what is companies act

1. By-
group 2
1723042
1723052
1723062
1723072
What is Companies act

2. DISCUSSION POINTS
 Introduction to the company law
 Development of company law in India
 Objective of company act 2013
 Punishment of improperly using limited and
private limited

3. Introduction to the company
law
 A Company is a legal entity, allowed by
legislation, which permits a group of people, as
shareholders, to apply to the regulators for an
independent organization to be created, which
can then focus on pursuing set objectives, and
empowered with legal rights which are usually
only reserved for individuals, such as to sue and
be sued, own property, hire employees or loan
and borrow money.

4. CONT.
 These distinct fundamental legal features and
characteristics of a company makes it more
advantageous over other forms of business like
sole proprietorship, Hindu undivided family,
partnership, Limited Liablility Partnership, etc.

5. CONT.
 A company is regarded as a distinct legal entity
and is said to cast a veil between the company
and its human constituents, ‘the corporate veil’.
This veil can be pierced for the purpose of
imposing some form of liability on a company’s
shareholders and / or directors

6. Development of company law in
India
 For the better understanding of the companies
act we can divided the evolution in two phase
1. Before the independence
2. After the independence

7. Pre independence
 Pre independence the companies act of India
was mostly based on the English company act.
The first company act of India was passed in
1850 which was based on the English company
act 1844. Concept of limited liability was not
introduced in the starting. it came into picture in
companies act 1857 but till that time the concept
of limited liability was not introduced in the act but
in 1858 it was extended to banking sector also.

8. Cont.
 In 1866 came the companies act 1866 which was
based on the English company act 1862 whose
major importance was to consolidate and
amending the law related to incorporation
regulation and winding up of a trading company.
 After this the major change was in 1913 in
companies act and after that till 1956 companies
act 1913 was followed . several minor
amendments was done in between like
1914,1915,1920,1926,1930 and 1932.

9. Post independence-
 Post independence- in 1950 after the
independence government of India appointed a
committee under the chairmanship of shri H.C
Bhaba who revised the whole act for the better
development of Indian trade and industry .
 In 1952 the committee submitted the report and
almost all the recommendations were taken into
consideration while formation of new company
law and in 1956 it was passes in legislation and
formed companies’ act 1956. References were
also taken from the English company act 1948.

10. Major changes in the companies act
were
 The promotion and formation of the companies
 Capital structure of companies
 Company meeting and procedure
 The presentation of company account ,their audit,
and the power and duties of auditors
 The inspection and investigation of the affairs of
the company
 The constitution of board of director and the
power and duties of director ,managing director
and managers
 The administration of company law

11.  In 1996 a working group was formed to rewrite
the companies act the objective was to facilate
healthy growth of Indian corporate under the
liberalized , fast changing and highly competitive
business . and after that many amendment were
done and most famous and important are as
followed

13. Objective of company act 2013
 To develop the economy by encouraging
entrepreneurship
 Create flexibility and simplicity in the formation
and maintence of companies
 To encourage transparency and procedures to
facilitate ease of doing business while protecting
interest of all the stakeholders
 to enforce strict action against fraud
 to set up institutional structure in the form of
various authorities, bodies and panels
 to cater to the need for more effective and time
bound approvals and compliance requirements

14. Punishment of improperly using
limited and private limited
 In companies act 2013
 In companies act 1956

15. In companies act 2013
 Chapter xxix MISCELLANEOUS
 Sec 453.
 Punishment for improper use of Limited or
Private Limited If any person or persons trade or
carry on business under any name or title, of which
the word ―Limited‖ or the words ―Private Limited‖
or any contraction or imitation thereof is or are the last
word or words, that person or each of those persons
shall, unless duly incorporated with limited liability, or
unless duly incorporated as a private company with
limited liability, as the case may be, punishable with
fine which shall not be less than five hundred rupees
but may extend to two thousand rupees for every day
for which that name or title has been used.

16. Punishment for Offences (Sections 447 to
453)
 Punishment for fraud (Section 447)
Fraud is punishable with imprisonment for a term of not
less than six months but it may extend to ten years. The
liability towards fine is not less than the amount involved in
the fraud but it may extend to three times the amount.
Where the fraud involves public interest, the imprisonment
shall not be less than three years. This is without prejudice
to the repayment of any debt involved in fraud. Fraud is
comprehensively defined to include (i) any act, omission,
concealment of any fact or abuse of position committed by
any person, with the connivance and with intent to deceive,
to gain undue advantage or injure the interests of the
company or its shareholders or creditors, (ii) wrongful gain
means the gain by unlawful means of property to which the
person gaining is not legally entitled, (iii) wrongful loss
means the loss by unlawful means of property to which the
person losing is legally entitled.

17. In companies act 1956
 PART XIII : GENERAL
Sec 631. PENALTY FOR IMPROPER USE OF
WORDS "LIMITED" AND "PRIVATE LIMITED" If
any person or persons trade or carry on business
under any name or title of which the word
"Limited" or the words "Private Limited", or any
contraction or imitation thereof is or are the last
word or words, that person or each of those
persons shall, unless duly incorporated with
limited liability, or unless duly incorporated as a
private company with limited liability, as the case
may be, punishable with fine which may extend to
1 [five hundred] rupees for every day upon which
that name or title has been used.

18. REFERENCE
 Companies act 2013
 Companies act 1956
 ICSI website
 Taxmann’s textbook – company law and practice
20th edition