Companies Act 1956
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Companies Act 1956

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Companies Act 1956 Companies Act 1956 Presentation Transcript

  • www.a2zmba.com
  • 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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  • THE COMPANIES ACT 1956
    • Came into force on 1 st april 1956
    • Based largely on the recommendations of company law 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 company
      • List of directors*
      • An undertaking*
      • A declaration
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  • FORMATION OF COMPANY ( contd… )
    • Certificate of Incorporation
    • Certificate of Commencement of Business
    • Promoter
      • Liability of Promoters
      • Remuneration of Promoters
    • Preliminary or Pre-Incorporation contracts
    • Provisional contracts
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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
    • -Doesn’t restrict right to transfer its shares
    • -Doesn’t Prohibit public issue of shares or
    • debentures
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  • KINDS OF COMPANIES ( contd…)
    • 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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  • KINDS OF COMPANIES ( contd…)
    • 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 ”
      • Holding Company -51% of the share capital
      • Subsidiary Company –less that 51%
      • Govt. Companies – MNTC, ONGC
      • Foreign Companies – IBM, MICROSOFT
    www.a2zmba.com A) B)
  • PUBLIC CO. VS. PRIVATE CO.
    • Number of members
    • Commencement of business
    • Invitation to public
    • Transferability of shares
    • Number of directors
    • Statutory meeting
    • Restrictions on appointment of directors
    • Managerial remuneration
    • Further issue of capital
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  • PARTNERSHIP VS. COMPANY
    • Registration
    • Number of members
    • Legal status
    • Property
    • Contracts
    • Management
    • Life duration
    • Liability
    • Creditors
    • Dissolution on death
    • Agency relationship
    • Transfer of interest
    • Statutory obligations
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  • MERGERS AND ACQUISITIONS
    • MERGER :
    • 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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  • MOTIVES AND BENEFITS OF M&A
    • Economies of scale
    • Improved market reach
    • Reduction in Tax liability
    • 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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  • M&A -ITS FINANCING
    • All Shares Deals
    • Cash
    • Hybrids
    • DEMERGER/SPIN-OFF/SPIN-OUT:
    • -Effective opposite of a merger
    • -One Co. splits into two
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