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Background and evolution of company law in the subcontinent

Company Law initiates with Act 43 of 1850, which was based on the English Companies Act of 1844, making it possible, for the first time, to incorporate and register a company without obtaining a royal charter. Under the Indian Act, the supreme courts in the presidency towns of Calcutta, Bombay and Madras were authorised to order the registration of unincorporated companies of partners associated under a deed containing a provision that the shares were transferable. The privilege of limited liability was not conferred upon by this Act, although a company was permitted to sue and be sued in its registered name. In 1857, an act for the incorporation and regulation of joint stock companies and other associations either with or without limited liability of the members thereof was passed. But under this Act the privilege of limited liability was not extended to a company formed for the purpose of banking or insurance. This disability was removed by the Act of 1860, based on the English Companies Act of 1857. Then, following the English Companies Act of 1862, a comprehensive act was passed in India in 1866 for consolidating and amending the laws relating to the incorporation, regulation and winding up of trading companies and other associations. Between 1866 and 1913, various amendments in the Indian law were made following similar changes in England. The law relating to companies was re-enacted in a comprehensive form in the Companies Act of 1913. This Act was principally based on the English Companies (Consolidation) Act of 1908. Between 1908 and 1936, small amendments were made in the Act of 1913. The Indian Companies (Amendment) Act, 1936 introduced important provisions in the Act of 1913 in the light of the English Companies Act, 1929. This Amendment Act of 1936 also recognised for the first time the system of managing agencies in the subcontinent. After the partition of India (1947), India passed a new comprehensive Act in 1956, based primarily on the English Companies Act, 1948 and the suggestions made in the Bhava Company Law Committee Report. During the Pakistan period a Company Law Commission was set up and it suggested amendments in 1962 in the light of the English and Indian amendments, and subsequently some amendments were made. The Securities and Exchange Ordinance, 1969 was the most important piece of legislation incorporating corporate activities during this period. It supplemented the Capital Issues (Continuance of Control) Act of 1947, giving extensive powers to the controller of capital issues. After the emergence of Bangladesh a Company Law Reforms Committee was set up in 1979, comprising leading government servants, chartered accountants and lawyers. The committee made many recommendations for changes in company law but not until 1994 was a new comprehensive act passed by Jatiya Sangsad. The Securities and Exchange Commission Act of 1993 created the SECURITIES AND EXCHANGE COMMISSION which oversees the issue of capital. Its primary purpose is to protect the investing public in corporate investments. It has been given extensive powers to make rules and regulations. Its responsibilities include those of the Controller of Capital Issues under the Acts of 1947 and 1969.

The essential elements of company law are the concepts of the company as a separate legal entity, irrespective of the closeness of the shareholders, investor protection, management of a company and the modes of winding up, and accounts and securities trading. The Companies Act of 1994 has been passed consolidating and amending the laws relating to companies and other associations. The present Act is based on the structure of Companies Act 1913. But the first statutory company legislation in this sub-continent was the British Companies Act 1850. Following that a comprehensive company law was passed in the year 1866 which was again recast in 1888. Several amendments were made and ultimately the Indian Companies Act of 1913 was passed. Until the adoption of the present Act in 1994 the Companies Act of 1913 remained in force in Bangladesh. In 1977 to remove the lacuna in law and to meet the present problems especially with regard to foreign investments the Law Reform Committee suggested re-enacting the Companies Act of 1913.On basis of that recommendation the present law was enacted in the year 1994 and came into force with effect from the 1st day of January 1995.