F.Y.B.M.

S - GROUP
‘B’ NO.
♣ The history of Indian company law began with the
Companies act of 1850, modelled on British Companies act
of 1844.
♣ This principle of limited liability was applied in the new
joint stock Companies act, 1857.
♣ Between 1850 and 1882, the Companies act was
amended many times and the act of 1882 repealed all the
previous laws and remained in force till 1912, though
amended many times.
♣ The Indian Companies act of 1913 was the result of
concerted effort for a consolidated and comprehensive law
and was based on the British Companies act of 1908.
♣ Subsequent amendments were in 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 January, 1937.
♣ After independence it was found that the company law
should again be amended.
♣ Therefore The Companies Act, 1956 was passed and it
st
 All company legislations in India are more or less a close
re-enactment of the English acts, extensively adopting the
very language.
This was firstly on account of the British occupation of
India, and secondly, their introduction into India both the
British company and partnership firm modes of business by
the acts of 1850 and 1932, respectively, on their familiar
models, together with big chunks of their Anglo-Saxon
jurisprudence as well as English as the official language.
Therefore, the English connection in our company law is
obvious.
 After the independence, it was found that the existing companies
actshould be amended to suit the changed conditions in the country.
In line with Cohen Committee of England, the central government
appointed a 12-member company law committee in October 1950
under the chairmanship of Mr. C. H. Bhabha (known as Bhabha
Committee) and submitted their report in April 1952.
The central government brought a bill in parliament on 2nd
September, 1953. The parliament appointed a joint parliamentary
committee in May 1954 to go into the recommendations of the
Bhabha committee and to suggest any modifications or changes.
On the basis of the recommendations of the joint parliamentary
committee, the parliament passed the new act in November, 1955
which received the presidents assents on 18th January, 1956, this act
came into force with effect from April, 1956.
It consists of 658 sections and 14 schedules.
It also helps the growth of companies on healthy business
principles.
The act of 1956 has been amended several times;
(1)in 1960 introducing some restrictions on management of
companies, managerial remuneration and private companies,
(2) in 1962 introducing section 293-B by which it empowered
the directors of companies to contribute to the national defense
fund to meet emergency arised from Chinese aggression,
(3)in 1963, for preventing abuses of powers by the company
management
(4) in 1965, changes were made to strengthen the provision
relating to investigation of affairs of companies.
Thereafter, minor amendments were made in 1966, 1967, 1969
and 1974.
The amendment act 1977 introduced, amongst other things, a
new sub-section (8) with sec. 58-A to empower the central
government to exempt any company from repayment of
deposits received from the public.
The companies (amendment) act, 1985 brought about provision
to contribute any amount upto 5 present of average net profits,
during the three immediately preceding financial years, directly
or indirectly to any political party or for any political purpose to
any person.
(a) To protect the interests of large number of shareholders,
as there exists separation of ownership from management in
a company.
 
(b) To safeguard the interests of creditors.
 
(c) To help the development of Companies in India on healthy
lines, because corporate sector constitutes a very important
segment of the economy.
 
(d) To help the attainment of the ultimate ends of the social
and economic policy of the Government.
 
(e) To equip the Government with adequate powers to
intervene in the affairs of a company in the public interest and
as per the procedure prescribed by law so that the interest of
all the stake-holders may be protected from unscrupulous
management.
A new section.2(45) defining company secretary was incerted
to recognize “ company secretary in practices”.

To transfer such judicial and quasi-judicial functions which are

being exercised presently by the court or by the central
government to company law board(independent company law
board has been set up).

To provide for intervention by the company law board against

non-payment of public deposits by companies.

For requiring companies to disclose reasons for refusal to

register transfer of shares.

For compulsory listening of all public issues with stock

exchange(s).

Measures for minimizing unnecessary burden and costs on the

companies in respect of procedural matters such as, holding
Prohibits the issue of irredeemable shares.

Revised the structure of managerial remuneration as per

schedule XIII.

Depreciation rates de-linked from income-tax and schedule

XIV is made applicable for depreciation rates.

Inter-corporate loans (sec.370) and inter-corporate

investments (sec.372) have been amended significantly.

In regard to the appointment of company secretary under

sec.383A, the central government is empowered to prescribe
the paid up share capital limits for the appointment of whole
time secretary.
Facilitates for nomination

Buy-back of Shares [S. 77-A]

Sweat Equity Shares [S. 79-A]

Investor Education and

Protection Fund

National Advisory Committee on

Accounting Standards [S. 210-A]

Inter-corporate loans and

investments [S. 372-A]