Section 455 of the Companies Act, 2013
Section 455 – Power of Central Government to give directions in the case of companies engaged in public interest (similar to Section 452)
Essence of Section 455:
This section empowers the Central Government to give directions to a company if it is in the public interest or if the company fails to comply with certain provisions of the Companies Act. It is a regulatory provision to ensure companies operate responsibly and comply with legal obligations, especially when public welfare is involved.
Key Points of Section 455:
Purpose of the Section:
To protect public interest in cases where a company’s activities could have a significant impact.
To ensure compliance with legal provisions of the Companies Act by companies.
To allow government intervention in cases of mismanagement, failure to follow law, or activities contrary to public interest.
Who Can Exercise This Power?
The Central Government, usually through the Ministry of Corporate Affairs.
Authorized officers may also act on behalf of the government for enforcement.
Scope of Directions:
The government may direct a company to:
Alter its operations or methods of working to comply with law.
Provide necessary information or reports to government authorities.
Cease or modify activities that are harmful to the public or violate law.
Implement corrective measures to rectify violations or mismanagement.
Situations Where This Power May Be Used:
If a company fails to comply with statutory requirements under the Companies Act.
If a company’s activities threaten public welfare, safety, or economic stability.
If a company is engaged in mismanagement or fraud affecting stakeholders.
Binding Nature:
Directions issued under Section 455 are mandatory.
Non-compliance can lead to penalties, prosecution, or other regulatory actions.
Importance of Section 455:
Ensures government oversight over companies whose actions affect public interest.
Acts as a preventive and corrective tool against mismanagement or legal non-compliance.
Protects stakeholders, employees, and the general public.
Reinforces corporate accountability and responsibility.
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