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Edit Comment Close Premium member Presentation Transcript Welcome to 4th Semester : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 1 Welcome to 4th Semester Company Law COURSE DESCRIPTION : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 2 COURSE DESCRIPTION Industrialisation plays a very vital role in the economic development of India. In the post independence era, industrial regulation is employed as a principal means in the strategy for attaining constitutional values. Companies are no doubt powerful instrument for development. Besides bringing returns and financial benefits to the capital and labour, they help amelioration of the living conditions of the masses. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 3 Cont… In a developing society like India vast varieties of consumer goods are manufactured or produced and different kinds of public utility services are generated both for general welfare and consumption purposes. Obviously, it is beyond the capacity of one or few entrepreneurs to engage into such activities. Because the problem of raising large capital needed for such enterprises, there is a looming danger of market risks. Hence, taking recourse to the device of incorporation is the only efficacious way to surmount all such hurdles. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 4 Cont… The more industrialized the society the more complicated the life. In such a situation, this branch of law grows and assumes greater importance in ordering just socio-economic relations. It is rightly said that the progress of a nation can be measured in terms of development of law of companies in that country. OBJECT OF THE COURSE : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 5 OBJECT OF THE COURSE The object of the course is to provide conceptual understanding and working knowledge of the provisions of – The Companies Act, 1956. The Securities Contracts ( Regulation ) Act 1956; and To give orientation and procedural requirements relating thereto including regulations and guidelines made by the Securities and Exchange Board of India for issue of capital, and To develop sound knowledge, skills and disposition amongst students of B.A. LL.B and BBA.LL.B on some of the contemporary issues of Company Law OBJECTIVES AND LEARNING OUTCOME : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 6 OBJECTIVES AND LEARNING OUTCOME This course is intended to provide a broad overview of main aspects of company law. It introduces the fundamental ideas of company law and gives the working knowledge and skill, needed to analyse practical problems involving companies. In addition to this it also examines some of the current trends in company law, in order to give some idea that how the field is likely to develop in future. Slide 7: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 7 Students will be encouraged to develop their own views on these and other pressing questions, and they will acquire the sound legal skills to argue for both sides of a case. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 8 Cont… The main objectives of the course are to impart an insight into a comprehensive understanding of Company Law so as to enable the students in analyzing legal problems, offering apt solutions and advancing reasoned arguments towards the intricacies involved therein. The course examines the Company Law in its entire convolution in two parts Company Law-I and Company Law II. The study will be based on relevant statutes and decided cases. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 9 Cont… On completing both the courses (Company Law-I and Company Law II), students will be well acquainted with the fundamental principles of Compnay Law, Securitieas Contract Regulation,etc., both statutory and case law. Students will have an understanding of the varieties of legal principles which are relevant in the formation and running a company properly. Objectives of Company Law -I : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 10 Objectives of Company Law -I To understand the main features of the Company Law in India. To understand the ways in which company law balances the interests of different groups represented with in the company and be aware of the debates about the suitability of different methods used. The focus is therefore On the legal nature of company as a business organization. The distribution of power in a company. Slide 11: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 11 What are the advantages and disadvantages of corporate existence and types of companies? The various procedure of Company Management. Lastly the emerging areas in company law. COURSE SUMMARY The topics for this course are divided into five modules : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 12 COURSE SUMMARY The topics for this course are divided into five modules Module -1 Formation of Company Module -2 Documentation Module- 3 Securities Trading Part-I Module- 4 Securities Trading Part-II Module-V Membership and Meetings TEACHING METHODOLOGY : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 13 TEACHING METHODOLOGY Company Law will be taught by a combination of lectures and consultation with the teacher. Being a branch of law essentially made of various statutes and decided cases, the course will be taught through the interpretation of various statutes and case method modified to suit the needs of beginners in legal study and will have four hours of lectures and one hour of consultation in a week. Participation in class discussion after prior reading of cases is the primary mode of teaching/learning. ASSESSMENT : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 14 ASSESSMENT The performance of the students on this course is assessed on the basis of 100 marks. The over all assessment of 100 marks is divided into sessional work (40 marks) and end semester examinations (60 marks). Sessional Work (40 Marks) : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 15 Sessional Work (40 Marks) Attendance/Class Participation : 5 Marks Project writing : 25 Marks Snap Tests : 10 Marks End Semester Examination (60 Marks) : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 16 End Semester Examination (60 Marks) Written closed Book examination of 60 Marks will be conducted at the end of the semester. The majority of the questions will be problem based. This is to check the in-depth knowledge and analytical & lawyering skills of the students in the subject. EXPECTATIONS What is expected of you? : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 17 EXPECTATIONS What is expected of you? Prior reading of the proposed lecture. Attend all the lectures. Read the core readings for each lecture. Participate and contribute in class discussion. Use the Recommended readings in order to develop good grasp of the topics in this course, answer the questions, and write research Projects. Give at least one presentation on the findings of your project. Study relevant cases, reports and articles from the journals. Discuss at least one decided case. What can you expect of your tutor? : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 18 What can you expect of your tutor? . Feedback on your snap tests within a short time. Availability during specified consultation hours to discuss any question or problem you might have during the course. Feedback on project presentations. Guidance and advice on preparation for research Projects and presentations. Feedback and collective evaluation of the class at the completion of the course. Module -1 Formation of Company : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 19 Module -1 Formation of Company The objectives of the module is to introduce the subject to the students and to give them a general conception about the subject by defining and explaining its features and distinguishing it from other legal concepts. Module -1 Formation of Company : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 20 Module -1 Formation of Company Meaning and characteristics; brief history of Company Law in India; company as distinguished from other associations of persons. Theories of Corporate Personality, Nature of Corporate Form, Advantages, and Disadvantages of Companies. Lifting the corporate veil. Types of companies; foreign companies; Government companies- special privileges and exemptions; enjoyed and accountability; private companies; holding companies and subsidiary companies; investment companies and finance companies. Promoters- position, duties and liabilities, and Pre-incorporation Contracts. Cases : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 21 Cases Salomon v. Salomon & Co, [1895-99] All ER Rep 33:66 L J Ch 35:75 L J 426:13 I L R 46: 1897 A C 22 Bacha F. Guzdar v. C I T, Bombay, (1955) 1 SCR 876 (difference between a company and a partnership ) Ashoka Marketing Ltd v. PNB, [1990] 4 SCC 406. (For the explanation of the term Body corporate) Punjab National Bank v. Lakhmi Industrial and Trading Corporation Private Ltd, A I R 2002 All 26 Slide 22: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 22 R. C . Cooper v. UOI, (1970) 1 SCC 248 1970 SCR 530. Bennett, Cole man & Co V. UOI (1972) 2 SCC 788, 806 Daimler Co. v. Continental Tyre and Rubber Co [1916] 2 AC 307. Apthorpe v. Peter Schoenhofen Brewing Co (1899) 4 T C 4 I Gilford Motor Co v. Horne [1933] 1 ch 935. State Trading Corporation of India Ltd v. CTO, AIR 1963 SC 1811 Workmen v. Associated Rubber Industiries Ltd (1985) 4 SCC 11 4. Slide 23: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 23 Peels Case (1867) 2 ch APP 674 : 16 LT 780 T.V. Krishna v. Andhra Prabha (P) Ltd, AIR 1960 AP 123 English & Colonial Produce Co, Re [1906] 2 ch 435 22 TLR 669 Kelner v. Baxter (1866) LR 2 CP 174 Moosa Goolam Ariff v. Ebrahim Goolam Ariff, ILR (1913) 40 Cal 1 PC Module -2 Documentation : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 24 Module -2 Documentation Need of company for development Incorporation of a company- private limited, public limited company limited by guarantee or company for charitable or other purposes documents to be prepared and filed. Memorandum of association – various clauses- alteration therein, doctrine of ultravires. Articles of association, binding force, alteration of articles, doctrine of constructive notice and indoor management. Cases : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 25 Cases Society of Motor Manufacturers and Traders Ltd v Motor Manufacturers and traders Mutual Issurance Co Ltd [1925] 1 ch 675. Malhati Tea Syndicate Ltd v. Revenue Officer, (1973) 43 comp Cas 357 Ashbury Railway Carriage and Iron Co. Ltd v. Riche (1875) 44 LJ Exch 185, (1875) 44 LR 7 HL 653. Slide 26: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 26 Attorney General v. Great Eastern Railway Co, (1880) 5 AC 473. London Country Council v. Attorney General 1902 AC 165 A Lakshmanaswami Muduliar v. Life Insurance Corporation of India AIR 1963 SC II 85 Coltman v. Brougham, 1918 AC 514 : [1881-19] All ER Rep 265. Borland’s Trustee v. Steel Brother & Co Ltd [1901] 1 Ch 279 Wood v. Odessa Water Works Co, (1889) 42 Ch D 636. Browne v. La Trinidad, (1887) 37 Ch D 1 Slide 27: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 27 Kotta Venkataswamy v. Rammurthy, AIR 1934 Mad 579 Dehra Dun Mussoorie Electric Tramway v. Jagmandardas, AIR 1932 A;ll 141 Royal British Bank v. Turquand (1856) 21 GER 886. Nash v. Lynd 1929 AC 158 : 140 LT 146 Dery v. Peek, (1889) 14 AC 337 Peek v. Gurney, (1873) 43 LJ ch 19 Shiromani Sugar Mills Ltd v. Devi Prasad, AIR 1950 ALL 508 Smith v. Chadwick (1884) 9 Ca 187 Module- 3 Securities Trading Part-I : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 28 Module- 3 Securities Trading Part-I 1. Regulation of contracts and options in securities under the Securities Contracts (Regulation) Act, 1965: Listing of securities listing agreement; title to dividend; free transferability; and registration of transfers; of listed securities of companies. Slide 29: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 29 Share holders and members-who can be and who can not be a share holder- modes of becoming a share holder- calls on shares-forfeiture and surrender of shares-lien on shares, Shares-general principles of allotment-statutory restrictions-share certificate its objects and effects, transfer of shares, restriction on transfer, procedure for transfer, refusal of transfer, role of public finance institutions, relationship between transferor and transferee, issue of shares at premium and discount, depository receipts, dematerialized shares (DEMAT). Slide 30: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 30 Share capital-Kinds, alteration and reduction of share capital, further issue of capital, conversion of loans and debentures into capital, duties of courts to protect the interests of creditors and share holders. Module- 4 Securities Trading Part-II : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 31 Module- 4 Securities Trading Part-II Prospectus-issue, contents, liability for misstatements, statements in lieu of prospectus. Commencement of business and commencement of new business by an existing company. Borrowing powers, effect of unauthorized borrowing, charges and mortgages, loans to other companies, investments, contracts by companies. Debentures: meaning, fixed and floating charge, kinds of debentures, share holder and debenture holder, remedies of debenture holders. Dividends- payment, capitalization, profit. Module-V Membership and Meetings : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 32 Module-V Membership and Meetings Mode of obtaining membership, minimum and maximum number of members, cessation of membership, personation and penalty therefor, index of members; register of members; - entries, rectification and closure; rights and liabilities of members; variation of members rights. Meetings- kinds; procedure; voting. References : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 33 References C.R Dutta on Compnay Law. R.R Pennington’s Company Law, Butterwrths. LCB Gower, Principles of Modern Company law, Sweet and Maxwell London. Susan Barber – Company Law S.M Shah – Lectures on Company Law, Tripathi, Mumbai Majumdar and Kapoor on Company Law Licholas Bourne on Principles of Company Law Palmer’s Company Law, Stevans, London. A. Ramaiya, Guide to Companies Act, Wadhwa. Statutory Material : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 34 Statutory Material Companies Act 1956. Securities Contract Regulation Act ,1956 Securities Exchange Board of India Act, 1992 Depositories Act, 1996 Sick Industrial Companies (special provisions) Act 1985 Company Law-I : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 35 Company Law-I Module -1 Formation of Company Meaning and characteristics : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 36 Meaning and characteristics The word ‘company’ is derived from the Latin ( com= with or together; panis = bread), and originally referred to an association of persons who took their meals together. It may be assumed- since human nature does not change- that in the leisurely past, no less than in the speedy present, merchants took advantage of festive gatherings, to discuss business matters. Now a days business matters have become most complicated and cannot be discussed at length on festive gatherings. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 37 Cont… In a popular parlance, company denotes an association of like minded persons formed for the purpose of carrying on same business or undertaking. Though an association may be brought into existence for multifarious purposes, in company law it figures predominantly as a business association with a large and fluctuating membership formed for acquisition of gain. There may also be non-profit trading concerns like a club or a society. In Smith v Anderson, ( 1880) 15 Ch. D. 247, it was observed that “ a company, in a broad sense may mean an association of individuals formed for some purpose.” Slide 38: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 38 A company may be incorporated or unincorporated A company is a corporate body and a legal person having status and personality distinct and separate from that of the members constituting it. It is called a body corporate because the persons composing it are made into one body by incorporating it according to the law and clothing it with legal personality, and so turn it into a corporation. ( The word corporation is derived from the Latin term ‘corpus’ which means ‘body’) Slide 39: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 39 Accordingly corporation is legal person created by the process other than natural birth. It is for this reason something called artificial legal person. As a legal person this corporate being is capable of enjoying many of the rights and incurring many of the liabilities of a natural person- a human being. But the company is not merely a legal institution. It is rather a legal device for the attainment of any social or economic end. It is therefore a combined political, social, economic and legal institution. Company is not a citizen : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 40 Company is not a citizen Company though a legal person is not a citizen either under the Constitution of India or under the Citizenship Act. This has been the conclusion of a special bench of the Supreme Court in State Trading Corpn. Of India Ltd. v CTO AIR 1963 SC 1811. In R. C Cooper v Union of India AIR 1970 1 SCC 564 : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 41 In R. C Cooper v Union of India AIR 1970 1 SCC 564 , also known as the Bank Nationalisation case, the Supreme Court held that where the legislative measures directly touch the company of which the petitioner is a shareholder, he can petition on behalf of the company, if by the impugned action, his rights are also infringed. In that case, the court entertained the petition under Art. 32 of the constitution at the instance of a director and shareholder of a company and granted relief. It is, therefore, to be noted that an individual rights is not lost by reasons of the fact that he is a shareholder of the company. Bennet Coleman Co. v Union of India AIR 1973 SC 106 : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 42 Bennet Coleman Co. v Union of India AIR 1973 SC 106 It is now clear that the fundamental rights of share holders as citizens are not lost when they associate to form a company. When their fundamental rights as shareholders are impaired by state action their rights as shareholders are impaired by state action their rights as shareholders are protected. The reason is that the shareholders rights are equally and necessarily affected if the rights of the company are affected. D.C.M Company Ltd. V Union of India and others 1983 5 comp. cas. 674. : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 43 D.C.M Company Ltd. V Union of India and others 1983 5 comp. cas. 674. Court took the similar view on the matter Daimler Co Ltd v Continental tyre co. (1916)2 A.C 307 HL Held that a company will be regarded as having enemy character, if the persons having de facto control of its affairs are resident in an enemy country, or wherever they may be, are acting under instructions from or on behalf of the enemy. Slide 44: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 44 Thanks, We will continue… You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
Company Law KLS Lecture 1 tabrezahmad Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 1822 Category: Education License: All Rights Reserved Like it (1) Dislike it (0) Added: October 15, 2009 This Presentation is Public Favorites: 2 Presentation Description Dr. Tabrez Ahmad, Lectures Comments Posting comment... By: kkrashman (8 month(s) ago) Very Good Presentation Saving..... Post Reply Close Saving..... Edit Comment Close By: pavanoooo (15 month(s) ago) very good Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Welcome to 4th Semester : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 1 Welcome to 4th Semester Company Law COURSE DESCRIPTION : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 2 COURSE DESCRIPTION Industrialisation plays a very vital role in the economic development of India. In the post independence era, industrial regulation is employed as a principal means in the strategy for attaining constitutional values. Companies are no doubt powerful instrument for development. Besides bringing returns and financial benefits to the capital and labour, they help amelioration of the living conditions of the masses. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 3 Cont… In a developing society like India vast varieties of consumer goods are manufactured or produced and different kinds of public utility services are generated both for general welfare and consumption purposes. Obviously, it is beyond the capacity of one or few entrepreneurs to engage into such activities. Because the problem of raising large capital needed for such enterprises, there is a looming danger of market risks. Hence, taking recourse to the device of incorporation is the only efficacious way to surmount all such hurdles. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 4 Cont… The more industrialized the society the more complicated the life. In such a situation, this branch of law grows and assumes greater importance in ordering just socio-economic relations. It is rightly said that the progress of a nation can be measured in terms of development of law of companies in that country. OBJECT OF THE COURSE : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 5 OBJECT OF THE COURSE The object of the course is to provide conceptual understanding and working knowledge of the provisions of – The Companies Act, 1956. The Securities Contracts ( Regulation ) Act 1956; and To give orientation and procedural requirements relating thereto including regulations and guidelines made by the Securities and Exchange Board of India for issue of capital, and To develop sound knowledge, skills and disposition amongst students of B.A. LL.B and BBA.LL.B on some of the contemporary issues of Company Law OBJECTIVES AND LEARNING OUTCOME : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 6 OBJECTIVES AND LEARNING OUTCOME This course is intended to provide a broad overview of main aspects of company law. It introduces the fundamental ideas of company law and gives the working knowledge and skill, needed to analyse practical problems involving companies. In addition to this it also examines some of the current trends in company law, in order to give some idea that how the field is likely to develop in future. Slide 7: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 7 Students will be encouraged to develop their own views on these and other pressing questions, and they will acquire the sound legal skills to argue for both sides of a case. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 8 Cont… The main objectives of the course are to impart an insight into a comprehensive understanding of Company Law so as to enable the students in analyzing legal problems, offering apt solutions and advancing reasoned arguments towards the intricacies involved therein. The course examines the Company Law in its entire convolution in two parts Company Law-I and Company Law II. The study will be based on relevant statutes and decided cases. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 9 Cont… On completing both the courses (Company Law-I and Company Law II), students will be well acquainted with the fundamental principles of Compnay Law, Securitieas Contract Regulation,etc., both statutory and case law. Students will have an understanding of the varieties of legal principles which are relevant in the formation and running a company properly. Objectives of Company Law -I : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 10 Objectives of Company Law -I To understand the main features of the Company Law in India. To understand the ways in which company law balances the interests of different groups represented with in the company and be aware of the debates about the suitability of different methods used. The focus is therefore On the legal nature of company as a business organization. The distribution of power in a company. Slide 11: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 11 What are the advantages and disadvantages of corporate existence and types of companies? The various procedure of Company Management. Lastly the emerging areas in company law. COURSE SUMMARY The topics for this course are divided into five modules : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 12 COURSE SUMMARY The topics for this course are divided into five modules Module -1 Formation of Company Module -2 Documentation Module- 3 Securities Trading Part-I Module- 4 Securities Trading Part-II Module-V Membership and Meetings TEACHING METHODOLOGY : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 13 TEACHING METHODOLOGY Company Law will be taught by a combination of lectures and consultation with the teacher. Being a branch of law essentially made of various statutes and decided cases, the course will be taught through the interpretation of various statutes and case method modified to suit the needs of beginners in legal study and will have four hours of lectures and one hour of consultation in a week. Participation in class discussion after prior reading of cases is the primary mode of teaching/learning. ASSESSMENT : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 14 ASSESSMENT The performance of the students on this course is assessed on the basis of 100 marks. The over all assessment of 100 marks is divided into sessional work (40 marks) and end semester examinations (60 marks). Sessional Work (40 Marks) : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 15 Sessional Work (40 Marks) Attendance/Class Participation : 5 Marks Project writing : 25 Marks Snap Tests : 10 Marks End Semester Examination (60 Marks) : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 16 End Semester Examination (60 Marks) Written closed Book examination of 60 Marks will be conducted at the end of the semester. The majority of the questions will be problem based. This is to check the in-depth knowledge and analytical & lawyering skills of the students in the subject. EXPECTATIONS What is expected of you? : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 17 EXPECTATIONS What is expected of you? Prior reading of the proposed lecture. Attend all the lectures. Read the core readings for each lecture. Participate and contribute in class discussion. Use the Recommended readings in order to develop good grasp of the topics in this course, answer the questions, and write research Projects. Give at least one presentation on the findings of your project. Study relevant cases, reports and articles from the journals. Discuss at least one decided case. What can you expect of your tutor? : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 18 What can you expect of your tutor? . Feedback on your snap tests within a short time. Availability during specified consultation hours to discuss any question or problem you might have during the course. Feedback on project presentations. Guidance and advice on preparation for research Projects and presentations. Feedback and collective evaluation of the class at the completion of the course. Module -1 Formation of Company : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 19 Module -1 Formation of Company The objectives of the module is to introduce the subject to the students and to give them a general conception about the subject by defining and explaining its features and distinguishing it from other legal concepts. Module -1 Formation of Company : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 20 Module -1 Formation of Company Meaning and characteristics; brief history of Company Law in India; company as distinguished from other associations of persons. Theories of Corporate Personality, Nature of Corporate Form, Advantages, and Disadvantages of Companies. Lifting the corporate veil. Types of companies; foreign companies; Government companies- special privileges and exemptions; enjoyed and accountability; private companies; holding companies and subsidiary companies; investment companies and finance companies. Promoters- position, duties and liabilities, and Pre-incorporation Contracts. Cases : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 21 Cases Salomon v. Salomon & Co, [1895-99] All ER Rep 33:66 L J Ch 35:75 L J 426:13 I L R 46: 1897 A C 22 Bacha F. Guzdar v. C I T, Bombay, (1955) 1 SCR 876 (difference between a company and a partnership ) Ashoka Marketing Ltd v. PNB, [1990] 4 SCC 406. (For the explanation of the term Body corporate) Punjab National Bank v. Lakhmi Industrial and Trading Corporation Private Ltd, A I R 2002 All 26 Slide 22: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 22 R. C . Cooper v. UOI, (1970) 1 SCC 248 1970 SCR 530. Bennett, Cole man & Co V. UOI (1972) 2 SCC 788, 806 Daimler Co. v. Continental Tyre and Rubber Co [1916] 2 AC 307. Apthorpe v. Peter Schoenhofen Brewing Co (1899) 4 T C 4 I Gilford Motor Co v. Horne [1933] 1 ch 935. State Trading Corporation of India Ltd v. CTO, AIR 1963 SC 1811 Workmen v. Associated Rubber Industiries Ltd (1985) 4 SCC 11 4. Slide 23: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 23 Peels Case (1867) 2 ch APP 674 : 16 LT 780 T.V. Krishna v. Andhra Prabha (P) Ltd, AIR 1960 AP 123 English & Colonial Produce Co, Re [1906] 2 ch 435 22 TLR 669 Kelner v. Baxter (1866) LR 2 CP 174 Moosa Goolam Ariff v. Ebrahim Goolam Ariff, ILR (1913) 40 Cal 1 PC Module -2 Documentation : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 24 Module -2 Documentation Need of company for development Incorporation of a company- private limited, public limited company limited by guarantee or company for charitable or other purposes documents to be prepared and filed. Memorandum of association – various clauses- alteration therein, doctrine of ultravires. Articles of association, binding force, alteration of articles, doctrine of constructive notice and indoor management. Cases : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 25 Cases Society of Motor Manufacturers and Traders Ltd v Motor Manufacturers and traders Mutual Issurance Co Ltd [1925] 1 ch 675. Malhati Tea Syndicate Ltd v. Revenue Officer, (1973) 43 comp Cas 357 Ashbury Railway Carriage and Iron Co. Ltd v. Riche (1875) 44 LJ Exch 185, (1875) 44 LR 7 HL 653. Slide 26: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 26 Attorney General v. Great Eastern Railway Co, (1880) 5 AC 473. London Country Council v. Attorney General 1902 AC 165 A Lakshmanaswami Muduliar v. Life Insurance Corporation of India AIR 1963 SC II 85 Coltman v. Brougham, 1918 AC 514 : [1881-19] All ER Rep 265. Borland’s Trustee v. Steel Brother & Co Ltd [1901] 1 Ch 279 Wood v. Odessa Water Works Co, (1889) 42 Ch D 636. Browne v. La Trinidad, (1887) 37 Ch D 1 Slide 27: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 27 Kotta Venkataswamy v. Rammurthy, AIR 1934 Mad 579 Dehra Dun Mussoorie Electric Tramway v. Jagmandardas, AIR 1932 A;ll 141 Royal British Bank v. Turquand (1856) 21 GER 886. Nash v. Lynd 1929 AC 158 : 140 LT 146 Dery v. Peek, (1889) 14 AC 337 Peek v. Gurney, (1873) 43 LJ ch 19 Shiromani Sugar Mills Ltd v. Devi Prasad, AIR 1950 ALL 508 Smith v. Chadwick (1884) 9 Ca 187 Module- 3 Securities Trading Part-I : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 28 Module- 3 Securities Trading Part-I 1. Regulation of contracts and options in securities under the Securities Contracts (Regulation) Act, 1965: Listing of securities listing agreement; title to dividend; free transferability; and registration of transfers; of listed securities of companies. Slide 29: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 29 Share holders and members-who can be and who can not be a share holder- modes of becoming a share holder- calls on shares-forfeiture and surrender of shares-lien on shares, Shares-general principles of allotment-statutory restrictions-share certificate its objects and effects, transfer of shares, restriction on transfer, procedure for transfer, refusal of transfer, role of public finance institutions, relationship between transferor and transferee, issue of shares at premium and discount, depository receipts, dematerialized shares (DEMAT). Slide 30: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 30 Share capital-Kinds, alteration and reduction of share capital, further issue of capital, conversion of loans and debentures into capital, duties of courts to protect the interests of creditors and share holders. Module- 4 Securities Trading Part-II : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 31 Module- 4 Securities Trading Part-II Prospectus-issue, contents, liability for misstatements, statements in lieu of prospectus. Commencement of business and commencement of new business by an existing company. Borrowing powers, effect of unauthorized borrowing, charges and mortgages, loans to other companies, investments, contracts by companies. Debentures: meaning, fixed and floating charge, kinds of debentures, share holder and debenture holder, remedies of debenture holders. Dividends- payment, capitalization, profit. Module-V Membership and Meetings : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 32 Module-V Membership and Meetings Mode of obtaining membership, minimum and maximum number of members, cessation of membership, personation and penalty therefor, index of members; register of members; - entries, rectification and closure; rights and liabilities of members; variation of members rights. Meetings- kinds; procedure; voting. References : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 33 References C.R Dutta on Compnay Law. R.R Pennington’s Company Law, Butterwrths. LCB Gower, Principles of Modern Company law, Sweet and Maxwell London. Susan Barber – Company Law S.M Shah – Lectures on Company Law, Tripathi, Mumbai Majumdar and Kapoor on Company Law Licholas Bourne on Principles of Company Law Palmer’s Company Law, Stevans, London. A. Ramaiya, Guide to Companies Act, Wadhwa. Statutory Material : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 34 Statutory Material Companies Act 1956. Securities Contract Regulation Act ,1956 Securities Exchange Board of India Act, 1992 Depositories Act, 1996 Sick Industrial Companies (special provisions) Act 1985 Company Law-I : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 35 Company Law-I Module -1 Formation of Company Meaning and characteristics : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 36 Meaning and characteristics The word ‘company’ is derived from the Latin ( com= with or together; panis = bread), and originally referred to an association of persons who took their meals together. It may be assumed- since human nature does not change- that in the leisurely past, no less than in the speedy present, merchants took advantage of festive gatherings, to discuss business matters. Now a days business matters have become most complicated and cannot be discussed at length on festive gatherings. Cont… : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 37 Cont… In a popular parlance, company denotes an association of like minded persons formed for the purpose of carrying on same business or undertaking. Though an association may be brought into existence for multifarious purposes, in company law it figures predominantly as a business association with a large and fluctuating membership formed for acquisition of gain. There may also be non-profit trading concerns like a club or a society. In Smith v Anderson, ( 1880) 15 Ch. D. 247, it was observed that “ a company, in a broad sense may mean an association of individuals formed for some purpose.” Slide 38: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 38 A company may be incorporated or unincorporated A company is a corporate body and a legal person having status and personality distinct and separate from that of the members constituting it. It is called a body corporate because the persons composing it are made into one body by incorporating it according to the law and clothing it with legal personality, and so turn it into a corporation. ( The word corporation is derived from the Latin term ‘corpus’ which means ‘body’) Slide 39: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 39 Accordingly corporation is legal person created by the process other than natural birth. It is for this reason something called artificial legal person. As a legal person this corporate being is capable of enjoying many of the rights and incurring many of the liabilities of a natural person- a human being. But the company is not merely a legal institution. It is rather a legal device for the attainment of any social or economic end. It is therefore a combined political, social, economic and legal institution. Company is not a citizen : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 40 Company is not a citizen Company though a legal person is not a citizen either under the Constitution of India or under the Citizenship Act. This has been the conclusion of a special bench of the Supreme Court in State Trading Corpn. Of India Ltd. v CTO AIR 1963 SC 1811. In R. C Cooper v Union of India AIR 1970 1 SCC 564 : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 41 In R. C Cooper v Union of India AIR 1970 1 SCC 564 , also known as the Bank Nationalisation case, the Supreme Court held that where the legislative measures directly touch the company of which the petitioner is a shareholder, he can petition on behalf of the company, if by the impugned action, his rights are also infringed. In that case, the court entertained the petition under Art. 32 of the constitution at the instance of a director and shareholder of a company and granted relief. It is, therefore, to be noted that an individual rights is not lost by reasons of the fact that he is a shareholder of the company. Bennet Coleman Co. v Union of India AIR 1973 SC 106 : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 42 Bennet Coleman Co. v Union of India AIR 1973 SC 106 It is now clear that the fundamental rights of share holders as citizens are not lost when they associate to form a company. When their fundamental rights as shareholders are impaired by state action their rights as shareholders are impaired by state action their rights as shareholders are protected. The reason is that the shareholders rights are equally and necessarily affected if the rights of the company are affected. D.C.M Company Ltd. V Union of India and others 1983 5 comp. cas. 674. : Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 43 D.C.M Company Ltd. V Union of India and others 1983 5 comp. cas. 674. Court took the similar view on the matter Daimler Co Ltd v Continental tyre co. (1916)2 A.C 307 HL Held that a company will be regarded as having enemy character, if the persons having de facto control of its affairs are resident in an enemy country, or wherever they may be, are acting under instructions from or on behalf of the enemy. Slide 44: Thursday, October 15, 2009 Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I 44 Thanks, We will continue…