The Companies Act 2013: An Overview with Examples and Questions (2024)

FAQs

What is the Companies Act 2013 in short? ›

The Companies Act, 2013 governs the company's functioning. It enumerates the rights and duties of a company and its members. It came into force on April 1, 2013, and applies to all companies incorporated under this Act or those whose incorporation has been renewed after April 1, 2013.

For example: Company “A” controls 20% or more but upto 50% of total voting power, or control of or participation in business decisions under an agreement of Company “B” then the Company “B” will be called Associate Company of Company “A” (other Company).

(g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed.

It imposes a duty to 'promote the success of the company for the benefit of its members as a whole' having regard to various factors including the longer term, and the interests of employees, suppliers, consumers and the environment.

The Companies Act, 2013 regulates appointment, qualification, remuneration, and retirement of directors of the Company. Aspects such as how to conduct Board Meetings and Shareholders Meetings. The preparation and presentation of annual accounts and the regular maintenance of books of accounts.

Further, significant influence is defined in the Act as: having control of at least 20% of the total share capital of the company. having control of the business decisions of the entity directly or indirectly through any agreement.

Its good so far i hope it gets better. In the Companies Act 2013, an affiliate is defined as an entity that directly or indirectly controls, is controlled by, or is under common control with another entity. This includes holding a significant percentage of the voting power or having the ability to influence decisions.

Practical Example

Berkshire Hathaway, a conglomerate holding company, holds significant minority holdings in multiple organizations. It owns 17.6% of American Express and 26.7% of the Kraft Heinz Company, among many others. Legally, this means that the companies are associate companies of Berkshire Hathaway.

A Ramaiya, Guide to the Companies Act is a section-based commentary of the Companies Act, 2013. Widely recognised as the most thorough and comprehensive reference work on corporate law, this book has been relied on and cited in various judgments of the Supreme Court as well as High Courts.

What are the new concepts introduced in Companies Act, 2013? ›

The new law is aimed at easing the process of doing business in India and improving corporate governance by making companies more accountable. The 2013 Act also introduces new concepts such as one – Person Company, small company, dormant company and corporate social responsibility (CSR) etc.

As per Companies Act of 1956, one person cannot form a company and as per Companies Act of 2013, one person can form a one person company. You can read about the Companies Act 2013 – Indian Companies Act Definition, Companies Act 1956 in the given link.

“relative”, with reference to any person, means any one who is related to another, if— (i) they are members of a Hindu Undivided Family; (ii) they are husband and wife; or. (iii) one person is related to the other in such manner as may be prescribed.