It gives extensive powers to the Central Movement and the Company Law Board to intervene directly in Use affairs of a companying public interest, in recognihonof the fact tlr.lt a public company should be regarded as a national asset and not as something of exclusive concern to the shareholders or tile directors.
Government Companies. Keeping in view the importance of statecrprises milder development plans, this Act recognizes the institution of Government Companies' (in which Government holds at least 51 per cent share capital) and makes special provisions for them, i e, they can be exempted from the application of any of the provisions of the Act.
Socialistic Pattern. In accordance with the acceptance of the principle. of socialistic pattern of society' as the and economic policy e Movement, theActalsoprovidesmeasures calculated to disinter the concentration of economic power and wealth which affects Hue place: interest adversely Fool instance, the Act inter allay provides that no parsec act as a managing director or manager of more than hove comp i.e.
INCORPORATION OF A COMPANY 33
both public and private, provided at least one of the too Cannes is a public company (Sec. 316) in the case of public companies and their subsidies: (i) the ram me ration payable to a managing director or Eager cannot be more t Ian 5 per cent of the annual net profits Idec 309( }a], (ii) the maximum overall managerial remuneration has been fixed atoll cent of annual net profits (Sec. 198) and (iii) issuing of deferred shares caring disproportionate voting rights has been prolribited (Sec. 88).
AMENDMENTS TO IHE COMPANIES Act 1956
With 'the growing complexities of modem business and with tile increasing role of joint stock enterprises in the economic development-of the county, the Company Law is fast developing in order to protect the joint stock companies from the inroads of undesirable persons, and to ensure that
he activities of the companies are carried on in furtherance of our economic goad of establishmga'sociahstic pattern of society'. As observed in the Repot of the Jenkins Committee in the UK, the Company Law is net airfield of legislator' in which 'finality is to be expected', as the la 'fails to be applied to a growing and changing subject matter' and the 'growing uses of. the cooping system as am instrument of business andfrnanceand; chepossibiii clews of abuse inherent in-that svstem'. Thus, in spice of its thoroughness the Companies-Act 1956 has been amended for roil than awoken tithes so far The latest in the series is the Company K s (Meriden Act, 1988. M
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