Companies Act 2013: Salient Features, Provisions, Notes, Company Act 2013 PDF

Companies Act 2013

The establishment and operation of corporations or companies in India are governed under the Companies Act 2013. In the post-independence period, referring to the Bhabha Committee’s suggestions, the country’s first-ever company act to regulate the functioning of corporate enterprises was formed in 1956. After that, in the year 2013, there felt a need to make amendments and revisions to this act to include several new provisions. That’s how the Companies Act 2013 came into the picture. India was the first nation to make corporate social responsibility (CSR) spending a legal requirement by Section 135 of the 2013 Act.

Companies Act 2013 PDF

The following Central government Acts are currently under the administration of the Ministry of Corporate Affairs:

• Companies Act 2013
• 1956 Companies Act
• 2002 Competition Act
• 2016 Insolvency and Bankruptcy Code
• 1949’s Chartered Accountant Act

The 1956 Act has been replaced by the Company act 2013.

Highlights of Companies Act 2013

The following list includes the main highlights of the Companies Act 2013:

• For private enterprises, the maximum number of stockholders has been set at 200, up from 50 previously.
• The idea of a one-person business has been developed.
• There are now two tribunals that are required. Which are:
  • Court of Appeals for Company Law
  • CSR for Company Law Tribunal

Definition of Company in Companies Act 2013

The definition of ‘Company’ in the Companies Act 2013 is as follows:- “Company means an entity incorporated under this Act or under any previous company law”. In layman’s language, a company can be defined as an artificially created entity based on law, which has all rights, obligations and power similar to a human being.

As per the Companies Act 2013, a company is a separate legal entity which can have various bank accounts or properties under its name. It can own and dispose of a property as and when required just like any other human being. A company has liabilities but it can either be limited or unlimited liability.

Salient Features of Companies Act 2013

The Companies Act 2013 is credited with the introduction of many significant concepts and organizations. It also provides power to the shareholders and supports women’s empowerment. The Companies Act 2013 lays down certain guidelines and also clearly identifies the role and duties of higher authorities.

Some salient features of the Companies Act 2013 are as follows:-

• The Companies Act is credited with the formation of the National Company Law Tribunal which is a quasi-judicial body.
• The Act also introduced the ‘Dormant Companies’ concept. According to the concept, a company that has not been in business for at least 2 years are considered dormant.
• All the documentation needs to be saved electronically as per the Companies Act.
• As per the Act, a notice of seven days is required to be sent prior to any board meeting.
• It also lays down the guidelines for a specific amount to be set aside by the companies for the purpose of ‘Corporate Social Responsibility’.
• This new class of privately owned companies may only have one stakeholder and one director. According to the 1956 Act, a private business needed at least two shareholders and executive members.
• Every company must have at least one director who has lived in India for at least 182 days during the previous calendar year.
• The Act allows for the perpetuation of the articles of incorporation (the application of extrajudicial protections).
• The responsibilities of a Director have been specified in this Act. The roles of “Key Managerial Personnel” and “Promoter” have also been described.
• The Act also forbids auditors from offering the corporation anything other than audits. There is significant civil and criminal liability for an auditor in the event of non-compliance.
• One director should represent small owners in listed businesses.
• During an inquiry, it is possible to search and seize papers without a magistrate’s permission.
• Strict guidelines have been established for taking public deposits.
• The National Financial Reporting Authority (NFRA) establishment has been planned for. It establishes and upholds accounting and auditing standards and controls the activities of auditors. India is now qualified to join the International Forum of Independent Audit Regulators (IFIAR) as a result of the NFRA’s notification.

Difference Between Companies Act 2013 and 1956

There were a number of differences between the companies act 2013 and 1956. The primary difference between both acts was that there were 26 chapters in Act of 1956 and 29 chapters in the 2013 Act. Another difference is on the basis of the number of sections in the acts where the 1956 Act had 658 sections and the Companies Act 2013 had 470 sections. Also, the number of schedules has been reduced in the 2013 act, which was formerly 15 in the 1956 act.

Details	Companies Act 1956	Companies Act 2013
Parts	13	NA
Chapters	26	29
Section	658	470
Schedules	15	7

Important Keywords related to Indian Companies Act

Indian Company Act 2013 is a purely business-oriented act that has some terminologies. The following list of terms from the Companies Act 2013 that every aspirant should be familiar with:

• Appellate Tribunal – Questions about the National Company Law Appellate Tribunal may be submitted to the appellate tribunal.
• Associate Company – You might inquire about what constitutes an associate company.
• Called-Up Capital – Concerns about the distinction between nominal capital, authorised capital, and called-up capital may be raised.
• Company Liquidator – It’s crucial to understand what a company liquidator is.
• The distinctions between debt securities, deposits, and contracts are up for discussion.

Company Act Amendment 2019

All the existing acts in the Constitution of India have undergone some kind of amendments as required. In March 2020, the Parliament approved this Act. The most recent update to the Companies Act suggests the following changes:

• The proposed law grants the government the power to permit specific public businesses to list securities in other countries (as determined by the government).
• The Bill grants the national government the power to exclude companies that issue specific assets from the definition of “listed company” in consultation with the Securities and Exchange Board of India.
• If business earnings are inadequate or absent in a particular year, the Company Act establishes special mechanisms for paying compensation to its executive directors (including the managing director and other full-time directors).

Unlimited Company in India under the Companies Act

A private company that can be created without shareholding is known as an unlimited corporation. However, the shareholders’ members’ liability is unlimited. That implies that in the event of the firm’s insolvency, the owners would be jointly liable for all debts of the company in any amount. This is in contrast to a limited corporation, where investors only have access to their own assets and the assets of the firm and are not directly liable to creditors.

Provisions of Companies Act 2013 – Amendments

During the winter session of Parliament, the Ministry of Corporate Affairs plans to introduce changes to the Companies Act 2013.

Professionals and experts have provided the ministry with comments on these suggestions given by the Company Law Committee, which presented its Recommendations to the Ministry of Finance and Corporate Affairs in April 2022.

As per the main suggestions,

• It is anticipated to raise the bar for corporate governance, particularly in terms of selecting candidates for board positions and managing resignations of top executives and auditors.
• The most important recommendations to the Companies Act 2013 aim to guarantee that independent directors are actually independent and that businesses are more transparent about instances of statutory auditors objecting to the income statement, putting conditions on them, or even ceasing their auditing assignment.
• By altering the law in a number of ways, including making certain types of joint audits necessary, it aims to safeguard the independence of statutory auditors.
• The government is considering these adjustments in light of some recent company bankruptcies, notably those involving sizable non-bank financial firms with major financial issues.

Companies Act 2013 UPSC

The Indian Companies Act 2013 is part of the Indian Polity subject of the UPSC Exam. This topic primarily covers the definition of a company and the provisions of the Companies Act. For learning more about the company act you can refer to the Indian Polity books for UPSC and previous year’s question papers for reference of the type of questions being asked in the Prelims and Mains exams.

Companies Act 2013 UPSC Question

Companies Act 2013 is a slightly different topic from others as it includes acts related to companies and types of companies. Therefore it is important to know what kind of questions are being asked in the IAS exam concerning the Indian Company Act 2013.

Q1. Section 2(36) of the Company Act is related to

1. Memorandum
2. Prospectus
3. Incorporation
4. Articles

Answer- Option B

Important Notes for UPSC
Average Age of UPSC Selected Candidates	Nehru Report 1928
Division of Himalayas	Indo-Greek
Indra Sawhney Case	Partition of Bengal