SYNOPSIS ON

A Study on Nature and Scope of Joint Stock Company in India

IN THE COURSE OF
MANAGERIAL ECONOMIS

SUBMITTED TO,

INSTITUTE OF LAW NIRMA UNIVERSITY

UNDER THE GUIDANCE OF PROF. ARUN B. PRASAD

SUBMITTED BY CHANDAN JANGID ROLL NO. : (10BBL027) SEMESTER: IV

As a part of continuous evaluation scheme

INTRODUCTION

Gone are the days when sole proprietorship and partnership were the most preferable form of the business wherein the person use to invest and earn profits out of the business for themselves, though these form of businesses still exist but are not the most common form of business today as now the taste of the consumers has changed, technology has advanced manifold, etc., which require fund, huge funds and because of involvement of few persons in sole proprietorship or partnership this needs of huge investment, production at large scale, etc, was not possible. So to fulfill these needs company form of business came into existence, as also with the time demand shifted from traditional goods to the capital goods and technological products, which require huge amount of labor and capital, supply of which was not the possible for a handful of persons. The Company Legislation in India has closely followed the Company Legislation in England. The first Legislative enactment for registration of Joint Stock Companies was passed in the year 1850 which was based on the English Companies Act, 1844. But since then a lot of changes have made like the concept of limited liability introduced in the Companies Act, 1857. Changes in the law related to the incorporation, regulation, and winging-up of trading companies and other association was introduced in the Companies Act, 1866. And several other small changes were made till the end of 1950, the Government of independent India appointed a committee under the chairmanship of Shri H.C. Bhaba to go into the entire question of the revision of the Indian companies Act, with particular reference to its bearing on the development of Indian trade and industry. Then on the bases of the recommendations of the company Law committee, a bill to enact the present legislation namely the Companies Act 1956 was introduced in Parliament. This act also largely followed the English Companies Act, 1948. According to the act the word company is defined in the section 3(1)(i) as a company means a company formed and registered under this act or an existing company defined in section 3(1)(ii). According to Lord Justice Lindley- A company is an association of many persons who contribute money or monies worth to common stock and employed in some trade or business and shares the profit and loss arising there from. The common stock so contributed is denoted in money and is the capital of the company. The people who contribute to it or to whom it pertains are members. The proportion of capital to which each member is entitled is his share. The shares are always transferable although the right to transfer is often more or less restricted. The different kind of companies that can be promoted and registered under the act are mainly of two types:a. Private companies. b. Public Companies.

These companies may be incorporated either as limited liability companies or as unlimited liability companies. The Companies may also be classified as:a. b. c. d. e. f. g. h. Statutory company Registered company Existing company Association not for profit Government companies Foreign companies Holding and subsidiary companies Investment companies.

Characteristics if a company:a. b. c. d. e. f. g. Incorporated association Legal entity distinct from its members Artificial person Limited Liability Transferability of shares Perpetual succession Common seal

Formation of a company requires a lot of formalities which can be divided into four stages, namely: 1. 2. 3. 4. Promotion Registration Floatation/ Raising of capital Commencement of business

TITLE: A Study on Nature and Scope of Joint Stock Company in India. STATEMENT OF PROBLEM:
To study in detail the origin of the company act, the types of Joint Stock Company and to study in detail the formalities required in the formation of the company and its incorporation and different steps involved in the company working.

OBJECTIVES:
The objectives of the study undertaken are stated as follows: a) To know the origin of the Company Law in India. b) To get a detailed idea of different forms of joint stock company. c) To study the different types of formalities required at different stages of the company i.e. at formation, incorporation, wind-up etc. d) To draw suggestions.

RESEARCH QUESTIONS:
The research questions involved in the research carried out are stated as follows: a) What is the origin of the company law in India? b) What are different types of companies which can be formed in India? c) What are the formalities required in the formation, incorporation and winding off the company?

METHODOLOGY
The research project is a piece of doctrinal report and the outcomes are primarily focused to study the nature and scope of Joint Stock Companies in India. A focus has also been placed on the legislative aspects of the companies act also. The research work is an outcome of the discussions with the course co-coordinator Prof. Arun B. Prasad and the valuable suggestions

proposed by him. Also the content is prepared from secondary sources such as library sources, online database, published journal and research articles and the official portal of various financial institutions. Effort has been made to bring out an original piece of work and to bring out a detailed study of the nature of companies in India.

REVIEW OF LITERATURE Books Referred: 1. Taxmanns Company Law:- By A.K. Majumdar 2. Company Law :-By Dr. Ashok Sharma 3. Elements of Business Law and Management :- ICSI

Websites Referred:
1. http://www.legalserviceindia.com/articles/eocindia.htm 2. http://books.google.co.in/books?id=iJynQT1lFQ8C&pg=PA3&lpg=PA3&dq=history+of+comp any+legislation+in+india&source=bl&ots=9UjE6aaBwi&sig=cx8WvdSqvalipxmnGz6xhqRuASo &hl=en&sa=X&ei=YAQuT9LyJ4jXrQf47_GPCw&ved=0CDIQ6AEwAQ#v=onepage&q=history% 20of%20company%20legislation%20in%20india&f=false 3. http://www.mca.gov.in/ 4. http://en.wikipedia.org/wiki/Corporate_law