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COMPANIES
ACT - 1956
Features of a Company
1.
2.
3.
4.
5.
6.
7.
8.
9.
Determination of character
Where company is a sham
Prevention of fraud or improper conduct
Where the company is acting as the agent of the
s.holders
Protection of revenue
Avoidance of welfare legislation
LIFTING THE
CORPORATE VEIL
B. Statutory exceptions
1.
2.
3.
4.
5.
6.
Registration
Separate legal entity
Right on property
Liability
Shares transferability
Perpetuity
Agent
Interference in affairs
Entering into contact
Powers
Members
Dissolution
Authority
Number of members
Basis of membership
Position of females
Homogeneous / Heterogeneous
Kinds of companies
Company
Registered co.
Statutory co.
Chartered co.
Public
&
Private
Formation
End words of the name
Membership
Prospectus
Allotment of shares
MOA and AOA
Preparation of Articles
Public issue of capital
Transfer of shares
Statutory meeting
Share warrant
..
Formation of a
Company
Incorporation
Documents to be filed with the Registrar
1.
2.
3.
4.
5.
6.
7.
8.
Memorandum of Association
Articles of Association
Agreement if any for appointment of M.D
Statement of nominal capital
Address of the Registered Office
List of directors and sign
Undertaking in writing to take and pay for his qualification
shares
Declaration
Memorandum of
Association-MOA
It is document which sets out the constitution of
the company and is the foundation of the
company. It contains the fundamental conditions
upon which the company is allowed to be
incorporated
Various Clauses in MOA-
1.
2.
3.
4.
5.
Name clause
Registered office clause
Objects clause
Liability clause
Capital clause
Alteration of MOA
1.
2.
3.
4.
5.
Change
Change
Change
Change
Change
of name
of Registered office
of Liability clause
in Capital clause
in Objects clause substantive limits
procedural limits
Articles of AssociationAOA
AOA refers to the rules and regulations of a
company framed for the purpose of internal
management of its affairs.The AOA of a
company are sub-ordinate to and are controlled
by the MOA.
Companies which must have their own articles-
1.
2.
3.
Contents of AOA
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Conversion of shares
into stock
Voting rights and
proxies
Meetings
Directors and their
appointment
Borrowing powers
Dividends and
reserves
Accounts and audit
Winding up
MOA
&
AOA distinguished
1.
2.
3.
4.
5.
PROSPECTUS
Definition
Sec 2(36) defines prospectus as any document
described or issued as a prospectus and includes any
notice, circular, advertisement or other document
inviting deposits from the public or inviting offers
from the public for the subscription or purchase of
any shares in, or debentures of a body corporate
Ingredients to be called prospectus 1.
2.
3.
4.
Objective of Prospectus
SHARE CAPITAL
The term share capital refers to the amount of
capital raised by a company through the issue of
shares
Features of Share capital:
1.
2.
3.
Classes of Capital
1.
2.
3.
4.
5.
6.
7.
SHARES
Section 2(46) of the companies Act of 1956
defines a share as a share in the share capital
of a company and includes stock except where a
distinction between stock and share is expressed
or implied
According to this definition a share is a fractional
part or unit of the capital of a company.
Equity
Cumulative
Preference
Deferred/Founders
Non-Cumulative
Participating
Non-participating
Redeemable
Non-redeemable
Debentures
The term debenture is derived from Latin term
deber meaning to owe So literally, debenture
means a document acknowledging a debt.
Debenture is an instrument issued by a company
under seal, acknowledging a debt to some person,
and containing an undertaking to repay the debt
after a specified date or on a particular date or at
the option of the company, and in the meantime , to
pay interest at a fixed rate and at regular intervals.
In short, a debenture is an instrument of credit, a
bond of indebtedness, a certificate of loan or an
acknowledgement of debts issued by a company.
Kinds of Debentures
Transferability Security
Registered
Bearer or
Unregistered
Redemption Convertibility
Simple or
unsecured
Mortgage or
Secured
Redeemable Convertible
Priority
First
MEETINGS
General Meetings
Board Meetings
Creditors Meetings
Annual general
Board meetings
Debenture holders
Extraordinary
Committee
Creditors [during
Statutory meeting
general
Class meeting
meetings
winding up]
Resolutions
When motion is passed in a meeting, it becomes a
resolution.
In other words it is the recorded decision of a meeting.
In short, it is the decision of a meeting on a motion.
Minutes of Meetings
Literally, minutes refer to a note to preserve the
memory of anything.
The minutes of a meeting are the written record
of the business transacted and decisions arrived
at a meeting.
U/S 193 of Co Act provides that every company
must keep minutes containing a fair and correct
summary of the proceedings.
2.
3.
4.
5.
Statutory Meeting
Statutory meeting is the first official general Meeting
of the shareholders of public co ltd by shares or a
public co ltd by guarantee & having share capital.
Provisions
1.
Notice.
2.
Statutory Report.
3.
4.
5.
Default.
Statutory Report
This is a report drafted by directors and certified as
correct by at least 2 of them including the managing
director.
U/S
165 (3) of the Companies Act of 1956, the
statutory report must contain the following matters:
1.
2.
3.
4.
Underwriting contracts.
5.
Calls in arrears.
6.
Commission or brokerage.
2.
3.
Provisions
1.
2.
3.
4.
5.
Notice.
WINDING UP OF
COMPANIES
Modes of Winding Up
By the Court Compulsory winding up
1.
i.
ii.
iii.
iv.
v.
vi.
Special resolution
Default in filing statutory report or holding
statutory meeting
Failure to commence business with in time
Reduction of membership
Inability to pay debts
Just and equitable clause of the court
2. Voluntary winding up
i.
ii.
The company
Any creditor or creditors including any
contingent or prospective creditor or creditors
Any contributor or contributories
The Registrar
Any person authorized by the central
government
Bankruptcy Date
Assets
WorldCom,Inc.
7/21/2002
$103,900,000,000
Conseco, Inc.
12/18/2002
$61,392,300,000
1/28/2002
$30,185,000,000
12/9/2002
$25,197,000,000
6/25/2002
$21,499,480,000
Kmart Corp.
1/22/2002
$14,630,000,000
5/8/2002
$13,026,100,000
8/11/2002
$7,941,000,000
XO Communications, Inc.
6/17/2002
$7,930,470,000
4/22/2002
$5,992,030,000
McLeodUSA, Inc.
1/30/2002
$4,755,100,000
7/29/2002
$4,469,500,000
11/18/2002
$3,800,000,000
11/18/2002
$3,632,540,000
2/12/2002
$3,364,300,000
NTL, Inc.
Source: www.bankruptcydata.com
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