Definition and Features of Company M & W
Section 2(20) of the Companies Act 2013 defines a company as "Company means a company incorporated under this Act or under any previous Company Law."
1. Registration
2.Artificial Legal Person
3. Independent Corporate Existence -
Separate Legal Entity -
Capacity to contract in its own name.
Salomon
v.
Salomon and Co. Ltd
4. Limited Liability.
5. Company never Dies - Perpetual Succession
7. Company owns its Capital and Assets - Separate Property.
8. Transferable Shares.
9. Common Seal.
10. Capacity to sue and be sued.
11. Separation of Ownership from Management
Promoters. Duties and liabilities. W
Promoter :
1. Named as such in prospectus.
2. Control over affairs of the Company.
3. The BOD is accustomed to act.
Duties and liabilities :
1. Fiduciary position.
2. Cannot - profits - consent - company.
3. Disclose
4. Prospectus - contains all particulars.
5. Compensate - misleading prospectus.
6. Criminally liable.
7. liable - contracts - prior to incorporation.
EFFECT OF PRE-INCORPORATION CONTRACTS M
Pre-incorporation or Preliminary Contracts
Position of Promoter as regards Pre-incorporation Contract
1. Company not bound by pre-incorporation contracts.
2. Company cannot enforce pre-incorporation contracts.
3. Promoter is personally liable.
Ratification of pre-incorporation contracts.
Specific performance of pre - incorporation contracts.
Consequences of Non Registration of a company W
1. Cannot enter into any contracts.
2. Personally liable - liabilities.
3. Cannot be wound.
4. Cannot contract debts.
5. Cannot - creditor.
6. No suit - partition.
Lifting of Corporate Veil W
1. For determination of enemy character
2. For prevention of fraud or improper conduct.
3. For protecting the revenue.
4. Agent of its members.
5. Company is bogus.
6. Company avoids legal obligation.
7. Protection of public policy.
Classification of Companies W
Classification of Companies
Chartered Companies Statutory
Companies Registered
Companies
Companies Limited by Shares Companies Limited by Guarantee Unlimited Companies
1. One Person Company
2. Private Company
3. Public Company
4. Producer Company
5. Company with Charitable object
6. Holding Company and Subsidiary Company.
7. Small Company
8. Dormant Company
9. Government Company
10. Foreign Company
Distinction between Private Company and Public Company. N
Private Company Public Company
1. Minimum Members
2. maximum Members.
3. Minimum Directors.
4. Transfer of Shares.
5. Invitation to public.
6. Name - Pvt Ltd / Ltd.
7. Minimum paid up capital - 1 lakh / 5 lakh.
8. Issue of prospectus.
9. Start of Business - COI / COI & CCOB.
10. Quorum at AGM - 2 / 5
Advantages and disadvantages of a private company and public company. B
Private Company
Advantages :
1. minimum 2 members.
2. minimum paid up capital 1 lakh.
3. liability - unpaid amount of share.
4. minimum 2 directors. - 1 director stayed in India 182 days.
5. perpetual succession.
6. need not issue prospectus.
Disadvantage :
1. transfer of share is restricted.
2. Public cannot be invited to subscribe.
3. Difficulty in raising finance.
4. Inviting deposits is restricted.
Public Company
Advantages :
1. Can raise capital from public.
2. freely transferable shares.
3. Minimum directors 3 maximum 15.
Disadvantages :
1. Strictly regulated - publish financial statements.
2. Issue of prospectus mandatory.
3. Heavy costs.
4. management to safeguard interest - 51% shares.
5. No independent decisions can be taken.
Procedure for Incorporation
1. Number of persons.
Section 2(20) of the Companies Act 2013 defines a company as "Company means a company incorporated under this Act or under any previous Company Law."
1. Registration
2.Artificial Legal Person
3. Independent Corporate Existence -
Separate Legal Entity -
Capacity to contract in its own name.
Salomon
v.
Salomon and Co. Ltd
4. Limited Liability.
5. Company never Dies - Perpetual Succession
7. Company owns its Capital and Assets - Separate Property.
8. Transferable Shares.
9. Common Seal.
10. Capacity to sue and be sued.
11. Separation of Ownership from Management
Promoters. Duties and liabilities. W
Promoter :
1. Named as such in prospectus.
2. Control over affairs of the Company.
3. The BOD is accustomed to act.
Duties and liabilities :
1. Fiduciary position.
2. Cannot - profits - consent - company.
3. Disclose
4. Prospectus - contains all particulars.
5. Compensate - misleading prospectus.
6. Criminally liable.
7. liable - contracts - prior to incorporation.
EFFECT OF PRE-INCORPORATION CONTRACTS M
Pre-incorporation or Preliminary Contracts
Position of Promoter as regards Pre-incorporation Contract
1. Company not bound by pre-incorporation contracts.
2. Company cannot enforce pre-incorporation contracts.
3. Promoter is personally liable.
Ratification of pre-incorporation contracts.
Specific performance of pre - incorporation contracts.
Consequences of Non Registration of a company W
1. Cannot enter into any contracts.
2. Personally liable - liabilities.
3. Cannot be wound.
4. Cannot contract debts.
5. Cannot - creditor.
6. No suit - partition.
Lifting of Corporate Veil W
1. For determination of enemy character
2. For prevention of fraud or improper conduct.
3. For protecting the revenue.
4. Agent of its members.
5. Company is bogus.
6. Company avoids legal obligation.
7. Protection of public policy.
Classification of Companies W
Classification of Companies
Companies Limited by Shares Companies Limited by Guarantee Unlimited Companies
1. One Person Company
2. Private Company
3. Public Company
4. Producer Company
5. Company with Charitable object
6. Holding Company and Subsidiary Company.
7. Small Company
8. Dormant Company
9. Government Company
10. Foreign Company
Private Company Public Company
1. Minimum Members
2. maximum Members.
3. Minimum Directors.
4. Transfer of Shares.
5. Invitation to public.
6. Name - Pvt Ltd / Ltd.
7. Minimum paid up capital - 1 lakh / 5 lakh.
8. Issue of prospectus.
9. Start of Business - COI / COI & CCOB.
10. Quorum at AGM - 2 / 5
Advantages and disadvantages of a private company and public company. B
Private Company
Advantages :
1. minimum 2 members.
2. minimum paid up capital 1 lakh.
3. liability - unpaid amount of share.
4. minimum 2 directors. - 1 director stayed in India 182 days.
5. perpetual succession.
6. need not issue prospectus.
Disadvantage :
1. transfer of share is restricted.
2. Public cannot be invited to subscribe.
3. Difficulty in raising finance.
4. Inviting deposits is restricted.
Public Company
Advantages :
1. Can raise capital from public.
2. freely transferable shares.
3. Minimum directors 3 maximum 15.
Disadvantages :
1. Strictly regulated - publish financial statements.
2. Issue of prospectus mandatory.
3. Heavy costs.
4. management to safeguard interest - 51% shares.
5. No independent decisions can be taken.
Procedure for Incorporation
1. Number of persons.
7/2/1
2. Name of the Company.
INC-1
ROC-Name approval letter.
Validity - 60 days.
3. First Directors of the Company.
DIN
DSC
Number of Directors - Public/Private/OPC
4. Memorandum and Articles of Association.
Signed by subscribers.
What is MOA/AOA ?
5. Decleration from professionals and experts.
Advocate/CA/Cost Accountant/CS
6. Decleration from subscribers of MOA.
Not convicted - 5 y
Information correct.
7. Payment of Fees and Stamp Duty.
8. Issue of Certificate.
Registrar - COI.2. Name of the Company.
INC-1
ROC-Name approval letter.
Validity - 60 days.
3. First Directors of the Company.
DIN
DSC
Number of Directors - Public/Private/OPC
4. Memorandum and Articles of Association.
Signed by subscribers.
What is MOA/AOA ?
5. Decleration from professionals and experts.
Advocate/CA/Cost Accountant/CS
6. Decleration from subscribers of MOA.
Not convicted - 5 y
Information correct.
7. Payment of Fees and Stamp Duty.
8. Issue of Certificate.
Registrar - Corporate identity number.
Memorandum of Association
Section 2(56) Defines “Memorandum means Memorandum of Association of the
Company as originally framed and as altered from time to time in pursuance of
any previous company law or of this Act.”
1.Name Clause.
Name should not be
identical
Use of the word Limited
Painting and Printing of Name
Prohibition of use of certain Names.
Prohibition of use of certain Names.
2. Registered Office Clause
15 Days
Verification 30 Days
3. Object Clause.
Main
Objects.
Other Objects.
4.
Liability Clause.
5. Capital Clause.
6. Association or Subscription Clause.
PROSPECTUS
2(70) ―prospectus‖ means any document described or issued as a prospectus and includes a red herring prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of body corporate.
CONTENTS OF PROSPECTUS (s. 26)
1. Main Objects – Names, address, decription and Occupation.
2. Number and Classes of Shares.
3. Number of Redeemable Preference Shares.
4. Number of Shares – Directors. Remuneration of Directors.
5. Names, Occupation and address of Directors, Managing Directors and manager.
6. Time of opening of subscription list.
7. Amount payable on application and allotment of each shares.
8. Particulars of any option on Preferential rights.
9. Number of shares and debentures issued within the two preceding years.
10. Particulars about premium received on shares within two preceding years.
11. The amount or rate of underwriting commission.
12. Preliminary expenses.
13. Name and address of auditors of the company.
14. When shares are more than one class – the rights of voting.
15. If reserves or profits of the company have been capitalised, particulars of capitalisation..
16. A reasonable time and place at which copies of all accounts on which the report of auditors is based may be inspected.
PRIVATE PLACEMENT (s. 42)
Articles of Association.
2(5) ―articles means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act;
1. Exclusion or partial exclusion of Table A.
2. Adoption of Preliminary Contracts.
3. Share Capital, number and value of Shares.
4. Share Certificate.
5. Call on Shares.
6. Company’s lien on members shares for amounts unpaid by them.
7. Transfer or Transmission of Shares.
8. Forfeiture of Shares.
9. Conversion of Shares into Stocks.
10. Share Warrants.
11. Alteration of Capital.
12. Voting rights of members, voting and poll, proxies.
13. Payment of Commission.
14. General meetings.
15. Directors, their appointments, remuneration, qualifications, powers and proceedings of BOD.
16. Manager and Secretary.
17. Payment of Dividend and Reserve.
18. Accounts, Audit and borrowing powers.
19. Capitalisation of profits.
20. Company’s seal and its use.
21. Wnding up of Company.
2(5) ―articles means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act;
1. Exclusion or partial exclusion of Table A.
2. Adoption of Preliminary Contracts.
3. Share Capital, number and value of Shares.
4. Share Certificate.
5. Call on Shares.
6. Company’s lien on members shares for amounts unpaid by them.
7. Transfer or Transmission of Shares.
8. Forfeiture of Shares.
9. Conversion of Shares into Stocks.
10. Share Warrants.
11. Alteration of Capital.
12. Voting rights of members, voting and poll, proxies.
13. Payment of Commission.
14. General meetings.
15. Directors, their appointments, remuneration, qualifications, powers and proceedings of BOD.
16. Manager and Secretary.
17. Payment of Dividend and Reserve.
18. Accounts, Audit and borrowing powers.
19. Capitalisation of profits.
20. Company’s seal and its use.
21. Wnding up of Company.
PROSPECTUS
2(70) ―prospectus‖ means any document described or issued as a prospectus and includes a red herring prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of body corporate.
VARIOUS KINDS OF PROSPECTUS
1. Ordinary Prospectus.
2. Deemed Prospectus.
3. Red herring prospectus.
4. Statement in lieu of Prospectus.
5. Shelf Prospectus.
6. Summary or Abridged Prospectus.
1. Ordinary Prospectus.
2. Deemed Prospectus.
3. Red herring prospectus.
4. Statement in lieu of Prospectus.
5. Shelf Prospectus.
6. Summary or Abridged Prospectus.
CONTENTS OF PROSPECTUS (s. 26)
1. Main Objects – Names, address, decription and Occupation.
2. Number and Classes of Shares.
3. Number of Redeemable Preference Shares.
4. Number of Shares – Directors. Remuneration of Directors.
5. Names, Occupation and address of Directors, Managing Directors and manager.
6. Time of opening of subscription list.
7. Amount payable on application and allotment of each shares.
8. Particulars of any option on Preferential rights.
9. Number of shares and debentures issued within the two preceding years.
10. Particulars about premium received on shares within two preceding years.
11. The amount or rate of underwriting commission.
12. Preliminary expenses.
13. Name and address of auditors of the company.
14. When shares are more than one class – the rights of voting.
15. If reserves or profits of the company have been capitalised, particulars of capitalisation..
16. A reasonable time and place at which copies of all accounts on which the report of auditors is based may be inspected.
PRIVATE PLACEMENT (s. 42)
1. Without contrary to the provision to provision of section 26.
2. 200
- Qualified Institutional Buyers
- employees
More than the prescribed number
3. No fresh offer .
4. Not in Compliance.
5. Payment.
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