Shah Lawedited

Corporations Law Section A

CHARACTERISTICS OF COMPANIES Artificial legal person with rights and powers of its own Separate legal entity – independent of people that control or run the entity Can sue and be sued in its own name Perpetual succession - lifespan of the company is not affected by the death of it members or officers Can hold and dispose of property

Kinds of Company Statutory Companies…. Special acts e.g RBI Registered Companies ..

Classification on the basis of liability Company limited by share Sec 12(2)a Company limited by guarantee Sec 12(2)b Company with unlimited liability Sec 12(2)c

Classification on the basis of Members

Private company “close corporation” Sec 3 (1) (iii) Restricts right to transfer shares Members from 2 to 50 Prohibits invitation to public for share/ Debenture.

Public Company does not restrict to transfer its shares Members from 7 to unlimited Can invite public for its shares/ debentures.

Consequences of the Separate legal entity doctrine Corporate capacity – campany can do most things that a natural person can do The companies obligations and liabilities are its own and not those of its participants A company can sue and be sued in its own name

Perpetual succession – continues until it is wound down and deregistered irrespective of changes in its participants A company’s property is not the property of its participants A company can contract with its own controlling participants

Formation of the Company Documents to be filled with registrar Certificate of incorporation Effect of Registration takes place

TOPICS Memorandum of Association Articles of Association

MOA Defines the legitimate objectives of a company. Identifies the nature and structure of the company. Allows for limited liability to be created.

AOA Rules and regulations contained for the operation of the company. It is a contract between the members of the company and the company where the members are seen as one party and the company is the other.

Memorandum of Association MOA Deals with the following issues: Name of Co Registered Office of the Company Objects Nature of Co i.e. Ltd Nominal Share Capital and Par Value

Articles of Association (AOA) These are much longer These are the internal rules for the Company There is no mandatory content You can address those issues here that you choose And you can provide the rules that you choose

Intra Vires Ultra Vires

SHARES ………. ………… ………. ………. ……….

Prospectus sec 2(36) Inviting offers from public for purchasing shares or debentures of a company is prospectus

Statement in lieu of prospectus Where a company arranges money from private source it need not issue prospectus but promoters are required to to prepare a draft known as “statement in lien of prospectus”

Minimum Subscription A company making any issue of shares/ debentures to the public must receive 90% subscription against the entire issue .

Management of the company The persons through whom a company acts and does its business are termed as directors. They collectively called board of directors

Definition Sec 2 (13) – Any person occupying the position of director, by what ever name called – May be defined as any person who having control over direction , conduct, mgt of the company affairs

Only individual can be director Number of directors??? First directors

Appointment of directors Sec 255 In case of public company or private which is subsidiary of a public company not less than 2/3rd of total directors must be appointed in annual general meeting. These directors are liable to retire by rotation Remaining 1/3rd in case of such company are subject to any Regulation in the Articles, also to be appointed in annual general meeting

Other appointments By board of directors By third party By direction of central government

Company Meetings

Meeting May be defined as coming together of at least a quorum of members in order to transact either the ordinary or special business of the company.

Kinds of Company Meetings

I. Meeting of share holders General Meeting which includes:  Statutory Meeting  Annual general Meetings 3. Extraordinary meeting

Class Meetings:

II. Meeting of creditors and debentures-holders During the life time of the company

At the time of winding up of the company.

Meeting of Directors Meeting of the Board of directors; and Meeting of committees of directors

Statutory Meeting Sec. 165

{Meeting of

Share holders}

The first meeting of the share holders of a public company is known as a statutory meeting. It has to be called with in six months from the date on which the company is entitled to commence business, but it cannot be held within one month from that date, Sec.165 Statutory Report [Sec. 165(2)]The directors are required to prepare and to send to every share holder a document containing fullest information on important matters known as statutory report”. Refrences:..........Company Laws Avtar Singh

Annual General Meeting [Sec.166] Every Company is required to call at least one meeting of its shareholders each year called Annual General Meeting The first with in 18 months No meeting necessary for year of incorporation Gap between two annual meeting should not be of more than fifteen months.

Extraordinary General Meeting [Sec 169] All general meetings of a company other than annual general meetings are called extraordinary meetings They are held when it found necessary to transact certain business Example alteration of MOM Increase/Decrease in share capital etc.

II Class meetings

Sec106

Meeting of different classes of share holders

Winding up of company Modes 2. Winding up by the court 3. Voluntary winding up …. – Members voluntary winding up – Creditors voluntary winding up

Winding up subject to supervision of the court.