This document provides an overview of Company Law in India, including the origins and evolution of the Companies Act. It discusses how the first Companies Act was modeled on British law and was later amended after independence. The key highlights are: - The Companies Act of 1956 was passed based on recommendations to amend the previous legislation. It came into force in April 1956 with 658 sections and 14 schedules. - The Companies Act of 2013 replaced the 1956 act after 57 years. It has 470 sections and 7 schedules and aims to strengthen shareholder rights and regulation of companies. - A company is defined as an association formed and registered under the Companies Act, with features like separate legal identity, limited liability, transferable shares,

1. Company Law
1956 & 2013
Prof. V. GURUMOORTHI
DEPT. OF COMMERCE
KAAMADHENU ARTS AND SCIENCE COLLEGE.
SATHYAMANGALAM.

2. Contents
UNIT 1
1. ORIGIN
2. EVOLUATION
3. MEANING OF COMPANY
4. FEATURES OF COMPANY
5. ADVANTAGES OF COMPANY
6. DISADVANTAGES OF COMPANY
7. DIFFERENCE BETWEEN COMPANY AND
PARTNERSHIP

3. 1. ORIGIN OF COMPANIES ACT

4. ORIGIN OF COMPANIES ACT
The history of Indian company law began with the
Companies act of 1850, modeled on British
Companies act of 1844.
• The Indian Companies act of 1913 was based on the
British Companies act of 1908.
After independence it was found that the company
law should again be amended.

5. CONT…
 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.

6. 2. EVOLUATION OF COMPANIES ACT

7. EVOLUATION OF COMPANIES ACT
• After a run of around 56 years the Indian companies act, 1956
is now in the process of being substituted by a new law.
• The new companies Bill 2012 was approved by the Lok Sabha
on 18 Dec 2012 & by the Rajya Sabha on 9 Augest 2013.
• On 29 Aug 2013 to become Law i.e, Indian companies act
2013.
• 2013 Act has 470 sec and 7 Schedules as against 658 sections
and 14 Schedules in 1956 Act.

8. To sustain trust & faith of Shareholders
To protect & preserve rights of Share holders
To make the drastic control over all the activities of
company
To make regulation of an effective Annual Meetings
Investment of general public should be used for the
development of society or social welfare
Main objectives of the Company
Law 1956

9. 3. MENAING OF THE COMPANY
Company Law, 1956 & 2013

10. MEANING OF COMPANY
• The word ‘companis’ is an amalgamation of
the Latin word ‘com’ meaning “With Or
Together” and ‘pains’ meaning “Bread”.
• A Company is a voluntary association of
persons formed for the purpose of doing
business, having a distinct name and limited
liability.

11. DEFINITION OF THE COMPANY
• Section 3(1)(i) of the Companies Act, 1956
defines a company as: “a company formed
and registered under this Act or an existing
Company”.
• They can be incorporated/Registered under
the Companies Act.
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12. FEATURES
• Separate legal entity
• Limited liability
• Separate property
• Transferability of shares
• Perpetual succession
• Common seal
• Can sue and be sued

13. 1. Separate Legal Entity
• The company is different and distinct from its
members in law. It has its own name and its
own seal, its assets and liabilities are separate
and distinct from those of its members.
• It is capable of owning property, incurring
debt, borrowing money, having a bank
account, employing people, entering into
contracts and suing and being sued
separately.

14. 2. Limited Liability
• The liability of the members of the company is
limited to contribution to the assets of the
company up to the face value of shares held
by him.
• A member is liable to pay only the uncalled
money due on shares held by him when called
upon to pay and nothing more, even if
liabilities of the company far exceeds its
assets.

15. 3. Perpetual Succession [sec 34(2)]
• A company does not die… Death or insolvency
of member does not affect the existence of
the company.
• Membership of a company may keep on
changing from time to time but that does not
affect life of the company.
• There is a very good saying. Even where
during war all the members of a private
company, while in general meeting was killed
by a bomb, the company survived; not even a
hydrogen bomb could have destroyed it.
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16. 4. Separate Property
•A company is a distinct legal entity. The company’s
property is its own. A member cannot claim to be
owner of the company’s property during the
existence of the company
5. Transferability of Shares sec(82)
•Shares in a company are freely transferable, subject
to certain conditions, such that no shareholder is
permanently or necessarily wedded to a company.

17. 6. Common Seal
•A company is a artificial person and does not
have a physical presence. Therefore, it acts
through its Board of Directors for carrying out its
activities and entering into various agreements.
•The common seal is the official signature of the
company. The name of the company must be
engraved on the common seal.
7. Capacity to sue and Being Sued
•A company can sue or be sued in its own
name as distinct from its members.

18. ADVANTAGES OF COMPANY
1. Limited Liability:
The liability of the members is limited to the
face value of the shares held by them.
2. Easy mobilization of resources:
The capital is divided in to a number of small
parts known as shares. Therefore even
people with limited resources can afford to
subscribe for the shares of the company.
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19. 3. Possibilities for Expansion:
The corporate form of organization also paves
way for expansion in future.
4. Long Life:
The company continues to be in existence
irrespective of the changes in its membership.
5. Easy transferability of shares:
The shares of a company can be transferred
form one person to another person in the
manner provided in the AOA.

20. DISADVANTAGES OF THE COMPANY
1. Company’s Formation requires many formalities
and is expensive:
2. Company is not citizen and can not have the benefit
of fundamental rights:
3. Company’s social responsibility is greater:
4. Company’s members can not have effective control:
5. Company’s tax burden is heavy:
6. No Business Secrecy:
7. Company’s winding up procedure is expensive and
time consuming:

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NATURE COMPANY PARTNERSHIP
MEANING Any voluntary association of
persons registered as a
company for attain specific goal.
Partnership is the relation
between two or more persons
who have agreed to share the
profits.
LAW It regulated by the companies
act 2013.
It regulated by the partnership act
1932.
REGISTRATION Company should be
compulsorily registered.
Registration of a partnership firm
is not compulsory.
LIFE TIME Its existence is not affected by
the change of membership or
death or insolvency of its
members.
Life of a partnership ends on the
death or insolvency or insanity or
any one partner.
LIABILITY The company’s shareholders
liabilities are Limited.
In case of partnership the liability
of the partners is Unlimited.
TRANSFERABILITY
OF SHARES
Freely transfer shares unless
articles restricted.
Partner can not transfer his share
without the consent of all other
partners.

22. NATURE COMPANY PARTNERSHIP
NUMBER OF
MEMBERS
Private Mini. Members – 2
Max. members – 50 (200)
Public Mini. Members -7
Max. Members - unlimited
Mini. Members – 2
Max. members – 20 (10 for Banking)
AUDIT Compulsory audit done by qualified
auditor.
Need not be audited.
DECISION
MAKING
Taking decisions on important
issues requires a fairly long time.
Quick decisions are not possible.
CAPITAL
FORMATION
Capital formation is possible. Capital formation is not possible.
SECRECY There is no secrecy of maintaining
accounts in case of companies.
Outsiders can not know the in and
outs of the firm.
DISSOLUTION A company can only be dissolved as
laid down by law.
Partnership firm can be dissolved at
any time by agreement.

23. SOCIAL MESSAGE
SAVE WATER!
SAVE YOUR (FUTURE) LIFE!

25. THANK YOU