Why Do We Have Both the Factories Act 1948 and the Companies Act 1956? Understanding Their Key Differences

Understanding the Difference Between the Factories Act of 1948 and the Companies Act of 1956

Can anybody let me know what the basic difference is between the Factories Act of 1948 and the Companies Act of 1956? Why were these two different acts needed to be formed?

Regards

Differences Between the Factories Act of 1948 and the Companies Act of 1956

The Factories Act of 1948 was enacted to consolidate and amend the law regulating labor in factories. The Companies Act of 1956, on the other hand, provides for the formation of a company, its capital, directors, and other aspects of the company as a legal entity. These two acts are entirely different statutes.

The Factory Act governs the compensation and working environment for the workers working therein. Besides, the Companies Act governs the organizational workings, profit/loss reporting, investors' interest protection, and tracking the constitutional changes within the organization, etc.

Understanding the Difference Between the Factories Act and the Companies Act

The Factories Act maintains the work environment, compensation, and related aspects concerning the employee and their work environment. In contrast, the Companies Act is related solely to management and government rules and regulations.

Factories Act 1948

The Factories Act 1948 constitutes the starting point for the functioning of factories. Its main objective is to set up and establish industrial units and control the factory processes for societal benefits. The Factories Act was established to control processes and derive individual and social benefits from the factory.

Companies Act 1956

On the other hand, the Companies Act 1956 constitutes the formation of a company to run the business and achieve organizational objectives.

Overview of the Factories Act of 1948

The Factories Act of 1948 is concerned with legal requirements, rules, and regulations that must be complied with for a manufacturing unit to function without violating any rules and regulations.

Overview of the Companies Act of 1956

The Companies Act of 1956 is concerned with the formation, day-to-day running, winding up, board meetings, shareholders' meetings, and rules and regulations that must be complied with by a business entity called a company vis-a-vis other forms of business such as proprietorship, partnership, society, trust, etc.