The Companies Act, 2013
The Companies Act 2013 & Applicability
The Companies Act of 2013 stands as a significant legislation enacted by the Parliament of India, governing the operations of various corporate entities within the country. Specifically applicable to Indian companies registered as private or limited companies, as well as entities such as Nidhi companies and finance companies, this comprehensive Act establishes a robust legal framework for their functioning.
Under this Act, your business assumes the status of a distinct legal entity, separate from its owners or shareholders. As a result, your company possesses the capacity to acquire loans, own and manage assets, and engage in various financial transactions. The primary objective of incorporating your company in accordance with the Companies Act is to ensure compliance with legal requirements and facilitate its proper governance.
The Companies Act 2013, has come into force with effect from 30th Aug 2013.it controls the Companies operating in India. The main purpose of this Act is, to regulate the companies for better governance, and better facilitation of business with the spirit of the law.
Since commodities typically pass through several stages before being sold to a consumer, from a manufacturer to a wholesaler to a retailer, GST is multi-stage. Each level involves a value addition, so GST is charged there as well.
GST is a destination-based tax, which implies that the state where the goods or services are consumed is responsible for collecting the tax. For
The Companies Act 2013 applies on
Business registered under this Act or previous Act (Companies Act 1956). Insurance companies and Banking companies
The Act also provides for the maintenance of financial records and the preparation and auditing of financial statements. It sets out the process for mergers, acquisitions, and amalgamations of companies, and provides for the dissolution of a company in certain circumstances, such as if the company is not carrying on any business or if it is unable to pay its debts.
Overall, the Companies Act, 2013 is applicable to all companies registered in India and regulates the incorporation, functioning, and dissolution of these companies. It plays a crucial role in ensuring that companies are governed and managed in a transparent and accountable manner.
The Company law is interchangeably used as a Business law, however, Company Law mainly focuses on the Companies Registered under the Companies Act, 2013. The Business Law covers other regulators also like Contract Act, Labor Act, Stock Exchange Etc.
Even though business terms use Company law as business law, but Business law has a wide definition then Company law.
The Key points under the Companies Act, 2013
Directors’ Role in Company Law
As the Company is a Separate person, it can execute its roles through Directors of the Company appointed by the Shareholders.
- Directors must act as per mentioned in the AOA of the company.
- Must act to promote the objects of the company for the benefit of Shareholders as a whole
- Must act to protect the interest of the Company, its employees, community as a whole
Importance of Meetings in Company Law
Board of Directors and Shareholders meetings are important aspect to make decisions and declare the Dividend, appointments, approval of the accounts and review the progress made by the Business etc.
Any business decision shall be made through the Board meetings which shall be held as per the specified quorum in the meeting with full support as per applicable Companies Act.
As per companies Act, the Companies Must have 4 Board meeting and 1 AGM every-year, however few exceptions given for small companies and OPC.
Powers of Directors as per Company Law
The Directors of the company derived the power from Shareholders to execute the day-today business affairs.The directors may be shareholders vice versa, all the acts done in good faith by directors are not liable for there personal property.
Below are the main powers of the Directors:
- Call for meeting to decide on the agenda’s
- Open a bank a/c
- Borrow money
- Investments on the business
- Approve of the financials and accounts
- Appointment of employees and agents
- Issue of other shares/ securities
- Approve bonus to staff
Importance of Shares in Company Law
Shares are a vital part of the business, it’s the capital required to run the business. The shareholders are the real owners of the business, they contribute the monies through subscription of the shares of the company.
The shares are easily transferable subject to rules of the Companies Act. The companies easily raise capital by way of issuing new shares to its existing members or through private placement route.
The shares are mainly classified as Ordinary shares, Preference shares, Redemble shares, and non-voting shares.
As per the Companies Act, 2013, the Key Managerial personnel is the one who has control over the affairs of the company, namely: directors of the Company, Company Secretary, Manager, Cfo, and any authorized by the Company. allthese persons are called Key managerial personnel of the company.
As per Act, the Key Managerial personnel are called officer in Default, that means, that means any issues or defaults happens in the company, then the so called Key Managerial personnel held responsible to answer those and resolve it.
Role of Chartered Accountant under Companies Act
The CA plays the vital role in Company, he gives advise on the proper management of books of accounts, Internal Audit, Statutory audits, certification of the records, advice on Internal controls etc.
He involves in the preparation of the tax planning, budgeting, year-end books closer etc.
Role of Company Secretary under Companies Act
The company secretary is a Key managerial person of the Company. he is the compliance person who advise the Board of directors regarding legal and financial risks of the company and ensures that the company complies with statutory regulations as applicable. The CS plays important role in deciding the business module, structure of the business, borrowings, management of the business, filings etc,New Companies Must do
The new private company must be aware of the below compliance on time.- within 30day – open a bank a/c, conduct Board meeting, the appointment of auditor etc,
- within in 60 days – the deposit of share money, allotment of shares
- within in 180 days – filing commencement of business certificate
- Maintenance of compliance books as per given above
- periodicity compliance – as per explained in the above chart
Among the many changes made by the 2013 Companies Act, one has to mention the introduction of the One Person Company. This was intended to encourage more companies to incorporate.
The other major change that the Act introduced is a requirement for a company to spend on corporate social responsibility. This is intended to increase accountability on the part of companies.
The Companies Act provides a legal framework for businesses to operate within, promoting transparency and accountability, and protecting against legal and financial consequences.
The role of a Company Secretary is essential in ensuring compliance with the Companies Act. They are responsible for advising the Board of Directors on their legal obligations and ensuring that the company complies with all relevant laws and regulations. This includes maintaining accurate and up-to-date records of the company’s activities, preparing and filing annual returns, and ensuring that the company is in compliance with all corporate governance requirements.
Company Secretary also acts as a point of contact between the company and regulatory bodies, such as the Registrar of Companies and the Securities and Exchange Board of India (SEBI), and ensures that the company is in compliance with all relevant laws and regulations, including the listing agreement and securities laws.
Additionally, company secretary also plays an important role in conducting Board Meetings, and maintaining the minutes of the meeting, and ensuring that the company’s internal policies are in compliance with the Companies Act, including the appointment of directors, share allotment, and other critical matters.
In summary, the role of a Company Secretary is critical in ensuring compliance with the Companies Act and other relevant laws and regulations. They provide valuable guidance to the Board of Directors and ensure that the company is operating in a legal and compliant manner.
A Company Secretary can effectively manage the Companies Act by staying informed, developing a compliance plan, and maintaining accurate records. Utilizing technology and seeking professional help when needed can also aid in compliance management.
Role of the Company Secretary, as a Practicing Company Secretary (PCS) is a professional who is registered with the Institute of Company Secretaries of India (ICSI) and holds a valid certificate of practice. A PCS is qualified to provide professional services in the field of company law and corporate governance to companies and other organizations.
The role of a PCS in relation to the Companies Act, 2013 is to assist companies in complying with the various provisions of the Act and other relevant laws and regulations. Some of the specific responsibilities of a PCS in relation to the Companies Act are:
Incorporation of a company:
A PCS can assist the company in the process of incorporating a company, including drafting the memorandum of association and articles of association and filing the necessary documents with the Ministry of Corporate Affairs.
Governance and management:
A PCS can advise the company on the duties and responsibilities of directors, the powers and duties of the board of directors, and the role of shareholders in the decision-making process of a company as per the Companies Act.
Maintenance of financial records:
A PCS can assist the company in maintaining proper financial records and in preparing and auditing financial statements in accordance with the prescribed accounting standards.
Mergers and acquisitions:
A PCS can advise the company on the process for mergers, acquisitions, and amalgamations of companies as per the Companies Act.
Dissolution of a company:
A PCS can assist the company in the process of dissolving a company as per the provisions of the Companies Act.
In addition to these responsibilities, a PCS may also be involved in other tasks such as drafting legal documents, representing the company in legal proceedings, and advising the company on compliance with other laws and regulations.
Overall, a PCS plays a crucial role in assisting companies in complying with the provisions of the Companies Act and other relevant laws and regulations, and in providing professional advice on legal and regulatory matters.
Not looking for Private Limited Company registration? Click below to find other forms of entity registration
- Setting up of Proprietary Concern in Bangalore
- One Person Company or OPC Registration in Bangalore
- Partnership Firms Registration in Bangalore
- Limited Liability Partnerships Registration or LLP Registration in Bangalore
- Subsidiary Company Registration in Bangalore
- Setup Branch / Liaison Office in India
Other registration required after Company registration depending on business :
- GST Registration
- Registration under Karnataka Shops and Establishment Act
- Profession Tax Registration
- MSME | Udyog Aadhaar Registration
- Employee Provident Fund Registration (PF Registration)
- Employee State Insurance Registration (ESI Registration)
- STPI Registration or Non-STPI Registration
- Import Export Code (IEC)
- Trade License from BBMP
