COMPANY COMMERCIAL
MGS LAW JOURNAL
1. Introduction
Company law deals with the formation, management, and regulation of companies. It defines how a company is created, how it functions, and the responsibilities of those managing it. Commercial law governs trade, business transactions, and agreements between companies or individuals. Together, these areas form the foundation for running and regulating businesses in India.
2. Basic Principles of Company Law
A company is treated as a separate legal entity, different from its owners. It can own property, enter into contracts, and be sued in its own name.
Key features of a company include:
Limited liability – Shareholders are only liable for the amount they invested.
Perpetual succession – The company continues to exist even if its members change.
Share transferability – In public companies, shares can be freely transferred.
3. Types of Companies
India allows different forms of companies to suit various needs:
Private Limited Company – Smaller businesses with restrictions on share transfer.
Public Limited Company – Larger companies where shares can be traded publicly.
One Person Company (OPC) – A single person can form a company with limited liability.
Section 8 Company – Non-profit organisations working for charitable purposes.
Limited Liability Partnership (LLP) – Combines partnership flexibility with limited liability.
4. Commercial Law and Business Transactions
Commercial law covers all aspects of trade and commerce. It includes:
Contracts – Rules for creating valid and enforceable agreements.
Sale of Goods – Legal framework for buying and selling goods.
Partnerships and LLPs – Rules for forming and managing joint businesses.
Business Documentation – Drafting agreements, MoUs, and policies to avoid disputes.
5. Regulatory Compliance
Businesses must follow several laws and regulations:
Companies Act, 2013 – Governs company formation and management.
Securities and Exchange Rules (SEBI) – For listed companies.
FEMA – For foreign investments and cross-border transactions.
Competition Act, 2002 – Prevents unfair trade practices.
Insolvency and Bankruptcy Code (IBC) – For handling insolvency and restructuring.
6. Governance and Directors’ Duties
Directors have a duty to act honestly and in the best interest of the company. They must follow the company’s Memorandum of Association (MoA) and Articles of Association (AoA). They are responsible for compliance, decision-making, and safeguarding shareholder interests.
7. Challenges in Company and Commercial Law
Complex compliance requirements due to multiple laws.
Unclear legal framework for new areas like digital contracts and online businesses.
Frequent disputes relating to contracts, taxation, and business ownership.
8. Importance of Legal Support
Professional legal advice helps businesses to:
Choose the right structure for their company.
Draft strong contracts and agreements.
Ensure regulatory compliance and avoid penalties.
Resolve disputes effectively through negotiation or litigation.
9. Tribunals and Enforcement
National Company Law Tribunal (NCLT) – Handles company-related cases, mergers, and insolvency.
National Company Law Appellate Tribunal (NCLAT) – Hears appeals from NCLT decisions.
10. Conclusion
Company and commercial law ensure that businesses run smoothly, fairly, and transparently. Understanding these laws helps entrepreneurs, investors, and organisations operate effectively while avoiding legal issues. With expert legal guidance, companies can focus on growth while staying compliant with all necessary regulations.