Amending the Framework: Recent Changes in Indian Company Law

Revisiting the fundamentals of corporate governance in light of the Companies (Amendment) Act, 2020 As I sit through another grueling class on Company Law, I find myself pondering the intricacies of corporate governance in India. It's an area that's as complex as it is fascinating, and one that's undergone significant changes in recent years. The Companies (Amendment) Act, 2020, for instance, introduced a plethora of amendments aimed at streamlining the regulatory framework and increasing transparency.

The Anatomy of a Company

In India, companies are governed by the Companies Act, 2013, which sets out the framework for incorporation, management, and dissolution of companies. At its core, a company is a separate legal entity from its shareholders and directors, enjoying perpetual succession and a common seal. Sounds simple, right? But in reality, the nuances of corporate law are far more complex.

Key Amendments

Here are some of the key amendments introduced by the Companies (Amendment) Act, 2020:

• Section 2(20) of the Companies Act, 2013, defines a 'company' as an entity formed under the Act, with or without a limited liability. The amendment clarifies that a company can be formed with a share capital or without one.
• Section 4 of the Companies Act, 2013, deals with the incorporation of a company. The amendment reduces the minimum subscription for an offer of securities from 90% to 75% of the total amount.
• Section 179 of the Companies Act, 2013, deals with the authorization of loans to directors. The amendment restricts such loans to 50% of the net worth of the company, down from 100% earlier.
• Section 189 of the Companies Act, 2013, deals with the creation of charges. The amendment introduces stricter requirements for creation of charges, including notification to the Registrar within 30 days.

Judicial Interpretations

In a landmark judgment, West Bengal Estates Acquisition Act, 1953 v. Smt. Kali Sundari Deb (1986) 2 SCC 545, the Supreme Court of India held that a company is a separate entity from its shareholders and directors. This judgment has far-reaching implications for corporate law in India.

Why this Matters Today

As India continues to grow as a global economy, the need for robust corporate governance frameworks has never been more pressing. The recent amendments to the Companies Act, 2013, are a step in the right direction, increasing transparency and accountability in the corporate sector. As law students and future practitioners, it's essential that we stay up-to-date with these developments and understand the intricacies of corporate law in India. With the MH CET Law exams just around the corner, it's more important than ever to revisit the fundamentals of company law and stay ahead of the curve.