Act of company

1. Welcome to the Session
on-
The Companies Act , 1994

2. Policy Vs. Regulation
* If policies are rules made to achieve certain goals in
a company or organization, regulations are acts or
statutes passed by the legislation having the force
of a law.
* Policy is done purposefully by the management to
ensure compliance as they want to keep the factory
safe from mishaps.
* Regulations are made to make people comply and
behave in a certain manner.

3. The Companies Act , 1994

4. Introduction
 The Companies Act 1994 has been enacted by the
parliament on 11 September 1994 and gazzetted on 12
September 1994 and made effective from 01 January 1995.
Before its enactment in 1994, company law was governed
by the Companies Act 1913 which was amended in 1915,
1920, 1926, 1930, 1932, 1936, 1938, 1949 ,1969, 1973 and
1984.
 The Companies Act 1994 is divided into 11 parts (total 404
sections) and 12 schedules.

5. Defining Company
 “Company means a company formed and registered
under this Act or an existing company”. – Sec 2 (1),
The Companies Act 1994.
 “ A company is a voluntary association or an
organization of many persons who contribute money
or money’s worth to a common stock and employ it in
some trade or business and who share the profit or
loss arising there from.”- Justice Lindley.

6. Common Characteristics of a Company
 Artificial Entity –
 Voluntary Organization –
 Perpetual succession –
 Creation of Law –
 Common Seal –
 Division of capital –
 Limited liability –
 Separation of ownership from control –
 Democratic control –
 Transferability of shares –
 Number of members.

7. Types of Companies
 A. Companies Limited by Shares (Public Ltd.
Company and Private Ltd. Company)
 B. Companies Limited by Guarantee
 C. Unlimited Companies

8. Private Company
Vs.
Public Company

9. Companies Act
Public Limited Company Private Limited Company
Minimum number of member is 7 and the
maximum number is unlimited.
Minimum number of members is 2 and
maximum 50.
At least 3 directors. At least 2 directors.
Statutory meeting and report is mandatory. It is not required.
An audit firm must audit financial statement. It is not mandatory.
Its financial statement is open for public
disclosure.
It is not open for public disclosure.
It has no restriction in transferring of shares. It restricts to transfer of shares.
Certificate of commencement is required to
start business operation.
Certificate of incorporation is sufficient to
start business operation.

10. Formation of a Company
 - Verification of Company Name to the Registrar
of the Joint Stock Companies(RJSCF).
 - When verified, the Memorandum of Association
(M/A) and Articles of Association (A/A) must be
prepared and submitted to the Registrar of the
Joint Stock Companies along with the application
form.
 - In case of public limited company, a duly signed
list of persons has to be consented as directors of
the company with their consent.
 - Declaring that all the requirements of the Act
have been complied with.

11.  After these, if the Registrar is satisfied with the
requirements submitted, he issues a certificate,
which is called “Certificate of Incorporation” to
a public limited company as well as to a private
limited company.

12.  But for a public limited company, it requires to obtain
another certificate, which is called “Certificate of
Commencement”. For obtaining this certificate a public
limited company has to –
a) Issue a ‘prospectus’ or ‘statement’( in lieu of prospectus)
b) Ascertain that minimum subscription has been collected
c) Ascertain that the directors’ qualifying share have been
collected
d) Declare about the required formalities has been made
according to the Act.
After obtaining the “Certificate of Commencement”, a
public limited company can start its business operation.

13. Types of Shares of a Public Limited Company
A. Ordinary Share/ Equity Share
B. Preference Share:
- Cumulative and Non Cumulative
- Participating and Non-participating
- Redeemable and Irredeemable

14. Meetings
* Annual General Meeting
* Statutory Meeting
* Extraordinary General Meeting

15. Companies Act
5. Memorandum of Association
- Companies Limited by Shares
- Companies Limited by Guarantee
- Unlimited Companies
6. Memorandum of Company Limited by Shares
- Name of the Company
- Address of the registered office
- Objects of the Company
- Limited Liability
- Share Capital Amount and Number of Shares
- Each subscriber of the MoA shall take at least one share
- Each subscriber shall write opposite to his name the
number of share he takes

16. Companies Act
9. Printing and Signature of Memorandum
11. Name of the Company and Change of Name
17. Articles of Association: Provisions for Regulating
the Affairs of the Company Share/ General
Meeting/ Power of Directors/Accounts/Audit

17. MoA Vs. AoA
Basis for Comparison Memorandum of Association Articles of Association
Meaning
Memorandum of Association is
a document that contains all
the fundamental information
which are required for the
incorporation of the company.
Articles of Association is a
document containing all the
rules and regulations that
governs the company.
Defined in Section 2 (56) Section 2 (5)
Type of Information contained
Powers and objects of the
company.
Rules of the company.
Status
It is subordinate to the
Companies Act.
It is subordinate to the
memorandum.
Retrospective Effect The memorandum of
association of the company
cannot be amended
retrospectively.
The articles of association
can be amended
retrospectively.

18. MoA Vs. AoA
Basis for
Comparison Memorandum of Association Articles of Association
Major contents A memorandum must contain six clauses
The articles can be drafted as per
the choice of the company.
Obligatory Yes, for all companies.
A public company limited by
shares can adopt Table A in place
of articles.
Compulsory
filing at the time
of Registration
Required Not required at all.
Alteration
Alteration can be done, after passing
Special Resolution (SR) in Annual General
Meeting (AGM) and previous approval of
Central Government (CG) or Company
Law Board (CLB) is required.
Alteration can be done in the
Articles by passing Special
Resolution (SR) at Annual General
Meeting (AGM)
Relation
Defines the relation between company and
outsider.
Regulates the relationship between
company and its members and also
between the members inter se.
Acts done
beyond the scope
Absolutely void Can be ratified by shareholders.

19. Companies Act
77. Registered Office of a Company
78. Publication of name by a limited company
81. Annual General Meeting
90. Directors Obligatory
94. Disqualification of Directors
- Person of Unsound Mind
- Insolvent
- Minor
96. Meeting of the Board

20. Companies Act
109. Restriction on Managing Director
110. MD not to be appointed for more than 5 years at a
time
181. Books to be kept by company
- All sums of money received and expended by the
company
- All sales and purchases of goods by the company
- The assets and liabilities of the company
183. Annual Balance Sheet
184. Board’s Report
195. Investigation of Affairs of Company by Inspectors

21. Winding-up
1) By the Court
2) Voluntary or
3) Subject to Supervision of Court

22. Opening a Bank Account of a Company
A banker has to obtain the following requirements
from a company to open an account with the
bank:
1. Duly completed account opening form
2. Specimen signature card with the signatures of
the authorized official with copies of power of
attorney (if any)
3. Copies of Memorandum of Association and
Articles of Associations
4. Certificate of Incorporation (Attested Copy)

23. 5. Certificate of Commencement (Attested Copy),
in case of public limited company
6. List of Directors under the signature of the
Chairman of the company
7. Certified copy of a resolution of the Board
regarding the execution of the papers and conduct
of the account
8. Copies of the latest financial statements
9. Bank must keep on record of the address of the
registered office of a company. Legal notice to be
served at the registered office.

24. Thank You All