Paper on the Historical Evolution of Corporate Law in India

I have posted a paper on SSRN
titled “The
Evolution of Corporate Law in Post-Colonial India: From Transplant to
Autochthony
”. The paper seeks to track the evolution of corporate law in
India from 1850 all the way until the enactment of the recent Companies Act,
2013, and to examine the different forces which were at play at important
points in time that shaped the nature of the law.
The abstract is as follows:
The essential
thesis of this paper is that while Indian corporate law began as a legal
transplant from England, it has been progressively decoupled from its source
with subsequent amendments and reforms being focused either on finding
solutions to local problems or borrowing from other jurisdictions. To that
extent, decolonization has had a significant effect of radically altering the
course of Indian corporate law. Current Indian corporate law not only
represents a significant departure from its colonial origins, but the
divergence between Indian law and English law as they have developed since
independence has been increasing. While the Indian lawmaking process indulged
in close cross-referencing of English legal provisions during the colonial
period and immediately thereafter, the more contemporary legislative reforms
pay scant regard to corporate law in the origin country that initially shaped
Indian corporate law.
This offers
valuable lessons. First, even though India is considered to be part of the “common
law” family, corporate law has evolved somewhat differently from the origin
country, England. In that sense, it casts significant doubt on the assumption
that all countries within a legal family bear similarities. On the contrary,
each host country may follow a trajectory that is different from that followed
by the origin country of corporate law. Second, it supports the proposition
that legal transplants can be challenging unless the local conditions in the
host country are similar to that in the origin country. Variations in economic,
social, political and cultural factors may bring about dissonance in the
operation of a transplanted legal system. Third, a comparison of the historical
colonial experience in the functioning of the transplanted legal system and the
more contemporary experience in the post-colonial period suggests fragility in
the foundations of the transplant.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

3 comments

  • OFFHAND

    The concept of ‘corporate’, in its origin, as a ‘form’ and given legal shape as an entity, as distinct from the rest, had the primary laudable objective of ‘ease of business’. However, that has, from time to time, undergone, rather made to suffer, several changes, over the years, many of them so drastic or violent as to reduce it to a mere hollow shell, now beyond recognition. Insistence and greater reliance on or leaning towards ‘substance’, instead of the ‘form’ being the natural complexion of corporate, can only be said to have overall accelerated the process of deterioration. The last significant change happens to have been thrust upon with the enactment of a new company law.
    As we have been marching from modern times to the ultramodern, one is perforce driven to reflect on one thing- that is, – not a day passes without having to remind self that the slogan, nay deeply ingrained belief, human is the most rational of all living beings/organisms on this planet, came to be given by man unto himself, and in ebullient moments of his life.
    In one of those rare moments of life, while in an apologetic mood, need to realise, – it is the failure to believe or have faith in the words full of wisdom, that-
    – there is more to business than success, more to success than monies- AND
    Spirit alone is the everlasting reality; and the infinite mystery of the material world can never be explained merely in material terms.
    That undoubtedly accounts for, and fully explains, the surrounding gloom, thick and fast.
    It is sad that, the new company law happens to be considered in knowledgeable circles a half-baked legislation (if not a still-born); hence no mind to venture to and visualize what it has in store for the next generation.
    For academic interest, but if interested to spare more altruistic thoughts,and independent analysis, for whatever that matters, suggest a mindful look into, among others,useful write- ups, in public domain, e.g HERE-
    "Ten things you wanted to know about the new Companies Bill" (BS)

  • To add: Most of the changes to the concept have been brought about under the guise of so called reformist or regularisation measures, inferably because of the need felt to subject the then and then extant provisions to ‘rationalization’ – which means, “the cognitive process of making something seem consistent with or based on reason”.

    How really those could be said to have been of any help in doing business is, for obvious reasons, a difficult terrain even angels may fear to tread.

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