COMPANIES ACT 1956It was enacted by the Parliament of India onJanuary 18, 1956 and started on April 1, 1956The Companies Act, 1956 is an Act in which rulesand regulations for maintaining the books ofaccounts of a company are written. No company inIndia can violate the regulations of this Act.It contains special laws which a company has tofollow while maintaining its books of accounts.Registration of all companies in India areundertaken by this Act. If any company does notfollow these rules and regulations, it is prohibitedto perform by law of India
CONTENTS : Nature and kinds of compaines Formation of a company Company management Company meetings Winding up of a company
COMPANY A company is a form of business organization. of A company is a form business organization. It is a collection of individuals and a collection of individuals It is physical assets with a common aim assets with a and physical of gaining common aim of gaining profits. profits. This collection exists in Law and therefore a company Law This collection exists in is and therefore a company is considered a "Legal Person". considered a "Legal Person". A company is a form of business organization’ of A company is a form business organization’
CLASSIFICATION OFCOMPANY Classification on the basis of incorporation Classification on the basis of liability Classification on the basis of No of member Classification on the basis of control Classification on the basis of ownership
ON THE BASIS OF INCORPORATIONStatutory companyRegistered company
STATUTORY COMPANIES Those companies which are created by a special act of the legislature.(Act 1956). Ex :-Reserve bank of India ,state bank of India, life insurance corporation,industerial finance corporation. It is also concerned with public utilities. Ex :-railway,tramways, gas ,electricity company.
REGISTERED COMPANIES Those companies which are formed and registered under the company act 1956. This company registered under any of the earlier companies Act .
COMPANIES WITH LIMITED LIABLITY1.COMPANIES LIMITED BY SHARE :-Company in which the liability of each shareholder is limited to the amount individually invested.Company limited by share are private company or public company.2.COMPANIES LIMITED BY GUARANTEE:- Where the liability of the member of a company is limited to the fixed amount in which the member undertake to contribute to the assets of the company. Company not formed for the purpose of profit but for the promotion of art, science,culture,sport,commerce………….
UNLIMITED COMPANIES A company without a share capital or limited liablity. Every member is liable for the debt of the company. It may or may not have a share capital. if it has share capital it will private company or public company.
ON THE BASIS OF NO OF MEMBER PRIVATE COMPANY:- A company which has minimum paid-up capital of 100,000. Its dot invites the general public to subscribe for the share ,debenture of the company. It hasnt right to transfer share and debenture. Private company become public company. conversion by default conversion by choice
PUBLIC COMPANY A company which has minimum paid-up capital of 5 lakh. Minimum no of person 7.
WHEN DOES A PRIVATE COMPANY BECOMES APUBLIC COMPANY Conversion by default : A private company makes a default in complying with the essential statutory requirements as laid down in Section 3(1)(iii)of the Actiie., if-its membership exceeds 50 and it does not restrict transfer of share by its members and gives invitation to public to buy its shares or to make deposits, the company cease to be entilted to be the privilege and exemptions conferred on private companies by or under this Act, under this circumstances , the act shall apply to the company as if it were a public not a private company.
CONVERSION OF A PRIVATE COMPANY INTO A PUBLIC COMPANY BY CHOICE:a) if a private company alter its article in such a manner that the nolonger include the provision due to which it is catogorised as aprivate company, the company shall cease to be a private company.It shall then, within a period of 30 days after the said date , file withthe registrar either a prospectous or a statement in lieu ofprospectous.b) A copy of special resolution in form 23 must be filled with R.O.Cwithin 30 days thereof.c) If the members are less than 7 steps must be taken to increasethis no. to Atleast sevend) If the No. of he director are less than 3 steps must be taken toincrease this no. to Atleast 3e) If the paid up share capital is less than 500000, steps must betaken to increase.f) The name of the company must be changed by deleting the word“Pvt
CONVERSION OF A PUBLIC COMPANY INTO A PRIVATECOMPANY (SEC 31(1)(2A)1) A general meeting must be held a special resolution must be passed foraltering the Articles of association that means restrictions, limitations andprohibitions which are necessary according to sec 3(1)(iii) are included.2) An application must be made to the central government in the form 1Bfor necessary approval.3) A copy of a special resolution in form 23 must be filed with the registrarwithin 30 days thereof along with altered articles.4) A copy of order of central government must be filed with R.O.C withinone month of receipt.5) Where the no. members are more than 50 steps must be taken to reduceto 50 or less.6) The name of the company must be changed by adding the word “Pvt”registrar under the new name of the company.7) A fresh certificate of incorporation must be obtained from the registrarunder the new name of the company.
ON THE BASIS OF CONTROL1.HOLDING COMPANY:-A holding company is a company or firm that owns other companies outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its only purpose is owning shares of other companiesa company which has which has control over that other company.2.SUBSIDIARY COMPANY:- A company is known as a subsidiary of another company when control is exercised by the latter (called holding to company) over the former called a subsidiary company. A company is deemed to be a subsidiary of another company in the following 3 cases:
(1)COMPANY CONTROLLING COMPOSITION OFBOARD OF DIRECTORS Where a company (Company A) controls the composition of board of directors of another company (Company B), the latter (Company B) becomes the subsidiary of the former (Company A).
(2)HOLDING OF MAJORITY OF SHARES: Where a company (Company A) holds more than half in nominal value of equity share capital of another company (Company B) the latter (Company B) becomes the subsidiary of the former (Company A).
(3)SUBSIDIARY OF ANOTHER SUBSIDIARY: Where a company (Company B) is subsidiary of anther company (say Company A1) which is itself subsidiary of the controlling company (Company A), the former (Company B) becomes the subsidiary of the controlling company (Company A).
(V)ON THE BASIS OF OWNERSHIP Government company, or Non-government company Government Company: A Government company means any company in which not less than 51 per cent of the paid-up share capital is held by. The central government, or Any state government or governments, or Partly by the central Government and partly by one or more state Governments.