Act Introduction
The Indian Companies Act, 2013, replaced the Companies Act, 1956. It streamlines company regulation, enhances compliance, and introduces new governance standards for corporate entities in India.
One Person Company
A novel introduction, the Act allows the formation of a One Person Company (OPC). An OPC can be formed by a single entrepreneur, which is groundbreaking for individual business owners.
Corporate Social Responsibility
Under the Act, certain companies must spend at least 2% of their average net profit on Corporate Social Responsibility (CSR) activities, reflecting the emphasis on ethical business practices.
Class Action Suits
The Act introduces class action suits, enabling shareholders and depositors to sue the company for acts of omission or commission. This empowers stakeholders and ensures greater accountability.
Women Director Mandate
A landmark mandate of the Act requires certain classes of companies to have at least one woman director, promoting gender diversity in corporate boardrooms.
National Company Law Tribunal
The Act establishes the National Company Law Tribunal (NCLT) and Appellate Tribunal, replacing the Company Law Board and the Board for Industrial and Financial Reconstruction for speedier dispute resolution.
Auditor Rotation Policy
To prevent complacency and collusion, the Act mandates the rotation of individual auditors every five years and audit firms every ten years for listed companies.
What did the 2013 Act replace?
Indian Companies Act, 2013
Companies Act, 1956
Corporate Social Responsibility Act
Company
