Company legislation in India originated from English company law. The various Companies Acts passed in India have largely followed the English Acts with some modifications. Early forms of companies included merchant guilds from the 11th-13th centuries and commenda and societas partnerships. Regulated companies with royal charters granting trade monopolies emerged in the 14th century, such as the East India Company. India's first company law was passed in 1850 based on the English 1844 Act, with limited liability first recognized in 1857. Subsequent Acts in 1866, 1913, and 1956 further developed company law, largely mirroring equivalent English Acts. The Companies Act of 1956 and subsequent amendments have shaped modern Indian company law.

1. By
ANJALI DIXIT
ASSISTANT PROFESSOR
FACULITY OF JURIDICAL SCIENCES
RAMA UNIVERSITY, KANPUR

2. Historical Development of Companies
Laws
Company Legislation in India owes its
origin to the English Company Law. The
Companies Acts passed from time to
time in India have been following the
English Companies Acts, with certain
modifications. Even the Companies Act,
1956, it is said, closely followed the U.K.
Companies Act, 1948

3. Historical Development of Companies
Laws
Merchant Guilds
11th to 13th centuries were called the merchant
guilds. These guilds obtained charters from
the Crown mainly to secure for their
members, a monopoly in respect of particular
trade or commodity.
These associations were either formed a
Commenda or Societas .

4. Historical Development of Companies
Laws
Commenda‘ or Societas
Commenda : - operated in the form of
partnership, the financier being a sleeping
partner with limited liability.
Societas : - In ‘Societas‘, all the members took
part in the management of the trade and had
unlimited liability, more in line with the
present day partnership

5. Historical Development of Companies
Laws
Company
In the 14th century, the word ‘Company‘ was
adopted by certain merchants for trading
overseas. This was, more or less an extension
of the merchant guilds in foreign trade.
By the end of 16th century Royal Charters
granted monopoly of trade to members of the
Company over a certain territory.
These companies were called regulated
Companies

6. Historical Development of Companies
Laws
• East India Company was one of such regulated
companies established by a Charter in 1600.
• It had monopoly of trade in India; its members
could carry on trade individually and had the
option to subscribe to the joint fund or stock
of the company.

7. Historical Development of Companies
Laws
History of Company Legislation in India
Company Legislation in India has closely followed
the Company Legislation in England.
The first legislative enactment for registration of
Joint Stock Companies was passed in the year
1850 which was based on the English Companies
Act, 1844.
limited liability concept in India, was recognised for
the first time by the Companies Act, 1857 closely
following the English Companies Act, 1856

8. Historical Development of Companies
Laws
• In 1866, the Companies Act, 1866 was passed
for consolidating and amending the law
relating to incorporation, regulation and
winding-up of trading companies and other
associations. was based on the English
Companies Act, 1862 and continued till 1913.

9. Historical Development of Companies
Laws
• The Act of 1913 had been passed following
the English Companies Consolidation Act,
1908.
• Till 1956, the business companies in India
were regulated by this Act of 1913. Certain
amendments were, however, made in the
years 1914, 1915, 1920, 1926, 1930 and 1932.
The Act was extensively amended in 1936 on
the lines of the English Companies Act, 1929.

10. Historical Development of Companies
Laws
Independent India’s Company Law
H.C. Bhaba Committee
At the end of 1950, the Government of
independent India appointed a Committee under
the Chairmanship of H.C. Bhaba to go into the
entire question of the revision of the Indian
Companies Act, with particular reference to its
bearing on the development of Indian trade and
industry and submitted its report in March 1952.
Note: Act 1956 largely followed the English
Companies Act, 1948

11. Historical Development of Companies
Laws
The Companies Act, 1956 has been amended
several times since then. The major
amendments were introduced in the years
1960, 1962, 1963, 1964, 1965, 1966, 1967,
1969, 1974, 1977, 1985, 1988 and 1991.
Companies (Amendment) Act, 1999 come to
surge the capital market by boosting morale of
national business houses besides encouraging
FIIs as well as FDI in the country.

12. Historical Development of Companies
Laws
Committees and amendments in Company Law
1960- On the recommendation of Shastri
Committee Companies (Amendment) Act,
1960 introduced several new provisions
relating to various aspects of company
management which were overlooked in the
1956 Act.
1963 - Related to appointment of a Companies
Tribunal and constitution of the Board of
Company Law Administration

13. Historical Development of Companies
Laws
• 1965 - Based on the recommendations of the
Vivian Bose Commission introduce clear
definition of the main and subsidiary objects of a
company in its Memorandum of Association;
Strengthening the provisions relating to
investigation into the affairs of the company.
1969 - Managing agents and secretaries and
treasurers were abolished with effect from April
3, 1970 and contributions by companies to any
political party or for any political purpose were
prohibited.

14. Historical Development of Companies
Laws
• 1974 – Object of this amendment is to inject
an element of public interest in the working of
the corporate sector
• 1985 - Amending Act substituted Section 293A
of Companies Act, 1956 with a new section
permitting Non-Government companies to
make political contributions, directly or
indirectly.

15. Historical Development of Companies
Laws
1988 - Expert Committee (Sachar Committee)
• Definition of Secretary brought in line with the definition of
‘Company Secretary’ in the Company Secretaries Act, 1980 (concept
of company secretary in practice was introduced for the first time )
• 1999 –
(a)Companies allowed to issue Sweat Equity shares and to buy-back
their own securities.
(b) Facility for nomination provided for the benefit of
share/debenture/deposit holders.
(c) An Investor Education and Protection Fund to be established. (
d) National Advisory Committee on Accounting Standards for
companies to be established.
(e) Prior approval of Central Government not required for inter-
corporate investment/lending proposals subject to certain
conditions.

16. Historical Development of Companies
Laws
• 2000 –
(a)Private Companies and Public Companies to have a minimum paid-
up capital of Rupees one lakh and five lakh respectively.
(b) Change of place of registered office from the jurisdiction of one
Registrar of Companies to another Registrar of Companies within
the same state requires confirmation from the Regional Director.
(c) SEBI given powers regarding issue and transfer of securities and
non-payment of dividend by listed public companies.
(d) Preferential offer/Private placement of securities to 50 (fifty)
persons or more treated as public issue. This shall not apply to a
preferential offer made by public financial institutions and NBFCs.
(e) Provisions relating to shelf-prospectus and information
memorandum, issue of equity share capital with differential rights
as to dividend, voting or otherwise included.
(f) Every listed company making initial public offer of any security for a
sum of Rupees ten crores or more will have to issue the same only
in a dematerialised form.

17. Historical Development of Companies
Laws
2002
National Company Law Tribunal (Tribunal) is to be
constituted instead of existing Company Law
Board.
Appeals against the orders of the Tribunal can be
filed with the Appellate Tribunal.
Appeal against the orders of the Appellate Tribunal
would lie to the Supreme Court.
Transfer of certain powers of the High Court to the
Tribunal.
Transfer of powers relating to winding up, mergers
and amalgamations from Court to the Tribunal.

18. Historical Development of Companies
Laws
• 2006
DIN to be obtained by all existing directors and
every other person, intending to become a
director.
All the provisions of Information Technology Act,
2000 relating to the electronic records, in so
far as they are not inconsistent with the
Companies Act, shall apply to the records in
electronic form.
Introduce E- Governance

19. Historical Development of Companies
Laws
2004 & J.J. IRANI REPORT
• to achieve global competitiveness
2013
The Companies Bill, 2012 was assented to by
the President of India on 29.08.2013 and
notified in the Gazette of India on 30.08.2013.
It finally became the Companies Act, 2013.

20. Historical Development of Companies
Laws
Passed in Lok Sabha December 18, 2012
Passed in Rajya Sabha August 08, 2013
President’s assent August 29, 2013
Total nubmer of Sections 470
Total number of chapters &
Schedules
29 & 7

21. Historical Development of Companies
Laws
Companies Act,2013’s new concepts
• Associate company
• One person company
• Small company
• Dormant company
• Independent director
• Women director
• Resident director
• Special court

22. Historical Development of Companies
Laws
• Secretarial standards
• Secretarial audit
• Class action
• Registered valuers
• Rotation of auditors
• Vigil mechanism
• Corporate social responsibility
• Cross border mergers
• Prohibition of insider training

23. Historical Development of Companies
Laws
Companies (Amendment) Act, 2019
Amendment Act received the assent of the
President on the 31st July, 2019
The main reforms undertaken through the
Ordinance include the following:
• Re-categorising of offences which are in the
category of compoundable offences to an in-
house adjudication framework.
• No change has been made in respect of any of
the non-compoundable offences

24. Historical Development of Companies
Laws
• De-clogging the NCLT by:
 enlarging the jurisdiction of Regional Director
(“RD”) by enhancing the pecuniary limits up to
which they can compound offences under section
441 of the Act.
vesting in the Central Government the power to
approve the alteration in the financial year of a
company under section 2(41); and
vesting the Central Government the power to
approve cases of conversion of public companies
into private companies.

25. Historical Development of Companies
Laws
• Re-introduction of declaration of
commencement of business provision; greater
accountability with respect to filing
documents related to creation, modification
and satisfaction of charges; non-maintenance
of registered office to trigger de-registration
process; holding of directorships beyond
permissible limits to trigger disqualification of
such directors.

26. Historical Development of Companies
Laws
De-clogging the NCLT
enlarging the jurisdiction of Regional Director (“RD”) by
enhancing the pecuniary limits up to which they can
compound offences under section 441 of the Act.
Power of Regional Director to compound offence punishable
increased upto Rs. 2,500,000/- Pre-Amendment, where the
maximum amount of fine which may be imposed for such
offence did not exceed five lakh rupees, such offence was
compounded by the Regional Director or any officer
authorised by the Central Government. Through the
Amendment, where the maximum amount of fine which
may be imposed for such offence does not exceed Twenty
five lakh rupees, such offence shall be compounded by the
Regional Director or any officer authorised by the Central
Government.

27. Historical Development of Companies
Laws
Some Important changes are:
• vesting in the Central Government the power
to approve the alteration in the financial year
of a company under section 2(41)
• vesting the Central Government the power to
approve cases of conversion of public
companies into private companies
• Insertion of new section 10A Commencement
of business, etc.

28. Historical Development of Companies
Laws
• Section 26: The requirement of registration of
prospectus with the Registrar of Companies
has been done away with. Instead the
prospectus would be filed with the Registrar
• Section 35: The reference of ‘Registration of
Prospectus with the Registrar’ is replaced by
‘Filing of copy of Prospectus with the
Registrar’.

29. Historical Development of Companies
Laws
Section 132 : Constitution of National Financial
Reporting Authority (NFRA)
• NFRA to perform its functions through such divisions
as may be prescribed by the Central Government.
• Executive body of NFRA shall consist of the
Chairperson and full-time Members for efficient
discharge of its certain functions.
• Debarring of the member or firm from being appointed
as an auditor or internal auditor etc. or performing any
valuation under section 247 by NFRA in case
professional or other misconduct is proved.

30. Historical Development of Companies
Laws
Section 135 - Corporate Social Responsibility
(i) In case the unspent amount does not relate to any
ongoing project, unspent amounts to be transferred
to a Fund specified under Schedule VII within a
period of six months of the expiry of the financial
year.
(ii) In case the unspent amount relates to any ongoing
project subject to fulfilling of prescribed conditions,
unspent amounts to be transferred by the company
within a period of thirty days from the end of the
financial year to a special account to be opened by
the company in that behalf for that financial year in
any scheduled bank to be called the Unspent
Corporate Social Responsibility Account.

31. Historical Development of Companies
Laws
Section 135 - Corporate Social Responsibility
(iii) Such amount shall be spent by the company in pursuance of its
obligation towards the Corporate Social Responsibility Policy within
a period of three financial years from the date of such transfer,
failing which, the company shall transfer the same to a Fund
specified in Schedule VII, within a period of thirty days from the
date of completion of the third financial year.
Penal provisions
The company - punishable with fine which shall not be less than Rs.
50,000 but which may extend to Rs. 25 lakh Every officer of such
company who is in default - shall be punishable with imprisonment
for a term which may extend to 3 years or with fine which shall not
be less than Rs. 50,000 but which may extend to Rs. 5 lakh, or with
both. (v) MCA empowered to give general or special directions to a
company or class of companies as it considers necessary to ensure
compliance of provisions of this section.

32. For any query you may contact
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