Companies And Business Law In India

Company and business law in India came into existence in 1956 after the recommendation of the Bhabha Committee established in 1950. The idea behind this was to leave the old corporate laws that existed during the times of the British Government and evoke new corporate laws in independent India. Therefore, in 1956, when India came up with its own corporate law, it repulsed the companies and business laws of 1913.

Seeing the need for new laws and regulations because of the constant growth of business in India, Companies and business law in India (1956) underwent various remarkable changes. These changes were brought through several amendments. Ultimately, in 2013, a new company law came into force. This article will discuss companies and business law in India in great detail.

Companies Act

Given are the four acts that together constitute companies and business law in India.

1. Companies Act, 2013

2. Societies Registration Act, 1860

3. The Indian Partnership Act, 1932

4. The Companies Amendment Act, 2006

5. The Limited Liability Partnership Act, 2008

The Companies Act of India regulates a company’s formation, working, dissolution, and responsibilities. The latest companies law (2013) replaced the 1956 company act after getting the president’s approval in 2013. It contains 484 sections, 7 schedules, and 29 chapters.

Notably, the Companies Act of 2013 has introduced a new term: One Person Company. Besides being one of the subcategories of private limited companies, it requires only one shareholder and one director.

Here, it is essential to note that traditional companies and business law in India require at least two shareholders and two directors to run a company. The companies act 2013 allows a single person to run a whole company and bear all the OPC profits and losses.

However, it has also introduced a new concept of nominees. Owners of the one-person company have to give a name as a nominee, who, after the death of the owner or his/her incapacity to run a company, would come forward and take over the OPC. Additionally, the company’s owner can change the nominee at any time.

Amendments have brought many changes to companies and business law of India (2013).

Companies 1st Amendment Act, 2015

This amendment has removed the paid-up capital amounts. In order to register itself as a private or public company, companies must have a paid-up capital amount of 1 lakh rupees in the case of private companies and 5 lakhs rupees in the case of public companies. The 2015 amendment has removed this limit to relieve the route to business.

2020 Amendment bill

Finance Minister Nirmala Sitaraman presented the latest bill in the Lok Sabha in the year 2020. It has made several significant changes to the 2013 companies law, including decriminalizing the trifling offense. Seeing the need, the 2020 amendment bill eliminated imprisonment as a punishment for 46 crimes mentioned in the act.

Advantages of a Company Registered Under Companies Law, 2013

Companies Law, 2013 provides a number of benefits and advantages once a company gets registered. Let us know what those advantages are.

Independent Identity

After the registration of a company under companies and business law in India, a company receives an identity of its own. It means the company would get independent recognition over its shareholders and owner under companies and business law in India. Under the companies and business law of India, the separate identity of a company allows it to survive even after the owner’s death or insolvency. People may come and go, but the company will always be there, holding its corporate identity.

Mobile Shares

People are free to buy shares of whichever company they want. After buying shares, they become shareholders of that company. Just owning the shares of companies does not seem to be a profitable business. Therefore, the idea of transferable share was introduced in the 1856 Companies and Business Law of India under section 82. According to this section, shareholders are free to sell their shares whenever they want without disturbing the company’s capital structure. The main idea behind introducing the concept of transferable shares is to allow the joint-holders of the company to transfer their share to someone else in return for money.

Company Asset

As mentioned above, companies and business laws of India give a separate and independent identity to a company. As a result of which, no member of the company can claim companies asset to be his own after registering the company. However, if an influential shareholder issues the company asset in his name, he would not be liable for any compensation in case the asset gets destroyed by any means.


Instead of having a separate identity, it cannot run by itself. Therefore, it attracts professional managers for its management. The members of the management team get the identity of the executive.


No matter how helpful something is, there are always some drawbacks, like the companies and business laws of India. Let us see some flaws of it.

Separate Identity

Even though the company has acquired a separate identity of a legal person under the companies and business law in India, it is not a citizen. Having a separate entity from its shareholders does not make it a citizen. It does not enjoy the rights an ordinary citizen enjoys in India.


In India, the formation of a company is an expensive process. Notably, every company needs to follow a set of rules properly.

Types of Companies According to Companies and Business Law of India, 2013

Companies and business law of India categorize companies into six different parts. Let us see what those are.

1. Foreign Company

Companies that are registered outside of India fall into this category.

2. Government Company

Companies whose more than 50% of shares are controlled by the government fall under this category.

3. Private Company

According to companies and business laws of India, companies that prohibit issuing any public notification for subscribing to its shares and debentures, have a capital of a minimum of 1 lakh rupees and have specific rights over their members fall under this category.

4. Unlimited Company

According to the companies and business law, unlimited companies are those whose members have unlimited liability and are equally responsible for the company’s debt in case of any type of insolvency.

5. Guarantee Company

Under this kind of company, members have to contribute a fixed sum of their money towards the development of the company’s assets.

How to Register for a Company

The company’s registration process is entirely online. To do so, you have to visit the MCA portal. Ideally, to register a company in India, you have to go through four stages.

Company and Business Law in India

1. Obtain a Digital Signature – As the registration is online, you will have to obtain a digital signature in order to sign up on various forms on the MCA portal. You can get a digital signature by visiting the certified authorities.

2. Get a Director Identification Number – Whoever wants to be the director of the company would have to get a DIN (Director Identification Number). To obtain a DIN, you must file SPICe, the company registration form. A maximum of three DINs can be obtained through it.

3. Registration on MCA Portal – First, the company’s director has to register on the MCA portal. After that, to register the company, fill SPICe form and submit it on the MCA portal.

4. Certificate – After the submission of the SPICe form, the registrar will go through the application. If everything goes well, certification of incorporation will be issued under the company’s name.


A firm, when registered under the companies or business law, 2013 becomes a company. According to the companies and business law in India, a company is a legal person having an identity different from its members. There are rules and regulations for registering and running a company that must be followed adequately.

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