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Presentation on legal aspects of business
 

Presentation on legal aspects of business

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    Presentation on legal aspects of business Presentation on legal aspects of business Presentation Transcript

    • PRESENTATION ON LEGAL ASPECTS OF BUSINESS PRESENTED BY GROUP A1 Nikita Bali (11004) Neethi Nair (11044) Ranjini Nair (11045) Chandan Pahelwani (11047) Himani Parihar (11049) Sonia Dadlani (10022)15/04/2013 Tolani Institute of Management Studies 1
    • 15/04/2013 Tolani Institute of Management Studies 2
    • DEFINITION• A fundamental document.• The Memorandum of Association is a document of great importance in relation to the proposed company.• It contains the fundamental conditions upon which alone the company is allowed to be incorporated.• It is the charter of the company and defines its reason for existence.15/04/2013 Tolani Institute of Management Studies 3
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    • Printing and Signing of memorandum• As per SECTION 15 the Memorandum of Association of a company shall be –(a) Printed(b) Divided into paragraphs numbered consecutively, and(c) Signed by 7 (2 in case of a private company) subscribers.15/04/2013 Tolani Institute of Management Studies 5
    • • Each subscriber shall sign in the presence of at least 1 witness who shall attest the signature and shall likewise add his address, description and occupation, if any.• The Memorandum of Association printed on computer laser printers should be accepted by the Registrar of a company provided it is neatly and legibly printed.15/04/2013 Tolani Institute of Management Studies 6
    • ASSOCIATION CLAUSE
    • Name clause:- The name of a company establishes its identity and is the symbol of its existence. Every company name must end with Limited (Ltd.). No name of the company should be the name of the existing company, king, queen, president, prime minister, Father of Nation or anything that signifies government sponsorship.15/04/2013 Tolani Institute of Management Studies 8
    • • The Registered Office Clause: Every company shall have a registered office from the day on which it begins to carry on business, or as from the 30th day after the date of its incorporation, whichever is earlier.06/04/2012 Tolani Institute of Management Studies 3
    •  The Object Clause: The object clause both defines and confines scope of the company’s powers, and once registered, it can only be altered as provided by the Act. Main objects of the company to be pursued by the company on its incorporation. Other objects of the company not included in the above clause. Tolani Institute of Management Studies15/04/2013 10
    •  The Capital Clause: The Memorandum of a company, havinga share capital, shall state the amount of theshare capital with which the company is to beregistered and the division thereof into shares ofa fixed amount.15/04/2013 Tolani Institute of Management Studies 11
    •  The Liability Clause: The Memorandum of a company limitedby shares or by guarantee shall also state thatthe liability of its members is limited. This clausetells about the duties and responsibilities of theOwners; i.e., whether the share holders areliable for their share capital or promise. 15/04/2013 6 Tolani Institute of Management Studies
    •  The Association Clause: This clause is followed by the names, addresses and descriptions of the subscribers and the number of shares taken by each one of them. Each subscriber has to take at least one share.15/04/2013 Tolani Institute of Management Studies 13
    • DOCTRINE of Ultra ViresA company has the power to do all such thingsas are:-• Authorized to be done by the Companies Act, 1956;• Essential to the attainment of its objects specified in the Memorandum.15/04/2013 Tolani Institute of Management Studies 14
    • Cont.. Reasonably and fairly incidental to its objects Everything else is ultra vires the company. ‘Ultra’ means ‘beyond’ and ‘vires’ means ‘powers’. The term ultra vires a company means that the doing of the act is beyond the legal power and authority of the company. Tolani Institute of Management Studies15/04/2013 15
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    • DEFINITION• The Articles of Association or just articles are the rules, regulations and bye-laws for the internal management of the affairs of the company.• The articles are next in importance to the Memorandum of Association which contains the fundamental conditions upon which alone a company is allowed to be incorporated. They are as such subordinate to, and controlled by, the Memorandum.15/04/2013 Tolani Institute of Management Studies 17
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    • Contents of articles• Share capital, rights of shareholders, variation of these rights, payment of commissions, share certificates.• Lien on shares.• Calls on shares.• Transfer of shares.• Transmission of shares.• Forfeiture of shares.• Conversion of shares into stock.• Share warrants.15/04/2013 Tolani Institute of Management Studies 19
    • • Alteration of capital• General meetings and proceedings threat• Voting rights of members, voting and poll, proxies• Directors, their appointment, remuneration, qualifications, powers and proceedings of Board of directors.• Manager• Secretary• Dividends and reserves• Accounts, audit and borrowing powers• Capitalisation of profits• Winding up15/04/2013 Tolani Institute of Management Studies 20
    • Form and signature of Articles• The Article shall be-a) Printedb) Divided into paragraphs, andc) Signed by each subscriber of the Memorandum in the presence of at least 1 witness who will attest the signature and likewise add his address, description and occupation, if any.15/04/2013 Tolani Institute of Management Studies 21
    • Distinction no. Memorandum of Association Article of Association The MA of a company is its charter and defined the The AA of a company defines the rules and regulations 1 limitations of the powers of the company, established concerning the internal affairs of the company. under the Company Act 1994 2 The company can’t operate beyond this document The AA has to follow the MA for any matter. 3 There is no supplement for the MA Table-A could be used as the supplement of AA It determine the nature of relationship with the third 4 It determine the internal affairs of the company party15/04/2013 Tolani Institute of Management Studies 22
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    • MEMBERS AND SHAREHOLDERS• The ‘members’ or ‘shareholders’ of a company are the persons who collectively constitute the company as a corporate entity.• The terms ‘member’ and ‘shareholder’ and ‘holder of a share’ are used interchangeably.• They are synonymous in the case of a company limited by shares, a company limited by guarantee and having a share capital and an unlimited company whose capital is held in definite shares.15/04/2013 Tolani Institute of Management Studies 24
    • • But in the case of an unlimited company or a company limited by guarantee, a member may not be a shareholder, for such a company may not have a share capital.15/04/2013 Tolani Institute of Management Studies 25
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    • • Any person who is competent to contract (sec.11 of the Indian Contract Act, 1872) may become a member of a company.• This is the subject to the provisions of the Memorandum and the Articles of the company.• The Articles may provide that certain persons cannot become members of the company.15/04/2013 Tolani Institute of Management Studies 27
    • • A minor is not competent to become the member of a company because an agreement with a minor is absolutely void.15/04/2013 Tolani Institute of Management Studies 28
    • How to become a member?A person may become a member of a companyin the following ways:Membership by subscription:- The subscribers to the Memorandum ofAssociation of a company are deemed to haveagreed to become its members. When thecompany is registered, their names are enteredas members in the register of members.15/04/2013 Tolani Institute of Management Studies 29
    • Membership by application and registeration: Apart from the subscribers of Memorandum, every other person, who agrees in writing to become a member and whose name is entered in the register of members, is a member of the company. A written application for allotment of shares is, therefore, necessary before a person can be entered as a member in the register of members.15/04/2013 Tolani Institute of Management Studies 30
    • Membership by beneficial ownership: Every person holding equity share capital of a company and whose name is entered as beneficial owner in the records of the depository shall be deemed to be a member of the concerned company. Membership by qualification shares: Before a person can be appointed a director of a public company, he must take, or sign an undertaking to take and pay for, the qualification shares, if any. He thus becomes a member and is in the same position as a subscriber to the Memorandum of the company.15/04/2013 Tolani Institute of Management Studies 31
    • Rights of membersStatutory rights These are the rights which are conferredon the members by the Companies Act. Theserights cannot be taken away or modified by anyprovision in the Memorandum or the Articles.Some of the statutory rights are: Right to obtain copies of the Memorandum and Articles.Right to transfer shares. 15/04/2013 Tolani Institute of Management Studies 32
    •  Documentary rights: These are the rights given to the members by the Memorandum and the Articles of Association.15/04/2013 Tolani Institute of Management Studies 33
    • Legal rights: These are the rights which are given to themembers by the general law.e.g.. In case of any misstatement orconcealment of a material fact in a prospectus, aperson who has applied for shares on the faithof such prospectus and has been alloted sharescan avoid the contract and claim damages underthe general law.15/04/2013 Tolani Institute of Management Studies 34
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    • DIRECTORS• The directors are the brain of a company.• They occupy a pivotal position in the structure of the company.• A director may be defined as a person having control over the direction, conduct, management or superintendence of the affairs of a company.15/04/2013 Tolani Institute of Management Studies 36
    • Number of directors• Every public company (other than a deemed public company) shall have at least 3 directors and every other company (e.g. a private company, a deemed public company) at least 2 directors.• A public company having :a) A paid-up capital of Rs.5 crore or more;b) One thousand or more small shareholders; shall have at least one director elected by suchsmall shareholders in the manner as may beprescribed.15/04/2013 Tolani Institute of Management Studies 37
    • Appointment of directors• First directors• Appointment of directors by the company• Appointment of directors by directors• Appointment of directors by third parties• Appointment by proportional representation• Appointment of directors by the central government15/04/2013 Tolani Institute of Management Studies 38
    • Position of directors• Directors as agents• Directors as employees• Directors as officers• Directors as trustees15/04/2013 Tolani Institute of Management Studies 39
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