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INTRODUCTION
Cherished child of English parents
First passed in India in 1850 First amendment in the year 1857 Amended several times later
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committee (Bhabha committee) Largest piece of legislation (658 sections and 15 schedules)
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FEATURES
Full and fair disclosure of various matters in the
prospectus Detailed information of financial affairs of the company to be disclosed in its accounts Provision for intervention and investigations by the government into the affairs of the company
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FEATURES (Contd)
Restrictions on powers of managing agents and other
managerial personnel Enforcement of proper performance of their duties by company management Protection of minority shareholders
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FORMATION OF COMPANY
Documents to be filed
MOA (Memorandum Of Association) AOA (Articles Of Association) A statement of the normal / authorized capital A notice of address of the registered office of the
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KINDS OF COMPANIES
BASED ON MEMBERSHIP
Private Company
-Min no. of members: 2 -Max no. of members: 50 -Restricts right to transfer its shares -Prohibits public issue of shares or debentures Public Company -Min no. of members: 7 -Max no. of members: Unlimited -Doesnt restrict right to transfer its shares -Doesnt Prohibit public issue of shares or debentures
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BASED ON INCORPORATION Chartered companies -companies which are incorporated under a special charter granted by the king or queen in exercise of royal power. -East India Company(1600) Statutory Companies -which are created by special act of parliament or state legislature at central or state govt. level -Reserve Bank of India Registered Companies are companies which are registered under the co.s act of 1956
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BASED ON LIABILITIES Co.s limited by SHARES companies in which the liability of its members is limited to the extent of the amount unpaid on the shares held by a particular member. Co.s limited by GUARENTEE -the liability of members is limited to a fixed amount which members undertake to contribute to the assets of the company in case of its winding up. Unlimited Co.s wherein members are liable for the debts of the company irrespective of their interest in the company
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BASED ON CONTROL
A) B)
Holding Company -51% of the share capital Subsidiary Company less that 51% Govt. Companies MNTC, ONGC Foreign Companies IBM, MICROSOFT
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PUBLIC CO.
VS.
PRIVATE CO.
Number of directors
Statutory meeting Restrictions on appointment of directors
Managerial remuneration
Further issue of capital
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PARTNERSHIP
Registration
Number of members Legal status
VS.
COMPANY
Liability
Creditors Dissolution on death
Property
Contracts Management Life duration
Agency relationship
Transfer of interest Statutory obligations
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Combination of two companies to form new company or to run business under any one of the merging companies name. Eg.:1. NBC Universal; NBC and Vivendi Universal Entertainment 2. US Airways; with America West Airways 3. Sony Ericson; Sony and Ericson 4. NSN; Nokia and Siemens
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ACQUISITION:
Purchase of one company by another with no new company being formed. Eg.:1. P&G buys Gillette 2. Tata steel acquires Corus 3. Google buys Youtube 4.Vodafone acquires Hutch
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Diversification of risk
Limit competition Eliminating the financial constraints Synergy
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TYPES OF MERGES
Horizontal merger
Vertical merger Market-extension merger
Product-extension merger
Conglomerate merger
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