An Introduction to Company Law

Dr. Leena James

Prof. Gnanendra M
 Expansion Inc: India has 15.27Lakh companies
The Economic Times : January 2016

• The total number of companies registered in the country rose to more

than 15.27 lakh in January while only 10.76 lakh of them were active
ones.

• Latest data compiled by the Corporate Affairs Ministry shows that there
were as many as 15.27 lakh registered companies at the end of January,
with majority of them from the private sector.

• Only about 10.76 lakh companies were active whereas the count of
closed entities stood at 2.83 lakh last month (December 2015)
• As per the data, more than 28,300 companies were under the
process of closure at the end of January.

• Among the active companies, 10.69 lakh were limited by shares and
the maximum were private sector entities.

• All the firms are registered under the Companies Act, which is
implemented by the Corporate Affairs Ministry.

• the government has been making efforts to further improve the

ease of doing business in the country and among other measures,
certain provisions of the Companies Act, 2013 have been
amended. came into force from April 1, 2014.
 Company
• Company is not merely a legal institution. It is
rather a device for the attainment of any social or
Company is not merely a legal institution. It is rather
a device for the attainment of any social or economic
economic endend
and and to extent
to a large a large
publicly extent
and sociallypublicly and
responsible.
socially responsible.
It is, therefore, a combined political, social,
economic and legal institution.
• It is, therefore, a combined political, social,
economic and legal institution.
• A company is nothing but a group of persons who
have come together or who have contributed money
for some common person and who have
incorporated themselves into a distinct legal entity
in the form of a company for that purpose.
 Company form of Organization
• Companies are owned by their shareholders.

• Small companies can have a single shareholder, while

very large and often publicly traded companies can
have several thousand shareholders.

• As a rule, the shareholders are only responsible for the

payment of their own shares. Therefore, they can be
regarded as suppliers of capital.

• The shareholders also elect the directors of the

company.
 Background-Types of Business
Organisation

Sole Joint Stock

Partnership
Proprietorship Company
 Other forms
• Service Business
• Merchandising Business
• Manufacturing Business.
• Hybrid Business
• Limited Liability Company etc.,
 Company Law-History
• In England the Joint Stock Companies Act was passed for the first
time in 1844. Under this act, a provision was made for the
registration of companies.

• In the year 1850, taking the English Joint Stock Companies Act 1844
as a base, a provision was made for registration of joint stock
companies in India.

• After this the Joint Stock Companies Act was passed in India, in the
year 1857, Under this Act the concept of limited liability was
introduced for the first time in India.
• Thereafter the Companies Act was passed in the year
1866. The Act consolidated and amended the law relating
to incorporation, regulation and winding-up of trading
companies and other associations.

• The Act was later replaced by The Indian Companies Act

1913.The Indian companies Act was based on the English
Acts, therefore in cases pertaining to Company Law, the
Indian Courts closely followed the decisions of the English
courts.
 Company Law-History
• After independence, the Government appointed a Committee under the
chairmanship of Shri H.C. Bhaba in the year 1950 to revise the Indian
Companies Act of 1913.

• The committee submitted its report in the year 1952. Based on the
recommendation of the committee and the provisions of the English
Companies Act 1948, the Companies Act 1956 was introduced in the
parliament.

• The Companies Act 1956 came into force on 1st April, 1956. The
Companies Act has been amended from time to time. The latest
amendments were made in 2006.
 Companies Act 2013
• The piecemeal reengineering of corporate regulatory
framework was not considered adequate to meet changes to
suit the national and international economic environment.
• Therefore a new company bill was taken up by the
government under the chairmanship of Dr. J.J Irani
• After passing from both the houses of parliament and getting
the President's assent –Company Act, 2013 has come as the
latest company law.