The persistence of colonial legal principles in postcolonial company law exemplifies what critical theorists describe as legal continuity in capitalist domination, writes Farrukh Khosru
THE evolution of company law in South Asia reflects more than a legal history of business regulation; it tells the story of how capitalist and colonial power was institutionalised through the language of law. The Companies Act of 1862, enacted in British India and its successor, the Companies Act of 1994 in Bangladesh, reveal a deeper continuity: corporate law has long served as a class instrument, safeguarding the interests of the wealthy elite, foreign and domestic alike. What is presented as a framework for entrepreneurship and economic growth, in reality, legitimises an unequal distribution of wealth and power between owners and labour and between centre and periphery.
When the British Companies Act of 1862 was extended to India, it was introduced under the guise of modernising commerce. In practice, it was a legal mechanism to cement the control of British and European capital over Indian markets, land, and labour. The Act allowed for limited liability, separate legal personality and free incorporation, three pillars of corporate law that facilitated rapid capital accumulation. While these features encouraged investment and large-scale industrial ventures, they also separated ownership from responsibility, allowing shareholders to profit from the exploitation of labour and natural resources without being personally accountable for corporate wrongdoing.
In India, the Companies Act of 1862 served the empire鈥檚 economic logic, not the local population. British planters, merchants, and financiers used the law to formalise enterprises in jute, tea, and mining, while systematically excluding Indian entrepreneurs, who lacked access to credit and legal privilege. The colonial legal structure thus reproduced a hierarchical capitalist order: the colonised supplied raw materials and cheap labour, while the metropole reaped industrial and financial profits. The result was a dependent economy locked into a pattern of unequal exchange, as India鈥檚 surplus flowed to Britain in the form of interest, dividends and home charges.
Company law was never neutral; it functioned as a tool of class domination. In the colonial context, it codified the power of the imperial bourgeoisie, providing legal legitimacy to capitalist relations of production. By institutionalising private ownership, profit maximisation, and capital accumulation, the Companies Act transformed the colonial economy into a site of systematic exploitation. The separation of the company as a 鈥榣egal person鈥� from its owners allowed wealth to be concentrated in corporate hands while insulating those owners from moral or financial liability. Law thus became a shield for capital rather than a mechanism of justice.
The material outcome was what economists later termed the drain of wealth: a continuous outflow of India鈥檚 economic surplus to Britain. This included guaranteed returns on railway capital, remittances for British officers鈥� salaries and pensions and payments on foreign debts. If reinvested locally, such capital might have laid the foundation for a domestic industrial economy. Instead, company law and colonial policy combined to prevent the emergence of an indigenous bourgeoisie, preserving the asymmetry between imperial capital and colonial labour.
Independence did not fully dismantle this economic architecture. The Companies Act of 1994 in Bangladesh, though drafted within a sovereign state, retains the same capitalist DNA embedded in the colonial Acts of 1862. Its central principles 鈥� protection of private property, limited liability, and minimal state interference 鈥� remain oriented towards facilitating capital accumulation rather than ensuring equitable economic participation. The Act鈥檚 silence on corporate social responsibility, fair wages, or environmental standards reveals a legal framework that continues to favour investors over workers and the public.
In practice, this has allowed a small number of family-owned conglomerates and politically connected elites to dominate Bangladesh鈥檚 corporate landscape. The concentration of power in these groups mirrors the colonial pattern of wealth accumulation, albeit under a national bourgeoisie rather than a foreign one. Globalisation has extended the hierarchy: where once British investors reaped the gains, today multinational corporations and domestic oligarchs share that position, while the working class remains structurally disempowered.
The persistence of colonial legal principles in postcolonial company law exemplifies what critical theorists describe as legal continuity in capitalist domination. The rhetoric of economic growth and industrialisation conceals an underlying logic of exclusion: laws that once served imperial capital now serve transnational capital and domestic elites. Labour, the true engine of production, remains marginalised, with little representation in corporate governance or profit-sharing structures.
To break from this legacy, company law must be reimagined beyond the logic of profit and private ownership. Genuine reform requires embedding social justice and public accountability into corporate governance. Provisions for mandatory corporate social responsibility, worker representation on boards, and transparency in environmental and labour practices could democratise economic power and align law with the constitutional vision of equality and social welfare.
The challenge lies not merely in amending statutes but in transforming the legal culture that treats corporate rights as sacrosanct while treating human rights as negotiable. The experience of both the 1862 and 1994 Acts shows that when law is crafted to protect capital first, society pays the price 鈥� through inequality, exploitation, and dependency. The time has come to reassert that law should serve the many, not the few.
The Companies Act of 1862 laid the legal foundation for colonial capitalism, and the Companies Act of 1994 continues to bear its imprint in Bangladesh. Both serve as reminders that law is never neutral: in colonial India, it safeguarded the interests of the imperial bourgeoisie; in postcolonial Bangladesh, it sustains the privileges of the national capitalist elite. Unless company law is restructured to prioritise social accountability over shareholder profit, it will remain, as it has always been, a class instrument of capitalist and neo-colonial power masquerading as the architecture of economic progress.
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Farrukh Khosru is a researcher.