What is the Companies Act, 2013?

The Companies Act, 2013 is the main law that governs companies in India. It sets out how a company is formed, who runs it and what they owe it, how it keeps and publishes its accounts, how it can merge, restructure or close, and the penalties for breaking the rules. It replaced the Companies Act, 1956, and every company registered in India, from a one-person start-up to the largest listed group, operates under it.

It matters well beyond boardrooms. It is the law under which many NGOs are set up, as Section 8 companies. It is the law that makes larger companies spend on corporate social responsibility (CSR), through Section 135. And it sets the rules for the reports, filings and disclosures that let investors, lenders, employees and the public see what a company is doing.

This guide explains the Act for everyone: students, NGO founders, CSR teams and anyone who deals with companies. It covers the Act’s structure, what it governs, who administers it, how rules and Schedules work, the main amendments, the pending Bill, and where CSR fits. It describes the law as in force on 3 October 2026.

The Act at a glance

How the Act came into force

Parliament passed the Act in 2013, but it didn’t all start on one day. Section 1 let the central government bring different provisions into force on different dates by notification. On 12 September 2013, 98 sections took effect. A second large batch followed on 1 April 2014, including the rules on accounts, directors and Section 135 on CSR. Other parts came later, such as the provisions for the National Company Law Tribunal, set up in 2016.

For several years the two Acts ran side by side: on matters where the new sections weren’t yet in force, the 1956 Act went on applying. Section 465 repeals the Companies Act, 1956, along with the Registration of Companies (Sikkim) Act, 1961, with savings for things done under them. So you will still meet references to the 1956 Act in older documents, court judgments and company records.

How the Act is organised

The Act is divided into chapters, each covering one part of a company’s life. Sections added later carry letters, such as Section 129A, or Sections 378A to 378ZU on producer companies.

Two chapters have changed shape since 2013. The sections on reviving sick companies in Chapter XIX were omitted by the Insolvency and Bankruptcy Code, 2016, which now deals with insolvency. And Chapter XXIA, on producer companies such as farmers’ collectives, was added by the Companies (Amendment) Act, 2020, from 11 February 2021.

What the Act governs

Forming a company

The Act recognises several kinds of company. A private company restricts the transfer of its shares and can’t invite the public to subscribe; a public company is any company that isn’t private; a One Person Company has a single member; and a small company is a private company below capital and turnover limits set by the government, with lighter rules. A company is incorporated under Section 7 by filing its memorandum and articles of association, on models in Schedule I, with the Registrar.

Section 8 lets the central government licence a company formed to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment or similar objects, which applies its income to those objects and pays no dividend. These are the not-for-profit companies many NGOs and company foundations use. See how to register a Section 8 company.

Directors and the board

Under Section 149, a public company needs at least three directors, a private company two and a One Person Company one, with at most fifteen unless members pass a special resolution. At least one director must have stayed in India for 182 days or more in the year, prescribed classes of company need a woman director, and listed public companies must have at least one-third independent directors, who follow the code in Schedule IV. Section 166 sets out directors’ duties, including acting in good faith in the interests of the company, its employees, shareholders, the community and the environment. Listed companies and other prescribed classes must form board committees, such as an audit committee (Section 177) and a nomination and remuneration committee (Section 178), and companies covered by Section 135 usually need a CSR committee.

Accounts, audit and disclosure

Every company keeps books of account, prepares financial statements in the format in Schedule III (Section 129), and files them with the Registrar (Section 137). The board’s report under Section 134 explains the year, including the company’s CSR policy and spending. Auditors are appointed under Section 139 and report under Section 143. The National Financial Reporting Authority, constituted under Section 132, oversees audit quality for listed and other prescribed companies. Each year a company also files an annual return (Section 92) and, if it is not a One Person Company, holds an annual general meeting (Section 96).

Restructuring, disputes and closing

Mergers, demergers and arrangements with creditors or members go through Sections 230 to 240. Shareholders who say the company is being run oppressively can apply under Section 241. A defunct company can be struck off the register under Section 248, and Chapter XX deals with winding up. Most of these matters are decided by the National Company Law Tribunal (NCLT), with appeals to the National Company Law Appellate Tribunal.

Investigation and penalties

The government can inspect a company’s books and order investigations under Chapter XIV, including by the Serious Fraud Investigation Office (Section 211). Serious wrongdoing, such as fraud (Section 447) and knowingly false statements (Section 448), is a criminal matter tried by Special Courts. Since amendments in 2019 and 2020, many smaller defaults are instead civil penalties, imposed by officers of the MCA under Section 454, and Section 450 sets a general penalty where no other applies. Our guide to CSR penalties shows how this works for CSR.

Who administers the Act

• The Ministry of Corporate Affairs makes the rules, issues circulars and runs the system.
• Registrars of Companies (ROCs), with offices across the states (Section 396), register companies, receive their filings and, as adjudicating officers, impose penalties for many defaults.
• Regional Directors hear appeals against those penalties and decide some applications.
• The MCA21 portal is where companies file forms and documents electronically, as Section 398 allows, and where the public can inspect company records.
• The NCLT and its Appellate Tribunal, constituted under Sections 408 and 410, took over company cases from the Company Law Board, which Section 466 dissolved.
• Special Courts (Section 435) try offences under the Act.

For listed companies, the Securities and Exchange Board of India (SEBI) adds its own listing and disclosure rules alongside the Act.

How rules, Schedules and circulars work

The Act sets the framework, and much of the detail is delegated:

• Rules. Section 469 lets the central government make rules to carry out the Act, and many sections leave details to be “prescribed” by them. There are separate sets for different subjects, such as the Companies (Incorporation) Rules, 2014, the Companies (Accounts) Rules, 2014, and the Companies (Corporate Social Responsibility Policy) Rules, 2014.
• Schedules. The seven Schedules hold forms, formats and lists. Under Section 467 the government can alter them by notification, and the change takes effect as if it were in the Act.
• Parliament’s check. Every rule and every alteration of a Schedule must be laid before both Houses of Parliament for 30 days, and the Houses can modify or annul it.
• Circulars and FAQs. The MCA explains how it reads the law in general circulars. They guide companies but can’t override the Act or the rules.

Key amendments since 2013

Other laws have also reshaped the Act, most of all the Insolvency and Bankruptcy Code, 2016, which took over corporate insolvency.

Where CSR sits in the Act

CSR is a small part of a large Act, but it draws on many other parts:

• Section 135, in Chapter IX on accounts, sets the duty: the coverage tests, the CSR committee, the policy, the 2% rule, unspent money and penalties. See Section 135, clause by clause.
• Schedule VII lists what CSR money can be spent on. See Schedule VII at a glance.
• The CSR Rules fill in the detail. See the CSR Rules.
• Section 198 sets how net profit is calculated, Section 134 puts CSR in the board’s report, and Schedule III requires CSR spending to be disclosed in the notes to the accounts. See calculating net profit for CSR.

For what CSR means in practice, start with what is CSR?, and for how the law developed, our short history of CSR in India.

The pending Corporate Laws (Amendment) Bill, 2026

According to PRS Legislative Research, the Bill would, among other things, replace more criminal offences with civil penalties, allow annual general meetings to be held virtually with a physical meeting at least once every three years, raise the limits that define a small company, allow documents to be served electronically, and make the Insolvency and Bankruptcy Board of India the authority for registered valuers. For CSR, it would raise the net profit test from ₹5 crore to ₹10 crore “or such sum as may be prescribed”, give companies 90 days instead of 30 to fund the Unspent CSR Account, raise the no-committee limit from ₹50 lakh to ₹1 crore “or such higher amount as may be prescribed”, and let the government exempt prescribed classes of companies from Section 135. Until it is passed and brought into force, the current law applies.

For a closer reading of the CSR provisions, the CSR Law in Depth course in the SocioStory Academy works through Section 135 and the Rules with examples.