The document provides an overview of key concepts related to companies under the Companies Act 2013 in India. It defines a company and its key characteristics such as separate legal entity, perpetual succession, and common seal. It outlines different types of companies and how they are formed, including requirements for the memorandum and articles of association. It also discusses prospectuses, shares and share capital, allotment of shares, members' rights and duties, types of company meetings, and winding up of companies.

4. CONTENT:
 Introduction
 Definition of company
 Characteristics of company
 Types of company
 Formation of company
 Memorandum of association
 Article of association
 Prospectus
 Public deposits
 Share & Share capital
 Allotment of Shares
 Members
 Meetings
 Winding up

5. Introduction:
 The Companies Act 2013 is an Act of the Parliament of
India which regulates incorporation of a company,
responsibilities of a company, directors, dissolution of a
company.
 The 2013 Act is divided into 29 chapters containing 470
sections and 7 schedules.
 The Act has replaced The Companies Act, 1956 (in a partial
manner) after receiving the assent of the President of
India on and with only 98 provisions 29 August 2013.
 The Act came into force on 12 September 2013 with few
changes like earlier private companies maximum number of
member was 50 and now it will be 200. A new term of "one
person company" is included in this act that will be a private
company of the Act notified.
 Another 184 sections came into force from 1 April 2014
Companies Act, 2013

6. Definition:
A company is an artificial
person created by law. It
has separate legal entity,
perpetual succession, and
common seal.
Companies act, 2013

7. Companies act, 2013
Characteristics of company:
1. Artificial person : the company becomes artificial person after
registration, it means that company hold property, enter into contracts ,
borrow or lend money on its own name.
2. Separate legal entity : the company has a separate legal entity, it
means it is independent from its members.
3. Perpetual existence : it means the company is not affected by death,
lunacy or insolvency of its member.
4. Limited liability : Since the company has separate legal entity, its
shareholders only liable for their liabilities not the liable for debts of the
company.
5. Separate property : a company, being a legal person, is capable of
owing, using & disposing of property in its own name.
6. Common seal : the company have its own common seal. The symbol of
seal is the signature of director of company, because company is an
artificial person

8. On the
basis of
liability
On the basis
of number of
members
On the basis
of control
On the basis of
ownership
On the basis
of
incorporation
Limited
liability
Unlimited
liability
Guarantee
liability
Public
company
Private
company
Holding
company
Subsidiary
company
Government
company
Foreign
company
Chartered
company
Statutory
company
Registered
company

9. Formation of company:
• In this promoter gives the idea of forming a
company.
• Then next step is to registered the company
by its own name through registrar office.
• After registration company gets the
certificate of incorporation.
• Now, the company raises capital for running
business.
• After raising capital company starts its
working.
Companies act, 2013

10. Note:
• For forming a public company, after
registration it issues prospectus for
raising capital outside the company.
• Then public company commence its
business.
• After raising capital, public company
gets the “ Certificate of commencement
of business”.

13. Memorandum of association:
Itlays down the objectsand powers
of company as wellas scopeof
operationsof the company beyond
which itcannot go.
Section
2(28)
Companies act,2013

14. Contents of MoA:
 The Name clause: it consists of company’s name.
 The Registered office clause: it consists of name of
state in which the registered office of company
situated.
 The Object clause: it consists of objective of company.
 The Liability clause : it consists of liability of
members.
 The Capital clause: it consist of amount of share
capital of company.
 The Association or Subscription clause: The
names, addresses, descriptions, occupations of the
subscribers, and the number of shares each subscriber
has taken and his signature attested by a witness.
Companies act, 2013

15. Article of association:
 It contains rules relating to the management
of its internal affairs.
 They define the duties, rights, powers and
authority of the shareholders and the directors
in their respective capacities of the company,
and the mode and form in which the business
of the company is to be carried out.
Companies act,2013

16. Contents of AoA:
 The business of the company;
 The amount of capital issued and the classes of
shares the increase and reduction of share capital;
 The rights of each class of shareholders and the
procedure for variation of their rights;
 The execution or adoption of a preliminary
agreement, if any; the allotment of shares; calls and
forfeiture of shares for non-payment of calls;
 The allotment of shares; calls and forfeiture of shares
for non-payment of calls;
 Transfer and transmission of shares;
Companies act,2013

17. Contd….
 Company’s lien on shares;
 Exercise of borrowing powers including issue of debentures;
 General meetings, notices, quorum, proxy, poll, voting
resolution, minutes;
 Number, appointment and powers of directors;
 Dividends – interim and final – and general reserves;
 Accounts and audit;
 Keeping of books-both statutory and others.
Companies act,2013

18. Prospectus :
A prospectus means any document
described or issued as prospectus and
includes any notice, circular advertisement
or other document inviting deposits from
the public or inviting offers from the public
for the subscription or purchase of any
shares in or debentures of a body
corporate.
Companies act,2013

19. Essential elements of Prospectus:
There must be an invitation to the
public.
The invitation must be made “by or on
behalf of the company”.
The invitation must be “to subscribe or
purchase of companies shares or
debentures or other instrument”.
Companies act,2013

20. Registration of the Prospectus
A copy of the prospectus duly signed by
every director or proposed directors must
be delivered to the Registrar before its
publication.
Section 60

22. Contents of Prospectus:
 Company’s name & address of its registered office,
 Objects of company.
 The number and classes of shares, if any, and the nature and
extent of the interest of the holders in the property and profits of
company.
 The details about redeemable preference shares intended to be
issued, if any, i.e., the date & mode of redemption, etc.
 Qualification shares of directors.
 Any provision in the articles as the remuneration of the directors,
managing directors.
 The names, addresses and occupation of the directors,
managing directors or managers.
Companies act,2013

23. Contd…
 The minimum subscription i.e., the minimum amount
which, in the opinion of directors, must be raised by
issue of shares.
 The date and time of opening and closing of the
subscription list.
 The amount payable on application and allotment of
each class of share.
 Rights, privileges and restrictions attached to each
class of shares.
 A reasonable time and place at which copied of audited
balance sheets and profit & loss A/c of the company
may be inspected.
Companies act,2013

25. Public deposits:
 A company can raise deposits from the public
ranging for a period from 6 months to 3 years.
 These deposits carry rate of interest specified
by the concerned company.
Companies act, 2013

26. Merits & Demerits of Public
Deposits:
Merits:
 Cheaper source.
 Low flotation costs.
 Trading on equity.
 Independence in management.
 No security.
 Flexibility.
Demerits:
o Misuse of funds because there is no security.
o Fixed obligation as interest.
o Unreliability.
o Unhealthy practice.
Companies act, 2013

27. Shares:
 The share capital of a company is divided into
a number of indivisible units of specified
amount. Each of such unit is called a ‘share’.
Classes of Shares: The most common classes
of shares are:
 Preference;
 Equity
Companies act,2013

28. Preference shares:
A preference share is one which carries the
following two rights over holders of equity
shares:
 A preferential right in respect of dividends at a
fixed amount or at a fixed rate;
 A preferential right in regard to repayment of
capital on winding up.
Companies act, 2013

29. Types of preference share:
 Participating & Non-participating.
 Redeemable & Irredeemable.
 Convertible & Non-convertible.
 Cumulative & Non-cumulative.
Companies act, 2013

30. Equity shares:
 ‘Equity share’ means a share which is not
preference share [Section 85].
 The rate of dividend is not fixed.
Companies act,2013

31. Share capital:
It means the capital of a company, or the
figure in terms of so many rupees divided
into shares of a fixed amount, or the
money raised by the issue of shares by a
company.
Companies act, 2013

32. Allotment of Shares:
It means and implies a division of the
share capital into defined shares of a
particular value or of different classes
and assignment of such shares to
different persons.
Companies act, 2013

33. Members of company:
Every person:
 Whose name is written in register of
members;
 Who holding equity shares of company;
 Who is beneficial holder.
Companies act, 2013

34. Rights of members:
 Claiming share certificate.
 Duplicate share certificate.
 Transfer of shares.
 Voting regarding dividend.
 Bonus share.
 Copy of P&L A/c.
 Attending meetings.
 Appointing proxy.
 Appointing auditor.
 Appointing & removing directors.
 Approaching court.
Companies act, 2013

35. Duties of members:
Every member who has been allotted shares is
liable to pay the company the total nominal
value of shares held by him.
If member faces problem to pay any call or
installments, he is serve with notice to pay call
money which he is unpaid, he is liable to pay
interest which may have occurred.
Companies act, 2013

36. Termination of members:
 Transfer of share: if any member is not able to
pay his debt, he will transfer the share.
 Forfeiture of shares: it means taken back of
shares from member due to his inability to pay
calls.
 Surrender of shares.
 Insolvency of shares.
 Winding up of company.
 Court order.
Companies act , 2013

37. Meetings:
Meetings can be defined as lawful association
and assembly of two or more persons by
previous notice.
We can say that, gathering of persons for
discussion or decision of profits, shares,
policies, future plans etc…..
Companies act, 2013

38. Types of meetings
Meetings of
Board of
directors
Meetings of
Shareholders
Meetings of
debenture holders
Meetings of
Creditors
Statutory
meetings
(sec.165)
Annual general
meeting (sec.166
& 167)
Extra-ordinary
meetings(sec.16
9)
Class
meeting

39. Statutory Meeting (Sec. 165)
 Every company limited by shares and every
company limited by guarantee and having a share
capital shall, within a period of not less than one
month and not more than six months from the date
at which the company is entitled to commence
business, held a general meeting of the members
of the company. This meeting is called the
‘statutory meeting’.
 This is the first meeting of the shareholders of a
public company and is held only once in the
lifetime of a company.
Companies act, 2013

40. Contd….
 Statutory report: The Board of directors shall, at
least 21 days before the day on which the meeting
is to be held, forward a report, called the ‘statutory
report’, to every member of the company.
 Procedure at the meeting: (a) List of members. (b)
Discussion of matters relating to formational aspect.
(c) Adjournment.
Companies act,2013

41. Contd…
Objects of the meeting and report
 To put the members of the company in
possession of all the important facts relating to
the company.
 To provide the members an opportunity of
meeting and discussing the management,
methods and prospects of the company.
 To approve the modification of the terms of any
contract named in the prospectus.
Companies act, 2013

42. Annual General Meeting (Sec.
166 and 167):
Every company conduct the meeting every year
known as Annual general meeting. There shall not be
an interval of more than 15 months between one
annual general meeting and another. But the first
annual general meeting should be held within a period
of 18 months from the date of its incorporation.
 A general meeting of a company may be called by
giving not less than 21 days’ notice in writing.
Companies act, 2013

43. Contd…
 This meeting is for discussion about dividend
payable to shareholders and retention money
for future plans.
 In this meeting all stakeholders are gather for
decision.
Companies act, 2013

44. Extraordinary General Meeting
(sec. 169):
A statutory meeting and an annual general meeting of
a company are called ordinary meetings. Any meeting
other than these meetings is called an extraordinary
general meeting. It is called for transacting some
urgent or special business which cannot be postponed
till the next annual general meeting. It may be
convened:
(1) By the Board of directors on its own or on the
requisition of the members; or
(2) By the requisitionists themselves on the failure of
the Board of directors to call the meeting.
Companies act, 2013

45. Class meeting:
Under the Companies Act, class meetings of various
kinds of shareholders and creditors are required to
be held under different circumstances. Under Sec.
106, class meetings of the holders of different
classes of shares are to be held if the rights attaching
to these shares are to be varied
Companies act, 2013

46. Winding up:
 Winding up is the process of selling all the
assests of a business, paying of creditors,
distributing any remaining assets to the
partners or shareholders an then dissolving
the business.
 Simply, it means liquidation and closing down
of company.
Companies act,2013

47. Winding-up by
court
Voluntary
winding -up
Winding upunder
supervision ofcourt
Member
voluntary
winding up
Creditor
voluntary
winding up

48. Compulsory winding up under an
order of the court:
Winding up of company by court due to following
reasons:
 Special resolution
 Default in holding statutory meetings
 Failure to commence business
 Reduction in membership
 Inability to pay debts
 Just & equitable
 Failure to file balance sheet
Companies act, 2013

49. Petition of winding up:
 By shareholder
 By company itself
 By registrar of company
 By any creditor of company
 By person authorized by central government
 By voluntary liquidator
Companies act, 2013

50. Voluntary winding up:
It further sub-divided into :
Members voluntary winding up
Creditors voluntary winding up
Companies act, 2013

51. A. Member voluntary winding up:
 In this case, directors declares in the meeting
of shareholders that company is fit for
winding-up. Through meeting shareholders
passes resolution for voluntary winding up
and appoints liquidator.
Companies act, 2013

52. Reasons for member voluntary
winding-up:
 Expiry of period.
 By special resolution.
 Declaration of solvency of company.
 Notice of appointment of liquidator to given to
registrar.
 Final meeting and dissolution.
Companies act, 2013

53. Creditors voluntary winding-up:
 The procedure in a creditors voluntary
winding-up is based upon assumption that the
company is insolvent.
Companies act, 2013

54. Winding-up under supervision of
court:
 At any time after passing resolution for
voluntary winding-up, the court may make an
order that the voluntary winding-up should
continue subject to supervision of the court.
 Application for such supervision order may be
made either by a creditor, shareholder, the
company or liquidator.
Companies act, 2013

55. Contd…..
The order passed by court due to following reason:
 Resolution for winding-up was obtained by fraud.
 The rules relating to winding-up order are not
being observed.
 The liquidator is prejudicial or is negligent in
collecting the assests.
So the court takes all the power as in case of
compulsory winding-up and appoints additional
liquidators.
Companies act, 2013

56. Thank you

57. Presented by:
Yamini Kahaliya
BBA(Honors’)