Companies_Act_2013

Companies Act 2013

Companies Act 2013

Indian company law legislation

The Companies Act 2013 (No. 18 of 2013) is an Act of the Parliament of India which forms the primary source of Indian company law. It received presidential assent on 29 August 2013, and largely superseded the Companies Act 1956.

Quick Facts The Companies Act 2013, Parliament of India ...

The Act was brought into force in stages. Section 1 of this act came into force on 30 August 2013. 98 different sections came into force on 12 September 2013 with a few changes.[1][2] A total of another 183 sections came into force from 1 April 2014.[3] The Ministry of Corporate Affairs thereafter published a notification exempting private companies from the ambit of various sections under the act.[4]

The Act increased the responsibilities of corporate executives in the information technology sector, increasing India's safeguards against organised cybercrime by allowing CEOs and CTOs to be prosecuted in cases of IT failure.

The Act established the National Company Law Tribunal (NCLT), which was constituted on 1 June 2016, based on the recommendation of the Justice Eradi committee on the law relating to insolvency and winding up of companies.[5] Further, the National Financial Reporting Authority (NFRA) was established in March 2018 as an oversight body to investigate matters of professional misconduct by Chartered accountants or CA firms.[6]

Features

Corporate Social Responsibility

Before the Act, corporate social responsibility (CSR) requirements applied only to public sector companies.[7] Section 135 of the Companies Act introduced mandatory CSR contributions for large companies, making it the only mandatory CSR law in the world. All firms above a particular net worth, turnover, or net profit threshold are required to spend at least 2% of their annual profits of the preceding year on corporate social responsibility. The law requires that all such companies establish a CSR committee to oversee the spending.

Company Secretaries

Section 203 of the Companies Act 2013 deals with the appointment of a company secretary. For the first time, the Act defined company secretaries as a key managerial personnel of the company. The Act made it mandatory for every Indian listed company, and every other entity having more than rupees ten crore (100 million) paid up capital, to have a full-time company secretary.

Types of companies

In addition to private and public limited companies, the Act also provides for a One Person Company (OPC), Section 8 companies, and producer companies. One Person Companies (OPC)[8] are companies with a single member. Only individual Indian citizens can be shareholders in an OPC. At first, only resident Indians could be shareholders, but after an amendment to the Act in 2020, even non-resident Indians can be shareholders.[9] Section 8 companies are non-profit companies governed by section 8 of the Act. Producer Companies are formed for agricultural purposes. Only farmers can be members of a producer company members can be farmers. They are governed by Section 378A to Section 378ZT of the Companies Act, 2013.[8]

See also

Notes

  1. [1]
    "Commencement Notification Of Companies Act 2013" (PDF). Ministry of Corporate Affairs, India. Archived (PDF) from the original on 11 January 2014. Retrieved 11 January 2014.
  2. [2]
    Varma, Sindhu. "India: New Companies Act, 2013 – The Cat Is Finally Out". Mondaq. Archived from the original on 28 March 2014. Retrieved 29 May 2023.
  3. [3]
    "MCA notifies 183 sections of Companies Act 2013". Business Standards. 26 March 2014. Archived from the original on 27 March 2014. Retrieved 27 March 2014.
  4. [4]
    "MCA lays draft notification us 462 for Private Companies in Parliament". Archived from the original on 13 February 2015. Retrieved 13 February 2015.
  5. [5]
    "Organisation | NCLT". Archived from the original on 21 March 2018. Retrieved 7 March 2019.
  6. [6]
    "Cabinet To Notify Audit Regulator NFRA, Approves Draft Rules", Bloomberg Quint, 1 March 2018, archived from the original on 2 March 2018
  7. [7]
    "A brief history of Indian CSR". 3 July 2015. Archived from the original on 10 August 2015.
  8. [8]
    "Companies Act, 2013". www.mca.gov.in. Retrieved 7 September 2022.
  9. [9]
    Ministry of Corporate Affairs- Government of India, MCA e book. "MCA Amendment Rules -" (PDF). mca.gov.in.
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