COMPANY LAW
Companies Act, 2013
Syllabus of First MODULE
Meaning , Nature and Characteristics of Company,
Classification of Companies,
Formation of Company: Promotion, Incorporation
and Registration of a Company
Documents for Registration:
1. Memorandum of Association,
2. Articles of Association,
Prospectus and its types,
Misstatement in Prospectus
Main objectives of the
Company Act,
1956/2013
To sustain trust & faith of Shareholders
To protect & preserve rights of Share holders
To make the drastic control over all the activities of
company
To make regulation of an effective Annual
Meetings
Investment of general public should be used for
the development of society or social welfare
DEFINITION OF COMPANY
Sec. 2(20) of companies act , defines company as,
“Company‖ means a company incorporated under this
Act or under any previous company law”;
Chief justice Marshall --- “a corporation is an
artificial person, invisible, intangible and existing
only in the eyes of law.
Lord justice Lindley – “an association of many
persons who contribute money to common stock
and employ it in some trade or business, and who
share the profit and loss.
Essential characteristics of a company
Incorporated association
Artificial legal person
Separate entity (Salomon v. Salomon & Co. Ltd)
Perpetual succession
Common seal optional
Limited liability
Transferability of shares
Separate property
Capacity to sue
Question
A shareholder cannot be personally held
liable for the acts of the company even if he
holds virtually the entire share capital
Case of Lee v. Lee's Air Farming Ltd
Difference between Partnership &
Company
Basis of difference
1. Meaning
2. Mode of creation
3. Regulation
4. No. of members
5. Separate entity
6. Liability of members
7. Property
8. Management
9.Audit of accounts
Diff between Public co. & Private
company
Basis of difference
1. No. of members
2. No. of Directors
3. Invitation to public to sell securities
4. Transferability of shares
5. Minimum Subscription
6. Issue of prospectus
7. Right shares
8. Quorum
9. Restriction on managerial remuneration
10. Last word in the name
Companies Act 2013
The Companies Bill, 2012 was assented to by the President
of India on 29.08.2013 and notified in the Gazette of India on
30.08.2013. It finally became the Companies Act, 2013.
Highlights of the Companies Act, 2013 :
Passed in Lok sabha December 18, 2012
Passed in Rajya Sabha August 08, 2013
President’s assent August 29, 2013
Total number of sections 470
Total number of chapters 29
Total number of schedules 7
New concepts Introduced in Companies Act,
2013
One person company
Small company
Dormant company
Independent director
Women director
Registered valuers
CSR
KINDS OF COMPANIES
1. ON THE BASIS OF CREATION:
A) Chartered companies (A royal charter is a formal document
issued by a monarch )
b) Statutory companies (RBI, State Bank of India, Life Insurance
Corporation, Unit Trust of India, Employees State Insurance Corporation, Oil
and Natural Gas Corporation etc. are some examples of statutory corporations.)
c) Incorporated or registered companies
KINDS OF COMPANIES
2. ON THE BASIS OF LIABILITY
A) Companies limited by shares
b) Companies limited by
guarantee (guaranteed amount becomes the
reserve capital of the company)
c) unlimited companies (even in
this case the creditors cannot sue the
members)
KINDS OF COMPANIES
3. ON THE BASIS OF NO. OF MEMBERS &
Invitation to the Public
A) Private company (may or
may not be a small company)
b) Public company
c) One-Person Company
Kinds of companies
4. ON THE BASIS OF OWNERSHIP
A) Govt. company
b) Non-govt. company
Government Company
It is a company in which government holds not
less than 51% of paid-up share capital.
For example, ONGC, SAIL
Here, The “Government” means the union
government or the State government(s) on both.
For example, in Company A, 30% shares are held
by union government, 10% by Gujarat
government, 11% by Madhya Pradesh
government, still Company A is a Government
company (30+10+11=51%)
KINDS OF COMPANIES
5. ON THE BASIS OF CONTROL OR INFLUENCE
A) Holding company
b) Subsidiary company
Ex: Tata Sons is the Holding Company and Tata
Motors, TCS, Tata Steel are Subsidiary Companies.
Coal India is a holding company. Bharat Coking ltd,
Mahanadi Coal Fields ltd are its subsidiary
companies.
Kinds of companies
6. ON THE BASIS OF NATIONALITY/Place of
Incorporation
A) Indian company
b) Foreign company
Features of a private company
Restriction on transfer of shares
Limitation of membership
Prohibition on making an invitation to public (or
prohibition on issue of prospectus)
Other features
Features of a Public Company
It is not a private company (No Restriction)
Minimum Paid-Up Capital (5 lakhs)
Ex:
Infosys started as a private ltd company in 1981,
but in 1992, it re-registered itself as a Public
Ltd company and launched the IPO in 1993.
Features of OPC
Natural one person, Indian citizen, and resident
Minor not eligible
Conversion into any other company restricted
Name of the company
Nominee
Compulsory Conversion into public or private
Kinds of Companies
Other companies:
1) Charitable companies (section 8)
2) Producer companies
3) Nidhi Companies
