This composition has been written by Pratham Singla, a 1st time BBA.LLB student from Manipal University Jaipur.
INTRODUCTION
Commercial Law also known as Company Law, Business Law, and Enterprise Law is the body of law governing the rights, relations, and conducts of persons, companies, associations, and businesses.
Company law is a branch of marketable law that governs the conformation, operation, operation, and dissolution of companies. A company is an artificial legal reality created by law, which has a separate legal personality from its members or shareholders.
The purpose of company law is to give a legal framework for the effective and orderly conduct of business and to cover the interests of investors, creditors, workers, and other stakeholders.
HISTORY
The 2013 Companies Act supplanted the Companies Act of 1956, under whose vittles Indian pots preliminarily operated. In addition to the Companies Act, pots are subject to other regulations administered by the Ministry of Corporate Affairs( MCA), which has two branches.
1.The Regional Director( RD) and
2. The Registrar of Companies( ROC).
At present, India has seven RDs and 22 ROCs. These two branches are also called in-house sources of adjudication.
CURRENT ACT UNDER WHICH COMPANIES ARE GOVERNED?
Presently, Companies are governed by the Companies Act 2013 under which all types of companies are regulated by the same act.
COMPANIES ACT 2013
The Companies Act 2013 regulates the conformation and functioning of pots or companies in India. The first Companies Act after independence was passed in 1956, which governed business realities in the country.
The 1956 Act was grounded 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 came the first country to make commercial social responsibility( CSR) spending obligatory by law. Presently, the Ministry of Corporate Affairs is administering the following Central government Acts.
- Companies Act 2013
- Companies Act 1956( some vittles of this Act still apply)
- Competition Act 2002
- Chartered Accountant Act 1949
- Insolvency and Bankruptcy code
The Companies Act 2013 has replaced the 1956 Act. Conformation OF A COMPANY The Conformation of a company involves the creation of a legal reality that has a separate legal personality from its members or shareholders. A company can be formed either by enrollment or by objectification. In the case of enrollment, the company is created by registering with the applicable government agency, similar to the Registrar of Companies. In the case of objectification, the company is created by a process of chartering, which involves carrying a duty from the government.
THE MEMORANDUM OF ASSOCIATION
The memorandum of association is a document that sets out the constitution of the company, including its name, registered office, objects, and capital. The objects of the company are the purposes for which the company is formed, and they must be stated in the memorandum. The capital of the company is the quantum of plutocrats that the company is authorized to raise by issuing shares to its members or shareholders.
THE ARTICLES OF ASSOCIATION
The Articles of association are a document that sets out the rules for the internal operation of the company, including the powers and duties of the directors, the rights of the shareholders, and the procedures for holding meetings and making opinions. The articles of association are a contract between the company and its members, and they’re binding on both the company and its members.
SIGNIFICANCE OF COMPANY LAW
Company law plays a vital part in regulating business practices in a country. Then are some points that prove why Company law is so applicable * Compensation Issues; It’s essential to handle colorful compensation issues in an association. It can help companies in settling issues related to compensation and payment operation. It’s the responsibility of the attorney to insure that his or her customer doesn’t violate compensation and benefits laws at any cost. *
Safeguarding the Rights of Shareholders – It plays a vital part when it comes to securing the rights of a company’s shareholders. An educated business law attorney can successfully handle similar issues along with conflicts related to nonage shareholders, indigenous documents, resolution by arbitration, and more. *
Business conformation – It plays the part of a foundation gravestone for any business concern. Establishing a business includes a lot of legal processes, leasing, and permits. A business law attorney is well-clued with all the applicable regulations and can help the concern establish its operations successfully.
Working Internal controversies– It helps in working Internal controversies among the Departments, Management, workers, etc.
TYPES OF COMPANIES
There are several types of companies, including.
- Sole procurement: A business possessed and operated by a single existent.
- Partnership: A business possessed and operated by two or further individuals who partake in gains and losses.
- Limited liability company( LLC): A mongrel business reality that combines aspects of a pot and cooperation, furnishing limited liability protection for its possessors while allowing for inflexibility in operation.
- Corporation: A legal reality that’s separate and distinct from its possessors, offering limited liability protection to its shareholder.
- Cooperative: A business possessed and operated by its members, who partake in gains and decision-making liabilities.
- Ballot: A business model in which a franchisor grants a franchisee the right to use its brand, products, and services in exchange for freight and royalties.
- Nonprofit association: A pot or association that operates for the benefit of the public and isn’t intended to make a profit.
- Social enterprise: A business that aims to achieve a social or environmental ideal while generating profit.
WHAT IF THERE’S NO COMPANY LAW?
Without company law, businesses would lack a clear and predictable legal framework for their operations. This would create several problems and challenges, including:
- Difficulty in forming a company: Without company law, there would be no legal requirements or procedures for forming a company, which would make it difficult for businesses to establish themselves as legal entities.
- Uncertainty around ownership and control: In the absence of company law, it would be difficult to determine who owns and controls a business, and how decisions are made.
- Lack of protection for investors: Without company law, investors would have little or no legal protection for their investments in businesses, which could discourage investment and stifle economic growth.
- Challenges in resolving disputes: Without company law, there would be no clear procedures for resolving disputes between business owners, investors, and other stakeholders, which could lead to protracted legal battles and create uncertainty for businesses.
- Difficulty in accessing capital: Without a clear legal framework for raising capital, businesses may struggle to access the funding they need to grow and expand.
Overall, company law plays a critical role in creating a stable and predictable legal environment for businesses to operate in and helps to promote economic growth by providing a framework for investment, capital formation, and dispute resolution
CONCLUSION
IN ABSTRACT, THERE’S NO SUCH SURVIVAL IN AN ECONOMY WITHOUT LAW’S. THEREFORE LAWS ARE ESSENTIAL IN EVERY FIELD WHETHER IT IS LITIGATION, JUDICIARY, OR EVEN THE CORPORATE WORLD.
FOR THE CORPORATE SECTOR, GOVERNMENT OF INDIA HAS PASSED A SEPARATE LAW i.e COMPANIES ACT 2013, UNDER WHICH ALL THE COMPANIES LISTED IN INDIA ARE GOVERNED.
FROM SETTING UP TO WINDING UP THE COMPANY, THE COMPANIES ARE UNDER THE ENFORCEMENT OF LAW THIS IS WHY WE NEED A SEPARATE LAW FOR THE SAME.
REFERENCE
2. Types of Companies under the Indian Company Law – The Company Ninja
3. What would happen when a company does not follow ethics? – Quora
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