Submitted To :- Prof. Priya kini

Prepared By - Vinay Golchha

1

1/10/2014
 A company can be defined as an "artificial person", invisible, intangible, created

by or under law, with a discrete leg...
 A company is an artificial person created by law.
 It is a voluntary association of individuals for profits.
 A compan...
 Separate legal entity
 Limited liability
 Perpetual succession

 Common seal
 Transferability of shares
 Separate p...
Types Of
Company

Companies

Incorporated

Chartered
Companies

Statutory
Companies

Registered
Companies

Companies
limit...
Types Of Company

Limited Liability

Liability

Unlimited
Liability

Number Of
Member

Public

Company

Private

Prepared ...
Types Of Company

Company

Control

Holding

Prepared By - Vinay Golchha

Ownership

Subsidiary

Govt.

Non Govt.

1/10/20...
 Incorporated Companies: These are the association of persons who contribute money to a
common stock known as capital of ...
Registered Companies: Companies registered under the Companies Act,1956, or the earlier
Companies Acts are called registe...
 According to Section 3(1)(iii) of the Companies (Amendment)Act,2000, a private

company means a company which:
 (a) has...
 According to Section 3(1)(iv) of the Companies (Amendment)Act,2000, a public

company means a company which:
 (a) is no...
 Government Companies: It is a company of which 51% or more equity share capital

is held by the Government. Rest of the ...
 A Company comes into existence when a group of

people come together with a view of forming an
association to exploit th...
 Promotion Stage.
 Selection of Name.
 Incorporation (Registration Stage).

 Raising the Share Capital Stage.
Prepared...
 Discovery of Business opportunities.
 Detailed Investigation.
 Assembling necessary requirements.

 Financing of prop...
 To be identified for legal and business purpose (i.e. “Ltd” or

“Pvt Ltd” ). The name should not be similar to the exist...
 A company is said to be incorporated when it fulfill the

formalities of registration and obtain “CERTIFICATE OF
INCORPO...
 Entering onto an agreement with underwriters.
 Applying to the stock exchange for listing of shares.

 Issue of prospe...
 Contains fundamental conditions.
 Charter of company.

 Lays down area of operation of the company.
 Regulates extern...
 Name.
 Object.
 Registered office clause.

 Liability Clause.
 Capital clause.
 Association or subscription.

Prepa...
 In corporate governance, a company's articles of

association is a document which, along with
the memorandum of associat...
 The important
 Powers, duties, rights and liabilities of Directors
 Powers, duties, rights and liabilities of members
...
 A prospectus, is a disclosure document that describes a

financial security for potential buyers. It commonly provides
i...
 Prospectus issued generally i.e. issued to persons who are

not existing members or debentures holders.
 Prospectus iss...
Prepared By - Vinay Golchha

1/10/2014

25
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Introduction to Company Act

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Basic Idea for the companies Act 1956

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Introduction to Company Act

  1. 1. Submitted To :- Prof. Priya kini Prepared By - Vinay Golchha 1 1/10/2014
  2. 2.  A company can be defined as an "artificial person", invisible, intangible, created by or under law, with a discrete legal entity, perpetual succession and a common seal. It is not affected by the death, insanity or insolvency of an individual member.  According to Section 3(1)(i) of the Companies Act, a company means, “ A company formed and registered under this Act or an existing company.”  A voluntary association formed and organized to carry on a business. Prepared By - Vinay Golchha 1/10/2014 2
  3. 3.  A company is an artificial person created by law.  It is a voluntary association of individuals for profits.  A company means a group of persons associated together for the attainment of a common end, social or economic.  „Existing Company‟ means a company formed and registered under any of the earlier Company Laws. Prepared By - Vinay Golchha 1/10/2014 3
  4. 4.  Separate legal entity  Limited liability  Perpetual succession  Common seal  Transferability of shares  Separate property Prepared By - Vinay Golchha 1/10/2014 4
  5. 5. Types Of Company Companies Incorporated Chartered Companies Statutory Companies Registered Companies Companies limited by shares Public Prepared By - Vinay Golchha Private Unincorporated Companies Limited By Guarantee Public Private Unlimited Companies Public Private 1/10/2014 5
  6. 6. Types Of Company Limited Liability Liability Unlimited Liability Number Of Member Public Company Private Prepared By - Vinay Golchha 1/10/2014 6
  7. 7. Types Of Company Company Control Holding Prepared By - Vinay Golchha Ownership Subsidiary Govt. Non Govt. 1/10/2014 7
  8. 8.  Incorporated Companies: These are the association of persons who contribute money to a common stock known as capital of the company. They have existence independent of its members.  Unincorporated Companies: These are the mere collection of persons who have agreed to join in partnership to run a business and share the profits.  Chartered Companies: The „Crown‟ in the exercise of the royal prerogative has power to create a corporation by the grant of a charter to persons assenting to be incorporated. Such companies or corporations are known as chartered companies.  Statutory Companies: A company may be incorporated by means of a special Act of the Parliament or any State Legislature. Such Companies are called statutory companies. Such companies are generally formed to carry out some special public undertakings, e.g., railways, waterways, gas, electric generation etc. They are governed by the Acts creating them. Prepared By - Vinay Golchha 1/10/2014 8
  9. 9. Registered Companies: Companies registered under the Companies Act,1956, or the earlier Companies Acts are called registered companies. Such companies come into existence when they are registered under the Companies Act and a Certificate of Incorporation is granted to them by the Registrar. A company registered under the Act may be: I. Companies limited by shares: In a company limited by shares the liability of the members is limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them. II. Companies limited by guarantee: It is a registered company public or private, in which the liability of members is limited to such amounts as they may respectively undertake by the memorandum to contribute to the assets of the company in the events of its being wound up. III. Unlimited Companies: A company not having any limit on the liability of its members is termed as unlimited company. Prepared By - Vinay Golchha 1/10/2014 9
  10. 10.  According to Section 3(1)(iii) of the Companies (Amendment)Act,2000, a private company means a company which:  (a) has a minimum paid up capital of one lakh rupees or such higher amount as may be prescribed by the Government;  (b) has a minimum of 2 and maximum of members excluding employees; (c) restricts the right of members to transfer its shares , if any;  (d) prohibits any invitation to the general public to subscribe for its shares or debentures;  (e) does not invite the public to subscribe to its deposits.  E.g.:- Ambika Industries Pvt. Ltd., Paras Pharmaceutical Pvt. Ltd. etc. Prepared By - Vinay Golchha 1/10/2014 10
  11. 11.  According to Section 3(1)(iv) of the Companies (Amendment)Act,2000, a public company means a company which:  (a) is not a private company; and  (b) has a minimum paid up capital of five lakh rupees or such higher amount as may be prescribed by the Government.  E.g.:-Reliance Industries Ltd., Tata Iron & Steel Co. Ltd., D.C.M. Ltd., etc. Prepared By - Vinay Golchha 1/10/2014 11
  12. 12.  Government Companies: It is a company of which 51% or more equity share capital is held by the Government. Rest of the shares can be held by private individuals or businessmen.  Foreign Companies: It is incorporated outside India but has a place of business in India. Some of the popular MNCs operating in India are Coca Cola(USA), Pepsi Cola(USA), Sony(Japan),etc. Prepared By - Vinay Golchha 1/10/2014 12
  13. 13.  A Company comes into existence when a group of people come together with a view of forming an association to exploit the business opportunities by bringing together; men, material, money and management. Prepared By - Vinay Golchha 1/10/2014 13
  14. 14.  Promotion Stage.  Selection of Name.  Incorporation (Registration Stage).  Raising the Share Capital Stage. Prepared By - Vinay Golchha 1/10/2014 14
  15. 15.  Discovery of Business opportunities.  Detailed Investigation.  Assembling necessary requirements.  Financing of proposition. Prepared By - Vinay Golchha 1/10/2014 15
  16. 16.  To be identified for legal and business purpose (i.e. “Ltd” or “Pvt Ltd” ). The name should not be similar to the existing. Prepared By - Vinay Golchha 1/10/2014 16
  17. 17.  A company is said to be incorporated when it fulfill the formalities of registration and obtain “CERTIFICATE OF INCORPORATION” by submitting the MoA, AoA and written consent of all the directors.  A public to commence business, should raise the required capital and obtain the “CERTIFICATE OF COMMENCEMENT OF BUSINESS”. Prepared By - Vinay Golchha 1/10/2014 17
  18. 18.  Entering onto an agreement with underwriters.  Applying to the stock exchange for listing of shares.  Issue of prospectus inviting public to subscribe.  Allotting shares Prepared By - Vinay Golchha 1/10/2014 18
  19. 19.  Contains fundamental conditions.  Charter of company.  Lays down area of operation of the company.  Regulates external affairs.  Defines the object and scope. Prepared By - Vinay Golchha 1/10/2014 19
  20. 20.  Name.  Object.  Registered office clause.  Liability Clause.  Capital clause.  Association or subscription. Prepared By - Vinay Golchha 1/10/2014 20
  21. 21.  In corporate governance, a company's articles of association is a document which, along with the memorandum of association form the company's constitution, defines the responsibilities of the directors, the kind of business to be undertaken, and the means by which the shareholders exert control over the board of directors. Prepared By - Vinay Golchha 1/10/2014 21
  22. 22.  The important  Powers, duties, rights and liabilities of Directors  Powers, duties, rights and liabilities of members  Rules for Meetings of the Company  Dividends  Borrowing powers of the company  Calls on shares  Transfer & transmission of shares  Forfeiture of shares  Voting powers of members Prepared By - Vinay Golchha 1/10/2014 22
  23. 23.  A prospectus, is a disclosure document that describes a financial security for potential buyers. It commonly provides investors with material information about mutual funds, stocks etc., any litigation that is taking place, a list of material properties and any other material information. In the context of an individual securities offering, such as an initial public offering ,a prospectus is distributed by underwriters or brokerage to potential investors. Prepared By - Vinay Golchha 1/10/2014 23
  24. 24.  Prospectus issued generally i.e. issued to persons who are not existing members or debentures holders.  Prospectus issued generally uniform with shares or debentures already quoted on stock exchange.  Prospectus not issued generally i.e. only to the existing share holders and debenture holder. Prepared By - Vinay Golchha 1/10/2014 24
  25. 25. Prepared By - Vinay Golchha 1/10/2014 25

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