THE COMPANY ACT 1956 : THE COMPANY ACT 1956 By..
GL BAJAJ (G. NOIDA) Contents:- : Contents:- COMPANY ACT 1956
TYPES OF COMPANIES.
MEMORANDUM OF ASSOCIATON.
ARTICLE OF ASSOCIATION.
STEP OF INCORPORATION OF A CO. Company act 1956 : Company act 1956 The company act came into force from 1 April 1956.
The act was based upon the recommendation of company law committee appointed under the chairmanship of Mr. C. H. Bhaba on 25 -10-1950.
The committee submitted its report in 1952. The Indian company act extends to the whole India. COMPANY : COMPANY Section 3(1)(i)&(ii) of the Companies Act, 1956 defines a company as: “a company formed and registered under this Act or an existing Company”.
‘Existing Company’ means a company formed and registered under any of the earlier Company Laws INCORPORATION UNDER COMPANY ACT 1956.. : INCORPORATION UNDER COMPANY ACT 1956.. 1 SEPERATE LEGAL ENTITY
6.TRANSFERABILITY OF SHARE 1. Separate legal entity : 1. Separate legal entity A company is an separate legal entity means it is different from its members. It works as a individual body.
It can make contracts, open a bank account, can sue and be sued by others. Artificial person : Artificial person A company is a purely a creation of law. It is invisible, intangible and exists only in the eyes of law.
It has no soul, no body, but has a position to enter or exit into a contract.
In short it can do every thing just like a natural person. Perpetual existence sec 34(2) : Perpetual existence sec 34(2) Section 34(2) of the act states that an incorporated company has perpetual life.
The life of the company is not related to the life of the members . Law create the company and law alone can dissolve it.
The existence of the company is not affected by death, insolvency, retirement or transfer of share of members. Common seal : Common seal A company being an artificial person can not work as a natural being.
Therefore, it has to work through its directors, officers and other employees. Common seal used as a official signature of a company. Limited liability : Limited liability It means that the liability of a member shall be limited to the value of the share held by him, he cannot be called upon to bear the loss from his personal property. Transferability of share sec 82 : Transferability of share sec 82 The share of a company are freely transferable. The shareholder can transfer his share to any person without the consent of other members.
A company cannot impose absolute restrictions on the rights of member to transfer their shares Types of companies (Registered under company act 1956) : Types of companies (Registered under company act 1956) INCORPORATED : INCORPORATED 1.CHARTERED COMPANIES
These companies are incorporated under a special charter such as the east India company. The bank of England. the company act does not apply to it.
These companies are incorporated by special act of legislature( act of parliament or state legislature) eg. RBI, UTI, LIC Slide 14: REGISTERED COMPANIES
companies registered under the Indian Companies Act, 1956 are called registered companies.
To become a registered company one has to take the certification of incorporation from the registrar. Cont…. COMPANY WITH LIABILITY : COMPANY WITH LIABILITY COMPANY LIMITED BY SHARE [sec12(2)a]
companies in which the liability of its members is limited to the extent of the amount unpaid on the shares held by a particular member.
COMPANY LIMITED BY GUARANTEE
The liability of members is limited to a fixed amount which members undertake to contribute to the assets of the company in case of its winding up.
wherein members are liable for the debts of the company irrespective of their interest in the company Number of members : Number of members PRIVATE COMPANIES [sec 3(1)(iii)]
A private company is one which, by its Article of association
restricts the right to transfer its share, if any
limits the maximum number of its member to fifty
prohibits any invitation to the public to subscribe for any share or debenture of the company. Slide 17: PUBLIC COMPANY [SEC 3(1)(iv)]
A public company means a company which is not a private company. In other words, a public company, means a company which by its article does not-
limit the number of its member.
prohibit any invitation to the public to subscribe for any share in, or debentures, of the company. companies according to control : companies according to control HOLDING AND SUBSIDIARY COMPANY
where a company has control over another company, it is known as the holding company
The company over which control is exercised is called the subsidiary company. ownership : ownership GOVERNMENT COMPANY (sec617)
a government company means any company in which at least 51% of the paid up share capital is held by the central government or by any state government or partly by one or more state Government. MEMORENDUM OF ASSOCIATION : MEMORENDUM OF ASSOCIATION The first step in the formation of the company is to prepare memorandum of association. it is one of the documents which has to be filed with registrar of the companies at the time of incorporation of a company.
It is vital document, tell about the object of the company’s formation ,the power of the company as well as the boundaries beyond which the action of the company can not go. Importance of memorandum : Importance of memorandum It defines the rights and liabilities of the members.
It shows the capital structure of the company
It shows the object of the company
It specifies the state in which the registered office of the company is situated.
It shows the constitution of the company
It specify the conditions under which the company has been incorporated. Article of association : Article of association Contents of article of association : Contents of article of association Rights of different classes of shareholder.
Use of common seal of the company.
Keeping of book of accounts and their audit.
Appointment , powers, duties, salary of MD, manager, and secretary.
Borrowing power of directors.
Voting rights of member .
Board meetings and proceedings.
Winding up company. Step of incorporation of company : Step of incorporation of company Slide 25: question Slide 26: Thank you