COMPANY LAWS

INTRODUCTION As per sect. 3 of Company Act, the company means a company formed and registered under the Act, or an existing company formed and registered under any of the previous Company Laws. Further Sec 12 allows the formation of various types of companies as follows: Companies limited by shares Companies limited by guarantees and Unlimited companies Most of the Companies in India are the companies limited by

Main characteristic features of a company: Incorporated Association

COMPANY LAWS

A company is required to be incorporated or registered under the Companies Act.

The minimum number of members should be seven. There is no upper limited.

A public limited company may have unlimited number of its shareholders (members).(reliance industries , L&T) In case of Pvt. Ltd company, minimum number is two and maximum number of 50.(PWC , ernst & young) A company is an artificial person. It can be sued as well can sue

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COMPANY LAWS
Common seal. Since company is an artificial person, it cannot sign on its own. The common seal of a company is known as its official signature on the documents. And it such Directors, who are authorized on this behalf by its Board, affix the common seal on its behalf, under their own signatures, too, which means the documents are, in fact, singed by the company. It has separate legal entity. Since it is an artificial person, it is so by virtue of being a separate legal entity.

COMPANY LAWS
Limited liability. In a limited company, limited by shares , the liability of the shareholders are limited only up to the extent of their respective shares in the company. Transferability of Shares. Perpetual Existence (Company never dies) May sue and be sued in its own name. Nationality and Domicile. No fundamental rights.

COMPANY LAWS
Lifting of a Corporate Veil. In the case of dishonest and fraudulent use of the facility of incorporation, the corporate veil is lifted by laws. And the law identifies the person (member) who is behind such dishonest and fraudulent use of the facility of incorporation.

TYPES OF COMPANIES
1. Companies Limited by shares. It is a registered company where in the liability of its shareholders is limited by its Memorandum of Association up to the maximum amount of the paid up shares, or up to the extent of the amount of unpaid shares, if any, held by them.

TYPES OF COMPANIES
Company Limited by Guarantees. It is a registered company wherein the liability of shareholders is limited by its MOA up to such amount as the members will respectively undertake to the Memorandum to contribute to the assets of the company in the event of it being would up. Such company is known as the Guarantee Company. Guarantee Company does not have share capital.

TYPES OF COMPANIES
Unlimited Company. The liabilities of the shareholders of such companies are not limited up to the share capital only, as is the case with limited liability companies. Instead, the liabilities of the shareholders are unlimited. In the case of winding up of the company, the members of such companies are liable to the full extent of their total assets, to meet the liability of the company.

PUBLIC COMPANY & A PRIVATE COMPANY

Distinguishing features of Public and Private Companies Public. Minimum no. of shareholders must be seven. No upper limit. Private Co. Minimum number of shareholders should be two and maximum number should be 50. Public Co. May be formed with a minimum paid up capital of Rs 5 lakh. A private company may be formed with a minimum paid up capital of Rs 1 lakh. Shares are freely transferable in public company where as there are certain restrictions imposed on the transferability of shares of a private company.

PUBLIC COMPANY & A PRIVATE COMPANY

Public company required issuing prospectus to the general public to invite subscriptions to its public issue of shares and debentures. Whereas no such prospectus is required to be issued as its maximum number of shareholders is limited to 50 only. Public company can accept term deposits from the public whereas a private company cannot accept. It cannot commence business until it receives the certificate to commence business where as private company can commence its business immediately after receiving the certificate of incorporation.

PUBLIC COMPANY & A PRIVATE COMPANY

Public company is required to hold a statutory meeting and file a statutory report to the respective Registrar of Companies. A private company is not required to hold any statutory meeting. In a public company directors are required to file with the ROC their written consent to act as directors of the company and must sign the Memorandum and must entered into a contract for their qualifying shares of the company. Whereas directors are not required to the any of such things.

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In public company, the directors of the company may not be appointed by single resolution whereas the directors of the a private company may be appointed by a single resolutions.

PUBLIC COMPANY & A PRIVATE COMPANY

1. In public company, the directors of the company may not be appointed by single resolution whereas the directors of the a private company may be appointed by a single resolutions.

PROMOTION OF A COMPANY
The term, promotion pertains to the preliminary steps that are taken for the registration and floatation of the company. The person who takes the charge and responsibility of promoting the company are referred to as the promoters of the company. The promoter may be an individual, association, syndicate, partnership or company.

REGISTRATION

As per sec 12, any seven or more persons in the case of a public company, an any two or more persons (not exceeding 50 members) in the case of a private com-any, associated for any lawful purpose may, by subscribing their names to a memorandum of Association, and otherwise complying with requirements of the Act in respect of registration, form an incorporated company with or without limited liability.

 As per sec 33, the following three documents are required to be submitted to the Registrar of Companies of the State in which the registered office of the company is to be situated: Memorandum of the Company Articles of the company, if any and The agreement, if any, which the company proposes to, enter into with any individual for the appointment as its managing or whole time director or manager. MOA of a company is its Charter. It contains fundamental conditions upon which alone the company can be incorporated.

 It contains its objects of the formation of the company and the maximum possible scope of its operation beyond which it cannot act or operate. Thus, it defines as also restricts (confines) the power of the company. Accordingly if any thing is done beyond these powers, that will be declared ultra vires (i.e. beyond the powers of) of the company and, thus, void. Thus, the MOA of a company enables the shareholders, creditors and suppliers and so on, to know whether the company is acting within the powers granted by its MOA, or it is indulging in some activities which are ultra vires.

 ALTERATION IN MEMORANDUM OF ASSOCIATION Sec. 16 provides that the company cannot change the conditions contained in the MOA except in the cases and in the mode and to the extent the express provision have been made in the Act. Thus, a company can change its, name, change its registered office, change its objects clause, and change its capital clause, by following the procedures laid down in these regards. A company limited by shares, can increase its authorized share capital by passing an ordinary resolution, if its Articles of association so authorizes.

 Within 30 days of the passing o the resolution for the increase in the authorized capital, the company is required to file a notice in this regard with the ROC. After receiving the notice, the ROC shall record the increase and also make any alterations that may be necessary in the companys MOA or AoA or both.

 ARTICLE OF ASSOCIATION MOA spells out the scope and powers of the company. AOA governs the ways in which the objects of the company are required to be carried out and achieved. Alteration in AOA involves a detailed and lengthy procedure. The AOA can be formed and altered by the members of the com-any by passing a special resolution. Thus, the AOA of the company and its by-laws are the regulations which govern the management of the internal affairs an carrying on the business of the company.

 These define the duties, rights, powers, and authority of the shareholders and the directors in their respective capacities as also of the company. This also explains the mode and form in which the business of the company is to be conducted. In other words, the AOA have a contractual force between the company and its members. The AOA of a company are subordinate to and, thus, are controlled by the MOA. Therefore, the AOA cannot supersede the objects as laid down in the memorandum of Association.

 One the required documents are filed with the ROC and the required fees has been deposited in his office. Once Registrar is satisfied, he enter the name of the company in the Register of Companies, maintained by him for the purpose. Thereafter, he will issue a Certificate of Incorporation under his signature The Certificate of Incorporation serves the same purpose in the case of company as the birth certificate does in the case of natural person.