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Pros And Cons Of The Companies Act 2013

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The Companies Act 2013 was enacted to regulate companies and protect the interest of shareholders and other stakeholders. It was enacted to make sure following objectives are met: • Key personnel in the company such as managerial position or directors were made accountable by defining their duties. • To ensure that provisions are made for stringent norms for the impartial disclosure of information at periodic intervals. • In cases, where it is necessary, it is made mandatory to take prior approvals from the shareholders. • Contribution towards CSR (Corporate Social Responsibility) is made mandatory. Below are the 6 changes (amendments) brought about with the introduction of the Companies Act, 2013 and their impact (pros and cons) in today’s Indian business: 1. One Person Company (Clause 3): - Under the Companies Act 1956 it was mandatory to have minimum 2 people to form a company. With the amendment brought with the introduction of Companies act 2013, a hybrid of sole proprietor and company form of business was allowed. a. It enables entrepreneur as sole proprietor enter in business by forming OPC. b. Only natural person who is Indian citizen and resident in India is eligible. c. It will be treated as private limited company. d. It is not bound to include cash flow statement in financial statement. e. It is not bound to hold or organize any annual general body meeting. Impact of OPC in today’s Indian business: Pros: • It will enable fast

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