The document discusses various aspects of a company's membership, shares, management, meetings, borrowings, accounts, and winding up. It defines members/shareholders as the persons who collectively form the company. Shares represent a unit of ownership and come in two types - ordinary shares and preference shares. Company management follows a hierarchy and involves planning, organizing, and other functions. Statutory meetings and annual general meetings must be held, with requirements around notice periods, quorum, and minutes. A company has implied borrowing powers but some restrictions apply, and debentures are a form of secured debt instrument that a company can issue.
This document provides guidance for technology companies raising venture capital. It addresses key considerations in the venture capital raising process, from pre-funding preparations through the financing terms. The pre-funding section emphasizes preparing an executive summary and business plan to attract investors. It also stresses selecting a committed management team. The document recommends planning the company's capital structure through multiple anticipated financing rounds to determine founder equity stakes. Attachments provide templates for summaries, financial projections, and due diligence checklists.
1) The document discusses various legal documents required to register a company including the Memorandum of Association (MOA), Articles of Association (AOA), and Prospectus. The MOA defines the objectives and rules of incorporation while the AOA contains the internal management rules.
2) It also discusses key concepts related to company registration like ultra vires, indoor management, and minimum subscription. The doctrine of ultra vires states that an act of a company must not be beyond the object clause of its MOA. Indoor management allows outsiders to assume internal procedures are properly followed.
3) A prospectus invites public investment and must disclose important company details and terms to help investors make informed decisions. It is accompanied
This document presents information on share capital from Sections 30-58 and 71-74 of the Companies Act. It discusses reduction of share capital, variation of shareholder rights, reserve capital, restrictions on a company purchasing its own shares, application to court for share capital reduction, objections from creditors, and penalties for non-compliance. It also summarizes the rights of holders of special classes of shares and how an unlimited company can provide for reserve share capital.
Share capital refers to the portion of a company's equity obtained by issuing shares to shareholders in exchange for cash or assets. There are several types of shares including preference shares, which give shareholders preferential rights over equity shares. Preference shares can be cumulative, participating, convertible, or redeemable. Equity shares do not carry preferential rights and shareholders have voting rights. A company's share capital is divided into the authorized capital stated in its memorandum, the issued capital that has been subscribed for, and the subscribed capital representing amounts called and paid.
The document discusses the formation of a company, including the stages of formation and key documents involved. It provides details on:
- The four main stages of company formation: promotion, incorporation, raising share capital, and obtaining a certificate of commencement.
- Key documents in the formation process, including the memorandum of association, articles of association, and prospectus.
- Types of share capital a company can issue, such as preference shares and ordinary shares, and their different characteristics.
- Other topics covered include sources of company finance, underwriting commissions, and distinctions between the memorandum and articles of association.
(1) The document discusses various types of shares such as equity shares, preference shares, and their characteristics. It explains concepts like share capital, types of share capital, rights of shareholders, and types of preference shares.
(2) It also covers topics like allotment of shares, declaration of dividends, transfer of shares, transmission of shares, and increase of share capital. Methods to increase capital include further issue of shares, rights issues, and conversion of loans or debentures into equity.
(3) SEBI guidelines related to rights issues are also summarized, setting limits on fund raising and requiring measures like underwriting and minimum subscription.
This document discusses share capital and loan capital (borrowing powers) of companies under Indian company law.
It defines various types of share capital including authorized capital, issued capital, subscribed capital, called-up capital, paid-up capital, and reserve capital. It also discusses alteration and reduction of share capital, duties of the court in reduction of capital, and liability of members after reduction.
It then discusses a company's borrowing powers, including implied powers to borrow for trading companies and express powers required for non-trading companies. It discusses limitations on director's borrowing powers and consequences of ultra vires borrowing by a company or directors. Key points covered are rights of lenders in case of ultra vires borrowing, and
The document provides information about Inland Diversified Real Estate Trust, Inc. and its offering of securities. It discusses Inland's history sponsoring other real estate investment trusts (REITs), the types of commercial real estate and other assets Inland Diversified plans to acquire, highlights of the offering including the primary share price and distribution reinvestment plan, and suitability standards for investors. The summary also notes that property photographs will be included as Inland Diversified acquires assets.
This document provides guidance for technology companies raising venture capital. It addresses key considerations in the venture capital raising process, from pre-funding preparations through the financing terms. The pre-funding section emphasizes preparing an executive summary and business plan to attract investors. It also stresses selecting a committed management team. The document recommends planning the company's capital structure through multiple anticipated financing rounds to determine founder equity stakes. Attachments provide templates for summaries, financial projections, and due diligence checklists.
1) The document discusses various legal documents required to register a company including the Memorandum of Association (MOA), Articles of Association (AOA), and Prospectus. The MOA defines the objectives and rules of incorporation while the AOA contains the internal management rules.
2) It also discusses key concepts related to company registration like ultra vires, indoor management, and minimum subscription. The doctrine of ultra vires states that an act of a company must not be beyond the object clause of its MOA. Indoor management allows outsiders to assume internal procedures are properly followed.
3) A prospectus invites public investment and must disclose important company details and terms to help investors make informed decisions. It is accompanied
This document presents information on share capital from Sections 30-58 and 71-74 of the Companies Act. It discusses reduction of share capital, variation of shareholder rights, reserve capital, restrictions on a company purchasing its own shares, application to court for share capital reduction, objections from creditors, and penalties for non-compliance. It also summarizes the rights of holders of special classes of shares and how an unlimited company can provide for reserve share capital.
Share capital refers to the portion of a company's equity obtained by issuing shares to shareholders in exchange for cash or assets. There are several types of shares including preference shares, which give shareholders preferential rights over equity shares. Preference shares can be cumulative, participating, convertible, or redeemable. Equity shares do not carry preferential rights and shareholders have voting rights. A company's share capital is divided into the authorized capital stated in its memorandum, the issued capital that has been subscribed for, and the subscribed capital representing amounts called and paid.
The document discusses the formation of a company, including the stages of formation and key documents involved. It provides details on:
- The four main stages of company formation: promotion, incorporation, raising share capital, and obtaining a certificate of commencement.
- Key documents in the formation process, including the memorandum of association, articles of association, and prospectus.
- Types of share capital a company can issue, such as preference shares and ordinary shares, and their different characteristics.
- Other topics covered include sources of company finance, underwriting commissions, and distinctions between the memorandum and articles of association.
(1) The document discusses various types of shares such as equity shares, preference shares, and their characteristics. It explains concepts like share capital, types of share capital, rights of shareholders, and types of preference shares.
(2) It also covers topics like allotment of shares, declaration of dividends, transfer of shares, transmission of shares, and increase of share capital. Methods to increase capital include further issue of shares, rights issues, and conversion of loans or debentures into equity.
(3) SEBI guidelines related to rights issues are also summarized, setting limits on fund raising and requiring measures like underwriting and minimum subscription.
This document discusses share capital and loan capital (borrowing powers) of companies under Indian company law.
It defines various types of share capital including authorized capital, issued capital, subscribed capital, called-up capital, paid-up capital, and reserve capital. It also discusses alteration and reduction of share capital, duties of the court in reduction of capital, and liability of members after reduction.
It then discusses a company's borrowing powers, including implied powers to borrow for trading companies and express powers required for non-trading companies. It discusses limitations on director's borrowing powers and consequences of ultra vires borrowing by a company or directors. Key points covered are rights of lenders in case of ultra vires borrowing, and
The document provides information about Inland Diversified Real Estate Trust, Inc. and its offering of securities. It discusses Inland's history sponsoring other real estate investment trusts (REITs), the types of commercial real estate and other assets Inland Diversified plans to acquire, highlights of the offering including the primary share price and distribution reinvestment plan, and suitability standards for investors. The summary also notes that property photographs will be included as Inland Diversified acquires assets.
This document outlines the key terms of a proposed investment in Company X by Investor Group 1 and Investor Group 2. Some key details include:
- Investor Group 1 will invest INR [amount] million for a shareholding percentage in Company X as outlined in Annexure 2.
- Investor Group 2 will invest INR [amount] million for a shareholding percentage in Company X as outlined in Annexure 2.
- The pre-money valuation of Company X is INR [amount] million.
- The investment will occur in tranches, subject to certain conditions being met.
- The document outlines various rights for Investor Group 1, including board representation, veto rights,
The document discusses various provisions related to the issue of capital by companies under Indian law. It covers topics like the memorandum of association, capital clause, alteration of capital clause, reduction of share capital, variation in rights of shareholders, prospectus, and allotment of shares. Key points include that the memorandum defines and limits a company's powers, a capital clause states the share capital amount and structure, and special provisions under law regulate the initial and subsequent allotment of shares offered to the public.
The document discusses various aspects of companies and shares under Indian law. It defines a company and its key characteristics such as separate legal entity, limited liability, perpetual succession etc. It also explains different types of companies and differences between private and public companies. Further, it discusses topics like types of shares, issue of shares including at premium and discount, oversubscription and under subscription of shares, calls made on shares, forfeiture of shares etc. Various journal entries required for accounting of share capital transactions are also provided.
This document discusses various aspects of share capital for companies. It defines shares and their key characteristics such as being movable property. It describes different types of share capital including authorized, issued, paid up, called up, and reserve capital. It explains how companies can issue shares and allot them to shareholders in return for consideration, typically cash but sometimes other assets. It also discusses rules around issuing shares at a discount or premium.
Within a business, the managing director oversees daily operations to accomplish goals set by the board of directors, while the CEO provides the overall strategic vision. Both are top executive roles, with the managing director focused on operations and the CEO on goals and strategy. An auditor examines a company's accounts and provides an annual report to shareholders on the company's financial position. Auditors must be qualified chartered accountants and have rights like access to records and attendance at shareholder meetings to perform their examination. They have duties like inquiring about transactions and reporting on financial statements, and can be removed by shareholders or resign.
Sample Silicon Valley Series A Term Sheet from DLA Piper [SVNewTech]Vinnie Lauria
This is a sample silicon valley Series A term sheet. Presented at the January Silicon Valley New Tech Meetup.
Presented by Brad Rock, partner at DLA Piper.
Full presentation with this sample term sheet are available - http://www.vinnie.net/2010/01/08/silicon-valley-term-sheets-presented-by-brad-rock-at-the-svnewtech/
http://www.dlapiper.com/
This document summarizes key terms for negotiating a Series A term sheet. It discusses control terms such as board composition, voting rights, investor protective provisions, and drag-along rights. It also covers economic terms like valuation, liquidation preferences, dividends, anti-dilution, preemptive rights, and registration rights. The document provides example language for these various terms and highlights important issues to consider in negotiating preferred stock financing agreements.
CLSP - Unit 4 - Share Capital & MembershipAjay Nazarene
The document provides an overview of share capital, shares, prospectuses, and shareholder rights and responsibilities under Indian company law. It defines key terms like shares, share certificates, types of shares, and how shares are issued and transferred. It also summarizes the required contents of a prospectus, the process of share dematerialization, who qualifies as a member or shareholder, and the rights and potential liabilities of members.
The document summarizes the terms for a series seed investment in [Company]. It outlines the structure of the financing round, including share classes, valuation, and investor ownership percentages. It also describes conditions of closing, important shareholder rights and controls, founder vesting and exit terms, board composition, and other customary legal terms for a seed financing.
09 Mba Bl Lec Oct 07 Shares Members CapitalUmang Doshi
The document discusses various aspects of shares, share capital, shareholders, directors and auditing in companies. It provides details on allotment of shares, types of shares, share capital structure, rights and duties of shareholders and directors. It also covers topics like dividends, maintenance of accounts, statutory audits and qualifications/duties of auditors.
MEETINGS OF BOARD AND ITS POWERS COMPANIES ACT 2013ABC
The document discusses rules regarding board meetings and loans to directors according to the Companies Act 2013. It states that companies can hold board meetings through video conferencing if they follow certain procedures to ensure security and record accurate minutes. It also prohibits companies from directly or indirectly lending money to directors, with some exceptions. Loans to directors require prior approval from shareholders. Companies must maintain registers of loans, investments, and interests declared by directors.
1. Common shareholders have six main rights: voting power on major issues, ownership in a portion of the company, the right to transfer ownership, entitlement to dividends, opportunity to inspect corporate books and records, and the right to sue for wrongful acts.
2. In addition to these six rights, corporate governance policies are also important in determining how a company treats shareholders.
3. A shareholder rights plan outlines what actions a company's board can take to protect shareholder interests, such as exercising rights if another entity acquires a certain percentage of shares in an attempt to take over the company.
The document discusses procedures related to changing a company's name, objects, and registered office. It provides details on the regulatory provisions, key points to consider, and steps involved in the procedures. Some of the main points covered include obtaining shareholder and government approvals for a name change, ensuring the new name is available and fits the company's activities, and filing the required forms with the Registrar of Companies.
Term Sheets – Legal Issues By Ms. Neela Badami of Samvaad VenturesKesava Reddy
Sources of equity funding for startups are becoming more numerous and more diverse in character. And so are the terms on which the funds are made available. It is important for a startup to understand the terms on which it raises funds. These are captured in a term sheet. The term sheet is a critical document because it captures the investor’s commercial expectation from the investment. Learn all about term sheets from a panel of experts comprising a leading lawyer, an investment banker, investment professionals and entrepreneurs at NSRCEL’s ForStartups.
The document discusses the process of liquidating a company. It begins by defining liquidation as the process where a company is ended and its assets are administered for creditors and members. A liquidator is appointed to sell assets, pay debts, and distribute any surplus. There are three modes of liquidation: compulsory by court, voluntary by members/creditors, and under court supervision. The roles and responsibilities of the liquidator are outlined, including preparing a final statement of accounts. Preferential creditors who are paid before unsecured creditors are also defined.
Prepared by CA Sandesh Mundra - An exhaustive presentation on Consolidation of Accounts covering the Standards - AS 21, AS23 and AS 27 with indepth analysis of the finer aspects involved.
Public companies, private companies, not-for-profit organizations, and employee benefit plans may soon have more guidance about how to adapt their financial reporting when they cross the line from going concerns to entities facing liquidation. Liquidation means the entity plans to convert its assets to cash, settle its obligations, and distribute any remaining cash or assets to its owners. The reasons for liquidation range from voluntary determinations, such as a decision that a company’s business model can no longer be sustained, to compulsory causes, such as an action by creditors or a court-ordered liquidation. Whatever the cause, when a company reaches this point, it means that general-purpose financial statements no longer provide the kinds of information most useful to creditors.
To promote consistent reporting in these unusual times, the FASB has issued a Proposed Accounting Standards Update (ASU) with guidance on how and when entities should apply a different basis known as the liquidation basis of accounting. This Messenger highlights the proposed guidance and open questions.
- Cool Commerce is an ecommerce company that has been in business for 2.5 years and has raised $750,000 to date. It is growing rapidly but also burning through cash.
- The company is proposing a Series A financing round of $4 million led by Hell's Kitchen Venture Partners. This would value the company at $10 million pre-money.
- The terms being negotiated include the stock price, liquidation preferences, board seats, voting rights, and registration rights for future shares. The financing would help fund further growth but dilute existing shareholders.
Advance Accounting b.com part 2 chapter 1 notes Mehar Irfan
This document provides an overview of accounting for companies, including issuance of shares and debentures. It defines key terms like shares, share capital, share premium, and preliminary expenses. It explains the types of companies, shares, and share capital. It also outlines the typical journal entries for issuing shares and debentures, as well as appropriating retained earnings. Finally, it discusses the syllabus and exam questions related to accounting for companies.
The document provides information about accounting for companies, specifically regarding the issuance of shares and debentures. It defines key terms like shares, share capital, ordinary shares, preference shares, and debentures. It also provides sample journal entries for issuing shares at par value, premium, and discount. Examples are given for recording the issuance of shares and any refunds required. The document is intended to outline the accounting treatment for common share and debenture transactions that may be asked about in exams.
This document outlines the key terms of a proposed investment in Company X by Investor Group 1 and Investor Group 2. Some key details include:
- Investor Group 1 will invest INR [amount] million for a shareholding percentage in Company X as outlined in Annexure 2.
- Investor Group 2 will invest INR [amount] million for a shareholding percentage in Company X as outlined in Annexure 2.
- The pre-money valuation of Company X is INR [amount] million.
- The investment will occur in tranches, subject to certain conditions being met.
- The document outlines various rights for Investor Group 1, including board representation, veto rights,
The document discusses various provisions related to the issue of capital by companies under Indian law. It covers topics like the memorandum of association, capital clause, alteration of capital clause, reduction of share capital, variation in rights of shareholders, prospectus, and allotment of shares. Key points include that the memorandum defines and limits a company's powers, a capital clause states the share capital amount and structure, and special provisions under law regulate the initial and subsequent allotment of shares offered to the public.
The document discusses various aspects of companies and shares under Indian law. It defines a company and its key characteristics such as separate legal entity, limited liability, perpetual succession etc. It also explains different types of companies and differences between private and public companies. Further, it discusses topics like types of shares, issue of shares including at premium and discount, oversubscription and under subscription of shares, calls made on shares, forfeiture of shares etc. Various journal entries required for accounting of share capital transactions are also provided.
This document discusses various aspects of share capital for companies. It defines shares and their key characteristics such as being movable property. It describes different types of share capital including authorized, issued, paid up, called up, and reserve capital. It explains how companies can issue shares and allot them to shareholders in return for consideration, typically cash but sometimes other assets. It also discusses rules around issuing shares at a discount or premium.
Within a business, the managing director oversees daily operations to accomplish goals set by the board of directors, while the CEO provides the overall strategic vision. Both are top executive roles, with the managing director focused on operations and the CEO on goals and strategy. An auditor examines a company's accounts and provides an annual report to shareholders on the company's financial position. Auditors must be qualified chartered accountants and have rights like access to records and attendance at shareholder meetings to perform their examination. They have duties like inquiring about transactions and reporting on financial statements, and can be removed by shareholders or resign.
Sample Silicon Valley Series A Term Sheet from DLA Piper [SVNewTech]Vinnie Lauria
This is a sample silicon valley Series A term sheet. Presented at the January Silicon Valley New Tech Meetup.
Presented by Brad Rock, partner at DLA Piper.
Full presentation with this sample term sheet are available - http://www.vinnie.net/2010/01/08/silicon-valley-term-sheets-presented-by-brad-rock-at-the-svnewtech/
http://www.dlapiper.com/
This document summarizes key terms for negotiating a Series A term sheet. It discusses control terms such as board composition, voting rights, investor protective provisions, and drag-along rights. It also covers economic terms like valuation, liquidation preferences, dividends, anti-dilution, preemptive rights, and registration rights. The document provides example language for these various terms and highlights important issues to consider in negotiating preferred stock financing agreements.
CLSP - Unit 4 - Share Capital & MembershipAjay Nazarene
The document provides an overview of share capital, shares, prospectuses, and shareholder rights and responsibilities under Indian company law. It defines key terms like shares, share certificates, types of shares, and how shares are issued and transferred. It also summarizes the required contents of a prospectus, the process of share dematerialization, who qualifies as a member or shareholder, and the rights and potential liabilities of members.
The document summarizes the terms for a series seed investment in [Company]. It outlines the structure of the financing round, including share classes, valuation, and investor ownership percentages. It also describes conditions of closing, important shareholder rights and controls, founder vesting and exit terms, board composition, and other customary legal terms for a seed financing.
09 Mba Bl Lec Oct 07 Shares Members CapitalUmang Doshi
The document discusses various aspects of shares, share capital, shareholders, directors and auditing in companies. It provides details on allotment of shares, types of shares, share capital structure, rights and duties of shareholders and directors. It also covers topics like dividends, maintenance of accounts, statutory audits and qualifications/duties of auditors.
MEETINGS OF BOARD AND ITS POWERS COMPANIES ACT 2013ABC
The document discusses rules regarding board meetings and loans to directors according to the Companies Act 2013. It states that companies can hold board meetings through video conferencing if they follow certain procedures to ensure security and record accurate minutes. It also prohibits companies from directly or indirectly lending money to directors, with some exceptions. Loans to directors require prior approval from shareholders. Companies must maintain registers of loans, investments, and interests declared by directors.
1. Common shareholders have six main rights: voting power on major issues, ownership in a portion of the company, the right to transfer ownership, entitlement to dividends, opportunity to inspect corporate books and records, and the right to sue for wrongful acts.
2. In addition to these six rights, corporate governance policies are also important in determining how a company treats shareholders.
3. A shareholder rights plan outlines what actions a company's board can take to protect shareholder interests, such as exercising rights if another entity acquires a certain percentage of shares in an attempt to take over the company.
The document discusses procedures related to changing a company's name, objects, and registered office. It provides details on the regulatory provisions, key points to consider, and steps involved in the procedures. Some of the main points covered include obtaining shareholder and government approvals for a name change, ensuring the new name is available and fits the company's activities, and filing the required forms with the Registrar of Companies.
Term Sheets – Legal Issues By Ms. Neela Badami of Samvaad VenturesKesava Reddy
Sources of equity funding for startups are becoming more numerous and more diverse in character. And so are the terms on which the funds are made available. It is important for a startup to understand the terms on which it raises funds. These are captured in a term sheet. The term sheet is a critical document because it captures the investor’s commercial expectation from the investment. Learn all about term sheets from a panel of experts comprising a leading lawyer, an investment banker, investment professionals and entrepreneurs at NSRCEL’s ForStartups.
The document discusses the process of liquidating a company. It begins by defining liquidation as the process where a company is ended and its assets are administered for creditors and members. A liquidator is appointed to sell assets, pay debts, and distribute any surplus. There are three modes of liquidation: compulsory by court, voluntary by members/creditors, and under court supervision. The roles and responsibilities of the liquidator are outlined, including preparing a final statement of accounts. Preferential creditors who are paid before unsecured creditors are also defined.
Prepared by CA Sandesh Mundra - An exhaustive presentation on Consolidation of Accounts covering the Standards - AS 21, AS23 and AS 27 with indepth analysis of the finer aspects involved.
Public companies, private companies, not-for-profit organizations, and employee benefit plans may soon have more guidance about how to adapt their financial reporting when they cross the line from going concerns to entities facing liquidation. Liquidation means the entity plans to convert its assets to cash, settle its obligations, and distribute any remaining cash or assets to its owners. The reasons for liquidation range from voluntary determinations, such as a decision that a company’s business model can no longer be sustained, to compulsory causes, such as an action by creditors or a court-ordered liquidation. Whatever the cause, when a company reaches this point, it means that general-purpose financial statements no longer provide the kinds of information most useful to creditors.
To promote consistent reporting in these unusual times, the FASB has issued a Proposed Accounting Standards Update (ASU) with guidance on how and when entities should apply a different basis known as the liquidation basis of accounting. This Messenger highlights the proposed guidance and open questions.
- Cool Commerce is an ecommerce company that has been in business for 2.5 years and has raised $750,000 to date. It is growing rapidly but also burning through cash.
- The company is proposing a Series A financing round of $4 million led by Hell's Kitchen Venture Partners. This would value the company at $10 million pre-money.
- The terms being negotiated include the stock price, liquidation preferences, board seats, voting rights, and registration rights for future shares. The financing would help fund further growth but dilute existing shareholders.
Advance Accounting b.com part 2 chapter 1 notes Mehar Irfan
This document provides an overview of accounting for companies, including issuance of shares and debentures. It defines key terms like shares, share capital, share premium, and preliminary expenses. It explains the types of companies, shares, and share capital. It also outlines the typical journal entries for issuing shares and debentures, as well as appropriating retained earnings. Finally, it discusses the syllabus and exam questions related to accounting for companies.
The document provides information about accounting for companies, specifically regarding the issuance of shares and debentures. It defines key terms like shares, share capital, ordinary shares, preference shares, and debentures. It also provides sample journal entries for issuing shares at par value, premium, and discount. Examples are given for recording the issuance of shares and any refunds required. The document is intended to outline the accounting treatment for common share and debenture transactions that may be asked about in exams.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
This document defines a company and outlines its key characteristics such as being a voluntary association, having an independent legal entity status, limited liability for members, use of a common seal, transferable shares, and perpetual existence. It also describes the different types of companies (statutory, government, registered) and classes of shares (ordinary, preferred, deferred, preference, cumulative, participating, guaranteed). The formation process of a company is explained including the documents required such as the memorandum of association, articles of association, statement of capital, and director consents.
The document discusses various topics related to company shares and capital structure under Indian law. It defines shares, preference shares, equity shares, and different types of share capital including authorized, issued, subscribed, paid-up, called-up, and uncalled capital. It also covers share classification, allotment of shares, transfer of shares, dividends, and the key contents required in a prospectus for public issuance of shares.
The document summarizes key provisions of the Companies Act 1956 in India. It defines a company and outlines its key features such as separate legal entity status and limited liability. It classifies companies into public limited, private limited, deemed public, unlimited, guarantee, government and foreign. It describes the process of company formation including memorandum of association, articles of association, prospectus, and registration. It also covers topics like board of directors, their powers and meetings, and winding up of companies.
This document appears to be a student project submitted to a professor. It includes:
1) An acknowledgements section thanking various people for their support and guidance during the project.
2) A certificate page certifying that the student completed the project work.
3) A declaration by the student that the work is their original research.
4) An abstract providing an overview of share capital terms like authorized capital, issued capital, subscribed capital, etc.
5) Several pages discussing topics related to types of share capital, preference shares, calculating shareholders' equity, and rules for altering share capital.
The document discusses company shares and share capital. It defines shares, preference shares, and equity shares. Preference shares have preferential rights over equity shares in regards to dividends and capital repayment. Equity shares do not have preferences. Share capital includes authorized, issued, subscribed, paid-up, called-up, and uncalled capital. The document also discusses allotment of shares, transfer of shares, dividends, and the required contents of a prospectus.
The document discusses company shares and share capital. It defines shares as a portion of a larger amount divided among people or to which people contribute. Shares are classified as preference shares or equity shares. Preference shares carry preferential rights to dividends and capital repayment over equity shares. Equity shares do not enjoy preference in dividend payments or capital repayment. Share capital includes authorized, issued, subscribed, paid-up, called-up, and uncalled capital. A prospectus must include information on the company, investment objectives, share details, purchasing and repurchasing shares, fees and management.
The document discusses various topics related to companies including company members, company law, types of companies, shares, debentures, and meetings.
It defines a company as an association of individuals with a common purpose. It explains corporate law deals with how shareholders, directors, and other stakeholders interact. It distinguishes between public and private companies based on factors like minimum members, transferability of shares, and directors.
It describes shares, shareholders, and share certificates. It explains different types of shares including equity, preference, and their features. It also discusses debentures and their types based on record, security, redemption, and convertibility.
Finally, it provides an overview of different types of company meetings including
- A joint stock company is a voluntary association of individuals who contribute money or money's worth to a common fund. The contributors share the profits or losses of the business proportionately.
- It has a separate legal entity from its owners, with its capital divided into transferable shares. Shareholders have limited liability and are not liable for the debts of the company beyond the face value of their shares.
- Joint stock companies allow for high capital accumulation as shares can be held by a large number of individuals. This facilitates large-scale industrial and commercial operations.
This document discusses key concepts related to companies in India including:
1) The doctrine of constructive notice which states that anyone dealing with a company is deemed to have read and understood its memorandum and articles of association.
2) Key aspects of a prospectus including the definition and requirements for a document to be considered a prospectus under Indian law.
3) Key differences between preference shares and equity shares in a company.
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This document provides an overview of corporate accounting concepts related to share capital. It defines key terms like authorized capital, issued capital, called-up capital, paid-up capital, and types of shares. It discusses the process of issuing shares which involves issuing a prospectus, receiving applications, and allotting shares. The accounting entries for this process are also summarized, including entries for application money, allotment money, calls, and calls in arrears. Examples of journal entries for share issues are also provided.
This document provides information on companies and their formation. It begins by defining a company as a group of persons associated to achieve common objectives. It then lists the key characteristics of a company including that it is an artificial person, has separate legal entity, limited liability, and perpetual existence.
The document further discusses the types of companies based on incorporation, liability, number of members, control, and ownership. It also covers the differences between public and private companies. The formation process of a company involving promotion, incorporation, capital subscription, and commencement of business is outlined. The key primary documents of incorporation namely the memorandum of association, articles of association, and prospectus are explained. Finally, the document discusses winding up of companies.
1. The document discusses the nature and types of share capital for companies. It defines a company and lists its key characteristics such as separate legal entity status, perpetual existence, and limited liability for shareholders.
2. There are three main types of companies - private companies which are restricted in ownership and transfer of shares, public companies which have no such restrictions, and one person companies which can only have one member.
3. Shares are classified into preference shares, which get priority in dividends and capital repayment, and equity shares. Key terms related to share capital such as authorized, issued, called up, and paid up capital are also explained.
1) A company is a legal entity formed by individuals to operate a business ranging from a partnership to a corporation.
2) There are several types of companies including companies limited by guarantee, unlimited companies, one person companies, private companies, and public companies.
3) The doctrine of ultra vires states that a company can only depart from its stated objectives in its memorandum to the extent permitted by law.
4) An equity share represents partial ownership where shareholders have voting rights and maximum entrepreneurial liability.
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Company's act 1956 (part 2)
1.
2. Membership in a Company
Share Capital
Shares
Company Management
Meetings and Proceedings
Borrowings Powers, Debentures and Charges
Accounts and Auditors
Prevention of Oppression and Mismanagement
Compromises, Arrangements and Reconstructions
Winding Up
3. MEMBERS & SHAREHOLDERS The members of shareholders of a company are the
persons who collectively constitutes the company as a
corporate entity.
The terms „member‟ and „shareholder‟ and „holder of a
share‟ are used interchangeably.
4. Any person who is competent to contract (sec.11 of the Indian Contract
Act, 1872) may become a member of a company . This is subject to the provision
of the Memorandum and the Articles of the company.
The articles may provide that following person cannot become members
of the company1.
2.
3.
4.
5.
Minor
Insolvent
Partnership firm
Foreigner
Company
5. Membership
by Subscription
Membership
by Application and Registration.
›by application and allotment
›by transfer
›by succession
›agreement to be in writing
Membership
by Beneficial Ownership
Membership
by Qualification Shares.
6. The
amount of share capital a company reports on its balance sheet only accounts for the
initial amount for which the original shareholders purchased the shares from the issuing
company. Any price differences arising from price appreciation/depreciation as a result of
transactions in the secondary market are not included.
For
example, suppose ABC Inc. raised $2 billion from its initial public offering. Over the
next year, the total value of its shares increases to $5 billion. In this case, the value of the
share capital is still only $2 billion because ABC Inc. had received only $2 billion from the
sale of its securities to the investing public.
7.
Authorized, registered, maximum or normal capital:The maximum amount of capital, which a company is authorized to raise from the public by the issue of
shares, is known as authorized capital. It is a capital with which a company is registered, therefore it is also
known as registered capital.
Issued Capital:Generally, a company does not issue its authorized capital to the public for subscription, but issues a part of
it. So, issued capital is a part of authorized capital, which is offered to the public for subscription, including
shares offered to the vendor for consideration other than cash. The part of authorized capital not offered for
subscription to the public is known as 'un-issued capital'. Such capital can be offered to the public at a later date.
Subscribed Capital:It can not be said that the entire issued capital will be taken up or subscribed by the public. It may be
subscribed in full or in part. The part of issued capital, which is subscribed by the public, is known as subscribed
capital
8.
Called Up Capital :It is that part of subscribed capital, which is called by the company to pay on shares allotted. It is not necessary
for the company to call for the entire amount on shares subscribed for by shareholders. The amount, which is not
called on subscribed shares, is called uncalled capital.
Paid-up Capital:It is that part of called up capital, which actually paid by the shareholders. Therefore it is known as real capital of the
company. Whenever a particular amount is called and a shareholder fails to pay the amount fully or partially, it is
known an unpaid calls or calls in arrears.
Paid-up Capital = Called up capital - calls in arrears
Reserve Capital:It is that part of uncalled capital which has been reserved by the company by passing a special resolution to be called
only in the event of its liquidation. This capital can not be called up during the existence of the company.It would be
available only in the event of liquidation as an additional security to the creditors of the company.
9.
A unit of ownership that represents an equal proportion of a company's capital. It
entitles its holder (the shareholder) to an equal claim on the company's profits and an
equal obligation for the company's debts and losses.
Two major types of shares are :
Ordinary Shares (Common stock), which entitle the shareholder to share in the earnings of the
company as and when they occur, and to vote at the company's annual general meetings and other
official meetings, and
Preference Shares (Preferred stock) which entitle the shareholder to a fixed periodic income
(interest) but generally do not give him or her voting rights.
10. Company Management
Hierarchy
Top Management
Middle Management
First – Line management
Chairman
General Manager
Supervisor
Vice President
Regional Manager
Office Manager
Board Of Directors
Chief Executive Officer
Team Leader
11.
Management involves the manipulation of the human capital of an enterprise to
contribute to the success of the enterprise. This implies effective communication: an
enterprise environment (as opposed to a physical or mechanical mechanism),
implies human motivation and implies some sort of successful progress or system
outcome.
As such, management is not the manipulation of a mechanism (machine or
automated program), not the herding of animals, and can occur in both a legal as
well as illegal enterprise or environment At first, one views management
functionally, such as measuring quantity, adjusting plans, meeting goals. This
applies even in situations where planning does not take place.
12.
From this perspective, Henri Fayol (1841–1925) considers
management to consist of six functions:
› Forecasting
› Planning
› Organizing
› Commanding
› Coordinating
› Controlling
13.
STATUTORY MEETINGS:
A public company limited by shares or a guarantee company having share capitals
required to hold a statutory meeting. Such a statutory meeting is held only once in the
lifetime of the company. Such a meeting must be held within a period of not less than
one month or within a period not more than six months from the date on which it
is entitled to commence business.
STATUTORY REPORT :
The report forwarded to every member of the company by the board of members
atleast 21Days before the actual date of the meeting.
›
›
›
›
Procedure of the meeting
List of the members
Discussion of matters relating to formational aspect
Adjournment
14.
ANNUAL GENERAL MEETINGS:
Must be held by every type of company, public or private, limited by shares or by
guarantee, with or without share capital or unlimited company, once a year. Every
company must in each year hold an annual general meeting. Not more than 15 months
must elapse between two annual general meetings.
› Time and place of meeting
› 21 days notice.
EXTRAORDINARY MEETINGS:
A meeting for transacting some urgent or special business which cannot be
postponed till the next AGM.
15. Notice of meeting – should contain the details of place, date, hour & purpose.
Quorum for the meeting – minimum no. of members that must be present to
constitute a valid meeting. Minimum 5for public company and 2 for any
other company.
Chairman or the presiding officer present in the meeting.
Minutes of the meeting.
PROXIES :
› An authority who can represent and :-vote for another person at a meeting is called a
proxy.
› Proxy to be in writing.
› It should be deposited 48 hours before the meeting.
16. RESOLUTION:-
The questions which generally come for consideration at the general meeting of a company are
presented in the form of proposals called „motions‟ and when this motion is carried, it becomes a
„resolution‟.
17.
Every trading company has an implied power to borrow, as borrowing is implied in
the object for which it is incorporated. A trading company can exercise this power
even if it is not included in the Memorandum. However non-trading company has no
implied power to borrow and such power can be taken by it implied power to borrow
and such power can be taken by it by including a clause to that effect in the
Memorandum.
Restrictions on borrowing power : A public company can borrow only after
the receipt of Commencement Certificate. [Section 149(1)]. But a private company
can borrow immediately after the incorporation
18.
The Board of Directors may borrow moneys by passing a resolution passed at the
meetings of the Board. The board may delegate its borrowing powers to a Committee
of Directors. Such a resolution should specifically mention the aggregate amount upto
which the moneys can be borrowed by the Committee, the Managing Director,
Manager or any other principal officer of the company on such conditions as it
may prescribe [Section292 (1) (c)]
The moneys borrowed together with the moneys already borrowed by the company
(excluding loans obtained from banks i.e. working capital) shall not exceed
the aggregate of the paid up capital and the free reserves.[Section 293(1)(d)]
It may be noted that a company may borrow in excess of its paid up capital and free
reserves if it is so consented and authorized by the shareholders at a general meeting.
19. Debenture includes debentures stock, bonds, and any other securities of a
company, whether constituting a charge on the assets of the company or not.
FEATURES OF A DEBENTURE SEC 2(12)] :
(i) In the form of a certificate (like a share certificate) issued under the common seal
of the company. The certificate is an acknowledgement by the company of
indebtedness to a holder.
(ii) Provides for the payment of a specified principal sum at a specified date with
contracted rate of interest.
20. Issued in series
(v) Secured by a charge on the undertaking of the company, or on some class of its
assets or on some part of its profits. [Unsecured debenture is a deposit with the
meaning of the Companies (Acceptance of Deposits)Rules 1975].
(iv)
DEBENTURE STOCK :
Debenture stock is of the same nature as debentures but instead of each lender
having separate debenture bond he gets a certificate entitling him to a specified portion
one large loan. It is borrowed capital consolidated into one mass for the sake of
convenience.
21.
22. Debenture may be of different kinds as follows:
›
›
›
›
Perpetual or Irredeemable Debentures
Redeemable Debentures
Registered and Bearer Debentures
Secured and Unsecured or Naked Debentures
CONVERTIBLE DEBENTURES:
› A convertible debenture mean, which by the terms of its issue gives the
holder the right of exchange debenture wholly or in part with fully, paid
shares.
› Section 81(3)(b) provides that the terms of issue of debentures may provide
for an option to convert debentures or loans in the company.
23.
Borrowing has become an equally important method along with share capital of financing
projects. Corporate borrowing has its own peculiarities. No single individual may in normal
circumstances be in a position to meet the loan requirements of a company.
Loan money has, therefore, to be raised from a large number of individuals very much in the
same way as share capital. Loans may have to be obtained in a sequence one after the other.
The problem was solved by the evolution, on the one hand, of debentures and, on the other, of
the concept of floating charge, both being reserved only for the corporate sector. The same
assets are charged to several lenders and also to several lenders in a series. That raises a
question as to who shall have priority. This gave rise to the concept of pari passu ranking.
Since other trade creditors have also to seek payment only out of the company's assets, the
problem had to be tackled as to how they should know, before supplying more credit, what
assets would be available as security for their payments?
24. The Act prescribes for registration of charges with the Registrar of Companies, and also
gives a list of assets a charge on which must be registered.
Registration of charges : Identifies the assets, which are subject to the charge. It becomes a
source of knowledge, and, therefore,
Operates as constructive notice : A protection, to "all classes of persons interested in knowing
the assets position of the company. It makes the charge effective against all quarters including
the liquidator.
Types of Charges:
FIXED CHARGE:
Charge is fixed when it is made specifically to cover definite an ascertained assets of
permanent nature such as land, building, o heavy machinery. A fixed charge passes legal title
to certain specific assets and the company loses the right to dispose of the property
unencumbered, though the company retains possession of the property.
25. FLOATING CHARGE:
› It is a charge on the current assets of the company, present or future which
changes from time to time in the ordinary course of business e.g. stock in
trade, bills receivable, cash in-hand, work in progress, goods in transit,
inventory etc.
When floating charge becomes crystallized :
When the company goes into liquidation
When the company ceases to carry on the business
When the creditors or the debenture holders take steps to enforce this security
e.g. by appointing receiver to take possession of the property charged.
On the happening of the even specified in the deed.
26. REGISTRATION OF CHARGES [SECTION 125] :
The security created and charged for the following purposes must be registered with the ROC within 30 days(or
further period of 30 days with additional fees) after the date of their creation.
Securing any issue of debentures;
Uncalled share capital of the company;
Any immovable property;
Book debts, stock in trade or other current assets of the company;
Any movable property (not being a pledge);
Calls made but not paid;
IPRs of the company.
The ROC shall with respect to each company maintain a Register of charges containing all the specified
particulars. Upon registration of charge by the company, ROC shall issue a Certificate of charges, which shall be
conclusive evidence.
27.
Proper and accurate compilation of financial information of a corporate and its disclosure, in a
manner that is standardized and understood by stakeholders, is central to the credibility of the
corporates and soundness of investment decisions by the investors. The preparation of financial
information and its audit, therefore, needs to be regulated through law with stringent penalties for
non-observance.
The present statute provides for a mechanism for development of Accounting Standards. We
understand that Accounting Standards for the use of Indian corporate sector, taking into account
International Accounting Standards, are being developed through the instrumentality of the
National Advisory.
The Committee took note of the contribution made by the ICAI and the NACAS in development of
proposals for Accounting Standards and took the view that the existing institutional mechanism
for formulating and notifying Accounting Standards under the Companies Act, 1956 may be
retained. Committee on Accounting Standards (NACAS). Holding-Subsidiary Accounts and
Consolidation .
The Committee took the view that consolidation of financial statements of subsidiaries with those
of holding companies should be mandatory. The Committee discussed the question of the manner
of maintenance of accounts of entities other than companies but controlled by companies
registered under the Act.
28.
With consolidation of financial statements by holding companies on mandatory basis, the provisions
requiring attaching the accounts of subsidiary companies with those of holding companies, for
circulation to shareholders in accordance with the provisions of the present Companies Act should
be done away with.
Further, the Committee took the view that the holding companies should be required to maintain
records relating to consolidation of financial statements for specified periods. Presentation of
consolidated financial statements by the holding company should be in addition to the mandatory
presentation of individual financial statements of that holding company.
At present, Section 209 (4A) of the Act requires companies to preserve the books of accounts,
together with the vouchers relevant to any entry in such books of account, in good order, relating to
a period of not less than 8 years immediately preceding the current year. The Committee felt that the
rules may provide for preservation of books of account and records of the company for a period of 7
years to bring it in harmony with Income Tax Act.
In order to bring about more transparency and uniformity in the maintenance of accounts, the
Committee felt that the companies should continue to be mandated to maintain their books of
accounts on accrual basis and double entry method of book keeping.
29.
Maintenance of Records Outside the Country :
The companies should have an option to keep records outside the country provided financial
information in compliance with the Companies Act is available within the country and written notice is
given to the Registrar of the place where the records are kept. However, such a Company should be
obligated to produce the records that are kept outside the country, if and when required to do so as
specified in the Rules.
Cash Flow Statement To Be Made Mandatory :
World over, the importance of Cash Flow Statement is being specifically recognized. At present, the
listed companies are mandated to include a Cash Flow Statement in the Annual Report and the
Standards of Accounting prescribed by ICAI also requires in specified cases a Cash Flow Statement to be
submitted along with the Balance Sheet and Profit & Loss Account with a view to make Cash Flow
Statement mandatory. The Committee felt that there was a need to include the definition of the term
Financial Statement in the Act, to include Profit & Loss Account, Balance Sheet, Cash Flow Statement
and Notes on Accounts. Financial Year
The Companies Act at present does not contain any provision relating to the minimum period of a
Financial Year. The Concept Paper has defined the Financial Year with the minimum period of six
months. The Committee dwelt on the subject and came to the conclusion that the first financial year
should begin from the date of incorporation and end on the immediately succeeding 31st March and the
subsequent Financial Years should also end on 31st March every year.
30.
A company in a broad sense is a group of persons who have come together or
who have contributed money for some common purpose and have
incorporated themselves into distinct legal entity. Company is the
amalgamation of two distinct words- “com” and “pain”, the former meaning
with/together and the later meaning “bread”. The whole scheme of the
Companies Act, 1956 is to ensure proper conduct of the affairs of the company
in public interest and preservation of image of country in public interest.
31.
Majority rule is hallmark of democracy. It equally applies to corporate democracy
and is not free from pitfalls and abuse. Corporate democracy is more vulnerable
to it because it is reckoned with the number of shares and not with number of
individuals involved.
The rule of majority has been made applicable to the management of the affairs
of the company. The members pass resolution on various subjects either by
simple or three-fourth majority. Once resolution is passed by majority it is
binding on all members. As a resultant corollary, court will not ordinarily
intervene to protect the minority interest affected by resolution. However there
are exceptions to this rule- Prevention of Oppression and mismanagement being
one such ground. The requisite number of members to make an application
before the Tribunal is :
› In case of Company having share capital: 100 members or 1/10th of total number of its
members, whichever is less or member/s holding not less that 1/10th issued capital. The
applicants should have paid all calls and other sum due on their shares.
› In case of Company not having a share capital: not less than 1/5th of total number of the
members. In case of joint shareholding they will be counted as only one member.
32. Winding up or liquidation of a company represents the last
stage in its life. It means a proceeding by which a company is
dissolved. The assets of the company are disposed of, the debts
are paid off out of the realised assets and the surplus if any ,is then
distributed among the members in proportion to their holdings in
the company.
The two terms winding up and liquidation are used
interchangeably.
33. There are three modes of winding up of a company are
a. Winding up by the court i.e. compulsory winding up (Sections.
433 to 483)
b.
Voluntary winding up (Sections. 484 to 521)Members voluntary winding up
2. Creditors voluntary winding up
1.
C.
Winding up subject to Supervision of Court.