Start-up companies especially Small and Medium enterprises (SMEs) lack basic knowledge of the regulatory requirements of the country and thus have to face the wrath of the various regulatory bodies in the country.

In many cases due to non-compliance of these regulations by companies they had been asked to shut down or were slapped hefty fines.

"When I started by small export house in my Gurgaon apartment, I was not aware that a Foreign Trade (Development and Regulation) Act, 1992 even existed. But when I got my first inquiry from a foreign client I was asked to show certain papers which I didn't have at all," says Malini Srivastava (Director), EMMS Global.

"Later, when I consulted my lawyer, he said that it was a dangerous proposition for a company to not follow the regulations set by a country. I immediately did the needful and today I'm still running successfully," she added.

Following the regulations is necessary for the healthy functioning of a business organization. In India, the most important regulation which regulates all the affairs of a company is the Companies Act, 1956.

The Companies Act is administered by the Central Government through the Ministry of Corporate Affairs and the Offices of Registrar of Companies, Official Liquidators, Public Trustee, Company Law Board, Director of Inspection, etc.

The Companies Act, 1956 has been amended from time to time (in the years 2000, 2001, 2002, and 2006) in response to the changing business environment. In this discussion, our attempt is to give an bird's eye view of the key regulations in India relating to a company and its functioning.

M K Singh, Delhi High Court civil and criminal lawyer often comes across cases where companies in many a time end up in the wrong side of the law. And in many cases they are even not aware of what wrong they had done.

"In export-import sector, if a person or company is found not complying to the regulations, their consignment is confiscated and bank guarantees are seized," Mr Singh said.

"He may also face arrest for Fraud (IPC 420) and Misappropriation (IPC 467/468)," he added.   

Recently, Corporate Affairs Minister Mr. Prem Chand Gupta had said that India is planning to streamline procedures for mergers and acquisitions by firms through changes in company laws.

A new bill is proposed to be introduced for amending the Companies Act, Mr Gupta said in a written reply to Parliament recently.

"A new Companies Bill, based on a comprehensive review of the Companies Act of 1956, and containing inter-alia, proposals for streamlining the process of mergers and acquisitions by companies in India, is under preparation," he said.

He did not give a time frame when the proposed bill is to be introduced in Parliament.