5 Most Important Objectives of the Company Law in India

Objectives:

The basic objectives of the Companies Act, 1956 as stated by C.D. Deshmukh, the then Finance Minister, are as follows:

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1. Minimum standard of business integrity and conduct in promotion and management of companies.

2. Full and fair disclosure of all reasonable information relating to the affairs of the company.

3. Effective participation and control by shareholders and the protection of their legitimate interests.

4. Enforcement of proper performance of duties by company management.

5. Powers of intervention and investigation into the affairs of companies where they are managed in manner prejudicial to the interests of the shareholders or to the public interest.

The primary objectives of the Act are to regulate all private investments for the common good of the society and to protect the legitimate interests of genuine investors.

The Act also aims at democratising and professionalising company managements so as to discipline the conduct and behaviour of the companies in public interest. The Act also aims at preventing the misconduct and malpractices on the part of company managements.

The term “company” is used to describe an association of a number of persons formed for some common purpose and registered according to the law relating to companies. Section 3(1) of the Companies Act 1956 states that a company means a company formed and registered under this Act or an existing company.

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