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Understanding the Companies Act 2013

The Companies Act 2013 is an important law in India. It governs how companies operate, form, and end. This act replaced the previous Companies Act 1956. It has more rules and they are stricter.

The Origin of the Act

The President of India ratified the Companies Act 2013 on 29th August 2013. It replaced the older Companies Act 1956. The Act took effect in phases. The first 98 sections became active on 12th September 2013. 184 sections enforced from 1st April 2014.

Purpose of the Act

The enactment of this Act aimed to join and amend the laws relating to companies in India. It sought to increase the accountability of corporate leaders. This was especially true in the IT sector. It aimed to improve the country's defences. It targeted organized cybercrime.

Establishing Regulatory Bodies

The Act led to the formation of the National Company Law Tribunal (NCLT) on 1st June 2016. The committee constituted it based on the recommendations of Justice Eradi. Further, the National Financial Reporting Authority (NFRA) was set up in March 2018. It is a body to investigate misconduct by Chartered Accountants or CA firms.

Significant Features of the Act

Corporate Social Responsibility (CSR)

Before the Act, CSR requirements were only applicable to public sector companies. But, Section 135 of the Companies Act 2013 made large companies give to CSR. This makes it the only mandatory CSR law in the world. Big companies must spend at least 2% of their average profits from the last three years on CSR. They must do this if they exceed set net worth, turnover, or net profit thresholds.

Company Secretaries

Section 203 of the Companies Act 2013 deals with naming a company secretary. It defines them as key company managers. It became mandatory for every Indian-listed company. It also applies to every other public company. These companies must have a paid-up share capital of ten crore rupees or more. They must appoint a whole-time company secretary.

Types of Companies

The Act also acknowledges different types of companies. These include private limited companies and public limited companies. Also, one-person companies (OPCs), Section 8 companies, and producer companies. OPCs are companies with one member. Only Indian citizens can be shareholders in an OPC. Section 8 companies are non-profit organizations. Farmers form producer companies for farming, and only farmers can be members.


The Companies Act 2013 has significantly revamped the corporate governance landscape in India. It has introduced many new concepts like CSR and OPCs. It has also increased the accountability and duties of the corporate sector.

Additional Resources

For further information on the Companies Act 2013, consider visiting the following resources:

1. Notified sections of Companies Act, 2013

2. Act No. 1 of 1956

3. Text of the Companies Act, 1956

4. General Circular No. 08/2015 by K.M.S. Narayanan, Ministry Of Corporate Affairs

This article aims to provide a comprehensive understanding of the Companies Act 2013. For a thorough study, readers should refer to the original Act and related changes.


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