COMPANY LAW

ANIRBAN MAZUMDER
 NATURE

Independent corporate existence

Limited liability by shares, by
guarantee or else unlimited company
Perpetual succession
Separate property share holders are
not owners of property of company
Transferable shares
Capacity to sue and to be sued
Professional management
Finances
 FEATURES

Public company min 7 members, no

upper limit, Private company min 2
members, max 50 members.
Association of more than 10 persons in
case of banking activity and more than
20 persons in case of other activity, if
not registered as company , shall be
illegal association
 DISADVANTAGES

Lifting corporate veil

Determination of character
Disregarding corporate entity
Government company
Personal liability of directors
Formality in functioning
Citizenship
Nationality and residence
 INCORPORATION

To be registered with Registrar of

Companies
Member - 2 for private and 7 for public
All documentation - MOA, AOA,
Certificate of Incorporation
Pre-incorporation contract can not
sue or be sued until ratified by
company
Certificate for commencement of
business public company
MEMORANDUM OF ASSOCIATION

Name, registered office, object,

liability, capital
Doctrine of ultra vires contract void
ab initio - personal liability
Change of object clause to be
registered
 ARTICLE OF ASSOCIATION

Relation between members inter se

and between company and members
Binding on members and company but
not on outsiders
Constructive notice of MOA , AOA
Doctrine of indoor management
contract will not be prejudiced by
irregularities if consistent with public
document
 SHARES
Share interest of shareholder in the
company
Stock aggregate of shares owned by
individual
Equity and Preference shares
Shares with and without voting rights
Authorised capital, issued capital,
subscribed capital, paid up capital.
Issue at par value, Issue at premium,
Issue at discount
Public issue , Private placement
 PROSPECTUS
Public co listed in a recognized stock
exchange can raise capital required for
business from public through prospectus
Private co is prohibited from inviting
monetary participation from public
Public co may obtain fund from own
contacts - prospectus is not required
SEBI guidelines have to be followed for
raising fund from public
To be dated, registered and disclosure
to be made.
Criminal liability for misrepresentation
 SHARES

On application
Allotment by proper authority and it is absolute
and unconditional
Certificate of shares
Transfer of shares
Rectification of register
Shares are kind of movable property bundle
of intangible assets against co
Underwriting commission guarantee for
subscription application for remaining shares
 DEBENTURE
An instrument under companys seal to
acknowledge indebtedness
Share holders are considered to be
owners of the company but debenture
holders are considered as companys
creditors.
Fully, partly, non convertible debenture
Company makes provisions for
borrowing power in MOA and AOA
provides methods of borrowing
 CHARGE
Ultra vires - borrowing without power
Defect can be removed by approval in
AGM
If company does not approve, lender
shall be protected by doctrine of indoor
management if the lender advanced in
good faith.
Company may charge its assets for
borrowing money but it needs to be
registered with ROC.
 MEMBERS
Who have subscribed memorandum of co
shall be deemed to be member
Members and shareholders are used
interchangeably
Co who do not have share capital have
members
Method subscribing memorandum,
qualification share allotment of share
transfer of share
Eligible competent of contract, co,
registered trade union, partnership
Forfeiture of share, surrender of share, lien on
share, buy back of shares.
 DIRECTORS
Corporation has neither body or mind of its own
cos business to be entrusted to human agents
Public co three director min, private co two
directors min. More than 12 requires govts
approval
Director hired professional, not servant of co
but officers of co controller of cos affair
Role as agent of co, as trustee of co, organ of
co body
First director by subscription, then at general
meeting
By nomination, by voting, by board, by central
govt
Qualification share , number restriction not
more than15 co., fiduciary duty, duty of care and
skill,
 MEETINGS
Statutory meeting within six months
required for public co having share capital
Annual general meeting once a year ultimate
control of co in the hands of shareholders to
review functioning of co Balance sheet, profit
and loss account, report of BOD, appointment of
director and auditor.
Extra ordinary general meeting if
required change in object clause, change
in location of registered office, change in
share capital
 MEETING
To be called by proper authority,
notice place, day, hour, statement
of business
Voting hands, proxy, postal ballot,

Minutes records of proceedings,

Ordinary resolution majority vote

Special resolution two third

majority
 WINDING UP
Compulsory winding up under of court
failure to commence business, reduction
in member, inability to pay debt.
Voluntary winding up winding up of co
by member or creditor
Dissolution of co
Liquidator