Beruflich Dokumente
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Object
Company law has been enacted to consolidate and amend law relating to companies and certain other associations. Objectives to be achieved: 1) To encourage investments 2) To ensure proper administration 3) To prevent malpractices 4) To allow for investigations
Prof. Mayur Malviya
Company [Sec.3]
Sec.3(1)(i) A company means a company formed and registered under this act or an existing company. a voluntary incorporated association which is an artificial person, created by law with limited liability having a common seal and perpetual succession.
CHARACTERISTICS OF A COMPANY
An Incorporated Association Artificial legal person Separate legal entity Perpetual existence Common seal
Common capital &limited liability Transferable shares Separate property Capacity to sue & to be sued Not a citizen
Prof. Mayur Malviya
Statutory Exceptions
No. of members below statutory minimum
Company as an agent of Shareholders Company formed by certain persons to avoid their own valid contractual obligation Company formed for some fraudulent purpose
Fraudulent trading
Company formed is against public interest or Public policy Prof. Mayur Malviya
Protection of Revenue. (Case Study Jugilal vs Commissioner of Income Tax) Prevention of Fraud or Improper conduct. (Case Study Johns vs Lip man) Company is a Sham. (Case Study Gilford Motor Co Ltd vs Horne) Determination of the character of the company. (Case Study Daimler Co Ltd vs Continental Tyre & rubber Co.)
Prof. Mayur Malviya
Types of Company
On the basis of Incorporation Chartered Companies Statutory companies Registered Companies On the basis of Liability - Limited by shares - Limited by guarantee - Unlimited Company
Prof. Mayur Malviya
On the basis of Number of members: - Private Company - Public Company On the basis of Control: - Holding Company - Subsidiary Company
Private Company
Private Company [Sec.3(1)(iii)] is a Company which by its articles of association: Limits the no. of its members to 50, excluding employees who are members or ex-employees who were and continue to be members. Restricts the rights of transfer of shares, if any. Prohibits any invitation to the public to subscribe for any shares or debentures of the co.
Prof. Mayur Malviya
Public company
According to Sec.3(1)(iv), A Public Company is one which is not a Private Company.
Minimum is 2 maximum is Minimum is 7. No 50 restriction on maximum. Three letter is not Consent letters by directors is required the
3. Minimum numbers of Two directors 4. Mode of appointment of Consent directors required 5. Subscription for shares 6. Transferability of shares 7. Minimum quorum
in Members can transfer their shares freely Five Should not exceed 12% of the profits
9. Borrowing powers
A private company can A public limited company borrow funds immediately can borrow loans only after obtaining certificate to after incorporation commence business No such right Can issue share warrant Name, must add the word Name must add the word Private limited at the end Limited at the end Not required
Must hold statutory meetings and file a statutory report by the registrar 13. Commencement of Soon after incorporation Only after obtaining certificate of commencement business of business Shares must be first offered Can be issued to outsiders 14. Further issue of Capital to the existing members.
By Default
By Operation of Law
By Choice
Formation of Companies
Promotion
Registration/ Incorporation
Commencement of Business
Promotion Stage
Discovery of business opportunity Conduct of preliminary investigation Assembling Financing
Role of Promoter
Ideation Arranging resources Preparing preliminary documents Preliminary investigation Preliminary Contracts Naming the company Finance Appoint bankers, brokers, solicitors and underwriters Obtaining license
Prof. Mayur Malviya
Incorporation
Availability and approval of the name Filing of documents MOA AOA Notice Agreements Return containing first directors particulars List of directors Written consent Statutory declaration Undertaking of shares for qualification shares Payment of fee Registration Certificate of incorporation Prof. Mayur Malviya
Commencement of business
Prospectus or Statement in lieu of prospectus Minimum subscription Qualification shares Return of allotment Declaration Statutory declaration Certificate of commencement of business
Prof. Mayur Malviya
Memorandum of association
Sec.2(28). Memorandum means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous companies law or of this act. Establish the relationship between the company and the outside world
Memorandum of association
Significance Basis of incorporation Charter of company objects Future structure Limits its activities Investments and risks Liabilities Authorisation Promoters
Prof. Mayur Malviya
Alteration of Memorandum
Change of name Change of Registered office Alteration of objects Change in liability clause Capital clause
Articles of association
Regulations which govern the management of its internal affairs Duties, rights,powers and authority of the management and the board of directors in their respective capacity A public company will be deemed to have adopted Table A in Schedule I if the Companies act, if it does not file its own Articles of Association (Properly stamped, duly signed and attested.)
Prof. Mayur Malviya
Contents
Share capital Lien on shares Calls on shares Procedure of allotment of shares Transfer of shares Share certificates issued Transmission, forfeiture and reissue Share warrants Alteration of capital Meetings and proceedings Voting rights Directors and capacities Manager Secretary Dividends and reserve Book keeping Accounts, audit and borrowing powers Capitalisation Winding up
Prospectus
Sec.2(36) Document described or issued as prospectus and includes any notice, circular, advt., or other documents inviting offers from the public for the subscription or purchase of any shares or debentures of a body corporate 1) Invites subscription to shares, debentures or deposits 2) Aforesaid invitation is made to public.
Prof. Mayur Malviya
1) If the private company is changed into Public Company 2) If there is automatic or immediate collection of capital at the time of incorporation 3) If the company has not issued prospectus due to any reason 4) If the company has decided that it will not issue shares or debentures to public.
Prof. Mayur Malviya
Types
Offer Draft Red-Herring Abridged Shelf
Contents
Objects Shares Body of Management Qualification shares Minimum subscription Application and allotment Preliminary expense Amount of premium Vendors Benefit paid or given to promoters Auditors, Creditors, Underwriting Commission Reserves and profits
APPOINTMENT OF DIRECTORS
By promoters By the court APPOINTMENT OF DIRECTORS By the central government By the third parties
By the company
DUTIES OF DIRECTORS
Statutory duties Fiduciary duties Duty not to delegate Duty to take reasonable care Duty to take part in company meetings Duty to disclose interest
Shares
Sec.2(46) of the Companies act, 1956 has defined: Share means share in the shares capital of the company and includes stock, except where a distinction between stock and shares is expressed or implied. Interest Liability Right Binding
Prof. Mayur Malviya
Shares
Types Preference shares Equity Shares Sweat equity shares Listing of Shares [sec.73]
Meetings
Statutory Annual general Extraordinary Class Quorum Resolution
Prof. Mayur Malviya
Winding Up
Compulsory Voluntary Supervision under court Winding up and Dissolution
Winding up the Company Act session!! Any Queries? Lets move ahead towards taxation Thank you