Application of Companies Act in India

May 2, 2023

Ms. TEENA KAPOOR a 3^rd year law student from Gitarattan International Business School college

INTRODUCTION

Though Section 1( 4) of the Companies Act is concerned with the conditions relating to the operation of Company law to colorful sectors, some aspects relating to fiscal statements, loans and investments, deposit acceptance, and so on don’t apply to certain sectors because they’re governed by the principle legislation that governs them.

The Companies Act, 2013 countries in Section 1( 4) that the vittles of the Act relate to-

pots formed under such an Act or any antedating company law;
Insurance companies, except to the extent that the below vittles conflict with the Insurance Act, 1938 or the Insurance Regulatory and Development Authority Act, 1999;
Banking enterprises, except to the extent that the regulations conflict with the Banking Regulation Act, 1949;
Companies involved in the product or generation of power, except to the extent that the anteceding vittles conflict with the Electricity Act, 2003;
Any other pot controlled by any special Act in effect at the time, except to the extent that the said vittles conflict with certain special Act’s vittles; and
similar body commercial, formed under any Act in effect at the time, as the Central Government may decide in this regard by regulation, subject to any diversions, emendations, or acclimations stated in the evidence. Though Section 1( 4) of the Companies Act is concerned with the conditions relating to the operation of Company law to colorful sectors, some aspects relating to fiscal statements, loans and investments, deposit acceptance, and so on don’t apply to certain sectors because they’re governed by the principle legislation that governs them.

The Companies Act, 2013 countries in Section 1( 4) that the vittles of the Act relate to-

pots formed under such an Act or any antedating company law;

Insurance companies, except to the extent that the below vittles conflict with the Insurance Act, 1938 or the Insurance Regulatory and Development Authority Act, 1999;

Banking enterprises, except to the extent that the regulations conflict with the Banking Regulation Act, 1949;

Companies involved in the product or generation of power, except to the extent that the anteceding vittles conflict with the Electricity Act, 2003;

Any other pot controlled by any special Act in effect at the time, except to the extent that the said vittles conflict with certain special Act’s vittles; and

similar body commercial, formed under any Act in effect at the time, as the Central Government may decide in this regard by regulation, subject to any diversions, emendations, or acclimations stated in the evidence.

MEANING

New generalities Introduce Under the Companies Act, 2013 Companies Act, 2013 has introduced several new generalities. Some of the generalities are bandied then in detail. Companies Nidhi company

Nidhi Company means a company which has been incorporated as a Nidhi with the object of cultivating the habit of providence and savings amongst its members, entering deposits from, and advancing to, its members only, for their collective benefit, and which complies with similar rules as are specified by the Central Government for regulation of similar class of companies.( section 406)

Private company Companies Act, 2013 introduces a change in the description for a private company,inter-alia, the new demand increases the limit of the number of members from 50 to 200.( section 2( 68). Small company A small company has been defined as a company, other than a public company

public company paid- up share capital of which doesn’t exceed fifty lakh rupees or similar advanced quantum as may be specified which shall not be further than ten crore rupees; and development of which as per profit and loss account for the incontinently antedating fiscal time doesn’t exceed two crore rupees or similar advanced quantum as may be specified which shall not be further than one hundred crore rupees

Conclusion

The current Companies Act, 2013 aims to strengthen the regulatory apparatus by establishing ‘vigil systems’ within businesses. Certain unique grey areas, however, continue to pose a challenge to implementation. The Act, it is believed, has brought in significant and desirable changes in company law. This transition, however, cannot be said to be complete. Furthermore, once the act is fully applied in the Indian sense, new areas for change will arise.

Foreign Direct Investment (FDI) plays an increasingly important role in the advancement of technology, expertise, and managerial capabilities. The contribution of FDI to economic growth is a significant influence. FDI has a significant impact on a country’s trade balance, raising labour standards and skills, transferring technology, and generating innovative ideas. Additional investments made with domestic resources help to create much-needed job opportunities. India needs Foreign Direct Investment (FDI) as a strategic component of investment for economic growth and development through job creation, expansion of existing manufacturing industries

Case laws

The most significant Takeover Regulations and Companies Act, 1956 (“Companies Act”) decisions from 2010 are summarised below.

Subhkam Ventures v. Securities and Exchange Board of India (SEBI)

In this case of takeover regulations, the Subhkam Ventures case altered the legal regime for rights related to public company investments. In that case, private equity investor Subhkam Ventures appealed a SEBI order to make an open offer because Subhkam’s purchase of 15% of MSK Projects, Ltd. gave it a veto right in MSK Projects the need for an open offer under Regulation 10 of the Takeover Regulations. Subhkam argued that the company was merely a financial investor and that acquiring a larger stake would not result in a change in control under Regulation 12 of the Takeover Regulations. SEBI dismissed Subhkam’s contention and asked the company to amend its offer document to comply with the Takeover Regulations.

Subhkam took his case to the Securities Appellate Tribunal (“SAT”), which looked at the difference between ‘positive control’ and ‘negative control’, concluding that the Takeover Regulations only protected “positive control.” The SAT determined that the right to nominate a nominee director, standstill clauses and protective rights granted to the company were not equivalent to owning or exercising power, after considering the substantive rights available to the company. The case has been appealed to the Supreme Court of India by SEBI. The SEBI Takeover Regulations would be affected by the Supreme Court’s ruling.

W. Maharashtra Dev. Corp. v. Bajaj Auto Ltd.

Western Maharashtra Development Corporation (WMDC) is a public-private partnership based in Mumbai, Maharashtra. “The Bombay High Court held in the WMDC” case that “a limitation on the transferability of shares in a private company must be contrasted with cases involving public corporations, where the law provides for free transferability.” It was also stated that “In the case of shares of a public company, free transferability of shares is the norm,” and that the rules under Section 111A of the Companies Act are based on the principles that the public must have the freedom to buy and shareholders must have the freedom to transfer shares of a public company.

In a case involving the constitutionality of presumption clauses and their incorporation into a public company’s charter documents, the Bombay High Court ruled that any provision in the memorandum, papers, agreement, or resolution that seeks to limit a shareholder’s right to transfer shares is invalid.

REFERECES

Aishwarya Says:

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems to secondinnings.hr@gmail.com

Join our Whatsapp Group for latest Job Opening

May 2, 2023