A small business enterprise may be run by a few
persons working in partnership and taking personal interest in
the business. But where the enterprise is big and requires a big
investment which cannot be financial by few persons, but a large
number of persons may be required to finance it. Moreover, where
a large number of persons are engaged in an enterprise, it is not
possible for them to take personal interest in the affairs of
business, nor is it possible for them to trust each other fully.
Such large partnership are, therefore, generally managed by a
few trustees. This separates ownership from managemeńt. In
other words, a fevw number of persons are appointed to manages
the enterprise on behalf of large number of persons.
In India the first important Act, relating to the Joint Stock
companies was passed in 1850. On the lines of English compa-
nies Act, of 1844. In 1856, an Act for the incorporation and
regulation of Joint Stock companies and other Associations, those
with or without limited liability of members thereof, was passed.
However, the priviledge of limited liability was not extended
to any banking of Insurance company.
This disability was removed by the Act, VIl of 1860 which was passed on the lines of
the English Act, of 1 856. Subsequently a comprehensive Act, the
Act of 1866, was passed on the lines of English Act of 1862.
This Act, consolidated and amended the laws relating to the
incorporation, regulation and wounding up of companis and other
The Act of 1866, was amended in 1882. Besides this, sev-
eral other Amending Acts were passed still the passing of Act,
VIl of 1913 which may be said to be a reproduction of English
Companies Act, of 1908. With the growing trade and commerce
the Act of 1913, was amended from time to time.
According to section 3 of the companies Act 1956, “Company law means a company formed and registered under this Act or
formed and registered under any of the previous company law
as specified in section 3 sub-clause in the present Act, which
states the following :-
(I) Any Act, or Acts, relating to companies in force before
the Indian Companies Act, 1866 and repeated by that Act.
(ii) The Indian Companies Act, 1866.
(iii) The Indian Companies Act, 1882.
(iv) The Indian Companies Act, 1913.
(v) The registration of transferred Companies Ordinance,1942, and
[vi) Any law corresponding to any of the Acts or the ordinances aforesaid and in force in the merged territories or in a
Part B State, or any part there of before extension there to of the
Indian companies Act, 1913.