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Companies Act 2013

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The Companies Act 2013
Parliament of India
  • An Act to consolidate and amend the law relating to companies.
CitationThe Companies Act, 2013
Territorial extentIndia
Enacted byParliament of India
Signed byPresident of India
Signed29 August 2013
Commenced12 September 2013 (98 sections)
1 April 2014 (184 sections)
Legislative history
Bill titleThe Companies Bill, 2012
Bill citationBill No. 121-C of 2011
Repeals
The Companies Act, 1956
Amended by
The Companies (Amendment) Bill, 2020
Status: In force

The Companies Act 2013 (No. 18 of 2013) is an Act of the Parliament of India which forms the primary source of Indian company law. It received presidential assent on 29 August 2013, and largely superseded the Companies Act 1956.

The Act was brought into force in stages. Section 1 of this act came into force on 30 August 2013. 98 different sections came into force on 12 September 2013 with a few changes.[1][2] A total of another 183 sections came into force from 1 April 2014.[3] The Ministry of Corporate Affairs thereafter published a notification exempting private companies from the ambit of various sections under the act.[4]

The Act increased the responsibilities of corporate executives in the information technology sector, increasing India's safeguards against organised cybercrime by allowing CEOs and CTOs to be prosecuted in cases of IT failure.

The Act established the National Company Law Tribunal (NCLT), which was constituted on 1 June 2016, based on the recommendation of the Justice Eradi committee on the law relating to insolvency and winding up of companies.[5] Further, the National Financial Reporting Authority (NFRA) was established in March 2018 as an oversight body to investigate matters of professional misconduct by Chartered accountants or CA firms.[6]

Features

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Corporate Social Responsibility

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Before the Act, corporate social responsibility (CSR) requirements applied only to public sector companies.[7] Section 135 of the Companies Act introduced mandatory CSR contributions for large companies, making it the only mandatory CSR law in the world. All firms above a particular net worth, turnover, or net profit threshold are required to spend at least 2% of their annual profits of the preceding year on corporate social responsibility. The law requires that all such companies establish a CSR committee to oversee the spending.

Company Secretaries

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Section 203 of the Companies Act 2013 deals with the appointment of a company secretary. For the first time, the Act defined company secretaries as a key managerial personnel of the company. The Act made it mandatory for every Indian listed company, and every other entity having more than rupees ten crore (100 million) paid up capital, to have a full-time company secretary.

Types of companies

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In addition to private and public limited companies, the Act also provides for a One Person Company (OPC), Section 8 companies, and producer companies. One Person Companies (OPC)[8] are companies with a single member. Only individual Indian citizens can be shareholders in an OPC. At first, only resident Indians could be shareholders, but after an amendment to the Act in 2020, even non-resident Indians can be shareholders.[9] Section 8 companies are non-profit companies governed by section 8 of the Act. Producer Companies are formed for agricultural purposes. Only farmers can be members of a producer company members can be farmers. They are governed by Section 378A to Section 378ZT of the Companies Act, 2013.[8]

Additions in 2025

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The Companies Act, 2013, which governs corporate regulation in India, has undergone significant amendments in 2025 aimed at enhancing compliance, transparency, and corporate governance, especially for Corporate Social Responsibility. These changes reflect the government's intent to create a more accountable and investor-friendly corporate environment.

Key Additions and Amendments

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  • Tiered Penalty System: A major reform is the introduction of a tiered penalty structure that differentiates penalties based on company size; small, medium, or large. This system reduces the burden on smaller companies and startups while imposing stricter penalties on larger firms to ensure greater accountability.
  • Mandatory Real-Time Compliance Disclosures: Companies are now required to update statutory filings such as changes in board composition or auditor appointments within 7 days, a significant reduction from the earlier 30-day window. Non-compliance attracts daily penalties with higher caps, promoting timely and transparent disclosures.
  • Increased Penalties for Repeated Non-Compliance: Penalties for companies repeatedly violating compliance norms within a three-year period have been doubled, discouraging habitual defaults and encouraging adherence to regulations.
  • Expanded Powers of Adjudicating Officers: Adjudicating officers must now resolve penalty proceedings within 90 days, expediting enforcement and reducing case backlogs. Companies have a 30-day window to appeal orders, emphasizing prompt compliance.
  • Stringent Penalties for Non-Maintenance of Statutory Registers: Penalties for failing to maintain updated statutory registers of members, directors, and debenture holders have increased from INR 50,000 to INR 5 lakhs, underscoring the importance of accurate record-keeping.
  • Extension for Dematerialization of Shares: The deadline for private companies to convert physical shares into dematerialized form has been extended to June 30, 2025, facilitating smoother compliance with securities regulations.
  • Streamlined Processes for Startups: The amendments have simplified the reverse merger process for startups returning to India from abroad, reducing the timeline from 12-18 months to approximately 3-4 months, thereby encouraging repatriation of innovative enterprises.
  • Enhanced Disclosure Requirements: Amendments to the Companies (Accounts) Rules mandate more comprehensive disclosures in board reports, including compliance with workplace ethics and labor laws, effective from July 14, 2025. This promotes transparency and corporate governance aligned with social responsibility.
  • Digitization and E-Form Migration: The Ministry of Corporate Affairs has migrated several e-forms from its Version 2 to Version 3 portal to streamline filing processes and encourage digitization of corporate records and compliance.
  • Accurate representation: Usage of AI and other technology based tools such as iAmpact is recommended to use for real-time tracking, monitoring and reporting.

These 2025 amendments collectively aim to foster a culture of proactive compliance, enhance investor confidence, and align Indian company law with global best practices. They require companies to strengthen internal controls, adopt robust compliance mechanisms, and ensure timely statutory disclosures.

See also

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Notes

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  1. ^ "Commencement Notification Of Companies Act 2013" (PDF). Ministry of Corporate Affairs, India. Archived (PDF) from the original on 11 January 2014. Retrieved 11 January 2014.
  2. ^ Varma, Sindhu. "India: New Companies Act, 2013 – The Cat Is Finally Out". Mondaq. Archived from the original on 28 March 2014. Retrieved 29 May 2023.
  3. ^ "MCA notifies 183 sections of Companies Act 2013". Business Standards. 26 March 2014. Archived from the original on 27 March 2014. Retrieved 27 March 2014.
  4. ^ "MCA lays draft notification us 462 for Private Companies in Parliament". Archived from the original on 13 February 2015. Retrieved 13 February 2015.
  5. ^ "Organisation | NCLT". Archived from the original on 21 March 2018. Retrieved 7 March 2019.
  6. ^ "Cabinet To Notify Audit Regulator NFRA, Approves Draft Rules", Bloomberg Quint, 1 March 2018, archived from the original on 2 March 2018
  7. ^ "A brief history of Indian CSR". 3 July 2015. Archived from the original on 10 August 2015.
  8. ^ a b "Companies Act, 2013". www.mca.gov.in. Retrieved 7 September 2022.
  9. ^ Ministry of Corporate Affairs- Government of India, MCA e book. "MCA Amendment Rules -" (PDF). mca.gov.in.
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