Gone are the days when lone proprietorship and partnership were the most desirable form of the business wherein the persons use to capitalize and earn revenues out of the business for themselves. Though these forms of businesses still exist but are not the most common form of business today is now the taste of the consumers has changed, technology has progressive manifold, etc., which require funds, huge funds and because of engrossment of few persons in sole proprietorship or partnership this need of huge investment, production at huge scale, etc, was not possible. So to accomplish these needs company form of business came into being, as also with the time demand budged from traditional goods to the capital goods and technological products, which require enormous amounts of labour and capital, supply of which was not possible for a minority of persons.
The concept of company law is not new. In Fact, it came into actuality in 4 B.C. This concept transformed with time. The British Parliament brought this Act to India. Indians were not ready to accept this because they were of the view that this will affect their economy in a wicked manner but still it was recognized because people were governed by English Rule.
The word 'Company' is a consolidation of the Latin word 'Com' meaning "with or together" and 'Panis' meaning "bread". originally, it referred to a group of persons who took their meals together. A company is nothing but a cluster of persons who have come together or who have contributed money for some common person and who have unified themselves into a separate legal entity in the form of a company for that persistence. However, the Supreme Court of India has held in the case of State Trading Corporation of India v/s CTO that a company cannot have the eminence of a citizen under The Indian Constitution.
For nearly six decades now, India has been governed by the now archaic Companies Act of 1956. Despite the recurring amendments over many years since its origination, many felt a need to expansively bring about a new modern act and consolidate India’s Company law, so as to bring it in line with the new ideas, global trends and universal company law practice. Hence, the question before us, after the interminable debates and passage of the new companies act by the parliament, is whether there has been a change in the way the companies have worked after the portrayal or has the new act, overcomplicated the situation and made it worse than before. Though it is not debated that the proclamation of the new law is a step towards globalization and it is an efficacious attempt to meet the changing environment, its fallacies are under scrutiny as there have been specific criticism of it, in so far as it creates difficulty and confusion instead of simplification of the earlier act.
With the aim of progressively changing the landscape of corporate law in India, the central government ratified the Companies Act 2013, one of the few pieces of legislation that seeks to substitute a former act completely and provide for a prospect to make corporate regulations more contemporary. The new enactment has tangled advanced practices, with magnetic characteristics, for instance, those on setting up fundamentals, hovering capital from open, inviting guidelines, leveraging e-administration activities, and corporate social obligations upon companies. It also accommodates boosted corporate legislation, advanced transparency, additionally prolonged responsibility of organization administrations and assessors. In fact, it is envisioned to adjust the stakeholders’ interests, in relation to promoters, shareholders and the public at large. Fascinatingly, there has been an upsurge in the number of Companies from roughly 30,000 in the year 1956 to 11,00,000 in the year 2013. However, what the new act has undoubtedly tried to achieve are the headways and ideas which might extricate regulations and bring more amazing clarity and limpidity in overseeing organizations.
The important changes in the provisions connected to governance, e-management, acquiescence and implementation, disclosure norms, auditors and mergers and acquisitions, have led it to be designated as a case of tremendously forward-thinking and a piece of legislation focused on restructuring the issues and challenges in the corporate governance. Law is not the result of affluence that we need to take as given. In the event that whatsoever we require another law, we require it for enhancing the working of organizations, not pounding them with regulations which trade-off on fundamental business prospects and mistakes in the most basic of draft sections.
These irregularities create, in today’s world an atmosphere where land peripheries have gotten exorbitant global moguls might basically quit entering India, and a few Indian organizations may consider transferring themselves somewhere else. Corporate regulation must be genuine; it can’t serve its own specific needs, or the needs of some insecure attitude stirred by a “no mistake henceforth” character. It is still time to correct a few issues by rulemaking and some by modifying the law, yet it might be truly a classic oversight assuming that we permit the law and the standards to be realized the way they at this moment are having replaced the old act or clothing the old act as new. It is seen that the companies act, indeed is an influential piece of legislation is a new commencement for the corporate world, but its influence may not be met with that effect as anticipated by its drafters because of some ill-fated incongruities.
The New Act seeks to boost the enforcement machinery by evolving ‘vigil mechanisms’ within the corporations. However, certain explicit grey areas remain a challenge to execution. It is opined that the New Act has substantially escorted in a wanted change in Company Law. However, this change can’t be said to be in full measure. Further, new areas of enhancement shall arise once the act in its wholeness is executed in the Indian context.
For any Business / Company Registration & Winding Up related matter, please Post Your Requirement anonymously and get free proposals OR find the Best Business / Company Registration & Winding Up Lawyers and book a free appointment directly.