One of the major, highly significant, and fast-progressive economies of the world, is the Indian economy. Hence, to make businesses in India optimally easy and smooth, legally more transparent, and rigorously well-regulated, and thus to boost further the constant and high economic growth rate of India in present-day highly competitive Indian and global business environments, the Government of India has now promulgated a new and highly refined company law, keeping in mind the dire requirements of the contemporary world of businesses and professions in various economic sectors. The international businesses of Indian and foreign people and companies, are also well-facilitated and maximally encouraged in India by this new Companies Act of 2013. In this highly informative and creative web article, we are providing rich and very useful information regarding this indian companies act of 2013, and some of the most significant and influential changes made in the earlier companies act of 1956, along with the necessities for devising this New Companies Act of 2013.
For the objectives mentioned above, the earlier company law of India had been amended at least 25 times in the past 57 years. Again, some of the provisions, rules, and regulations given in the Companies Act of 1956, were outdated or inadequate to the requirements of the modern and contemporary world of businesses and professions. Lastly, some new provisions and policies were to be introduced, for smooth and transparent corporate governance, due corporate social responsibility, increased participation of women in the corporate sector, security and welfare of shareholders and investors, greater FDI in India, and desired betterment in corporate management and regulation. In the new CA2013 of India, these all vital and highly significant things are prudently encompassed.
- The New Companies Act, 2013 of India contains 29 Chapters, 470 Sections, and 07 Schedules, as compared to as much as 658 Sections and 14 Schedules in the earlier Companies Act of 1956.
- Elegant provisions for the One Person Company [OPC], the Small Company, and the Dormant Company, have been presented in the Companies Act of 2013.
- To facilitate gathering of greater capital without going public, the maximal allowable number of partners in a private limited company, has been extended to 200, from 50 in the earlier Act.
- The general partnership firms can now have partners as much as 100 (increased from 20 in the former Act). However, the professional partnership firms are allowed to keep as many partners as they like, even beyond 100.
- According to the New Companies Act, 2013 of India, at least one-third of the total magnitude of directors in a public limited company, must be as independent directors, with no financial interests in the company. Duties of directors are defined duly in the new company law. Again, at least one director of a company must have resided in India for a period of 182 days in the previous year.
- Prudential and securing entrenchment in the articles of association of a company is now possible.
- Shareholders and Investors are now given greater liberty and rights, for their security, supremacy, and welfare.
- To encourage and strengthen participation and contribution of women to the corporate world, appointment of at least one woman director in every (big) company is prescribed by the New Companies Act, 2013 of India.
- Provisions are provided for fast, secure, and trustworthy e-governance, through use of electronic forms and documents.
- Fast and easy mergers of companies are well-facilitated by the new company law. Now Indian companies can also merge to foreign companies in specified jurisdictions, equally well.
- All publically-traded companies must change their respective auditor and audit firm regularly in every five-year and ten-year periods, respectively.
- Every big company (with a net worth of 5 billion Rupees or more), or with a minimal turnover of 10 billion Rupees, or earning a net profit of at least 50 million Rupees, in any financial year, is now needed to expend at least two percent [02%] of its average profit earned during three preceding years, every year in diverse activities and programs for social-welfare.
- Recommended are National Company Law Tribunal and the National Company Law Appellate Tribunal, to replace the existing CLB and the BIFR, for the purposes of faster and specialized solutions and justice.