COMPANY LAW NOTES

1. DR J KUMAR
ASSISTANT PROFESSOR
DEPARTMENT OF COMMERCE
COMPANY LAW

2. Define “Company”.
A company is a legal entity formed by a group of
individuals to engage in and operate a business
enterprise in a commercial or industrial capacity. A
company's business line depends on its structure,
which can range from a partnership to a
proprietorship, or even a corporation.

3. List out the types of company.
Companies limited by guarantee.
Unlimited companies.
One person companies
Private companies.
Public companies.
Holding and subsidiary companies.

4. WHAT IS DOCTRINE OF ULTRA VIRES.
The doctrine of ultra vires is a fundamental
rule of company law. It states that the objects of a
company, as specified in its memorandum of
association, can be departed from only to the
extent permitted by the act.

5. WHAT IS EQUITY SHARE?
An equity share, normally known as ordinary share
is a part ownership where each member is a
fractional owner and initiates the maximum
entrepreneurial liability related to a trading
concern. These types of shareholders in any
organization possess the right to vote.

6. GIVE THE SHORT NOTE ON CAPITAL CLAUSE.
Capital clause: This clause details the maximum
capital a company can raise, also called the
authorized/nominal capital of the company. It also
explains the division of such capital amount into
the number of shares of a fixed amount each.

7. STATE THE PROSPECTUS
A prospectus is defined as a legal document
describing a company's securities that have been
put on sale. The prospectus generally discloses the
company's operations along with the purpose of
the securities being offered.

8. WHO IS A DIRECTOR?
A director is an elected individual who, along with
other directors, is responsible for a company's
corporate policy. Collectively, directors form the
board of directors.

9. LIST OUT THE DUTIES OF A LIQUIDATOR OF A
COMPANY.
If your company enters into liquidation, a
liquidator is appointed to investigate your
company's financial affairs, and identify and sell
unsecured assets for the benefit of your creditors
and shareholders.

10. WHAT IS PERCEPTUAL SUCCESSION.
In company law, perpetual succession is the
continuation of a company's/corporation's or
other organization's existence despite the death,
retirement, bankruptcy, insolvency, insanity,
change in membership or an exit from the
business of any owner or member, or any transfer
of stock etc.

11. State the qualification of a director
21 years of age
18 years of age if having a power of attorney
Sound mind
Without any judicial cases

12. List out any two directors’ rights of a director
Individual Rights
The right to receive notices of board meetings
The right to engage in proceedings and cast votes in favor or
against proposals
The right to receive draught circular resolutions (Under
Section 289), and the right to inspect minutes of board
meetings.
Collective Rights
Right to refuse to transfer shares:
Right to elect a chairman:
Right to appoint a Managing Director

13. State any two liabilities of the Director
Directors to make the necessary disclosures under
the SEBI.
Refunding of share application or excess in share
application fee
To pay for qualification shares
Civil Liability for Prospectus Misrepresentation

14. Who is held liable for mistakes in the prospectus?
Persons like Managers, Company Secretaries
and Directors who has signed and given
consent to the prospectus is liable for
misstatement.

15. Write a short note on Reserve capital
Reserve capital represents the portion of
subscribed capital that remains uncalled except in
case of winding up or at the time of liquidation. A
company can create reserve capital by passing a
special resolution.

16. What do you mean by Gestation Period?
In business, the gestation period is the pre-
traction period. It is the time taken to get the
business earnings. This period includes
making investments in projects, completing
them on time with quality, and making profits.

17. LIST THE PROCEDURES FOR ALTERATION IN AOA.
Do not conflict with the provisions in the
Memorandum of Association and the Companies Act.
A board meeting must be convened to pass a
resolution proposing the alteration of the AOA
Once the board has approved the resolution, it must
be submitted to the shareholders for their approval.
The alteration of AOA requires a special resolution,
File with the Registrar