The document discusses company law concepts such as the definition of a company, features of a company like separate legal entity status, types of companies, how a company can be wound up through various modes of winding up like voluntary and compulsory, and dissolution of a company. It also discusses key cases like Salomon v Salomon that established the separate legal entity principle of a company.

1. Company Law

2. Team Members
 Ritesh Nair MBAAVI014004
Kunal Patil MBAAVI014005
Gursimran Kaur MBAAIV014003
Anisha Jaikumar MBAAVI014010
Ramesh Mishra MBAAVI014009

3. Contents
• What is a company?
• Features of a company
• The Companies Act, 1956
• Characteristics of a Company
• Types of Companies
• How can be company be wound up?
• Modes of winding up
• Dissolution of the company
• Doctrine of Indoor Management
• Cases
• Conclusion

4. What is a company?
• A company is an artificial person created by law.
• A company means a group of persons
associated together for the attainment of a
common end, social or economic.
• Company law is defined under the Company
Act,1956.Section 3 (1)(i) of the Company Act
1956 defines a company as , ”a company
formed or registered under this Act or an
existing company.”
• ‘Existing company’ means a company formed
and registered under any of the earlier Company
Laws.

5. Features of a company
• A company is considered as a separate
legal entity from its members, which can
conduct business with all powers to
contract.
• Independent corporate entity (Saloman V.
Saloman) It is independent of its
members and shareholders
• It can own property, separate from its
members. The property is vested with the
company, as it is a body corporate.

6. The Companies Act, 1956
• The Companies Act 1956 is an Act of
the Parliament of India, enacted in 1956, which
enabled companies to be formed by registration, and
set out the responsibilities of companies,
their directors and secretaries.
• The Companies Act 1956 is administered by
the Government of India through the Ministry of
Corporate Affairs and the Offices of Registrar of
Companies, Official Liquidators, Public
Trustee, Company Law Board, Director of
Inspection, etc.
• Since its commencement, it has been amended
many times, in which amendment of 1988, 1990,
1996, 2000 and 2011 are notable

7. The Companies Act, 2013
• 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 as against 658 Sections in
the Companies Act, 1956 and has 7 schedules.
• The Act has replaced The Companies Act,
1956 and came into force completely on 1st
April,
2014.

8. Characteristics of a Company
• Separate Legal Entity
• Perpetual succession
• Limited liability
• Requires compulsory registration
• Transferability of shares
• Separate property
• Can sue and can be sued

9. Registration of Companies
1. Application of availability of name is to be made.
2. MOA and AOA along with the agreement, if any, with any
individual for appointment as its managing director, whole-
time director or manager to be filed with the Registrar of
Companies.
3. Particulars of situation of the registered office of the
company and particulars of the first directors of the company
to be filed.
4. Declaration by an advocate of the Supreme Court or High
Court or Secretary or Chartered Accountant or by a person
named in the articles as director, manager or secretary of the
Co. that all requirement have been complied with

10. Types of Companies
• Limited Company
• Unlimited company
• Government Company
• Foreign Company
• Private Company
• Public Company
• Trade union

11. Trade Union
1.Geared to regulate the relationship
between workers and employers.
2.Used for demanding the right of the
workers and agriculture laborers.
3.It is registered under the trade union Act.
4.It also have an executive body, elected or
nominated for the administration f the
organization.

12. Objective of company
• A company objective is a goal or outcome an
organization would like to achieve. Company objectives
are measurable. They effectively describe the actions
required to accomplish a task. Objectives define the
techniques an organization will use to achieve :-
• Sales success,
• Customer service goals,
• Financial goals and
• Any other measurable aspirations of the company

13. Ashbury Railway Carriage & Iron Co. v. Riche ,
1875
• In this case the objects set out in the company’s memorandum were
“to make and sell, or lend on hire, railway carriages and wagons, and
all kinds of railway plant, fittings, machinery and rolling stock; to
carry on the business of mechanical engineers and general
contractors; to purchase, lease, work and sell mines, minerals, land
and buildings; to purchase and sell as merchants, timber, coal,
metals, or other materials, and to buy any such materials on
commission or as agents.”
• The directors purchased a concession for making a railway in
Belgium and contracted with Riche to construct the line.
• The construction of a railway, as distinct from rolling stock, was ultra
vires. Therefore Riche’s action for breach of the alleged contract
failed as it was void.
• This would have been the case even if every shareholder of the
company had given approval - it was an act which the company had
no lawful power to do.

14. Court of Appeal
 The British Court of Appeal considered the matter and stated that
• The provision under which that system of limiting was inaugurated,
were provision not merely, perhaps I might say not mainly, for the
benefit of the share holders for the line being in the company, but
were enactments intended also to provide for the interest of two
other very important bodies, in the first place, those who might
become shareholders in succession to the persons who were
shareholders for the time being and secondly, the outside public,
and more particularly, those who might be creditors of compaines of
the kind.

15. How can be company be wound up?
• By passing a special resolution
• If there is a default in holding the statutory
meeting
• Failure to commence the business
• If there is reduction in the membership of the
minimum number of members as per the
statutory requirement
• If it not able to pay its debts

16. Modes of winding up
• Compulsory winding up under the supervision of
the court
(Reasons as stated in the previous slide)
Compulsory winding up may happen for just
and equitable reasons also.
The just and equitable grounds can be like loss
of substratum , where there is dead lock in the
management, etc
• Voluntary winding up ( Members voluntary
winding up and creditors voluntary winding up)
• Voluntary winding up subject to the supervision
of the court.

17. Winding up procedure
• A petition for winding up has to be filed by the
concerned person to the prescribed authority
• Liquidator to be appointed to safeguard the
property of the company
• Then the court will hear the matter and pass
necessary orders. It can dismiss the petition or
pass an order of winding up

18. Dissolution of the company
• When the company ceases to exist as a
corporate entity for all practical purposes it is
said to have been dissolved.
• Dissolution has to be declared by the court.
• It will not be extinct and will be kept under
suspension for 2 Years.
• The order has to be forwarded by the liquidator
to the Registrar of the Companies within 30 days
from the date of the order of dissolution.

19. Doctrine of Indoor Management
• Though every person is bound to read the
Articles and Memorandum of the company, it is
not bound to enquire into the internal
management of the company whether they are
being conducted according to the Articles of the
company or not.
• An outsider is entitled to presume that the
directors are acting lawfully in all respects.

20. Doctrine of Indoor Management
1. Where the act is ultra vires the Memorandum it is void
abinitio.
2. Where the third person has actual or constructive notice
regarding non-compliance and irregularity of internal
procedure.
3. Where the act of an agent falls outside his authority.
4. Where an act of an official of the company is apparently
outside his authority.
5. Where there is irregularity in the affairs of the company
which could be discovered. In these case, the doctrine of
indoor management cannot be applied.

21. Salomon v Salomon & Co. Ltd – Case
study analysis
• Salomon v Salomon & Co. Ltd (1895-99)
• Introduction
• Human beings are generally legal person but
humanity is a state of nature and legal personality is
an artificial construct, which may or may not be
conferred. The origin of corporation lies in a logical
extension of this separation of humanity from legal
personality as the group of humans who are
engaged in a common activity could attempt to
simplify their joint activity by gaining legal personality
from the venture.

22. Facts of Salomon v Salomon
Aron Salomon was a leather merchant who converted his
business into a Limited Company as Salomon & Co. Limited
(the ‘company’). The company so formed consisted on
Salomon, his wife and five of his children as members. The
company purchased the business of Salomon for £39,000;
the purchase consideration was paid in terms of £10,000
debentures conferring a charge over the company’s assets,
£20,000 in fully paid, £1 share each and the balance in
cash.
The company in less than one year ran into difficulties and
liquidation proceedings commenced. The assets of the
company were not even sufficient to discharge the
debentures (held entirely by Salomon himself). And nothing
was left for unsecured creditors. The liquidator on behalf of
unsecured creditors alleged that the company was a sham
and mere alias or agent for Salomon.

23. Court of Appeal
•The British Court of Appeal considered the matter and Kay LJ
stated that
•“The statue was intended to allow seven or more persons, bona
fide associated for the purpose of trade to limit their liability,
under certain conditions and to become a corporation. But
shareholders of Salomon & Co Ltd. were not intended to legalize
the pretended association for the purpose of enabling an
individual to carry on his business within; limited liability in the
name of joint stock company.”
•Thus, the focus of court of appeal was that the six family
members never intended to take part in the business and only
held the shares to fulfill the technicality required by the
companies act.

24. • Lord Macnaghten held that ‘the company is different person
altogether from subscribers… and, though it may be that after
incorporation the business is precisely the same as it was
before and same persons are managers, and same hand
receive the profit, the company is not agent for subscriber or
trustee for them. Nor are the subscribers as member liable, in
any shape or form, except to the extent and manner
prescribed by the Act.’
• It can be summarized from the above discussion that the
House of Lord unanimously held that the company had been
validly constituted, since the Companies Act only required only
seven (7) members holding at least one (1) share each. It said
nothing about their being independent, or that there should be
anything like a balance of power in the constitution of the
company. Therefore, the business belonged to the company
and not to Solomon rather Solomon was its agent. The
company was not agent of Solomon.

25. Principles Laid in Salomon v Salomon
• Artificial Person
• Limited Liability
• Lifting the Veil of Incorporation
The circumstances under which the courts may lift the corporate
veil may broadly be grouped under the following two heads:
(1)Statutory Provisions which includes-
Reduction of membership
Misrepresentation in prospectus
Mis-description of name
Fraudulent conduct
Liability for ultra vires acts
(2)Judicial Interpretations

26. Conclusion
• It may, therefore, be concluded in the light of
above discussion that though it is firmly
established ever since Salomon’s case that a
company is an independent and legal
personality distinct from the individuals who
are its members, it has since been held that
the corporate veil may be lifted, the corporate
personality may be ignored and the individual
members recognized for who they are in
certain exceptional circumstances.

27. Highlights on New Indian
companies Act
 Immediate change in letterhead
 Other personal company
 Women Director
 Resident Director
 Accounting year
 Loans to director
 Article of Association
 Disqualification of directors
 Appointment of statutory auditor

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