Evolution of Company Law in

India and UK
 Meaning of “Company”

Com- with
or together
Latin word
Panies-
bread
 Today- denotes- joint
Corporation derived
stock companies-
from Latin word
contribution of capital
Corpus (body)
by many

Corporate body &

Association of like
legal person-
minded persons- to
personality distinct
carry on
from people
business/undertaking
constituting it

Owes existence either

to Act of Parliament
or company
legislation
History of Company Law-
U.K.
 Old Company Law
Incorporation • 17th and 18th century- by a Royal charter or by Special
Act of Parliament

of co.
• Both methods- expensive and slow

• Purpose- to meet growing commercial needs of

Large the nation

• Traded in corporate form

incorporated • Trustees managed business

• Ownership separated from management

partnerships
• Fraudulent promoters- exploited public money
• Bogus co.s mushroomed

The Bubbles • Prohibited formation of fraudulent co.s

• Promotion of co.- made illegal

Act, 1720 • Set back for trade and commerce

• Repealed in 1825
 Modern Company Law

• Incorporation by regn. • Mode of creating co.s

• Royal charter/ The Limited by MOA and AOA
sanction by spl Act of Liability Act, 1855
Parliament- wasn’t
mandatory
• Office of Registrar of • Limited liability of
Joint Stock Co.’s members of regd co.s
created
• ‘Limited liability
deniedThe
to members
Joint Stock The Joint Stock
Companies Act, Companies Act,
1844 1856
 The Companies Act, 1862
Sir Francis Palmer- “magna carta of co-
operative enterprises”
MOA and
AOA-
Alteration
integral Provisions
in object
part of Co. ltd. by of winding
clause of
formation guarantee up
MOA-
of ltd. introduced
prohibited
Liability
co.
 The Directors’ Liability
Act, 1890
• Amendment of • Compulsory audit of
object clause companies accounts
allowed • Liability of directors enforced
• Spl. Resln to be of company was
passed by members introduced
in GM+ sanction of
court reqd
The Companies
The Companies Act,
(Memorandum and
1900
Association) Act, 1890
 The Companies
• Concept of private Act, 1948 • Emphasis on public
company accountability of co.,
introduced for the principles of
first time • Based on a committee accountancy
• Two more report headed by Lord recognised, auditors’
Cohen powers increased vis-
legislations- 1908 • Concept of exempt a-vis directors
& 1929 to private co. introduced • Protection of minority,
consolidate earlier removal of director in
Acts shareholders meeting
before completion of
The Companies tenure
Act, 1908 The Companies
Act, 1948
 The Companies
• Amended the 1948 Act, 1976 • Insider trading
Act made a criminal
• Based on reports & offence
• New issue of
recommendations
of Jenkins • Addressed defects shares-
committee in 1948 & 1967 Acts shareholders given
• Emphasis on • Strengthened right of pre-
requirements of emption
disclosures
public • Dealings b/w
• Abolished exempt
accountability directors and co.s
private companies
• & disclosure of restricted- max.
• Ltd. Co.s had to file
interests in shares financial limit
accounts introduced
• Stringent of co.
• Minority
provisions- shareholders
disclosure of protected- right to
The
directors Companies
interests file petition in case
The Companies
(Amendment) Act, of prejudice
Act, 1980
1967
 Consolidation
of Companies
• Purpose of disclosure- small,
medium sized and otr co.s- Acts
disclosure requirements • Companies Acts from 1948-
differentiated
1981
• Co.s authorized to issue
• Methods of consolidation
redeemable equity shares
and advantages
and buy its own shares
•

The Companies
Act, 1981
 The Companies Act, 1985
• Came into force from July 1, 1985
• The Companies Act, 1948 and 1981 repealed by
the Companies Consolidation (Consequential
Provisions) Act, 1985
• Minor consolidating enactments:
a.The Business Names Act, 1985
b.The Company Securities (Insider dealing) Act,
1985
 The U.K. Companies Act, 2006
• Received royal assent on November 8, 2006
• Emphasis on enhanced duties of Director
• Simpler regime for private co.s
• Increased use of e- communication
• Enhanced auditor liabilities
History of Company Law-
India
 The Companies
The Companies The Companies
(Amendment)
Act, 1850 Act, 1856
Act, 1857
• Based on the • Repealed all the • Right of regn
Joint Stock Co.s, previous Acts with or without
Act, 1844 • Provisions for ltd. liability
• Provided for incorporation, • Liability of
regn of co.s and regulation and members of
transferability of winding up of banking co.s
shares co.s unlimited; 1866-
• Recogd co.s as • Recast in 1882- ltd. liability
distinct legal incorporating all made applicable
entities, did not amendments in • Based on
introduce UK till 1881 English
concept of ltd. Companies Act,
liability 1856
The Companies Act, The Companies Act,
1866 1882
• Consolidation and • 1866 Act recast to
amendment of law bring Indian
relating to company law in
incorporation, conformity with
regulation and amendments
winding up of made in English
trading co.s Companies Act
• Based on English 1862
Companies Act, • Continued till 1913
1862
 Developments till 1956
• 1913: consolidating Act was passed; followed
English Companies Consolidation Act, 1908
• 1936: major amendments were made to it
• 1951: Indian Companies (Amendment)
Ordinance (based on UK Companies Act, 1948)-
extensive powers of intervention in affairs of co.
by Government & Court & also to take necessary
action in the interest of co.
• 1951: Ordinance replaced by Act
 The Companies Act, 1956
• Enacted on April 1, 1956 to consolidate and
amend earlier laws
• Based largely on recommendations of the
Company Law Committee- Bhabha Committee
(Committee constituted in 1950, report
submitted in March 1952)
• Companies Act, 1956- 658 sections & 15
schedules; base on English Companies Act, 1948
 The Companies Act, 1956
• Provided for following:
a.Promotion and formation of companies
b.Capital structure of companies
c.Company meetings and procedures
d.Presentation of company accounts, their audit, powers and duties of
auditors
e.Inspection and investigation of affairs of company
f. Constitution, powers & duties of BoD, MDs and managers
g.Administration of co. law
• Amendments: 1960, 62, 63, 64, 65, 66, 67, 69, 71, 77, 85, 88, 91, 96, 98,
99 (FIIs and FDI, buy back of shares, investments and loans, sweat equity
shares), 2000 (corporate governance), 2001 , 2002 (2 amendments-
producer companies winding up expedited NCLT proposed), 2006 (DIN
and e-filing), Depositories Act, 1996, Companies Bill, 2011.
 Companies Act, 2013
• Need to meet national and international economic
environment and to accelerate the expansion and growth of
economy
• Companies Bill 2009 & 2012
• Introduction of- E- governance, CSR, enhanced accountability
on part of co., disclosure norms, raising of capital by co.,
woman director, NCLT
• Received assent of President of India on 29 Aug, 2013
• Gazette notification on 30 Aug, 2013
• 29 chapters, 470 sections
• Certain sections notified on 12 September, 2013- certain
sections on 1 April, 2014