V In India, <


<  is the most important piece
of legislation that empowers the Central Government to regulate
the formation, financing, functioning and winding up of
companies.
V It empowers the Central Government to inspect the books of
accounts of a company, to direct special audit, to order
investigation into the affairs of a company and to launch
prosecution for violation of the Act.
V These inspections are designed to find out whether the
companies conduct their affairs in accordance with the
provisions of the Act, whether any unfair practices prejudicial to
the public interest are being resorted to by any company or a
group of companies and to examine whether there is any
mismanagement which may adversely affect any interest of the
shareholders, creditors, employees and others.
V The Companies Act is administered by the Central
Government through the Ministry of Corporate Affairs
and the Offices of Registrar of Companies, Official
Liquidators, Public Trustee, Company Law Board,
Director of Inspection, etc. The Registrar of
Companies (ROC) controls the task of incorporation
of new companies and the administration of running
companies.
V %Companydz means a company formed and registered
under the Act or an existing company as defined in
clause (ii):

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V Ôor the purposes of this Act, a company shall subject to the provisions of
sub-section (3), be deemed to be a subsidiary of another if, but only ifȄ
V that other controls the composition of its Board of directors; or %that
other-
V Where the first-mentioned company is an existing company in respect of
which the holders of preference shares issued before the commencement
of this Act have the same voting rights in all respects as the holders of
equity shares, exercises or controls more than half of the total voting
power of such company;
V where the first-mentioned company is any other
company, holds more than half in nominal value of its
equity share capital; or
V The first mentioned company is a subsidiary of any
company which is that otherǯs subsidiary.
V Ô
  Ô  

V The Company shall be registered under the
Companies Act whether it is private or public.
V A minimum standard of good behavior and business honesty
in company promotion and management.
V Due recognition of the legitimate interest of shareholders
and creditors and of the duty of managements not to
prejudice to jeopardize those interests.
V Provision for greater and effective control over and voice in
the management for shareholders.
V Proper standard of accounting and auditing.
V A fair and true disclosure of the affairs of companies in their
annual published balance sheet and profit and loss
accounts.
V Recognition of the rights of shareholders to receive
reasonable information and facilities for exercising an
intelligent judgment with reference to the management.
V A ceiling on the share of profits payable to managements as
remuneration for services rendered.
V A check on their transactions where there was a possibility of
conflict of duty and interest.
V A provision for investigation into the affairs of any
company managed in a manner oppressive to minority
of the shareholders or prejudicial to the interest of the
company as a whole.
V Enforcement of the performance of their duties by
those engaged in the management of public
companies or of private companies which are
subsidiaries of public companies by providing
sanctions in the case of breach and subjecting the
latter also to the more restrictive provisions of law
applicable to public companies.
V The Companies Act, 1956 has been amended from
time to time in response to the changing business
environment. These amendments include:-
V The Companies (Amendment) Act, 2000
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