Tuesday, May 20, 2014

OBJECTIVE OF THE COMPANIES ACT OF 1956:

The main objectives of the companies Act of I956 are:
1.       To protect the interests of the investors by furnishing fair and accurate information in the prospectus.
2.       To recognize the rights of the shareholders to receive reasonable information for making an intelligent judgment with reference to the management.
3.       To ensure full and fair disclosure of the affairs of the companies in their published annual accounts.
4.       To protect the interests of the Share holders by ensuring the holding of general body meeting and ensuring effective participation and control by the share holders and providing for prevention of oppression of minority and mismanagement.
5.       To protect the interest of the creditors by preventing reduction of capital, by convening the meeting of creditors and appointment of liquidators, and taking over the companies in case of mismanagement.

6.       To enforce proper performance of duties by persons responsible for the management of Companies.
7.       To prevent misconduct and malpractices on the part of company's management and abuse of power vested in them.
8.       To promote the healthy growth of companies by ensuring integrity in the conduct and management of the company by the board of directors, placing restrictions on the borrowing powers of the board of directors and preventing any act which is prejudicial to the interest of the shareholders, the public and the companies.
9.       To ensure that the activities of the company are carried on nut only in the interests of those directly concerned with them but also in furtherance of the economic and social policy (i.e., the socialistic pattern of society) of the country.
10.   To empower the government to interfere and investigate into the affairs of the Company and to take over the Company when the business of the Company is carried on in a manner prejudicial to the interests of the Shareholders, the Company or the general public.

11.   To provide for the establishment of an appropriate authority for the administration of the Companies Act.