Companies Act , 1956

The first Companies Act after independence was passed in 1956, which governed business entities in the country. The 1956 Act was based on the recommendations of the Bhabha Committee. This Act was amended multiple times, and in 2013, major changes were introduced. By Section 135 of the 2013 Act, India became the first country to make corporate social responsibility (CSR) spending mandatory by law.

The main objectives of Company law are:

To protect the interest of shareholders.
To safeguard the interest of creditors.
To help the development of companies in India on healthy lines.
To help the attainment of ultimate ends of the social and economic policy of the government.
To equip the government with necessary powers to intervene directly into affairs of a company in the public interest.

Special features of the Companies Act are:

It provides more stringent provisions relating to the company promoters and company management.
It provides elaborate provisions relating to the form and contents of a prospectus, maintenance of accounts by companies, reduction of share capital, etc.
This Act recognizes the institution of ‘Government Companies’ (in which the government holds at least 51% share capital) and makes special provisions for them.
The Act also provides measures calculated to disintegrate the concentration of economic power and wealth which affect the public interest adversely.
It gives extensive powers to the Central Government and the Company Law Board to intervene directly in affairs of a company in the public interest, in recognition of the fact that a public company should be regarded as a national asset and not as something of exclusive concern to the shareholders or the directors.

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