Regulating Act, 1773 was a parliamentary enactment defining the powers and responsibilities of the various organs of the east india company including its territorial control over Bengal. Before the conquest of Bengal, the East India Company was having immensely profitable trade in Bengal. The proprietors of the company's shares used to receive attractive dividends regularly. But ever since the conquest of Bengal, the company was running at a loss. Instead of pursuing lawful business for their employers, the company's servants had kept themselves engaged in plundering the resources of the country and thus making themselves rich overnight. The famine of 1769/70 in the midst of the company's ravages had awakened the administration of Prime Minister Lord North to the realisation that parliamentary interference must be made into the affairs of the company in order to save the company and the new kingdom from ruin. An opportunity came when the renewal of the company's charter fell due in 1773 and when the company also applied to government for a 'rescue loan'. Parliament granted the loan and with it imposed a law regulating the affairs of the company at home and overseas. The Act made many intricate provisions, but the ones that are most relevant to the company's Bengal kingdom are as follows:

1. That, for the government of the presidency of fort william in Bengal, there shall be a Governor General, and a Council consisting of four councillors with the democratic provision that the decision of the majority in the Council shall be binding on the Governor General.

2. That warren hastings shall be the first Governor General and that Lt. General John Clavering, George Monson, Richard Barwell and philip francis shall be four first Councillors.

3. That His Majesty shall establish a supreme court of judicature consisting of a Chief Justice and three other judges at Fort William, and that the Court's jurisdiction shall extend to all British subjects residing in Bengal and their native servants.

4. That the company shall pay out of its revenue salaries to the designated persons in the following rate: to the Governor General 25000 sterling, to the Councillors 10,000 sterling, to the Chief Justice 8000 sterling and the Judges 6000 sterling a year.

5. That the Governor General, Councillors and Judges are prohibited from receiving any gifts, presents, pecuniary advantages from the Indian princes, zamindars and other people.

6. That no person in the civil and military establishments can receive any gift, reward, present and any pecuniary advantages from the Indians.

7. That it is unlawful for collectors and other district officials to receive any gift, present, reward or pecuniary advantages from zamindars and other people.

The provisions of the Act clearly indicate that it was directed mainly to the malpractice and corruption of the company officials. The Act, however, failed to stop corruption and it was practised rampantly by all from the Governor General at the top to the lowest district officials. Major charges brought against Hastings in his impeachment trial were those on corruption. Corruption divided the Council into two mutually hostile factions- the Hastings group and Francis group. The issues of their fighting were corruption charges against each other. Consequently, pitt's india act, 1784 had to be enacted to fight corruption and to do that an incorruptible person, lord cornwallis, was appointed with specific references to bring order in the corruption ridden polity established by the company. [Sirajul Islam]