Companies Act 2013 Section 374

Companies Act 2013 Section 374 empowers the Central Government to frame rules necessary for carrying out the provisions of the Act. This section is crucial for ensuring the Act's smooth operation and adaptability to changing corporate environments.

Understanding this section helps directors, company secretaries, legal professionals, and companies comply with evolving regulations. It bridges the gap between the Act’s broad provisions and practical corporate governance requirements.

Companies Act Section 374 – Exact Provision

This provision grants the Central Government the authority to create detailed rules to implement the Companies Act effectively. It ensures flexibility and timely updates to corporate regulations without amending the Act itself.

• Empowers Central Government to make rules.

• Rules must be notified in the Official Gazette.

• Ensures effective implementation of the Act.

• Allows timely updates without legislative amendments.

Explanation of Companies Act Section 374

This section authorizes the Central Government to formulate rules necessary for the Act’s implementation.

• Applies to the Central Government as rule-making authority.

• Enables creation of detailed procedural and compliance rules.

• Mandates publication of rules via Official Gazette notification.

• Triggers when provisions of the Act require detailed guidelines.

• Permits amendment, addition, or repeal of rules as needed.

Purpose and Rationale of Companies Act Section 374

This section strengthens the regulatory framework by allowing the Central Government to specify detailed rules. It ensures the Act remains relevant and adaptable.

• Strengthens corporate governance through detailed rules.

• Protects stakeholders by clarifying compliance requirements.

• Ensures transparency and accountability in rule-making.

• Prevents ambiguity in the Act’s application.

When Companies Act Section 374 Applies

The section applies whenever detailed rules are needed to implement any part of the Companies Act.

• Applies across all companies governed by the Act.

• Triggered by the need for procedural or compliance rules.

• Relevant for new provisions or amendments.

• No exemptions; rule-making is a continuous process.

Legal Effect of Companies Act Section 374

This section creates the legal basis for the Central Government to issue binding rules. These rules have the force of law and affect corporate compliance and governance.

Non-compliance with rules made under this section can lead to penalties under the Act. The section interacts closely with MCA notifications and circulars to ensure updated governance standards.

• Creates binding duties through rules.

• Impacts corporate compliance and procedures.

• Non-compliance attracts penalties under the Act.

Nature of Compliance or Obligation under Companies Act Section 374

Compliance with rules framed under this section is mandatory for companies and their officers. The obligation is ongoing as rules evolve with changing corporate needs.

Directors and company secretaries must ensure adherence to these rules to maintain lawful operations and governance.

• Mandatory compliance with issued rules.

• Ongoing obligation as rules are updated.

• Responsibility lies with company officers and directors.

• Influences internal governance and procedures.

Stage of Corporate Action Where Section Applies

This section applies at all stages where rules are required to implement the Act’s provisions.

• Incorporation and registration processes.

• Board and shareholder decision-making compliance.

• Filing and disclosure requirements.

• Ongoing governance and regulatory compliance.

Penalties and Consequences under Companies Act Section 374

While this section itself does not prescribe penalties, non-compliance with rules made under it can lead to fines, imprisonment, or disqualification as per the relevant provisions of the Act.

• Monetary penalties for rule violations.

• Possible imprisonment for serious breaches.

• Disqualification of officers for non-compliance.

• Additional fees or remedial directions by authorities.

Example of Companies Act Section 374 in Practical Use

Company X received a notice from the Registrar of Companies for non-compliance with filing deadlines prescribed under rules framed by the Central Government. Director X ensured immediate compliance by following the updated MCA portal guidelines, avoiding penalties.

• Shows importance of adhering to rules framed under Section 374.

• Highlights role of directors in compliance management.

Historical Background of Companies Act Section 374

Section 374 replaced the rule-making powers under the Companies Act, 1956, consolidating authority in the Central Government for efficient governance. It was introduced to allow flexibility and timely updates without frequent legislative amendments.

• Shifted rule-making power from earlier Acts to Central Government.

• Introduced in 2013 for modern corporate regulation.

• Facilitates dynamic regulatory environment.

Modern Relevance of Companies Act Section 374

In 2026, this section remains vital for digital compliance and e-governance. It supports the MCA portal’s evolving rules and aligns with ESG and CSR compliance trends.

• Enables digital rule notifications and updates.

• Supports governance reforms and transparency.

• Ensures practical applicability of the Companies Act.

Related Sections

• Companies Act Section 2 – Definitions relevant to corporate entities.

• Companies Act Section 8 – Formation of companies with charitable objects.

• Companies Act Section 135 – Corporate Social Responsibility.

• Companies Act Section 166 – Duties of directors.

• IPC Section 447 – Punishment for fraud.

• SEBI Act Section 11 – Regulatory oversight for listed companies.

Case References under Companies Act Section 374

No landmark case directly interprets this section as of 2026.

Key Facts Summary for Companies Act Section 374

• Section:

  374

• Title:

  Power of Central Government to make rules

• Category:

  Governance, Compliance

• Applies To:

  Central Government, Companies, Directors, Officers

• Compliance Nature:

  Mandatory, ongoing

• Penalties:

  As per rules made under the section

• Related Filings:

  MCA notifications and rule compliance filings

Conclusion on Companies Act Section 374

Section 374 is a cornerstone provision empowering the Central Government to create detailed rules for the Companies Act’s effective implementation. It ensures that the Act remains flexible and responsive to the dynamic corporate environment.

For companies and professionals, understanding and complying with rules framed under this section is essential for lawful and efficient corporate governance. It bridges legislative intent and practical application, fostering transparency and accountability.

FAQs on Companies Act Section 374

What authority does Section 374 grant to the Central Government?

Section 374 authorizes the Central Government to make rules necessary to implement the Companies Act effectively. These rules help detail procedures and compliance requirements.

Are companies required to follow rules made under Section 374?

Yes, compliance with rules framed under Section 374 is mandatory for all companies and their officers as these rules have the force of law.

How are rules under Section 374 notified?

The Central Government publishes rules in the Official Gazette, making them officially binding and accessible to all stakeholders.

Does Section 374 specify penalties for non-compliance?

The section itself does not specify penalties, but non-compliance with rules made under it can lead to penalties under other provisions of the Companies Act.

Why is Section 374 important for corporate governance?

It allows the government to update and clarify regulations, ensuring companies operate transparently and comply with evolving legal standards.