D'Prism

The Companies Act is the mother legislation that empowers the Central Government to regulate the formation, financing, and functioning of companies. It is in 2013, nearly after five decades, that the Companies Act has been completely re-written in India – the result:  the Companies Act, 2013. This Act was ‘in the making’ having regard to the rapidly changing environment, primarily since India opened up its trading borders, and with significant global events in the financial markets,  in governance, and in technology, all in the last decade. The 2013 Act introduces new concepts like one person companies, independent directors, corporate social responsibility, internal financial controls systems, class action suits, and brings about far reaching changes in other areas like protection of minority shareholders interest,  related party transactions, mergers and acquisitions, revival of financially distressed companies, directors and auditors responsibilities .

With a view to keep the Act flexible so as to adapt to the fast ever changing environment, the Companies Act 2013 delinks the procedural aspects from the substantive law. The procedural aspects have been prescribed in the Rules.

To demystify the provisions of the Companies Act, 2013,   Deloitte Touche Tohmatsu India Private Limited has compiled D’Prism which is a series on the Companies Act, 2013. Each issue of D’Prism covers a specific subject related to the Companies Act 2013 which other than providing an overview of the relevant legislation provides interpretative guidance where the legislation is not sufficiently detailed. It endeavors to highlight the practical difficulties that companies may face while interpreting and transitioning to the Companies Act, 2013.