Companies: The Company’s Act

KNC501/KNC601 Constitution of India, Law and Engineering

Chapter 17: Sole Traders and Partnership

Unit 1

Unit 2

Unit 3

Unit 4

Unit 5


Companies: The Company’s Act

Indian Companies Act was an Act of the Parliament which was enacted in 1956. It was enabled the companies to be formed by registration, sets out the responsibilities of companies, their executive director and secretaries. It provides for the procedures for its winding.

Later in 2013, the Government of India has amended the Indian Companies Act 1956 and added a new Act called as Indian Companies Act 2013.


The Companies Act, 1956 has been replaced in a partial manner by the Indian Companies Act 2013. The President of India gave his assent to the bill on 29 August 2013. Subsequently, it became the act and finally it into force on 12 September 2013.

Why is the Indian Companies Act, 2013 in news?

Recently, the Parliament of India has passed the Companies (Amendment) Bill, 2020, on 19 September 2020 to further amend the Companies Act and decriminalise various compoundable offences as well as promote ease of doing business in the country.


The Companies (Amendment) Bill, 2020 was passed by a voice vote from Rajya Sabha and also got approval from the Lok Sabha.


The Companies (Amendment) Bill, 2020 looks for to decriminalise several penal provisions, permit the direct overseas listing of Indian corporate and to introduce a new chapter related to producer organisations in the legislation.


Reduction in penalties for certain offences as well as in timeline for rights issues, relaxation in corporate social responsibility (CSR) compliance requirements and creation of separate benches at the National Company Law Appellate Tribunal (NCLAT) are among the proposed changes too.

Features of the Companies Act of 2013

  1. It regulates incorporation of a company, responsibilities of a company, directors, and dissolution of a company.
  2. It is divided into 29 chapters which containing 470 sections as against 658 Sections in the former Companies Act, 1956 and has 7 schedules. However, there are only 438 (470-39+7) sections remains in this Act currently.
  3. It provides a maximum of 200 members, earlier the private companies the maximum number of members were 50.
  4. A new term of ‘one-person company’ is included in this act.
  5. It notified 98 provisions of the Act, and has a total of another 184 sections.


The Act has been so far amended four times, first in 2015 and till this year 2020.

  1. Companies (1st amendment) Act 2015
  2. Companies (2nd amendment) Act 2017
  3. Companies (3rd amendment) Act 2019
  4. Companies (4th amendment) Bill 2020

Memorandum of Association (MOA)

Memorandum of Association (MOA) represents the charter of the company. It is a legal document prepared during the formation and registration process of a company to define its relationship with shareholders and it specifies the objectives for which the company has been formed.

Purpose of Memorandum of Association

The main purpose of the memorandum is to limit the scope of activities and powers of the company. Thus, any act outside the memorandum is ultra vires the company. Such an act is not enforceable and directors involve personal liability for it.

How do you write Memorandum of Association

I/WE, the undersigned whose name(s), address(es) and description(s) is/are given below, wish to form a company, in pursuance of this memorandum of association, and I/we respectively agree to take the number of share(s) in the capital of the company set opposite my/our respective name(s).

What are the features of Memorandum of Association?

The following information is mandatory in an MOA:

  • Name Clause. For a public limited company, the name of the company must have the word ‘Limited’ as the last word. …
  • Registered Office Clause. …
  • Object Clause. …
  • Liability Clause. …
  • Capital Clause. …
  • Association Clause. …
  • For One-Person-Company. …
  • A few things to remember

Author – Dilip Kumar Rawat

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