UNIVERSITY OF SCIENCE AND TECHNOLOGY,

MEGHALAYA

HISTORY BACKGROUND OF COMPANIES WITH REFERENCES TO

INDIAN COMPANIES ACT, 1956 AND 2013

Submitted to : SAMSUL ISLAM

Name : PREMJIT SINGH

ROLL : 2021/MBA/0080
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 HISTORY BACKGROUND OF COMPANIES WITH REFERENCES TO
INDIAN COMPANIES ACT, 1956 AND 2013

INTRODUCTION
The concept of company law is not new. Infact it came into existence in 4 B.C.
This concept changed with time. This act came to India by British Parliament.
Indians were not ready to accept this because they were on the opinion that
this will affect their economy in bad manner but still it was established because
people were governed by English Rule. I am going to talk about the evolution
of Company Law in India and how people reacted over it. Furthermore, what
are the changes that took place from 1850 till today.

Meaning: Company
We have an Indian Company Act of 2013 which defines Company as” a legal
person or a legal entity that has special features specified under the law” It
mainly help the state to meets with its economic ends and it can be considered
as a social, economic and legal entity of a state. It is basically an organisation
which has great importance in today economic system of INDIA

Evolution of company law in INDIA

In 1850, Company Law was introduced with the Companies Act of 1850 by
Joint Stock Company Act of 1844. Company Law was amended many times
between 1852 to 1883 because there was a lot of conflict on its
implementation in India. Main reason behind this conflict was the difference
among the views of different people residing here and their worst thinking
about English Laws. At that point of time India was not advance people and
their way of living was not as good as that of English people. This Joint Stock
Companies Act of 1844 for the first time provide that an organisation might be
incorporated by registering without obtaining a charter or sanction of the

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registrar of this act was created by this act but the power of financial
obligation was denied for the registrar in this act. But later in 1955, the British
Parliament with the majority passed the indebtedness act which provide some
liabilities over the members of the company who were registered and by this
the earlier act of 1844 get suspended when this new act of 1856 come into
existence. This act helped a lot of companies to develop their economic base.
Many companies were established at that era and a lot of economic
development took place which makes England economically strong. Basically, a
smart mode of making companies memorandum has been introduced by this
act which joined a lot companies all together

Amendments in Companies Act

Later in 1862 this act was again amended by adding some of the provisions in it
and the title “Companies Act” was given. With the implementation of this new
amendments two new documents were introduced: namely the memorandum
of association and article of an association. These two documents were the
basis of the indebtedness’ company. Not only this some more changes were
found that is the liability which is limited by the guarantee to of a company.
And if the head of the organization want to make alterations within the object
clause of the memorandum, he is been prohibited from doing so. Thus, by
these points we can easily understand that the basic structure of the company
has been already formed with the help of the new provision and company law
was indirectly shaping its body parts. In 1990, the liability of the administrators
of the organisation was made compulsory audit of the company. Before 1908,
people were only known about the public companies but the concept of
private company was introduced in 1980. In 1908 and 1929 the two continuous
acts were passed to consolidate the previous acts. Under Lord Cohen support
the principal act operative report and the committee for its proper working
was made in the companies act of 1948. By this act inter alia, another new
formation in company law was introduced and is properly known as exempt
private company and this act was also important for the general public
accountability in a firm. Not only this, the legislation of 1948 extended the
protection of the majority defined in section 210 of this act and therefore gives
power to the board of trade to order an investigation on company affairs

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defined in section 64(a) to Section 175 of Companies Act. By this for the first
time the shareholders of the company get a right to remove the director
before the period expiration of his company. The Companies Act, 1956 was
introduced to consolidate and amend the provision laws. This act come into
force on 1st of April, 1956. This act was formed by Bhabha committee
popularly known as company law committee, which submitted their report
over it in March 1952. This act was the lengthiest piece of legislation ever
found in Indian parliament.  All the amendments were made one-by-one and
consists of 15 schedule and 658 sections. This act provides the legal framework
for companies in India and was mammoth legislation. As, we already know that
this act of 1956 has been undergone a lot of changes and been amended 24
times since today. The basic reason behind this was the continuous growth of
corporate sector and their implementation in our country. Earlier people were
not aware about the basics of this act. But with time, they realise the
importance of changes need to make in this act for the proper functioning of
the company and to maintain the formal relation between employees we need
to make certain changes in the amendments for the proper growth of
economy of our nation.

Amendments in Companies Act

Later in 1862 this act was again amended by adding some of the provisions in it
and the title “Companies Act” was given. With the implementation of this new
amendments two new documents were introduced: namely the memorandum
of association and article of an association. These two documents were the
basis of the indebtedness’ company. Not only this some more changes were
found that is the liability which is limited by the guarantee to of a company.
And if the head of the organization want to make alterations within the object
clause of the memorandum, he is been prohibited from doing so. Thus, by
these points we can easily understand that the basic structure of the company
has been already formed with the help of the new provision and company law
was indirectly shaping its body parts. In 1990, the liability of the administrators
of the organisation was made compulsory audit of the company. Before 1908,
people were only known about the public companies but the concept of
private company was introduced in 1980. In 1908 and 1929 the two continuous
acts were passed to consolidate the previous acts. Under Lord Cohen support

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the principal act operative report and the committee for its proper working
was made in the companies act of 1948. By this act inter alia, another new
formation in company law was introduced and is properly known as exempt
private company and this act was also important for the general public
accountability in a firm. Not only this, the legislation of 1948 extended the
protection of the majority defined in section 210 of this act and therefore gives
power to the board of trade to order an investigation on company affairs
defined in section 64(a) to Section 175 of Companies Act. By this for the first
time the shareholders of the company get a right to remove the director
before the period expiration of his company. The Companies Act, 1956 was
introduced to consolidate and amend the provision laws. This act come into
force on 1st of April, 1956. This act was formed by Bhabha committee
popularly known as company law committee, which submitted their report
over it in March 1952. This act was the lengthiest piece of legislation ever
found in Indian parliament.  All the amendments were made one-by-one and
consists of 15 schedule and 658 sections. This act provides the legal framework
for companies in India and was mammoth legislation. As, we already know that
this act of 1956 has been undergone a lot of changes and been amended 24
times since today. The basic reason behind this was the continuous growth of
corporate sector and their implementation in our country. Earlier people were
not aware about the basics of this act. But with time, they realise the
importance of changes need to make in this act for the proper functioning of
the company and to maintain the formal relation between employees we need
to make certain changes in the amendments for the proper growth of
economy of our nation.

Importance of Companies Act, 2013

As we already know that company law has been amended many times but the
changes which took place in 2013 under company’s act has great importance
and the reasons are: Firstly, the number of members in the private company as
a shareholder were increased from fifty to two hundred. Secondly, the concept
of One Person Company was introduced. In this, the company is incorporated
by a single person and that single person is also the nominee of that company.
Thirdly, one of the most important change which took place in this act was of
the changes related to the rights of renunciation lastly, section 135 of this act

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was amended which deal with the corporate social responsibility as well as
company law tribunal and company law appellate tribunal. Basically, this act of
2013 modernized the whole concept of company law. As a result, companies
act of 2013 only consists of twenty-nine chapters and four hundred seventy
sections whereas the earlier acts had six hundred fifty-eight sections and seven
schedules.

Recent Developments in This Pandemic in Companies Act, 2013 All the

companies of India are managed by the Ministry of Corporate Affairs and is
working under Companies Act of 2013. In pandemic the Ministry of Corporate
Affairs companies amended the 2013 act by 2020 act by inserting a provision
rule 2(1) (e) of this act, which explain that any company which is already
engaged in research and development of vaccine required in covid-19 and
medical devices needed in their normal course of business, they are forced to
disclose their activity on the research to CSR separately in the annual report
included in the board report. The MCA has amended this act to help and
enable company management to comply with the provisions of this act in this
crucial and difficult time. Furthermore, the steps taken by MCA has proven
beneficial to investors and companies. While MCA has implemented the
conduct of board as AGMs through electronic communications so that people
did not get affected by the pandemic. We can also say that it would be safe to
assume that conducting meetings via such methods will become the new
norms in future.

Conclusion
At last, I would like to conclude my topic “company law: evolution & its
development” by saying that, though this concept of company law was
introduced by English Parliament and is there in the world since 4 B.C. but
when it reaches to India it was converted in a way by lawmakers so that it can
help each and every person who is working in a company or a firm. And its
continuous amendments are showing the faster development and the
increasing interest of the people in the Indian economy.

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