Companies Act 1956

INTRODUCTION - MEANING AND NATURE

 An Introduction
 Companies Act of 1956 constitutes the Company Law of India
 characteristics of company :
 formation
 Powers and responsibilities of Directors and Managers
 Raising of capital
 Holding of company meetings
 Maintenance and
 Audit of company affairs
 Finally – winding up of companies .
The Companies Act –an introduction

 Origin of the company law is from the English Company Law .

 First legislative enactment for “registration of joint stock companies “was passed
in 1950.
 This did not grant the privilege of limited liability
 The joint stock companies Act was passed in India in1856, which recognized the
principle of limited liability for the first time.
 Subsequently there were amendments made in 1914,1915, 1920,1926,1930 and
1932, 1936. From1937 to 1951 revisions were made almost every year .
 The companies act 1956 brought in major revisions
 The Companies ACT of 2013
 This Act was enacted to achieve the following broad objectives :
 To achieve transparency, accountability and high standards of cooperate governance
management.
 To enforce stricter action against fraud and gross non compliance with the latest
company law provisions.
 To set up institutional structures in the form of various authorities , bodies and panels
as well as recognition of various roles for professionals and other experts .
 To implement more effective and time-bound approvals and compliance requirements
and
 To recognize various new concepts and procedures to protect the interests of all
stakeholders , that is , shareholders , debenture holders , company personnel, creditors,
financial institutions , bankers , tax authorities , management personnel etc,
Meaning and Definition
 Chief Justice Marshall

“A company is a person, artificial, invisible , intangible and existing

only in the eyes of law. Being a mere creature of law , it possesses only
those properties which the charter of its creation confers upon it either
expressly or as incidental to its very existence” .

According to Sec.3(1) of the Company Act “a company means an

association of individuals formed for some purpose and registered
under the present Companies Act or an earlier Indian Company Act”.
 Basic features of the Company

Separa
Format
te legal Limite Transfe Perpet
ion of
Entity Artifici d rability ual Commo
the capacit
or al liabilit of success n seal
compa y to sue
Existen y shares ion
ny
ce
 Advantages
Huge
Limited
financial
liability
resources

Economi
es of Transferab
large ility of
scale shares
business

Profession
Continuo
al
us
manageme
existence
nt

Protectio
n of
Investors
 Disadvantages

Difficult Lack of
formation secrecy

Separation of Irregularities
control from and
ownership manipulation
Doctrine of lifting the corporate veil
 Under Express
Under judicial interpretation
Statutory provisions

No. of members fall below Determining character

stat. min. of the company

Non disclosure of Preventing fraud

representative capacity

Holding and subsidiary

company Protect revenue

For investigation into affairs of

selected company
Avoiding welfare laws

Fraudulent conduct of business acting as agent of

members

Failure to refund application money

LIFTING OF CORPORATE VEIL