I had my Business law exam today as a part of my MBA at IIM Kozhikode and it went well. A significant part of the course deals with Contract law, the Companies Act 2013 and the various rules and regulations that govern companies in India.

I remembered my former boss, Mr UK Bhattacharya, former Director of NTPC who made me read the Companies Act in and out. He used to say that the Companies Act is the Bible for a company and every employee should read it at least once. Even though I didnot understand him then, I agree with him completely now - especially after going through the course and running a company myself.

I run Zeorwatt, an energy startup with my friends and as an entrepreneur, I have to deal with various aspects of the Companies Act on a daily basis. It could be something as simple as filing the annual return or something as complex as a share transfer or a rights issue. I have to deal with the Companies Act on a daily basis and it is important to understand the law and how it applies to my company. Interactions with my chartered accountant and the company secretary clears a lot of my doubts, but I still need to understand the law myself. You cannot rely on others all the time. There could be a time where you need to make a decision quickly and you cannot wait for your CA or CS to respond. Every time I do this, I am reminded of Mr Bhattacharya’s words.

Reading the Companies Act is not just about understanding the law, but also about understanding how companies operate in India. It gives you a framework to work within and helps you make informed decisions. It also helps you understand your rights and responsibilities as a director or shareholder of a company.

I would recommend every entrepreneur - especially a startup founder - to read the Companies Act. It is a long read, but it is worth it. You could get a copy here. You can also find a free copy online here.