company law 1956 introduction

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introduces the company law 1956

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company law 1956 introduction

  1. 1. COMPANY LAW-2 SYLLABUS&UNIT -1
  2. 2. UNIT-1 BORROWING POWERS
  3. 3. BORROWING-BUSINESS
  4. 4. BORROW OR BURROW
  5. 5. WHAT DOES THIS SAY ?
  6. 6. MEANING, ULTRA VIRES, MORTGAGE AND CHARGES, FIXED AND FLOATING,REGISTRATIONOF CHARGES, LEGAL PROVISIONS, EFFECTS AND CONSEQUENCES OF NON REGISTRATION OF CHARGES. DEBENTURES, DEFINITION, KINDS, GUIDELINES FOR THE ISSUE OF DEBENTURES, DUTIES OF A SECRETARY,COMPARE SARHOLDER/DEBENTURE HOLDER.
  7. 7. BORROWING DO THE COMPANY HAVE THE CAPACITY TO PAY BACK?
  8. 8. WHAT IS BORROWING POWER?
  9. 9. BORROWING POWERS NEED FOR FUNDS  PROTECTS 
  10. 10. NON TRADING BORROWING POWERS SPECIFIC FOR CERTAIN PURPOSES  NO DIVIDENTS TO ITS MEMBERS 
  11. 11. CONDITIONS TO BORROW FUNDS EXPRESSED OR IMPLIED  POWER TO BORROW SHOLD BE IMPLIED  POWER TO BORROW  TRADING COMPANIES  RESTRICTED OR REGULATED  SETTING LIMITS UNDER THE MEMORANDUM OR THE ARTICLES OF ASSOCIATION. 
  12. 12. BOARD OF DIRECTORS POWERS TO BORROW  STATUTORY LIMIT ON THE BORROWING POWERS OF THE COMPANY  SEC 293 OF COMPANYS ACT PROHIBITS THE COMPANY TO BORROW ANY FUNDS  IF THE FUNDS BEING BORROWED ALREADY. 
  13. 13. MONEY FOR BUSINESS
  14. 14. DIRECTOR`S POWER ANY LOAN OBTAINED BY THE COMPANY  LENDER IN GOOD FAITH 
  15. 15. COMPANIES AND ULTR VIRES • • • • • Unauthorised borrowing Ultra vires the company Beyond the limit of the company`s articles and memorandum Director –ultra vires Beyond the authority of directors specified under the articles and memorandum.
  16. 16. THE COMPANIES ACT-ULTRA VIRES
  17. 17. BORROWING ULTRA VIRES OF THE COMPANY
  18. 18. MANAGEMENT THE MANAGERS
  19. 19. WHAT IS ULTRA VIRES?  An ultra vires act is one beyond the purposes or powers of a corporation. The earliest legal view was that such acts were void. Under this approach a corporation was formed only for limited purposes and could do only what it was authorized to do in its corporate charter.
  20. 20. REMEDIES TO THE LENDER Injunction Not spent by the company  Lender can obtain the order of injunction  Principle  of tracing Asset bought by that money could be obtained
  21. 21. REMEDIES TO THE LENDERS Subrogation  Company payment for intra vires debts  Rank by applying the doctrine of subrogation  Lender get back the loan like any other authorised creditor.
  22. 22. REMEDIES-RECOVERY Recovery of damages  Company could borrow from the third party  Mortgages  (immovable properties)  Pledge  Charged with hypothecation 
  23. 23. TYPES OF MORTGAGES   Simple mortgage (immovable property, money on due date, property sold through court order, judicial sale Mortgage by conditional sale  (have the property conveyed in his name, pays the entire amount, to the lender, foreclosure, judicial sale.) 
  24. 24. EQUITABLE MORTGAGE  Deposit of title deeds Anomalous mortgage  More than one type of above mortgages mentioned. Judicial sale, foreclosure , a suit for obtaining money, due on a mortgage. 
  25. 25. CHARGES- CREATION Loans are advanced to the creditor to the debtor  By the creditor to the debtor  on the security of either movable or immovable properties   “A charge is nothing but a right created by debtor in favour of the creditor over a movable or immovable property given as a security.”
  26. 26. MORTGAGE AND CHARGES
  27. 27. HOW IS THAT POSSIBLE
  28. 28. COMPARISON Fixed charge Floating charge
  29. 29. FIXED CHARGE Con some specific asset of the company  Related only to that asset  Land or a building  Prevents the company to deal with out the consent of the lender 
  30. 30. FLOATING CHARGE Equitable charge on some asset  Charge on stock in trade  Book debts  Debentures usually create a floating charge on the assets of the company. 
  31. 31. DISTINGUISH fixed floating
  32. 32. DISTINGUISH Fixed Second charge not possible Fixed asset given as security gets prioritised
  33. 33. REGISTRATION OF CHARGES Third party under notice  Registration of same property  Secured feeling of lenders  Charge holders feel that the advance is secured 
  34. 34. MUST REGISTER Charge holder must register the following  Issue of debentures  Uncalled capital of the company  Immovable property  Book debts  No pledge on movable property of a company  Floating charge including stock in trade  Calls made but not paid 
  35. 35. EFFECTS AND CONSEQUENCES OF NON REGN. Charge becomes void  Unsecured debt  Immediately payable  5000 rs every day for  conscious non registration  Registration charges deleted from the  memorandum of the company 
  36. 36. APPLE FOR YOUR BRAIN  Debentures
  37. 37. WHAT ARE THEY They are debts  Stock  Bonds  Charge on assets of the company or not  Fixed rate of interest  No voting rights  Secured for the floating charge on the assets of the company 
  38. 38. TYPES Registered  Bearer  Secured and unsecured  Redeemable and non redeemable  Convertible and non convertible  Preferred and ordinary  Equitable  Legal 
  39. 39. PARI PASSU CLAUSE Pari passu clause (the secured debentures discharged though issued at different dates)  No preferences 
  40. 40. BUSINESS  What is that mean?
  41. 41. GUIDELINES FOR THE ISSUE OF DEBENTURES
  42. 42. NO VOTING RIGHTS
  43. 43. REDEMPTION RESERVE TO BE CREATED  To redeem them
  44. 44. NO DISCOUNT ON DEBENTURES  Article s does not permit them if permits at a special case then it is not in the capital structure of the company
  45. 45. UNSECURED CREDITORS OF THE COMPANY  In the Event of winding up
  46. 46. SHARE AND DEBENTURE HOLDERS Share holders debenture holders creditors Income dividend interest All the same rate except the preference shares certain Vote, attend meetings No voice Repayment only redeemable preference shares otherwise no payback at the time of liquidation At the time of redemption Dividend after payment of income and taxes Before arriving at the profits int charged on the profits After debenture holders Priority
  47. 47. WIMBLEDON DEBENTURE SEATING
  48. 48. SECRETARY`S DUTIES IN THE ISSUE OF DEBENTURES
  49. 49. CONVENE A MEETING OF THE BOARD OF MEETING
  50. 50. PASS A RESOLUTION Issue of debentures  Terms of issue  Rate of interest 
  51. 51. PERMISSION OF RESERVE BANK Bearer of the debentures issued  Approval of board of directors  Resolution appointment of underwriters  Approval of the board drafting of propectus  Debentures bond  Trust deed approved by the board  Printing of  Prospectus  Debenture bonds and trust deed. 

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