Business Env. Unit-4

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BUSINESS ENVIRONMENT

Unit -4 BUSINESS AND LAW

*Provisions under Companies Act*-


The Companies Act encompasses provisions governing various aspects of business, including
incorporation procedures, corporate governance practices, financial disclosures for
transparency, shareholder rights protection, compliance with legal requirements, dissolution
processes, and the definition of legal liabilities for company officers. These provisions
collectively form the legal framework shaping the operation and management of companies
within a business environment.

The Companies Act in a business environment typically includes provisions related to:

1. Incorporation: Outlining the process and requirements for forming a company.

2. Corporate Governance: Defining the structure and responsibilities of the board of


directors, shareholders' meetings, and executive officers.

3. Financial Disclosures: Mandating the publication of financial statements and reports for
transparency.

4. Shareholder Rights: Outlining the rights and protections afforded to shareholders,


including voting rights and dividends.

5. Compliance: Ensuring adherence to legal requirements, such as filing annual reports and
maintaining statutory records.

6. Dissolution and Winding Up: Providing procedures for closing or liquidating a company.

7. Legal Liabilities: Defining the legal responsibilities of company officers and directors.

These provisions are designed to create a legal framework that governs the operation,
management, and accountability of companies within a business environment. The specifics
can vary based on the jurisdiction and the Companies Act in place.

Provisions under Companies Act, 1956 relating to setting up of a Company-


The Companies Act of 1956, though no longer in force in many jurisdictions, including India,
had several provisions related to the setting up of a company. Some key aspects included:

1. Incorporation Process: Detailed procedures for registering a company, specifying


requirements and documents needed for incorporation.

2. Types of Companies: Classification of companies, distinguishing between public and


private companies, and outlining their respective features and regulations.
3. Memorandum and Articles of Association: Defining the company's constitution,
objectives, and internal regulations.

4. Share Capital: Rules regarding the issuance, valuation, and maintenance of share capital.

5. Directorial Structure: Regulations pertaining to the appointment, powers, and


responsibilities of directors.

6. Annual General Meetings: Requirements for holding regular meetings where financial
statements are presented, and shareholders exercise their rights.

7. Audit and Financial Disclosure: Mandating regular financial audits and disclosure of
financial statements to shareholders.

8. **Winding Up: Procedures for the dissolution and winding up of a company, including
liquidation processes.

It's important to note that the Companies Act has evolved over the years, and many
jurisdictions, including India, have since replaced the Companies Act of 1956 with more
contemporary legislation.

*Provisions Under the MRTP Act relating to Restrictive trade Practices and Unfair trade
Practices-
The Monopolies and Restrictive Trade Practices Act (MRTP Act) of 1969 in India, though it
has been repealed and replaced by the Competition Act of 2002, had provisions addressing
Restrictive Trade Practices (RTP) and Unfair Trade Practices (UTP). Here are some key
aspects:

1.Restrictive Trade Practices (RTP):


- Defined practices that restricted, distorted, or disrupted competition in the market.
- Examples included price fixing, bid rigging, market sharing, and collusive tendering.

2. Unfair Trade Practices (UTP):


- Prohibited deceptive practices that misled consumers or harmed competitors.
- Covered false advertising, misleading product claims, and unfair competition.

3. Monopolistic Trade Practices (MTP):


- Addressed practices that led to the concentration of economic power in the hands of a
few.
- Aimed at preventing the abuse of dominant positions in the market.

4. MRTP Commission:
- Established the MRTP Commission to adjudicate and take corrective measures against
unfair and restrictive trade practices.
It's important to note that the MRTP Act has been replaced by the Competition Act of 2002
in India, which focuses on promoting fair competition and preventing anti-competitive
practices.

Silent Features of the Consumer Protection Act relating to Consumer protection in India-

The Consumer Protection Act in India, amended in 2019, encompasses several key features
to enhance consumer rights and protection. Notable aspects include the clear definition of
consumers, the recognition and enforcement of consumer rights, the establishment of
Consumer Disputes Redressal Commissions at various levels, the introduction of product
liability, prohibition of unfair trade practices, empowerment of Consumer Protection
Councils, provisions for handling e-commerce transactions, promotion of alternate dispute
resolution, and penalties for non-compliance. These measures collectively aim to provide
consumers with stronger safeguards and more effective mechanisms for addressing
grievances.

The Consumer Protection Act (CPA) in India was amended in 2019 to enhance consumer
rights and protection. Here are some salient features:

1.Definition of Consumer: Clearly defines who can be considered a consumer, expanding the
scope to include online transactions and telecommunication services.

2. Consumer Rights: Recognizes and enforces the rights of consumers, including the right to
be protected against marketing of goods and services that are hazardous to life and
property.

3.Consumer Disputes Redressal Commissions: Establishes various Consumer Disputes


Redressal Commissions at the district, state, and national levels to handle consumer
complaints and disputes.

4.Product Liability: Introduces the concept of product liability, holding manufacturers,


service providers, and sellers accountable for defective products and services causing harm
to consumers.

5. Unfair Trade Practices: Defines and prohibits unfair trade practices, ensuring consumers
are protected from deceptive practices, false advertising, and unfair business methods.

6. Consumer Protection Councils: Empowers Consumer Protection Councils at the district,


state, and national levels to promote and protect consumer rights through advocacy,
education, and awareness.

7. E-commerce Transactions: Addresses issues related to online transactions, protecting the


rights of consumers engaged in electronic commerce.

8. Alternate Dispute Resolution: Encourages and facilitates alternative dispute resolution


mechanisms such as mediation and settlement, providing quicker and more accessible
remedies to consumers.
9.Penalties for Non-Compliance: Imposes penalties and fines on businesses and individuals
who violate consumer rights or fail to comply with the provisions of the act.

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