The Companies Act, 2013 replaced the six-decade-old 1956 Act, modernising India’s corporate governance framework with stronger disclosure norms, mandatory Corporate Social Responsibility (CSR) spending, and enhanced accountability for directors and auditors.
Section 135 mandates that companies meeting specified net worth, turnover or profit thresholds spend at least 2% of average net profit of the preceding 3 years on CSR activities, making India one of the few countries with mandatory CSR spending written into law.
Section 149 requires certain classes of companies to appoint at least one woman director on their board, and independent directors for listed and large companies, strengthening board governance and diversity. Section 447 introduced the offence of fraud with stringent punishment of imprisonment from 6 months to 10 years and fine, for serious corporate fraud.
The Act also introduced the concept of a One Person Company (Section 3) allowing a single individual to incorporate a company, and streamlined incorporation through the SPICe+ integrated form, significantly easing the process of starting a business in India.