of limited liability
was recognized in India by virtue of the Joint Stock Companies
Act, 1857 which was passed following the English law, the Joint
Stock Companies Act, 1856.
1862- Corporate personality- Salomon Vs Salomon Ltd.
1866:- Indian Companies Act, - laws relating to incorporation
,regulation and winding up
1882:- Indian Companies Act, (Amendment)- Distribution of capital,
liability of members, management and administration and winding
-up.
1913:- Indian Companies Act, (Amendment)- Extension of earlier act.
1936:- Indian Companies Act, (Amendment)- Extension of earlier act.
1942:- The Registration of Transfer Ordinance
1950:- HC Bhaba Committee was appointed to have a study of
company law in India.
1956:- The Indian Companies Act was formed on the
recommendations of the above committee
After 1956 ,amendments were made in the following years:-

1960,1965,1974,1977,1988,1996,1999,2000,2001,
2002,2006,2008,2012.

The Companies (Second Amendment) Act, 2002


provides for the setting up of a National Company Law
Tribunal and Appellate Tribunal to replace the existing
Company Law Board (CLB) and Board for Industrial
and Financial Reconstruction (BIFR).

2013:- Indian Companies Act


After 2013, amendments were made in the following years 2014
and2015
An overview of Companies Act 1956
Companies Act 1956 explains about :-
Procedure of the how to form a company, its fees
procedure, name, constitution, its members.
Motive behind the company
share capital
general board meetings,
management and administration of the company
including an important part which is the directors as
they are the decision makers and they take all the
important decisions for the company their main
responsibility and liabilities about the company matter
the most.
The Act explains about the winding of the business as
well and what happens in detail during liquidation
period.
Features of Companies Act,
1956
The Companies Act 1956 is administered by the Government
of India through the Ministry of Corporate Affairs and the
Offices of Registrar of Companies, Official Liquidators, Public
Trustee, Company Law Board, Director of Inspection, etc.
The Act is 658 sections long.
The Act contains provisions about Companies, directors of the
companies, memorandum and articles of associations, etc.
This act states and discusses every single provision requires
or may need to govern a company.
It mentions what type on companies their differences,
constitution , management, members , capital, how should
the shares should be issues, debentures, registration of
charge, at the end of the act it concludes the about winding
up of a company, discussing the situations a company needs
to be winded up. The ways it should be done by volunteer or
through courts.
Objectives of the Companies Act, 1956
A minimum standard of good behaviour and business honesty in company
promotion and management.
Due recognition of the legitimate interest of shareholders and creditors and of the
duty of managements not to prejudice such stakeholders interest
Provision for greater and effective control over and voice in the management
for shareholders.
A fair and true disclosure of the affairs of companies in their annual published
balance sheet and profit and loss accounts.
Proper standard of accounting and auditing.
Recognition of the rights of shareholders to receive reasonable information and
facilities for exercising an intelligent judgment with reference to the management.
A ceiling on the share of profits payable to managements as remuneration for
services rendered.
A check on their transactions where there was a possibility of conflict of duty
and interest.
A provision for investigation into the affairs of any company managed in a
manner oppressive to minority of the shareholders or prejudicial to the interest of
the company as a whole.
Enforcement of the performance of their duties by those engaged in the
management of public companies or of private companies which are subsidiaries of
public companies by providing sanctions in the case of breach and subjecting the
latter also to the more restrictive provisions of law applicable to public companies.
Various chapters of the 1956 Companies Act.
Part I - Preliminary ( Section 1 - 10D )
Part IA - Board of Company Law Administration ( Section 10E - 10FA )
Part IB - National Company Law Tribunal ( Section 10FB - 10FP )
Part IC - Appellate Tribunal (Section 10FQ - 10GF)
Part II - Incorporation of company and matters incidental thereto (Section
11 - 54)
Part III - Prospectus and allotment, and other matters relating to issue of
shares or debentures ( Section 55-81)
Part IV - Share capital and debentures ( Section 82 - 123 )
Part V - Registration of charges ( Section 124 - 145 )
Part VI - Management and administration ( Section 146 - 424 )
Part VIA - Revival and Rehabilitation of sick industrial companies (Section
424A - 424L)
Part VII - Winding up ( Section 425 - 560 )
Part VIII - Application of act to companies formed or registered under
previous companies laws (Section 561-564)
Part IX - Companies authorised to register under this act ( Section 565 -
581 )
Part IXA - Producer Companies (Section 581A - 581ZT)
Part X - Winding up of unregistered companies ( Section 582 - 590 )
Part XI - Companies incorporated outside india ( Section 591 - 608 )
Part XII - Registration Offices and Officers and Fees ( 609 - 614A )
Companies Act empowerment and
mechanism
In India, the Companies Act, 1956, is the most important piece of
legislation that empowers the Central Government to regulate the
formation, financing, functioning and winding up of companies.
The Act contains the mechanism regarding organizational, financial, and
managerial, all the relevant aspects of a company.
It empowers the Central Government to inspect the books of accounts of
a company, to direct special audit, to order investigation into the affairs of
a company and to launch prosecution for violation of the Act.
These inspections are designed to find out whether the companies
conduct their affairs in accordance with the provisions of the Act, whether
any unfair practices prejudicial to the public interest are being resorted to
by any company or a group of companies and to examine whether there is
any mismanagement which may adversely affect any interest of the
shareholders, creditors, employees and others.
If an inspection discloses a prima facie case of fraud or cheating, action is
initiated under provisions of the Companies Act or the same is referred to
the Central Bureau of Investigation.
The Companies Act, 1956 has been amended from time to time in
response to the changing business environment.
Highlights of the companies act 2013
Immediate Changes in letterhead,bills or other official communications,
as if full name, address of its registered office, Corporate Identity Number (21
digit number allotted by Government), Telephone number, fax number, Email
id, website address if any.
One Person Company (OPC):It's a Private Company having only one
Member and at least One Director. No compulsion to hold AGM. Conversion of
existing private Companies with paid-up capital up to Rs 50 Lacs and
turnover up to Rs 2 Crores into OPC is permitted.
Woman Director: Every Listed Company /Public Company with paid up
capital of Rs 100 Crores or more / Public Company with turnover of Rs 300
Crores or more shall have at least one Woman Director.
ResidentDirector:EveryCompanymusthaveadirectorwho stayed
inIndiaforatotal periodof182daysormoreinpreviouscalendaryear.
Accounting Year: Everycompanyshallfollowuniformaccountingyeari.e.1
stApril -31stMarch.

Loans to director The Company CANNOT advance any kind of loan /


guarantee / security to any director, Director of holding company, his partner,
his relative, Firm in which he or his relative is partner, private limited in which
he is director or member or any bodies corporate whose 25% or more of total
voting power or board of Directors is controlled by him.
Articles of Association-In the next General Meeting, it is desirable to
adopt Table F as standard set of Articles of Association of the Company with
relevant changes to suite the requirements of the company. Further, every
copy of Memorandum and Articles issued to members should contain a copy
of all resolutions / agreements that are required to be filed with the
Registrar.
Disqualification of director-All existing directors must have Directors
Identification Number (DIN) allotted by central government. Directors who
already have DIN need not take any action. Directors not having DIN should
initiate the process of getting DIN allotted to him and inform companies.
The Company, in turn, has to inform registrar.
Financial year-Under the new Act, all companies have to follow a uniform
Financial Year i.e. from 1st April to 31st March. Those companies which
follow a different financial year have to align their accounting year to 1st
April to 31st March within 2 years. It is desirable to do the same as early as
possible since most the compliances are on financial year basis under the
new Companies Act.
Appointment of Statutory Auditors- Every Listed company can appoint
an individual auditor for 5 years and a firm of auditors for 10 years. This
period of 5 / 10 years commences from the date of their appointment.
Therefore, those companies have reappointed their statutory auditors for
more than 5 / 10 years, have to appoint another auditor in Annual General
Meeting for year 2014
Background of Companies Act

1956:- Company's Act


1991:- Economic reforms
2012:- Company Bill sent to president
2013:-Companys Act was passed

Features
29 chapters
470 sections
7 schedules
Various chapters of the 2013 Companies Act.
Part I - Preliminary ( Section 1 - 2 )
Part II - Incorporation of company and matters incidental thereto(Section 3-22)
Part III - Prospectus and allotment, and other matters relating to issue of shares or debentures
( Section 23-42)
Part IV - Share capital and debentures ( Section43-72)
Part V - Acceptance of deposits by companies (Section 73-76)
Part VI - Registration of charges ( Section 77-87 )
Part VII -Management and administration(Section 88-122)
Part VIII- Declaration and Payment of Dividend (Section 123-127)
Part IX Accounts of companies ( Section 128-138)
Part X Audit and Auditor ( Section 139-148)
Part XI Appointment and Qualification of directors ( Section 149-172)
Part XII Meeting of Board and its powers ( Section 173-195)
Part XIII- Appointment and remuneration of managerial personnel ( Section 196-205)
Part XIV- Investigation, inspection and Inquiry ( Section 206-229)
Part XV Compromise, Arrangements and Amalgamations ( Section 230-240)

Part XVI- Prevention of oppression and Mismanagement ( Section 241--246)


Part XVII- Registered valuers ( Section247)
DEFINITIONS
Features of Companies
1. Flexibility
Act,2013.
2. Wide scope
3. Liberal administration
4. Strict punishment
5. Strong administrative framework
6. Suited for globalized world
7. Integration of Corporate Governance and
Corporate Social Responsibility
8. Information Technology

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