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HISTORICAL EVOLUTION OF COMPANY LAW IN INDIA

Introduction

The history of our country is widely mentioned by numerous scholars, historians, etc. India was a colony for nearly two hundred years that left a large impact on all aspects, specifically trade and business. company law that's prevailing these days all across the country within the organized form i.e, the Companies Act,2013[1] finds its roots back within the time of British rule.


Early history

Earlier the trades were in the form of Guilds once the Britishers invaded India they established a monopoly system through the East Indies Company. Until 1850 there was no legislation to regulate the system, and a lot of associated orthodox manners, which led to varied kingdoms amassing wealth and prosperity thanks to measures taken by their kings to confirm sensible governance.

As early because the third century B.C.E., Chanakya, the wazir for the dominion of Pataliputra, published the four-fold duties of a king – Raksha, plans, vriddhi, and yogakshema, that mostly correspond to the protection of the wealth of shareholders in an exceeding company (Raksha), maintaining the wealth of a corporation through profitable ventures (palana), correct utilization of the assets to spice up wealth (vriddhi), and safeguarding interests of the shareholders (yogakshema). Thus, the system existed, in an associated orthodox manner, that led to varied kingdoms amassing wealth and prosperity thanks to measures taken by their kings to confirm sensible governance. Kautilya’s Arthashastra and Neetishastra, 2 golden books on economic administration and political ethics, give associate insight into the first management practices of the businesses in India.[2]


Corporate law throughout the colonial amount (1850-1947)

In 1850, the primary legislation of company law was sculpturally supported by the businesses Act,1844 in European countries therefore India’s registration of the Joint stock firms Act, 1850 was written. But, this legislation had 2 major defects i.e, it had not been clothed according to the conditions of change in India and it failed to mandate the registration of firms. The legislation of 1850 failed to have the privilege of the financial obligation that was later brought in by the legislation of 1860.

In this Era, it had been the settled version therefore anytime the companies act in Britain went through a modification Britishers parallelly transplanted the Indian company law, therefore, several historians argue that during this section of company development the Indian legislation was created to serve the British interest instead of to modernize the Indian law.

The Companies Act of 1956 at first separated itself into thirteen components, consisting of 658 sections, and fifteen schedules. It remained in effect for a protracted time and was amended in many instances as a result of growth within the company sector once independence saw an abrupt boom. The Act went on to comprise the provisions of shelf prospectus, audit committee, communicating ballot, etc., in conjunction with establishing the National Company Law judicature (NCLT) and therefore the National Company Law proceedings judicature (NCLAT). In 2006, provisions of DIN and online filing of documents came into the application.[3]


Development after decolonization (1947-1990)

As the agency system emerged that resulted in the scattered company system that later led to outlaw transactions the Companies Act,1956 emerged primarily to manage the agency problems whereby a socialistic approach was adopted and it had been determined that allowed each activity of trade to be licensed by the govt.

However, it led to license rules and thanks to lack of infrastructure and resources it became laborious for tiny businesses to control. License rule later led to the bureaucratic procedure that enhanced and got a hike in corruption therefore the Babha committee was appointed to convey a report and suggestions. However, the main downside during this era was that no measures to handle and manage the agency system were taken and therefore the families began to acquire serious belongings within the company, breaking the socialistic approach.


Paradigm shift vis-a-vis booming scandal

A major depression arrived in 1990 and therefore the country took a hefty loan from the world bank that forced North American countries to adopt the easing policy i.e, to permit foreign investments, and therefore the country even had to pledge its gold reserves.

Thus there have been simplifications done to the simple protein 1990. The economic easing was supposed to spice up commercial activity and foreign investment however successively, it led to varied scams eg. In 1992, SEBI Act was enacted to manage the exchange.


Companies act, 2013 and its aftermath

This legislation is the result of virtually two decades of dialogue and discussions. In 2004, an associate knowledgeable committee headed by J.J.Irani was established and within the year 2008, the bill was introduced. However, sadly, the parliament dissolved once the bill was still unsanctioned in the meantime resulting in the Satyam scam which is one of the foremost talks concerning economic scandals within the company world.

In 2009 a desire was felt to handle the challenges faced by the company world and its regulation therefore the bill was reintroduced because the company bill, 2009 was noticed by the commission headed by Yashwant Singh. World Health Organization opined that there square measure numerous changes to the bill needs to bear so that they determined to reframe the bill and introduced it in 2011 that was given assent on thirty-first august 2013 that was implemented in phases and it came to be referred to as the businesses act, 2013.

This act has 470 sections and VII schedules and has undergone modification fourfold within the years 2015,2017,2019,2020 severally these days the company world is organized and simplified within the interest of the businesses.


Conclusion

The new regime caused by the Companies Act of 2013 pushes Indian companies to fulfill international standards. It aims to produce an associate enhanced level of transparency and higher protection for investors. Recent forms within the laws of Foreign Direct Investment and Finance laws, further because of the pro-arbitration stance taken by the Indian judiciary in matters associated with company disputes, square measure the steps that may take the Indian company world to new heights. However, the government still has to do a lot in terms of formulating effective and easy rules and regulations where discretion is with the Ministry of Corporate Affairs.


-- [1] Companies Act, 2013 [2] “Zara Suhail Ahmed”, History of Company Law in India (April 11, 2022),https://lawcorner.in [3] “Zara Suhail Ahmed”, History of Company Law in India (April 11, 2022),https://lawcorner.in



This article is written by Khushi Gupta of M.S. Ramaiah college of law.

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