Ipcc Co Law by Akr 2017 PDF

Fast Track notes for CA- IPCC Company
Law. Considering the difficulty faced by the

students, this material has major portion of
Companies Act, 2013 with tabular and
summary presentation for quick revision.
Happy Reading
Fast Track
IPCC Company Law
CA Anil K Reddy (MCom, ACA)

CA-IPCC Business law, Ethics and Communications
Nature of Company
Definition of Company, Sec 2(20)
As per Sec 2(20), company means a company incorporated-
Under this act Under any previous company law
Meaning of a Company
Justice Marshall Justice Lindley
Artificial person Association of person
Invisible and intangible Common stock
Exists only in contemplation of law Members(contributors)
Members share profit or losses
Share
Shares are transferable
Features of Company, Sec 9

1 Incorporated Association With minimum number of members
Recognized & Registered as per law
Comes into existence after registration
2 Artificial Person Recognized in the eyes of law
Run by natural persons
3 Separate legal entity Members are different from the company
Salomon Vs Salomon Co Ltd
Lee Vs Lee air farming ltd
4 Common seal (optional) Signature of the company
May have common seal.
5 Perpetual succession Exists even if all the members die
6 Separate property Can have own property
7 Transferability of shares Freely transferable
Restrictions in private company
8 Separation of ownership and management Management is entrusted to Board of directors
9 Citizen or Not? Not a citizen
10 Capacity to sue and be sued Company can sue and can be sued
Outsiders cannot sue members in their individual capacities
11 Liability Liability of members are limited to unpaid value of shares
Lifting & Piercing of corporate veil

A company in the eyes of law is regarded as an entity separate and distinct from its members
This principle of differentiating the legal entity of the company from that of its shareholders may be
referred to as the veil of incorporation
The effect of this principle is that the members or shareholders of a company cannot be held liable in
respect of any liability accruing on the company.
Certain exceptional circumstances the courts may disregard or pierce the corporate veil of a company
and hold persons controlling the affairs of the company liable for the acts of the company.
Where the legal entity of a corporate body is misused for fraudulent and dishonest purposes, the
individuals concerned will not be allowed to take shelter behind the corporate entity of the company
1 Prevent illegal or Horne Vs Gilford motors company ltd
improper conduct
Employee entered into contract with company not to solicit the employers customers
after leaving the employment. After leaving the employment, employee incorporated
a company and started soliciting the customers. Court held such soliciting is illegal.
CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 1

2 To protect revenue of Sir Dinshaw Maneckjee Petit
the Govt
Sir was receiving huge dividend and interest income from investments. He incorporated
4 Pvt Companies and transferred the investments to Company since investment income
from companies was exempt from tax laws. Therefore court held investments were
made only to evade taxes.
3 To prevent violation of Associated rubber industry ltd
labour and welfare laws
As per bonus Act, bonus it paid on profits earned. to avoid labour laws, company
incorporated a subsidiary and transferred some valuable investments of it. Subsidiary
does no business otherthan investments transferred to it. Court held, Company is
formed for avoid labour laws.
4 To determine the enemy Diamler company ltd Vs Continental tyre and rubber company Ltd
character of the company A company was formed in England to sell tyres made by german company. Entire share
capital is held by german company and all directors are german residents. German
Company raised debt recovery case, court held suit is not maintainable.
5 To determine the New Horizons India Ltd
technical competence of Company started with object of making movies, but entered into projecting movies
the company made abroad. Court decided, company shall operate in accordance with objects.
6 In quasi criminal cases Look behind the legal person to punish the person who violated
Mandatory use of Limited and Pvt Limited

Every company shall end the name with Limited or Pvt Punishment: fine not less than 500 but may be extended
Limited depending of nature of company upto 2000 per day.
Exception: Sec 8 company
Classification of Companies
Size Liability Control Listing Other companies
Pvt Co 2(68) Limited Co Holding Co 2(46) Listed Co 2(52) Foreign Co 2(42)
- OPC 2(62) - By shares 2(22) Subsidiary Co 2(87) Unlisted Co Govt Co 2(45)
- Small Co 2(85) - By guarantee 2(21) Associate Co 2(6) Sec 8 Co
- Other - Both Dormant Co Sec 455
Public Co 2(71) Unlimited Co 2(92) Nidhi Co Sec 406
One Person Company [Section - 2(62)]

Minimum share capital as may be prescribed (Rs ommited /- Certain exemptions are provided in the Act
) Compulsory conversion into either private
Only one person as member or public company if paid up share capital
Nominee is compulsory exceed Rs 50,00,000 /- (or) Average
One person or nominee can only hold one OPC (preceding 3 years) annual turnover
Only resident of India can start OPC (those who resided exceeds Rs 2 crores
for not less than 182 days in the preceding financial year) Can also be converted voluntarily
Small Company Sec2(85)

Other than a PUBLIC Company
A company is said to be small company if is satisfies the following conditions
a. Its Paid up capital does not exceed-
i. Rs 50 Lakhs or
ii. Such other amount as may be prescribed (not being more than 5Crs)
b. Its turnover does not exceed-
i. Rs 2 Crs or
ii. Such other amount as may be prescribed (not being more than 20Crs)

Holding, Subsidiary and Associate Company
Holding company 2(46) controls the Subsidiary Two companies are treated as Associate
Company 2(87) either by companies 2(6) if one company holds 20% or more
controlling composition of directors in another. (Significant interest)
controlling more than half of total share capital
either directly or indirectly
Sec 8 Company
Not for profits. Established for promotion of commerce, health, research, social welfare, science,
education, sports, religion & protection of environment or any such other acts
Not to declare dividends
Obtain license from the central government
The CG will direct the company upon contents of MOA & AOA
company may either be limited by shares or by guarantee
Monies raised must be spent only for purpose for which it has been started
Certain privileges are available in Act ( a firm may become a member)
May alter its MOA and AOA with prior approval of CG and complying provisions of law.
Sec 8 Company may be converted in to other kind of company by with conditions as may be prescribed and
passing special resolution in GM.
CG may cancel license by giving the company an opportunity of being heard
Foreign Company [Section 2(42)]
A company incorporated outside India but having place of business in India and conducts some business activities in
India.
Illegal Association [Section 464]
Any association for profit in which more than prescribed members but shall not exceed 100 members. Rule 10 of
Companies (Misc) Rules, 2014 prescribes it as 50 members.
Exceptions: Contravention
Company Punishable with Rs. 1 Lakhs and
Registered under any other Act Personally liable for all liabilities incurred
Service motive (NPO)
Single HUF
Partnership formed by professionals
Compiled by CA. Anil Kumar Reddy. M.Com, ACA.

For his face to face classes on
CPT- M.Law/IPCC Law and Auditing \Final - Corporate and Allied Laws and Audit
And
Summary book on CPT- Law/IPCC-Law and Audit/Final-Law and Audit
Contact: +91 99850 91719

Promotion
Promoter [Section 2(69)] Duties of Remedies available Validity of Pre-Incorporation
Promoter to company contracts
-A person who has been named -Duty not to -Rescission of -Will be binding on the
as such in Annual return and make secret contract company if the company
prospectus profits decides to adopt the same,
-Recovery of secret otherwise the promoter will be
-A person who controls affairs -Duty to disclose
profits liable.
of the company either directly the interest in
or indirectly as a shareholder, transactions
-Suit for breach of -The company may adopt if
director or otherwise
-Note: May get trust the contract was entered on
remuneration if condition of incorporation and
-A person in accordance with
there is written for the object of the company.
whose instructions the BODs
agreement
will act
Functions Position
Generating idea of starting of business Neither an agent nor a trustee since co is not formed, but
Feasibility study his position is similar to that of agent and trustee
Takes decision on formation of company
Preparation of MOA and AOA He Stands in a fiduciary capacity towards company
Arrange subscribers to MOA
Filing of documents with ROC
Appointment of first directors
Enter pre-incorporation contracts
Arrangements for issue of shares
Process of Incorporation (Section 7)
In terms of section 3(1)(a) a public company may be formed for any lawful purpose with 7 or
more persons by subscribing their names to a memorandum and complying with the requirements of the
Companies Act for the registration of companies.
In exactly the same way, under section 3 (1)(b), 2 or more persons can form a private company.
Check name availability Apply to ROC ROC intimates within 7 days Name is available for
(3 names) next 60 days.
Submission of documents MOA/AOA
Statutory Declaration
Address of Registered Office
Applicable forms for Incorporation
Particulars of Directors named in AOA
Shall have RO after 15days of incorporation and verification has to
be submitted to ROC within 30days of incorporation
ROC issues certificate Incorporation certificate dated and contains CIN
Incorporation Incorporation certificate is conclusive and cannot questioned
Integrated Process for incorporation
(1) For the purpose of simplifying the filing of forms for incorporation of a company, the
integrated process shall apply with effect from 1st May, 2015.
(2) the application for allotment of Director Identification Number (DIN) upto 3 Directors,
reservation of a name, incorporation of company and appointment of Directors of the
proposed company shall be filed in Integrated Form No. INC-29,
(3) for One Person Company, Private company, Public Company and producer company,
with the Registrar within whose jurisdiction the registered office of the company is
proposed to be situated, along with the fee of rupees two thousand in addition to the
registration fee as specified in Companies (Registration of Offices and Fees) Rules, 2014.
(4) For the purposes of filing Integrated Incorporation form, the particulars of maximum of 3
directors shall be allowed to be filled in INC-29 and allotment of DIN of maximum of 3
proposed directors shall be permitted in Form INC-29 in case of proposed directors not
having approved DIN.
(5) The promoter or applicant of the proposed company shall propose only one name in e-form
No. INC-29.
(6) The promoter or applicant of the proposed company may prepare Memorandum of
Association as per templates in Form INC-30 and may opt for templates of Articles of
Association in Form INC-31 in accordance with the provisions of rule 13 for preparation
of Memorandum of Association and Article of Association.
(7) The promoter or the applicant shall sign and witness, the Memorandum of Association
and Articles of Association in the forms downloaded from the portal of the Ministry of
Corporate Affairs and scanned legibly and attach to e-form INC-29 in accordance with the
provisions of rule 16 for preparation of Memorandum of Association and Articles of
Association.
(8) The facility to file Integrated application for incorporation in Form INC-29 is available as
an option to the process for separate applications for allotment of Director Identification
Number, reservation of name and Incorporation of a company as provided in these rules.
(9) A company using the provisions of this rule may furnish verification of its registered office
under sub-section (2) of section 12 of the Act by filling e-Form INC -29 in which case
the company shall attach along with such e-Form INC-29, any of the documents referred
to in sub-rule (2) of rule 25.
(10) The requirement of filing e-Form INC-28 may be dispensed with if, the proposed company
maintains its registered office at the given correspondence address.
(11) The Registrar within whose jurisdiction the registered office of the company is proposed to be
situated shall process INC-29 including application for allotment of DIN.
(12) (a) Where the Registrar, on examining e-form INC-29, finds that it is necessary to call
for further information or finds such application or document to be defective or
incomplete in any respect, he shall give intimation to the applicant to remove the
defects and re-submit the e-form within fifteen days from the date of such intimation
given by the Registrar.
(b) After the resubmission of the document, if the registrar still finds that the document
is defective or incomplete in any respect, he shall give one more opportunity of
fifteen days to remove such defects or deficiencies.
(c) In case, the Registrar is of the opinion that the document is defective or incomplete
in any respect after giving such two opportunities, the e-form INC- 29 of the
proposed company shall be rejected.
(13) The Certificate of Incorporation shall be issued by the Registrar in Form No. INC-11.
Effects of incorporation (Section-9)

distinct legal entity perpetual existence property is not the property of the shareholders

Memorandum & Articles

Memorandum of Association [Section 2(56)]
Format: Given in Table A, B, C, D & E of Schedule I
Definition of MOA:
Memorandum means the Memorandum of Association of a Company as originally framed or as
Sec.2(56)
altered from time to time in pursuance of any previous Company Law or of this Act.
Contents
Name clause Word Limited / Private Limited / OPC have to be added
Name must not be identical, undesirable, projecting connection to the Government,
against Names & Emblems Act
Clearly engraved outside every place of business and printed on all letter head, bills,
vouchers along with RO address
If name is written wrong then the officer signing the document is personally liable
Situation clause State of the RO
Details to ROC : Verification of Registered Office, in Form No.INC.22.
Time Limit : Within 30 days of incorporation.
Punishment : Fine of Rs.1,000 for every day during which the default continues. Maximum Fine
= Rs.1 Lakh.
Objects Clause Not illegal
Main objects, Incidental objects & Other objects
Liability Clause Liability of the members
Authorized share capital

Capital clause Total number of shares
Nominal value of shares (division)
At least 2 (or) 7 as the case may be
Subscription Clause Minor cannot sign as subscriber
Each subscriber agrees to take at least on share
First members of the company
Nomination clause Only for OPC
State the Name of the person who, in the event of death of the Subscriber, shall
become the Member of the Company.
Alteration of Memorandum of Association [Section 13]

Name Clause Voluntary Change
(BM then GM for SR [Special Resolution CG Approval Inform ROC within 30 days]
then CG approval - Alteration of words Private CG approval not required
apply in INC-24 for Listed companies some additional procedures
name availability) Change in name by CG order [on own or on application]
(name is valid only from
[Ordinary Resolution Inform ROC within 15 days]
new certificate is issued
by ROC) Comply with directions within 3 months
For every alteration of MOA, a copy of Special Resolution u/s 13(1) shall be filed with ROC in
Form No.MGT-14 within 30 days from the date of passing resolution. [Sec.13(6)]
Change of name shall not be allowed to a Company which has defaulted in - filing its
Annual Returns or Financial Statements or any document due for filing with the ROC, or
re-payment of matured Deposits or Debentures or Interest on Deposits or Debentures.
Situation Clause Within city limits
BM [Board Resolution Inform ROC within 15 days]- INC22
GM
Apply to RD/CG From one city to another (no change in ROC)
Alter MOA [Special Resolution Inform ROC within 30 days]
Intimate ROC
From one city to another (change of ROC)
[Special Resolution RD Permission (INC-23) - Inform ROC within 60 days of order]
Inform ROC within 15 days]- INC22 change in place of registered office
From one state to another

[Special Resolution CG Approval(INC-23) Inform ROC within 30 days of order]
No reduction in employees, no pending investigations, repay or provide security to
creditors (Affidavit by CS and 2 Directors)
See Chart Below
Object Clause Alteration of the memorandum simpler and more flexible
(BM-GM(SR)-ROC) Special resolution in GM
Filing of the Special Resolution by the company with the Registrar
ROC to certify the registration within a period of thirty days from the date of
filing of the special resolution by the company
Limited to Unlimited
Liability clause [Ordinary Resolution Inform ROC within 30 days] SH-7
Unlimited to Limited Re registration

Increase Authorised Share Capital, Consolidate or
Split the Shares, sub-divide
Capital Clause Reduce the balance of Authorised Share Capital
Convert Shares into Stock and Vice Versa
[Ordinary Resolution Inform ROC within 30 days] SH-7
Subscription Clause Cannot be changed
Nomination Clause At any time by informing to ROC
Shifting of Registered office Chart.

From To MOA Authority
Change
One Premises, Another Premises / Place in the No Board Resolution
Place same City, Town or Village (Local
Limit)
One City, Town or Another City, Town or Village in the
Village same State, but within the No Special Resolution
jurisdiction of the same ROC.
One City, Town or Another City, Town or Village in the
Village, in same State, in jurisdiction of Special Resolution + Regional
No
jurisdiction of another ROC within the same State. Director Confirmation
one ROC
Special Resolution + Central
One State Another State Yes
Government Confirmation
Articles of Association [Section 2(5)]
Format: Given in Table F, G, H, I & J of Schedule I
Definition [Sec.2(5)] : Articles means the Articles of Association of a Company as originally framed or as altered from
time to time or applied in pursuance of any previous Company Law or of this Act.
Contents: Alteration of AOA Entrenchment Provision
AOA of a Company shall contain the regulations [Special Stricter provision for altering
for management of the Company Resolution AOA
Rights of each class of share holders Inform ROC Must be included in AOA at the
Procedure for allotment of securities, within 15 days time of incorporation
increase or decrease in share capital, CG permission if Can be included afterwards
transfer of securities, issue of share certificates converts public (private company
company into a unanimous resolution)
Procedure to appoint directors, audit & accounts
private (Public company special
Constitution of committees
company resolution)
Borrowing powers of board etc.
Memorandum of Association vs Articles of Association

Particulars Memorandum of Association Articles of Association
They are fundamental conditions upon which They are internal regulations of
Company is allowed to be incorporated, Company and Shareholders / Members
1. Meaning
introduced for benefit of Creditors, outside and amongst members themselves.
Public and Shareholders.
Lays down the area beyond which the activities Provides for Regulations inside the area
2. Scope of the Company cannot go. MOA lays down outlined by MOA, i.e. AOA is subordinate
parameters for AOA. to the MOA.
Name Clause, Situation Clause, Objects Clause, Contains Regulations for Company
3. Contents Liability Clause, Capital Clause and Association management and those that regulate
Clause. relationship between members inter se.
Can be altered only under certain situations and
in the manner provided. Approval of Central
Can be altered by the members by
4. Alteration Government is required, besides approval of
passing a Special Resolution only.
Shareholders in a General Meeting by way of
Ordinary or Special Resolution.
5. Subsidiary to Companies Act. Both Companies Act and the MOA.
Acts beyond scope of MOA are ultra vires and Acts ultra vires AOA can be ratified by
6. Ultra vires hence void. Acts Ultra Vires MOA cannot be members resolution, provided that they
ratified by members. are within the scope of MOA.

Conversion of Companies
Private to Public Alter AOA removing restrictions
Increase members
Alter name clause in MOA
Public to Private Check that the Memorandum of Association does not contain any restrictive
clause
Alter AOA to include restrictions required u/s2(68)
Apply for NCLT for approval
File to ROC on approval within 15days
Voluntary Conversion
Minimum 2 years shall be lapsed from incorporation
OPC to Private or Increase members
Public Alter MOA & AOA
(Compulsory Conversion discussed already)
Alter MOA & AOA

Private to OPC NOC from creditors
Submit documents to ROC
Ultra Vires and Doctrine of Constructive notice

Ultra vires- beyond the powers. Doctrine of Constructive Notice
A Company cannot effectively do anything beyond the Memorandum and Articles of Association, when
powers expressly or impliedly registered with the ROC, become Public Documents
Company is allowed to only such acts Person dealing with the company is deemed to
a. Within framework of MOA have constructive notice of their contents
b. Reasonably and fairly incidental to main objects The doctrine of constructive notice is not a positive
c. Authorized by AOA one but a negative one
Richie Vs Ashbury Railway Carriage and Iron Company Kotla Venkata swamy Vs Ram murthy
Ltd AOA & MOA are public documents; every person
Beyond the powers of AOA Voidable dealing with the company is expected to have
Beyond the powers of MOA Void knowledge of these provisions.
Beyond the Act Void-ab-intio (Protects Company)
Implication of ultra-virus Note: they need not inquire into the regularity of
a. neither party can enforce the internal proceedings as required by the
b. no claim or compensation Memorandum and the Articles. This limitation of the
c. no personal liability on part of directors unless doctrine of constructive notice is known as the
they entered fraudulently doctrine of indoor management
Doctrine of Indoor Management (Protects Outsiders)
Turquand Vs Royal British Bank
Every person dealing with the company can assume that internal procedures are complied. They are bound
to examine the registered documents of the company and ensure that the proposed dealing is not inconsistent.
The doctrine of indoor management aims to protect outsiders against the company.
Exceptions
Knowledge of irregularity (T.R. PRATT (Bombay) Ltd. v. E.D. Sasson& Co. Ltd.)
Negligence (Anand Bihari Lel v. Dinshaw& Co.)
No knowledge of AOA Rama corporation Vs Proved tin & General investment co
Forgery Ruben Vs Great Fingall Company Ltd
Ultra vires transactions Void ab initio

Prospectus
Def- Section 2(70) defines Prospectus as
any document named as prospectus and
Includes Red herring prospectus, Shelf prospectus, Any notice, circular, advertisement or any other document
inviting offer from public for subscription and purchase of shares of the company.
When Prospectus is not required

Right issue or Private Conversion of loan Bonus ESOPs Issued to Application for Listed company
further issue placement or debenture or issue QIBs underwriting similar issue as
PSC earlier
Requirements for issue of prospectus
Matters to be stated in a Registration of Approval of The lead financial institution
Prospectus prospectus prospectus by underwriting the issue, if applicable
various agencies
comprehensive Section 26 (4) approved by draft prospectus is vetted by
information on all provides that no various agencies SEBI
aspects of the company prospectus shall before it is filed to ensure adequacy of
section 26 (1) of the be issued, unless with the ROC disclosures
Companies Act, 2013 Registrar for vetting by SEBI does not amount
lists down a large list registration to approval of prospectus
of items that must be signed by every SEBI does not take any
stated in the Prospectus person responsible responsibility for the correctness
for issue of the statements
Contents of Prospectus (26)
Business Capital Details of persons
All about the Earlier public issue & Failure to obtain minimum
company plan Structure connected utilization & Expert statement subscription
Notes:
a. Last 5 years Audit reports & financial statements must be attached to prospectus
b. Prospectus must contain a declaration that all the provisions of this act, SCRA and SEBI are complied.
c. Prospectus must also contain consent given by every person named in prospectus
d. Prospectus is signed by every director of Company
Registration Prospectus

Before issue to public copy No prospectus can be Date of prospectus is the If above provisions are not satisfied
must be given to ROC issued 90 days after date which is printed in then penalty of Rs 50000 - 300000
submission to ROC prospectus
Abridged prospectus (Sec 33)
Def Section 2(1) issued along with application form abridged prospectus Default
need not accompany
the application forms
a memorandum no application form for the purchase bona fide Non-Compliance by
containing such of any of the securities of a company invitation to a Company with
salient features can be issued unless such form is person to enter Sec.33 attracts a
of a prospectus accompanied by an abridged into an penalty of
as may be prospectus underwriting Rs.50,000 for each
specified by the investor gets opportunity to study the the securities are default.
SEBI by making contents of this abridged prospectus not offered to the
regulations in objective of the abridged prospectus public
this behalf.
is to reduce the cost of issue as the
detailed prospectus
Shelf Prospectus (31)
Meaning key features
shelf prospectus is a prospectus in A shelf prospectus is a prospectus; hence it must comply
respect of which the securities or class with all the provisions of Section 26
of securities included therein are issued A shelf prospectus may be issued by companies only if
for subscription in one or more issues and subject to the regulations of SEBI;
over a certain period without the issue validity of a maximum period of one year during which
of a further prospectus. time the company may bring out a number of issue of
second or subsequent offer of such securities, all covered by the same prospectus.
securities issued during the period of Validity of a shelf prospectus of a maximum period of one
validity of that prospectus, no further year shall commence from the date on opening of the first
prospectus is required offer.
Note: Information memorandum has to be filed explaining the changes during the period.
Deemed Prospectus or offer for sale (25)
section 25 (1), any document by which an offer for sale of any The prospectus must contain additional details
securities is made to the public and the company allots or Net consideration receivable by company
agrees to allot securities in terms thereof, then such document Place, date, time where the agreement can
shall for all purposes, be deemed to be a prospectus be verified
Red herring Prospectus (32)
A red-herring prospectus means a prospectus which file Register it with the Registrar at least three days prior to
does not include complete particulars of the price or the opening of the subscription list and the offer.
the quantum of securities offered therein
issue of a red herring prospectus does not absolve a On the basis of offers received, company will finalise the
company from issuing a regular prospectus issue price and issue size and then close the offer
Expert w.r.t. Prospectus
Aspect Description
Def Expert includes an Engineer, a Valuer, a Chartered Accountant, a Company Secretary, a Cost Accountant and
[Sec.2(38)] any other person who has the power or authority to issue a Certificate in pursuance of any law.
Reports of an Expert should be included in a Prospectus only if such Expert -
(a) is not engaged or interested in the formation or promotion or management of the Company,
Conditions
(b) has given his written consent to the issue of the Prospectus, and
[Sec.26(5)]
(c) has not withdrawn the consent until delivery of Prospectus to ROC for registration.
Note: The Prospectus should contain a statement to the above effect.
Misstatement in Prospectus (34, 35)
Remedies Available Rescind the contract & Sue for the damages
Criminal liability(sec 34) Civil Liability(sec 35)
Any statement is untrue or misleading in form or a person has subscribed for securities of a
context company acting on any statement included,
included or where any inclusion or omission of any or the inclusion or omission of any matter,
matter is likely to mislead the reader in the prospectus which is misleading
Every person who authorizes the issue of such such person has incurred loss due to such
prospectus shall be liable under section 447. decision
Section 447 liable to pay compensation to every person
imprisonment- 6M-10years who has sustained such loss or damage
fine- amount involved -3times of amount involved
Defence Not given consent, withdrawn consent, believed to be true, genuine and immaterial

Share Capital
Def- As per Section 2(84) Share means a share in the share capital of a company and includes stock
Share vs Stock :
Basis Share Stock
Can either be fully paid-up or partly Always fully paid-up. Stock can never be partly paid-
1. Paid up
paid-up. up.
Creation / Shares can be issued originally. Company cannot make an original issue of Stock.
2.
Issue Fully paid Shares can be converted into Stock later.
Nominal Share usually has an issued Nominal Stock has no Nominal Value.
3.
Value Value.
Each Share us referred by a distinct Stock has no such number.
4. Identity number that distinguishes it from
other Shares.
Shares can be transferred only in its Stock may be transferred in any fractions.
5. Fractions
entirety or in its multiples.
Kinds Of Shares
Preference Share Equity Share
Carries preferential right in respect of payment of Which has equal rights; The Company may
dividend; and repayment of capital. A company can issue issue equity shares with differential rights
only redeemable preference shares
Issue of Shares
Public Offer (sec 23) Further Issue (or) Rights Issue (sec 62)
Pass a special resolution Pass a board resolution
Get listed To the existing shareholders in
Open a separate bank account for application monies proportion of their holding
Enter into agreements with underwriters & broker At least 3 days notice shall be given
Prepare prospectus before opening of subscription list
Submit prospectus to ROC Give 15 days time for the shareholders
Print the prospectus and issue the applications to public to decide whether to accept such
Open Subscription list shares or renounce
Receive application monies Member can renounce the rights
Close the subscription list unless restricted by Articles
Calculate minimum subscription Board may deal with the shares not
Allot shares or refund monies applied for or renounced as their
Only in Dematerialised form wish/discretion
File return of allotment with ROC File return of allotment with ROC

And
Contact: +91 99850 91719
Private Placement
Pass a Mention the names in register Send private placement offer No File return of
special to whom private placements letter to the proposed advertisement allotment with
resolution can be made investors (no prospectus) ROC
Conversion of loan/ debentures into shares (Section 62)
No special resolution is The government in public interest may order Company must file appeal within 60
required the company to convert days to NCLT
Sweat equity shares (54) Bonus shares Issue of shares at premium(sec 52)
Can be issued at discount Only with respect to fully paid Meaning : Premium refers to the excess of
One year lapsed from DOI shares the Share Issue Price over its Face Value
Special resolution has to be Authorization in AOA Cash or Kind
passed Pass ordinary resolution Rate of Premium
Same class already issued No default in redemption, Securities Premium Account
Notice must be detailed payment of dividend & Application of Premium:
Company may place statutory dues relating to
restrictions on transferability Security premium account can be used
labour
File return of allotment with for bonus shares,
File return of allotment with ROC
ROC write off preliminary expenses,
write off issue expenses,
payment of premium on redemption,
And buy back.
Issue of Shares at Discount Prohibited [Sec.53]
Calls Calls paid in advance (Sec 50
Call refers to the demand for Share Money Authorized by AOA
Call may be made at any time (i) during the lifetime of the Company, or (ii) Can pay interest on advance -
during its winding up. maximum rate of 12% p.a.
Made by board of directors Cannot pay dividend
Not more than 25% of face value No additional voting rights
At least 14 days notice No refund
No voting rights - till calls are paid In liquidation these will be paid
Gap between two calls - at least 1 month before payment of share capital
Interest on non-payment: Shareholder liable for interest as per the AOA.
[Table F provides for a maximum of 10% Interest p.a.]
Call may be revoked / postponed at the discretion of the Board of Directors.
Forfeiture Surrender
Authorized by AOA Same as forfeiture
Fully paid shares can also be forfeited As per the provisions of articles
BODs decision Profit on reissue may be given to defaulting share
At least 14 days notice holder if articles permit
Can be re issued
Re issue price must not be less than the amounts due
from defaulting SH
Profit on reissue may be given to defaulting share holder if
articles permit

Reduction of share capital (Sec 66 COA 2013)
Forms procedure
1. Extinguish or reduce 1. special resolution
the liability of capital 2. An application is to be made to Tribunal
not paid; and 3. Tribunal shall give notice to the CG, Registrar, SEBI
2. Cancel any paid-up 4. Receive representation from CG or Registrar or SEBI within 3 months of
share capital notice.
3. Paying off any paid up 5. If no recommendation is received within specified period is deemed no
share capital. objection.
6. Tribunal must settle the list of creditors who are entitled to object such
as creditors having a debt or a claim admissible on a winding up..
7. The Tribunal may publish notices for Creditors, the right of objecting to the
reduction.
8. File a copy of reduction of share capital with Roc
Buy back of shares
Purposes - To improve EPS, avoid hostile takeover, return surplus cash, provide SH option to exit
Eligibility - No default in redemption of PS/Debenture/Deposits/Bank loans, payment of interest &
dividend (for 3 years). Must have filed Annual returns, followed Schedule III
Limit
o 25% of equity paid up capital at a time
o Amount to be withdrawn 10% of (PUSC+FR) [Boards Permission]
- 25% of (PUSC+FR) [Special Resolution]
o Debt equity ratio after buy back not more than 2:1
Sources for buy back
o Amounts required can be withdrawn from either FR, Security premium or fresh issue (not same
class)
o If Security premium account used create capital redemption reserve
Time limits
o To be completed within 1 year from resolution
o Gap between two buy backs at least 1 year
o No issue of same class of shares for next 6 months
o Within 30 days from completion of buy back intimate ROC
o Destroy Share Certificates within 7 days
Other Conditions
o Only fully paid shares
o Solvency certificate
o Disclose failure to buy back in Directors report
o Penalty Rs 1lac 3 lacs & Imprisonment 3 years
Underwriting Commission
should not exceed
As per Equity Shares Preference Shares Debentures
SEBI Guidelines
(a) Subscription by Public Maximum 2.5% Upto Rs.5 Lakhs : 1.5.% Upto Rs.5 Lakhs : 1.5%
Above Rs.5 Lakhs: 1% Above Rs.5 Lakhs: 1%
(b) Amount devoting on Maximum 2.5% Upto Rs.5 Lakhs : 2.5% Upto Rs.5 Lakhs : 2.5%
Underwriters Above Rs.5 Lakhs: 2% Above Rs.5 Lakhs: 2%
Least of the following Least of the following
Companies Act 5% of the Issue Price, or 2.5% of Issue Price, or
Amount or Rate authorised by AOA. Amount or Rate
authorised by AOA.
Penalty for Non-Compliance [Sec.40(5)] : In case of non-compliance with the above, the punishment will be
(a) Company is punishable with Fine of Minimum Rs.5 Lakhs, Maximum Rs.50 Lakhs.
(b) Every Officer in default is punishable with (i) Imprisonment of maximum 1 year, or (ii) Fine of Minimum
Rs.50,000, Maximum Rs. 3 Lakhs, or (iii) Both.
Underwriting vs Brokerage
Basis Underwriting Brokerage
It is a Contract entered into between the Broker merely undertakes `to place
Company and Underwriters whereby the Shares, i.e. finds person who will buy
Meaning Underwriters agree to subscribe the shortfall in Shares for an agreed brokerage.
minimum subscription. (Brokerage is the sum paid by Company
for placing its Shares)
Underwriter is liable to take the Shares when Broker does not have any liability to
Liability there is failure by public to subscribe. subscribe to the Shares. He merely finds
Buyers.
The risk associated with underwriting is the No risk because Broker does not
Risk development of underwriters in case of failure undertake to subscribe for the Shares.
of public to subscribe.
Risk is suitably compensated by way of Broker gets Brokerage only when he
Reward
Underwriting Commission. places the Shares, Else, no Brokerage.
Commission is payable only when there is an Brokerage may be paid even if the AOA is
Authority
express authority in the AOA. silent about it.
Commission is payable only when Shares are Brokerage is payable even when the
Public Offer
offered to public. Shares are not offered to public.
Name, Address and Occupation of underwriters Details of Brokers are not required to be
Disclosure
should be disclosed in the Prospectus. disclosed.
Allotment
Proper Authority Board or Committee
Written Application Allotment shall be done only on applications
Minimum Subscription (Section 39(1)) 90% offer made
Mentioned in prospectus
No allotment if not received in 30 days of issue of prospectus
Return within 15 days
Otherwise directors personally liable for interest @ 15% p.a
Application Monies [39(2)] Not less than 25% or 5% of nominal value
Must be kept in separate bank account
Not used for other purposes
Listing of shares [40(1)] Mandatory for issue of shares to public
To be mentioned in Prospectus
Separate Bank Account [40(3)] Deposit of Application Money in Separate Bank Account
Return of Allotment (Form PAS 3)[39(4)] Filed within 30 days to ROC
Not required for reissue of forfeited shares
SHARE CERTIFICATES
Meaning and Features
1. Share Certificate: Share Certificate is the document issued by a Company to its Shareholders, declaring the
interest of that person, in the Capital of the Company. It is the representation of the Share held by a Member.
2. Features : Share Certificates
(a) are issued under the Common Seal of the Company

(b) Bear the Distinctive Number.
(c) Are given in Form No. SH-1 or as near thereto as possible.
(d) Contain details like (i) Members Name; (ii) Number of Shares held by him, (iii) Amount paid on such
Shares.
Signature in a Share Certificate
Signatory : The Certificate should be signed by
(a) EITHER (i) 2 Directors authorized by the Board, OR (ii) Committee of the Board, if authorized by the Board,
AND
(b) Secretary, or any person authorized for the purpose (including Company Secretary appointed under the Act.)
Time Limit for Issue [Sec. 56(4)
Situation Share Certificate shall be issued -
1. Subscribers to MOA Within 2 months from the Date of Incorporation.
2. On Allotment of Shares Within 2 months from the date of allotment of Shares.
3. Transfer / Transmission of Within 1 month from the date of receipt of Instrument of Transfer or
Securities Intimation of Transmission.
4. Allotment of Debentures Within 6 months from the date of allotment of Debentures.
5. Tf of debentures Within 1 month from date of receipt of tf deed
Duplicate Share Certificates [Sec.46(2)]
Situation Conditions to be satisfied
Prior Consent by Board Resolution is a must for issue of Duplicate
in this case.
The Company may charge a Fee (not exceeding Rs.50 per Share
Certificate) for issue of Duplicate Share Certificate.
The Board may impose reasonable terms, e.g. (i) furnishing
Existing Certificate is supporting evidence and indemnity, and (ii) payment of out-of-
(a) proved to be lost or pocket expenses incurred by the Company in investigating the
destroyed. evidence produced.
The words Duplicate Issued in lieu of Share Certificate No .....
shall be stated prominently on the Certificate.
The word Duplicate shall be stamped or printed prominently on
the face of the Certificate, in addition to the above In lieu of ...
Statement.
(b) Existing Certificate is Earlier Certificate must be compulsorily surrendered to the
defaced, multilated, torn Company.
or old, decrepit or worn- The Company may charge a Fee (not exceeding Rs.50 per Share
out. Certificate) for Issue of Duplicate Share Certificate.
Earlier Certificate must be compulsory surrendered to the
Company. [Note: However, Board may pass a Resolution waiving
Shares are sub-divided or
(c) requirement of Surrender.]
consolidated.
The Company may charge a Fee (not exceeding Rs.50 per Share
Certificate) for issue of Duplicate Share Certificate.
(d) Fresh Certificates are Board may pass a Resolution waiving the surrender of earlier
required to be issued Certificate.
upon Merger / Demerger No Fee shall be payable, if so specified in the scheme of
/ Reconstitution. arrangement sanctioned by the High Court or Central Government.
Time Limit for Issue :

Company Duplicate Certificate to be issued within
Unlisted Companies 3 months from the date of submission of complete documents with the Company.
Listed Companies 15 days from the date of submission of complete documents with the Company.
Note : Power to issue Duplicate Share Certificates can be exercised by a Committee of the Board, subject to
any Regulations made in this regard, by the Board. [MCA Circular No.19/2014]
Distinction between a share warrant and a share certificate
Basis SHARE CERTIFICATE SHARE WARRANT
meaning A share certificate is a prima facie A share warrant is a bearer document stating that
evidence of document of title, stating the holder is entitled to certain number of shares
that the holder is entitled to specified specified therein.
number of shares
Nature of Share certificate can be issued by a public Share warrant can be issued only by public
Co. and private company companies.
Paid up A share certificate can be issued for a fully A share warrant can be issued only with respect of
value paid and partly paid up shares fully paid up shares
member The holder of a share certificate is The bearer of a share warrant can be a member only if
normally a member of the company the articles provide.
negotiable A share certificate is not a negotiable A share warrant is by mercantile usage a
instrument instrument negotiable instrument
Execution The shares can be transferred by A share warrant can be transferred by mere
of deed execution of a transfer deed and its delivery and no registration of transfer with the
delivery along with the share certificate. company is required.
The transfer is complete when it is
Stamps registered
Stamps dutyby the
is company.
payable on transfer of No stamp duty is payable on transfer of a share
duty shares specified in a share certificate warrant
Membership
Def - Section 2(55) says Member includes
All the subscribers to the Those who have agreed in writing to become the Those who are named as beneficial
memorandum member of the company and their names are entered owners in the depositories books
in the Members register
Modes of becoming a Member

By subscribing to MOA
By purchasing shares of the company
By providing guarantee
By applying in writing for membership and their name entered in members register
By becoming beneficial owner
Member by Estoppel
By transfer & transmission
Note: All share holders are members, but all members need not be share holders
Capacity to become Member
Mehri Bibi Vs Dharmodas Gosh
No contractual capacity
Minor No Repudiate if accidentally becomes a member
Partly paid share cannot be transferred to minor however
fully paid shares can be

Company Yes Provided in MOA
Subsidiary cannot become member of Holding
Firm No But can become member of Section 8 company
Co operative Society Yes
HUF No
Trade union Yes
Insolvent No Discharged insolvent can become a member
Trust No
Members Register, Annual Return (Section 88 ,92)

Registers to be maintained by every Company [Sec.88 (1)] :
Type of Register How maintained Form No.
Separately for each class of Equity and Preference Shares
Register of Members MGT - 1
held by each of Member residing in or outside India.
Register of Debenture Holders Separately for each type of Debenture or Other Security.
MGT - 2
(or) Other Security Holders
Contents Name, Address, No. of shares held, Amount of guarantee given, class of shares etc
Index For more than 50 members
Kept at RO of the company, A copy of register can be kept outside India for the purpose of members outside
India
Can be kept any other place where more than 10% of its members reside by passing a special resolution
and intimation to ROC
Closure 30 days at a stretch & 45 days in total in a year (7days notice must be given) (Rs 5,000 per day penalty)
Annual return To be file within 60 days of AGM (if no AGM 60 days from the last day on which AGM should have
been held)- Form MGT-7
Must be signed by 2 directors and CS
Inspection Every member, debenture holder, other security holder can inspect without any fees. Outsiders
upon payment of fees.
Only during business hours & working days
Extracts & Copies Members, debenture holders, and other security holders can request copies. Company shall
provide within 7 days. (Rs 1,000 per day penalty)
Member vs Shareholder
Basis Member Shareholder
Meaning Member is a person whose name is entered A person who holds Shares in the Company is a
as a Member of the Company in its Shareholder.
Register of Members.
(a) Subscribing to the MOA, or (a) Allotment of Shares by the Company,
(b) Acquisition of Shares and entry in the (pending entry in Register) or
Manner of Register of Members, (b) Purchase of Shares from the open market.
becoming (c) Beneficial Owner as per Depositorys
Records.
Shareholder is not a Member, unless his name is
Status Member is also Shareholder.
entered in Register of Members.
Name Name is found in the Register of Members Name does not always find an entry in the
Register of Members.
Legal By transmission, they first become Shareholders.
Should apply to the Company for entry in
representatives Then only on an application for entry in Register,
the Register of Members.
they become Members.
Rights of a Member of a Company

Upon acquiring Shares in a Company, a Member will have the right to
1) Have the Certificate of Shares held or the Certificate of Stock issued to him within the prescribed time.
2) Have his name borne on the Register of Members.
3) Transfer Shares subject to any restrictions imposed by the AOA of the Company.
4) Receive proper notice, attend Shareholders Meeting and vote thereat.
5) Associate in the declaration of dividends and to apply to the Court for an injunction restraining the Directors
from paying dividends on an ultra vires declaration or out of Capital.
6) Inspect the Registers, Indexes, Returns and Copies of Certificates kept by the Company and to obtain extracts or
copy thereof.
7) Obtain copies of MOA and AOA on request and on payment of the prescribed fees.
8) Have the first option in case of issue of new Shares or further issue (i.e. right to pre-emption) of Shares by the
Company.
9) Apply to the Court to have any variation or abrogation to his rights set aside by the Court.
10) Have notice of any resolution requiring Special Notice.
11) Obtain on request minutes of proceedings at General Meeting.
12) Appoint / Remove Directors at a General Meeting / AGM.
13) Obtain a copy of the Financial Statements, along with the Auditors Report.
14) Apply for the appointment of one or more competent Inspectors by the Government to investigate into the
affairs of the Company as well as for reporting thereon.
15) Appoint / Remove an Auditor at the AGM.
16) Inspect the Auditors Report at the AGM of the Company.
17) Receive a share in the Capital of the Company & in the surplus assets , if any, on the Companys liquidation.
18) Participate in passing of Special Resolution that the Company may be wound up by the Court or voluntarily.
19) Participate in the appointment and in fixation of remuneration of one or more Liquidators in the case of a
Members Voluntary Winding Up and to fill any vacancy in the office of a Liquidator so appointed by him.
Termination of Membership of the Company :

Termination of Membership can take place in any of the following modes
Mode Description
1. Transfer Member transfers his Shares to another person and the Shares are registered in the name
of the Transferee,.
2. Forfeiture His Shares are forfeited by the Company for non-payment of calls,
3. Surrender He surrenders his Shares to the Company which the Company accepts,
4. Sale by His Shares are sold by the Company to enforce its lien, and the Buyer of such Shares is
Company registered as a Member,
He dies and his Legal Representative gets his own name registered in the Register of
5. Death
Members or sells Shares to a third party who gets his name registered with the Company,
6. Insolvency He is adjudged insolvent and the Official Receiver / Official Assignee either transfers the
Shares or disclaims the Shares,
7. Redemption He was holding Redeemable Preference Shares which have been redeemed by the
Company,
8. Rescission He rescinds the contract of Membership on the ground of fraud or misrepresentation in the
Prospectus, or a genuine mistake.
9. Tribunals Order His Shares are purchased either by another Member of the Company or by the Company

itself by an order of Tribunal u/s 242,
10. Warrants He is issued Share Warrants, for fully paid Shares, in exchange for Share Certificates.
11. Winding Up On the commencement of winding-up of the Company. (He will be liable as a Contributory
and is also entitled to a Share in the surplus assets, if any).
When a Company is a Member of another Company, and if the Shareholding Company is
Company being
12. being wound-up, then its Membership will come to an end if the Liquidator disclaims the
Member
Shares or transfers them.
TRANSFER OF SHARES
Blank and forged transfer
Blank transfer Forged transfer
is an instrument of transfer signed by the A Forged transfer is a nullity
transferor in which the name of the transferee and It does not give the transferee concerned any title
the date of the transfer are not filled to the shares
blank transfers are no longer valid it is bound to restore the name of the real owner
`Transfer vs `Transmission of Shares

Basis Transfer of Shares Transmission of Shares
Transfer refers to voluntary conveyance of Transmission of Shares takes place when Shares
Meaning
rights / duties / liabilities of a Member. are transferred by operation of law.
The Transferor Member ceases his membership It may happen on
or decrease his number of Shares held in favour (a) Death of a Registered Shareholder or
of a person, Transferee. The Transferee is (b) Insolvency of a Member, or
Instances
desirous of becoming a member, or who (c) Shareholder being a Company, going into
desires to increase the number of Shares liquidation.
already held by him.
Stamp duty Payable on execution of Transfer Deed. Not Payable.
For an effective transfer, there should be a There is no requirement as to consideration.
Consideration
valid consideration.
Course of Transfer is done by a member acting in his Transmission is the result of operation of law on
Action individual capacity as a Transferor. death or insolvency of a member.
Transfer can be effected only by a valid No Deed is required for transmission of Shares.
Execution of
Transfer Deed signed by the Transferor, Only an intimation to company is sufficient.
Instrument
signifying his consent to transfer the Shares. [Sec.56(2)]
Apply to company within 60 days from date of instrument of transfer.
Partly paid Company has to obtain NOC from transferee within 2 weeks
Joint holders Transposition not a transfer
Transfer must be registered within 1 month from receipt of all documents
If rejected by company intimate transferee within 30 days from application
Transferee may appeal to NCLT
NCLT within 10 days issues an order
Transfer of Partly Paid Shares [Sec.56(3)]

Where Shares are partly paid and Transferor makes an application for transfer
Notice No Objection Registration
The Company should give a Notice of Transferee shall give his No- Upon receipt of No-Objection from
such application to the Transferee, in Objection to the transfer, within 2 the Transferee, the Company shall
Form No.SH 5. The Transfer shall not be weeks from the date of the proceed to register the Transfer.
registered immediately. receipt of Notice.

Nomination
Nomination is the process of assigning or identifying the next person to whom the Securities
(a) Meaning
held by a person will vest in the event of his death.
(b) Form Nomination shall be in Form No. SH.13, and can be made at any time.
Every Holder of Securities of a Company.
(c) Nominator
Note : In case of Joint Holdings, all Joint Holders shall together nominate any person as Nominee.
Any person including a Minor.
(d) Nominee Note : If Nominee is a Minor, the Holder of Securities may appoint a Person, who shall become
entitled to the Securities in the event of death of Nominee during his minority. (Form No.SH.14)
Note:
Firm, HUF, Trust cannot be nominated
To be recorded within 2 months
Can be changed at any time
Charges
Def: Charge means an interest or lien created on the property or assets of a company, it includes mortgage &
hypothecation [Section 2(16)]
Fixed Charge Floating Charge Crystallization of Floating charge
created on some created on class of assets, present Winding up
identifiable property and future Liquidation;
closure of business;
creditors enforce their security;
on happening of event specified.
Distinction between fixed charge and floating charge:
Fixed charge Floating charge
1. It is a legal charge. 1. It is an equitable charge.
2. It is a charge on specific, ascertained and 2. It is a charge on present and future assets.
existing asset. No specific assets.
3. Company cannot deal with the assets except with 3. Company is free to use or deal with the assets
the consent of the charge holder. the way it likes until the charge becomes fixed.
4. Registration of fixed charge on movable 4. Registration of all floating charge on all kinds of
assets is not compulsory. assets is compulsory by law.
5. Fixed charge has always priority over floating 5. Ambulatory and shifting in character.
charge.
Registration:
Every Company creating a charge, within a period of 30 days from the date of creation of charge shall
register with ROC, can be extended up to 300 days by ROC, Beyond 300 days CG approval
Registration shall be in Form No.CHG-1 (for other than Debentures) or Form No.CHG-9 (for Debentures),
May be registered by ROC up on application from creditor by giving 14 days notice to the company
Once charge registered any person dealing with such property is deemed to have been given notice
If unregistered, the obligation is on company but in liquidation such creditor becomes unsecured creditor
Penalty Company (Rs 100,000 10,00,000) Officer (Rs 25,000 1,00,000 & 6 months imprisonment)
Note: Provisions applicable to assets acquired with charge & any modifications afterwards.

Debentures
Def- As per Section 2(30) Debenture includes debentures stock, bonds and other instrument of a company
evidencing a debt whether constituting a charge on the assets on the company or not
Features of Debentures
1) Payment of Interest : The Company pays a specified fixed rate of interest on Debentures.
2) Date of Maturity / Redemption : Generally Debentures are issued for a specified period of time, after which they
mature or have to be redeemed by the Company by paying back the money to the Investors.
3) Creation of Charge : Debentures are generally secured by way of a charge on the assets / part of the assets of the
Company. However, there may also be Unsecured Debentures.
4) Movable Property [Sec.44] : Like Shares, Debentures are also movable property, capable of being transferred in
the manner provided in the AOA of the Company.
5) No Voting Rights [Sec.71(2)] : Debenture Holders are mere lenders to the Company, who are generally secured
for payment. Hence they do not have any right as to voting in meetings. A Company shall not issue any
Debentures carrying any voting rights.
6) Specific Performance [Sec.71(12)] : A contract with a Company to take up and pay for any Debentures of the
Company, may be enforced by a decree of specific performance.
7) Register and Index of Debenture Holders [Sec.88] : The provisions as to Register and Index of Members, apply to
Debenture Holders also.
8) Certificate [Sec.56] : Debenture Certificate shall be issued
(a) within 6 months from the date of allotment of Debentures, and
(b) Within 1 month from the date of receipt of Instrument / Intimation, in case of Transfer / Transmission.
Remedies to Debenture Holders in case of Default by Company
A. Under Sec.71 of Companies Act :
Section Anticipated Default Sec. 71(9) Actual Default Sec.71(10)
If the Debenture Trustee considers that the Company fails to
Companys Assets are Insufficient or are likely (a) redeem the Debentures on the date of their
Situation
to become insufficient to discharge the maturity, or
principal amount when it becomes due. (b) pay interest on the Debentures when it is due.
Application to Tribunal by
Remedy Petition to Tribunal by Debenture Trustee. (a) All or any of the Debentureholders, or
(b) Debenture Trustee
The Tribunal may impose restrictions on The Tribunal may direct the Company to redeem the
Tribunal incurring of any further liabilities by the Debentures forthwith, on payment of principal and
Order Company, in the interest of the Debenture interest due thereon.
Holders.
Note :
1) Non-compliance with Tribunals order, every Officer in default shall be punishable with Sec.71(11)
(a) Imprisonment (Maximum 3 years), or
(b) Fine of Minimum Rs.2 Lakhs, Maximum Rs.5 Lakhs, or
(c) Both.
Debenture Trustee
If issue is for more than 500 members or Issue of Secured Debentures
Debenture Trust Deed shall be executed in Form No.SH.12, within 60 days of allotment of Debentures.
Trustee must be an independent person (Not a shareholder, officer, director, promoter, KMP, Creditor,

Customer, Relative of officer promoter KMP Director)
Written consent from trustee shall be obtained
Name of trustee must be stated in every notice that makes
Casual vacancy to be filled by Board (If due to resignation to be filled by written consent of majority DH)
Removal if approved by 3/4th ( 75%) of value holding debenture holders
Duties: Ensure that letter of offer does not contain inconsistent matters with trust deed; terms not
prejudicial; Get periodical performance reports; Communicate promptly the defaults made by company;
Appoint a nominee director; ensure sufficiency of assets
If found negligent then liable for damages (can escape if 75% consents)
Debenture Trust Deed shall be open to inspection to any Member or Debenture Holder of the Company
Company should forward a copy of Trust Deed within 7 days, when a request is made by a Debenture Holder or
Member, along with payment of fee.
Debenture Redemption Reserve

Debenture Redemption Reserve (DRR) must be created u/s 71(4), and as per Rules, given below
-Creation of DRR : DRR shall be created out of the profits of the Company available for payment of Dividend.
-Use : The amount credited to DRR shall be utilized by the Company only for the redemption of Debentures.
-DRR Exempted : No DRR is required for Debentures issued by All India Financial Institutions (AIFIs) regulated
by RBI and Banking Companies for both public as well as privately placed Debentures.
Adequacy of DRR :
Type of Company Adequacy for DRR
(a) NBFCs registered with RBI u/s 45-IA 25% of the Value of Debentures issued through Public Issue. [See Note ]
of RBI (Amendment) Act, 1997 Note : NO DRR is required in the case of privately placed Debentures.
Other Companies including 25% of the Value of Debentures issued through Public Issue.
Manufacturing and Infrastructure Note : 25% DRR is also required in the case of privately placed
(b) Companies. Debentures by Listed Companies.
Unlisted Companies issuing
c) Debentures on private placement 25% of the Value of Debentures.
basis.
Note : 25% in Points (a) and (b) above, is as per present SEBI (Issue and Listing of Debt Securities), Regulations 2008.
Investment in Earmarked Securities :
Applicability Every Company required to create DRR.
Cut Off date On or before 30th April in each year.
Requirement Invest or Deposit atleast 15% of the amount of its Debentures maturing during the year
ending on the 31st March of the next year.
(a) Deposits with any Scheduled Bank, free from any charge or lien,
Unencumbered Securities of the Central Government or of any State Government,
Eligible (b) Unencumbered Securities as per Sec.20 (a) to (d) and (ee) of the Indian Trusts Act,
Securities 1882.
(c) Unencumbered Bonds issued by any other Company notified u/s 20(f) of Indian Trusts
Act, 1882.
Use of above The amount invested or deposited as above shall not be used for any purpose other than for
amount redemption of Debentures maturing during the year referred above.
(a) The amount remaining invested or deposited, shall not at any time fall below 15% of
Annual
the amount of the Debentures maturing during the year ending on the 31st March of
Contribution
that year.

(b) Hence, annual contribution is required to make up the amount, in case of shortfall.
For PCDs In case of Partly Convertible Debentures, DRR shall be created in respect of non-convertible
portion of Debenture Issue.
Deposits
Def: As per Section 2(31) Deposit includes any receipt of money by way of deposit or loan or in any other form by a
company, but does not include such categories or amount as may be prescribed in consultation with the RBI.
(Advance, Borrowings, Commercial Paper & calls in advance, Debentures unsecured, Employees, Foreign Govt &
Foreign Bank. Inter-company loans, loans from directors and promotors, trade advance, advances from employees,
share application money )
Depositormeans
any Member of the Company who has made a Deposit with the Company in accordance with Sec.73(2), or
Any person who has made a Deposit with a Public Company in accordance with Sec.76.
Provision on deposits
From Members: Sec.73(2) From Public: Sec.76
1. Any company 1. Only eligible companies (Public company Net worth not
2. Ordinary Resolution less than Rs 100 Crores or T/O not less than Rs 500 crores)
3. No default earlier in interest & repayment 2. Board Resolution if total borrowings do not exceed (PUSC
4. Enter into Deposit insurance at least 30 days + FR), otherwise Special resolution in GM
before circulation of notice
3. File SR with Roc within 30days in MGT-14
5. File circular with ROC within 30 days before its
circulation 4. Obtain credit rating from a recognized credit rating agency
6. At least 7 days before circulation appoint a 5. No default earlier in interest & repayment of deposits
trustee(DPT-2) 6. Enter into Deposit insurance at least 30 days before circulation
7. Circular to all its members of notice
8. Circular shall be valid till 6 months after closure 7. File circular with ROC 30 days before its circulation
of FY 8. At least 7 days before circulation appoint a trustee
9. Issue Deposit Receipt within 21 days from 9. Circular in form of advertisement
receipt of money from members. 10. Circular valid till 6 months after closure of FY
10. Within 30 days of acceptance create security 11. Issue Deposit Receipt within 21 days from receipt of money
12. Within 30 days of acceptance create security (Charge +
(Charge + Insurance = Value of Deposits)
Insurance = Value of Deposits)
11. (Deposits outstanding + Deposits to be taken
13. Maximum [10% of PUSC + FR from members, 25% of PUSC +
or renewed) must not exceed 25% of PUSC +
FR from public]
FR
Terms & Conditions
Period Not less than 6 months & not more than 36 months (Above 3months and less than 6 months up
to 10% of PUSC + FR)
Interest rate should not exceed rate prescribed for NBFCs
And
Contact: +91 99850 91719
General Meetings
Getting together of a number of persons for transacting any lawful business
Kinds of Company Meetings :
Kinds of Company Meetings
Shareholders Meetings Directors Meetings Other Meetings

(a) Annual General Meeting (a) Meetings of Board of (a) Meetings of Debenture holders and
(AGM), Directors, Creditors, - (i) for winding up, or (ii) for
purposes other than winding-up,
(b) Extraordinary General (b) Meetings of the (b) Meetings of Contributories in winding
Meeting (EGM), Committees of Board up.
Requisites of a Valid Meeting:

1. Authority : The Meeting must be convened by the proper authority. Example : Board of Directors,
Shareholders, etc,
2. Notice : Adequate notice should be given to all persons entitled to attend the meeting, i.e. time period
for notice, contents of the notice, documents accompanying notice, etc. should be proper and adequate.
3. Chairman : A fir and proper person should chair the Meeting.
4. Quorum : There should be proper quorum as specified in the Law/AOA.
5. Conduct : The business at the meeting should be validly transacted.
6. Compliance : The provisions of the Governing Act and Rules, including AOA should be strictly adhered to.
Ordinary and Special Business [Sec.102(2)] :

1. Ordinary Business 2. Special Business
(a) Can be transacted only at AGMs. (a) Any Other Business (except the 4
specified items) to be transacted at
the AGM is deemed to be Special.
(b) Items considered as Ordinary Business, are (b) For any meeting other than the AGM,
Consideration of Financial Statements, and Reports of all business shall deemed Special.
Board of Directors and Auditors, (c) Explanatory Statement should be
Declaration of Dividends, annexed to the Notice for every item
Appointing Directors in place of those retiring, and of Special Business.
Appointing Auditors & fixing their remuneration.
Note : Dividend can be declared in a Meeting other than AGM, in which case it becomes Special Business.
AGM can have Ordinary as well as Special Business. Every Meeting other than AGM has only Special
Business.
Ordinary Resolution [Sec. 114(1)] :

A Resolution shall be an Ordinary Resolution if -
(a) If the Notice required under the Act has been duly given, and
1. Meaning
(b) Votes cast in favour of the resolution exceed the votes against the resolution.
An Ordinary Resolution is required to be passed in the following situations -
(a) Consideration of Directors Report,
2. Situations (b) Election of Directors,
(c) Appointment of Auditors,
(d) Declaration of Dividends,

(e) Increase, Consolidation, Conversion or Sub-Division of Share Capital,
Special Resolution [Sec.114(2)] :

A Resolution shall be a Special Resolution when -
(a) The Intention to propose the resolution as a Special Resolution has been duly
specified in the Notice calling the General Meeting or other intimation given to the
1. Meaning Members of the Resolution,
(b) The 21 days Notice required under the Act has been duly given, and
(c) Votes cast in favour of the resolution, note less than 3 times the number of the votes,
if any, cast against the resolution.
A Special Resolution is required to be passed in the following situations -
(a) Alteration of Memorandum or Articles of the Company. (Sec.13/14)
(b) Further issue of Share to persons other than existing Shareholders. (Sec.62)
2. Situations
(c) Reduction of Share Capital. (Sec.66)
(d) Variation of Shareholders Rights. (Sec.48)
(e) Removal of Auditor (Sec.140)
Ordinary Resolution vs Special Resolution :

Notes : Common Points for Both Ordinary and Special Resolution
(a) Vote may be cast (i) by Show of hands, (ii) electronically of (iii) on a Poll.
(b) Voting shall be done only by Members entitled to do so.
(c) Voting may be done by Members in person or by Proxy, or by Postal Ballot.
(d) Casting Vote, if any, of the Chairman is also considered, only for Ordinary Resolution.
Point Ordinary Resolution [Sec.114(1)] Special Resolution [Sec.114(2)
1. Intention No specific need for intention to move Intention to move Special Resolution should be
Ordinary Resolution. specified in the Notice.
2. Majority Simple Majority, i.e. 51% Special Majority, i.e. not less than 75%.
3. Casting Vote Considered / included. Not considered / not included.
of Chairman
4. ROC Filing No need to file all Ordinary Resolutions Copy of every Special Resolution should be filed
with ROC, except as stated in certain with ROC in Form No. MGT.14, within 30 days of
provisions of the Act, e.g. AOA Alteration. its passing
Annual General Meeting

Applicable First AGM: Subsequent AGMs:
for Every Within 9 months from the Every calendar year must have one AGM
Company conclusion of first FY Gap between 2 AGMs must not be more than 15 months
except No extension can be Within 6 months from the conclusion of FY
OPC granted ROC can extend up to 3 months
Day, Time and Place of AGM :

Day AGM shall be held on any day, not being a National Holiday. (National Holiday means and includes a day
declared as National Holiday by the Central Government.)
Note : Two AGMs can be held on the same day provided separate notices are issued therefor.
Time AGM shall be held during business hours (i.e. from 9 am to 6 pm)
Place AGM shall be held at the Registered Office of the Company or at some other place within the Town,
City or Village in which the Registered Office is situated.
Effect of failure to convene AGM [Sec.97 & 99] :

Consequences of not holding AGM
Tribunal may call the AGM Penalty for not convening AGM
[Sec. 97] [Sec.99]
(a) Power to Call : Tribunal may, on an application of any (a) If the Company fails to hold he AGM
Member, can call or direct calling of AGM of the Company, either originally or when directed to do
notwithstanding anything contained in this Act or the so by the Tribunal, then the Company
Articles of the Company. and every Officer who is in default
shall be punishable with fine upto
Rs.1,00,000.
(b) Additional Directions : The facilitate calling, holding and (b) For continuing default, a further fine
conducting the meeting, the Tribunal may give such of Rs.5,000 per day shall be levied.
ancillary or consequently directions as it think fit.
(c) 1 Main Quorum : The directions may include a direction
that one Member of the Company present in person or by
proxy shall be deemed to constitute a meeting.
(d) Deemed AGM : A meeting held in pursuance of Tribunals
directions shall be deemed to be an AGM of the Company.
Extraordinary General Meeting [Sec.100] :

1. Meaning : All General Meetings other than the Annual General Meeting (AGM), are called as
Extraordinary General Meetings (EGM).
2. Purpose : An EGM is convened for transacting some special or urgent business that may arise in
between two AGMs, e.g. change in Objects, shift of Registered Office, alteration of Capital, removal of
Director(s) / Auditor(s), etc.
3. Special Business : All businesses to be transacted at EGMs are Special Business. Hence, every item on
the agenda must be accompanied by an Explanatory Statement.
4. Time / Place : EGM can be held on any day including Sunday except in case of EGM held by Requisitions
themselves pursuant to failure of the Board to call EGM. It can be held any place within India.
5. Calling Authority / Intimation : An EGM may be called by
(a) Board of Directors, whenever it deems fit [Sec.100(1)]
(b) Directors on Requisition by prescribed number of Members [Sec.100(2)],
(c) Requisitionists themselves [Sec.100(4)], or
(d) Tribunal [Sec.98].
Each of these methods of calling EGM are explained below.
Notice of GM
Time Contents Sent to Business Explanatory
statement
Not less than 21 Date, Time & Every member/ Ordinary Only for special
clear days notice Place Legal Business business
either in writing or Agenda/ representative/ o Consideration of Contents:
through electronic Business official assignee Accounts Material facts,
Right to Auditor(s) o Declare dividend Interests of
mode (excluding
appoint proxy Directors o Retirement &
directors,
date of notice, date
Failure to send appointment if
of meeting & 2 days Inspection of
notice to eligible directors &
for transmission) auditors documents
person invalidates
Shorter notice can the meeting Special business relating
be ratified by 95 % (Exception (Other than (For non-

of number of When it is ordinary) disclosure every
members either unintentional) officer in default
before or at will get a fine of
meeting Rs 50000/- or %
times the benefit)
Quorum (Section 103)

Private Company 2 members personally present
Public Company -
Up to 1000 members 5 members personally present

More than 1000 but up to 5000 members 15 members personally present
More than 5000 members 30 members personally present
Note: AOA may mention higher quorum
Need not be present throughout the meeting
Situation Rules
(a) Member To ascertain quorum, only Members present in person shall be counted. Proxies are not
present in taken for ascertaining quorum. AOA of a Company cannot provide for counting proxies for
person quorum.
(b) Corporate If Companies or Governments are Members of a Company, Authorized Representatives
Member appointed by them will be considered Proxy, but included for Quorum.
(c) Preference Preference Shareholders present are not counted for quorum, except where proposed
Holders business includes any item directly affecting them.
(d) Joint Holders Joint Holders of Shares are treated as single Member to count the number of Members for
quorum. Where more than one of the Joint Holders tender a vote, vote of the senior only,
whether in person or by proxy, shall be accepted.
(e) Dual Capacity A Member present in two capacities, as an individual Member and as a Trustee, is counted
as two Members personally present.
Consequences if there is no quorum within 30 minutes from scheduled time

Meeting is called upon requisition members Meeting shall stand dissolved
Other case Meeting shall be adjourned to:
the same day in next week, at the same time and place, or
such other day, time and place as determine the Board
Adjourned meeting Members present shall be the Quorum.
Note: Single person cannot be considered as quorum
Chairman of Meeting [Sec.104] :

1. Meaning : Chairman is the person who has been designated or elected to preside over and conduct the
proceedings of a Meeting. He is usually a Member of the Body over which he is to reside.
2. Appointment of Chairman :
General If AOA provides so Chairman for GM (Regulation 46 / 47 of Table F)
(a) First Chairman as named in AOA. In case of General Meeting, when -
(b) Chairman of Board of Directors presides (a) No Director is willing to act as Chairman, or
over General Meetings. Board may decide (b) No Director is present within 15 minutes after the
to elect new Chairman every year at the appointed time.
Board Meeting held immediately after the Members present may elect one amongst
AGM. themselves to be the Chairman.

Proxies (Section 105)
1. Members Right to a appoint Proxy
2. Need not be member of company
3. Specified form given by company
4. Must be deposited at least 48 hours before meeting or such less time prescribed by articles
5. Also valid for Adjourned meeting
6. May even specially be appointed for adjourned meeting
7. Shall Not counted for quorum
8. No participation
9. Cannot inspect minutes book
10. Only votes in poll.
11. Can also demand poll.
12. One person can act as proxy for different members (maximum 50)
13. Members can inspect proxies list by giving 3 days notice to company.
14. If member attends himself proxy is cancelled
15. Remains valid even if member has died or insolvent
Voting (106 109)
Method Description
(a) Persons present indicate their approval or disapproval of the motion by clapping of hands,
cheering or applause, etc.
Acclamation
(b) It is adopted where there is unanimous approval or disapproval, e.g. Thanks to Chair.
(c) It is not adopted if there is a sharp difference of opinion among the Members.
(a) Chairman puts the proposition before the meeting, persons favouring say `Yes and those
against say `No.
(b) Chairman hears both Yeses and Nos and gives his decision after ascertaining numbers of
Voice Vote
`Yes and `No.
(c) Any Member who is dissatisfied with Chairmans decision on voice vote may demand a vote
by show of hands.
(a) Chairman requests the Member present to divide themselves into two blocks, one
favouring and another against.
Division
(b) Chairman, with Secretarys help, counts number of persons in favour and against and gives
his verdict based on majority principle.
(a) First, Chairman asks all those in favour of the resolution to raise their hands. He notes down
the number of hands that goes up.
(b) Next, those against are requested to do likewise and it is counted.
Show of
(c) Chairman later declares result of voting, i.e. whether proposal is carried or lost, by accepting
Hands
the number which is larger.
(d) At any General Meeting, unless a poll is demanded, a resolution put to vote shall be
decided on a show of hands.
(a) Every person present records his vote on a ballot paper and deposits it in the ballot box.
Ballot (b) Counting of ballots cast for and against the motion reveals the results.
(c) This ensures secrecy in casting votes.
(a) Voting by poll is according to the number of Shares held by a Member.
(b) Voting by show of hands may not always reflect the opinion of Members on a value basis.
Poll
(c) Proxies can vote only in case of a poll and not by show of hands. Hence, it enables to
ascertain the true intention of the Meeting.
OTHER PROCEDURES
1. Minutes Book [Sec. 118] :

1. Meaning : Minutes are the record maintained by a Company of the proceedings of -
(a) every General Meeting (i.e. AGM, EGM, etc.),
(b) Class Meeting of Shareholders / Creditors,
(c) Every Resolution passed by postal ballot (recorded as if passed in the general meeting),
(d) every Meeting of its Board of Directors, and
(e) every Meeting of a Committee of the Board.
2. Separate Minutes Book : The Book in which entries are made is called Minutes Book.
(a) Separate Minutes Book should be maintained for every such Meeting as aforesaid.
(b) Resolution passed by Postal Ballot shall be recorded in the Minutes Book of General Meeting (since it is
deemed passed at the General Meeting.)
3. Time Limit : Entries in the Minutes Book should be made within 30 days of the conclusion of every Meeting,
along with the date of the entry.
4. Place : Minutes Book shall be
(a) maintained at the Registered Office of the Company, or other place approved by the Board.
(b) preserved permanently.
(c) be kept in the custody of the Company Secretary or any Director duly authorized by the Board.
5. Pages : Pages of every Minutes Book shall be consecutively numbered.
6. Report on Postal Ballot : In case of a Postal Ballot, the following details shall be entered in the Minutes Book
of General Meeting
(a) a brief report on the Postal Ballot conducted including the resolution proposed,
(b) result of the voting thereon, and
(c) summary of the Scrutinizers Report.
7. Signing : Each page of Minutes Book must be initialled or signed. The last page of the record of proceedings
of each Meeting in the Minutes Book should be dated and signed as under
(a) For Board or Committee Meeting - Chairman of the same or next succeeding Meeting, and
(b) For General Meeting (including Resolution through Postal Ballot) Chairman of the same meeting or in
the event of death or inability of the Chairman, by a Director duly authorised by the Board for the
purpose.
8. Contents of Minutes : Minutes must be a fair and correct summary of the proceedings of the Meeting.
Minutes should contain Minutes should not contain
(a) All appointments of Officers made at the Any matter, which in the opinion of the Chairman, is -
Meeting, e.g. Directors, Auditors, etc.
(b) For Board / Committee Meeting, the Minutes (a) Defamatory of any person, or
shall contain details of (b) Irrelevant or immaterial to the proceedings, or
Names of Directors present at the (c) Detrimental to Companys interests.
Meeting, Note : Chairman shall exercise absolute discretion in
Names of Directors, dissenting from or regard to the inclusion or non-inclusion of any matter in
not concurring for each resolution the Minutes on the grounds specified above.
passed at the Meeting.
Necessity : Minutes Book should be maintained compulsory due the following reasons -
Penalty Default in maintaining Minutes Book as per Sec.118, attracts a fine upto Rs.25,000 for the Company
and Rs.5,000 for every Officer of the Company in default.
Evidence Minutes of Meetings kept in accordance with Sec.118 is evidence of the proceedings recorded therein,
Prima facie When Minutes are made & maintained as per Sec.118, then unless otherwise proved, it is deemed that
proof -
(a) Meeting has been duly called and held,
(b) All proceedings threat have duly taken place,
(c) Resolutions passed by Postal Ballot to have been duly passed,
(d) All appointments of Directors / KMPs / Auditors / Company Secretary shall be deemed
to be valid.

10. Publication : No document purporting to be a report of the proceedings of any General Meeting of the
Company shall e circulated or advertised at the Companys expense. Unless it includes matters required to be
included in the Minutes of the Meeting.
11. Compliance with Secretarial Standards : With respect to General and Board Meetings, every Company shall
observe Secretarial Standards specified by the Institute of Company Secretaries of India.
12. Penalty for Tampering of Minutes : If a person is found guilty of tampering with the minutes of the
proceedings of Meeting, he is punishable with (a) Imprisonment upto 2 years, and (b) Fine of Minimum
Rs.25,000, Maximum Rs. 1 Lakh.
13. Inspection of Minutes Book by Members [Sec.119] :
Inspection of Minutes Book of Meetings
Board Meeting: Not Open for inspection General Meeting (including resolutions passed through
postal Ballot) : Open for Inspection [Sec. 119]
(a) Inspection : Minutes of proceedings a General Meeting will be open to for inspection of any Member
without charge. The Company, can however, by its AOA or General Meeting, impose reasonable
restrictions, such that atleast two hours in each day or allowed for inspection.
(b) Hard Copies : Members are entitled to a copy of any minutes of General Meeting which they can obtain
within 7 days from the date of request. They may be required to pay the sum as specified in AOA, but
not exceeding Rs.10 per page or part of any page.
(c) Soft Copy : A Member who has made a request for provision of soft copy in respect of minutes of any
previous General Meeting held during immediately preceding 3 Financial Years shall be entitled to be
furnished with the same free of cost.
(d) Penalty : Refusal to permit inspection of Minutes or non-furnishing of copies within the time specified,
attracts a fine upto Rs.25,000 for the Company and Rs.5,000 every Officer in default, for each refusal /
default.
(e) Direction by Tribunal : In case of any refusal or default, the Tribunal may, by order (a) direct an
immediate inspection of Minutes Book, or (b) direct that copy required shall forthwith be sent to person
requiring it.

And
Contact: +91 99850 91719


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Fast Track notes for CA- IPCC Company

Law. Considering the difficulty faced by the

CA Anil K Reddy (MCom, ACA)

Features of Company, Sec 9

Lifting & Piercing of corporate veil

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Mandatory use of Limited and Pvt Limited

One Person Company [Section - 2(62)]

Small Company Sec2(85)

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 2

Compiled by CA. Anil Kumar Reddy. M.Com, ACA.

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 3

Effects of incorporation (Section-9)

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 5

Memorandum & Articles

Authorized share capital

Alteration of Memorandum of Association [Section 13]

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 6

From one state to another

Unlimited to Limited Re registration

Shifting of Registered office Chart.

Memorandum of Association vs Articles of Association

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 8

Alter MOA & AOA

Ultra Vires and Doctrine of Constructive notice

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When Prospectus is not required

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 11

Compiled by CA. Anil Kumar Reddy. M.Com, ACA.

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 13

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 15

Time Limit for Issue :

Modes of becoming a Member

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Members Register, Annual Return (Section 88 ,92)

Rights of a Member of a Company

Termination of Membership of the Company :

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`Transfer vs `Transmission of Shares

Transfer of Partly Paid Shares [Sec.56(3)]

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CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 21

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 22

Debenture Redemption Reserve

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Shareholders Meetings Directors Meetings Other Meetings

Requisites of a Valid Meeting:

Ordinary and Special Business [Sec.102(2)] :

Ordinary Resolution [Sec. 114(1)] :

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Special Resolution [Sec.114(2)] :

Ordinary Resolution vs Special Resolution :

Annual General Meeting

Day, Time and Place of AGM :

Effect of failure to convene AGM [Sec.97 & 99] :

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 26

Extraordinary General Meeting [Sec.100] :

CA Anil Kumar Reddy(M Com, ACA) facebook.com/caanilkreddy Page 27

Quorum (Section 103)

Up to 1000 members 5 members personally present

Consequences if there is no quorum within 30 minutes from scheduled time

Chairman of Meeting [Sec.104] :

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