Following the recommendations of the Company Law Committee known as the Bhaba Committee set up in 1950 the Companies Act, 1956, was enacted with the object to amend and consolidate the law relating to companies and certain other associations by repealing the Companies Act, 1913. The Companies Act, 1956, has been amended as many as 24 times since 1956. The major amendment to the Companies Act, 1956, was made after considering the recommendations of the Sachar Committee by enacting the Companies Amendment Act, 1988. The next major amendment was made by the Companies Amendment Act, 2002, consequent to the report of the high powered Eradi Committee. Looking at the proliferation and diversity of amendments which have been made to the Act, an attempt to recodify the law appears inevitable.
The previous two attempts at making a comprehensive review of the existing law by introducing Companies Amendment Bill 1993 and 1997 failed as the assent of the Parliament could not be received. The Ministry introduced the Companies (Amendment) Bill, 2003, containing important provisions in the arena of independence of auditors, relationship of auditors with the management of the company, independent directors with a view to improve the corporate governance practices in the corporate sector. Department examined the concerns expressed and the suggestions made by the industry associations, organizations and professionals and sought to introduce an amendment to the Amendment Bill. In the meanwhile, a decision was taken by the Government for preparation of a concept paper containing a model codified company law which would consolidate the existing provisions of the law. Read More...