Fundamentals of The Company Law at a Glance

All Indian private companies need to follow some legal rules and regulations about copyrights, trade secrets patents, trademark registration, company registration etc. The Companies Act, 2013 replaced the Companies Act, 1956. Only 98 sections were notified with effect from 12th September, 2013; most of the remaining provisions came into force from 1st April, 2014. Some of the primary guidelines of the CA2013 are as under:

• The CA2013 provides new form of private company, i.e., one person company is introduced that may have only one director and one shareholder. The CA1956 requires minimum two shareholders and two directors to form a private company. But as per CA2013 one director and one shareholder can form a private company.
• The CA 2013 increased the maximum number of shareholders in a private company from 50 to 200.
• The CA2013 focuses on appointing of at least one woman Director on the Board room.
• The CA2013 implements certain class of Companies to invest a certain amount of money every year for improving the Under-privileged & backward sections of Society.
• The CA2013 focuses on a fast track and simplified procedure for mergers and amalgamations of certain class of companies. The CA2013 also permits cross border mergers.
• Each and every company shall have at least one director who has stayed in India for a total period of not less than 182 days during the financial year (the requirement was changed from the previous calendar year to the financial year by the Companies (Amendment) Act, 2017).
• The CA2013 requires at least seven days notice to call a board meeting. The notice may be sent by electronic means to every director at his/her address registered with the company.
• The CA2013 does not restrict an Indian company from indemnifying its directors and officers like the CA1956.
• The CA2013 provides for rotation of auditors and audit firms in case of publicly traded companies.
• The CA2013 proposed E-Governance for various company processes like maintenance and inspection of documents in electronic form, option of keeping of books of accounts in electronic form, financial statements to be placed on company’s website etc.
• Every company’s financial year will be the period ending on 31 March every year.
• The rehabilitation and winding-up provisions originally enacted in the CA2013 were never fully brought into force; the entire insolvency, rescue and liquidation process for companies in financial distress is now governed by the time-bound framework of the Insolvency and Bankruptcy Code, 2016.
• Every company should have at least one director who has stayed in India for a total period of not less than 182 (one hundred and eighty two) days during the financial year.

Apart from that, few more implementation and amendments have been made by the Indian Government like entrenchment in articles of association, independent directors, duties of director defined, auditors performing non-audit services and supremacy of shareholders.