law term paper (2)

8/8/2019 Law Term Paper (2)

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FORMATION OF COMPANY OF AUTOMOBILE SECTOR

TERM PAPER

MGT518

Lovely Professional University

Submitted by Submitted to

Avtar Singh Mr. Amarjeet Saini

Subject Name Corporate and Business Law

Program Code 193

Block Name LSM (Lovely School of Management)

Roll No. RS1902-A13

Regn. No. 10900128

Sem. 1st

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Brief Contents

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Chapter nos. Chapter name Page no.

Chapter 1 Introduction to

Company and public

company

3

Chapter 2 Memorandum of

Association

7

Form no. 1 9

Form no. 1A 11

Form no. 1AB 12

Form no. 18 13

Form no. 19 14

Form no. 29 16

Chapter 3 Contracts 18-20


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Chapter 1

Introduction

What is A COMPANY?

A company may be defined as an association of individuals for some common purpose. But it

is an voluntary association of persons. It has a perpetual succession and a common seal. It

has a separate legal entity from its members. It exists only in contemplation of law. It has

capital divisible into parts, called shares. It is formed under the rules and regulations of the

Companies Act, 1956.

CHARACTERSTICS OF A COMPANY

1. Separate legal entity

It means that a company has a separate legal entity from its members .It has an independent

existence. The companys money and whole property belong to the company and not to the

shareholders of the company.

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2. Limited liability

A company may be company limited by shares or company limited by guarantee. In a

company limited by shares, the liability of members is limited up to the unpaid value of shares.

In a company limited by guarantee, the liability of members is limited to such amount as the

members may undertake to contribute to the assets of the company.

3. Perpetual succession

As it is created by a process of law, so it can be put to an end to only by a process of law. It

continuous to exist even its members are dead.

4. Common seal

Since a company has no physical existence, it must act through its agents and all such

contracts entered into by agents must be under the common seal of the company.

5. Separate property

As company has a separate legal entity it is capable of owning, enjoying and disposing of

property in its own name.

6. Capacity to sue

A company can sue and be sued in its corporate name.

7. Transferability of shares

The capital of company is divided into parts, called shares. These shares are, subject tocertain conditions, freely transferable, so that no shareholder is permanently wedded to

company.

The Companies Act, 1956 sets down the rules for the establishment of both public and

private companies. A company is formed by registering the MoA (Memorandum of

Association) and AoA (Articles of Association) with the Registrar of Companies (ROC) of

the state in which the head office is to be situated. The most commonly used forms of

companies is the limited and unlimited common being relatively uncommon.

What is a Public Limited Company?

A public Limited Company is a Company limited by shares in which there is no restriction

on the maximum number of shareholders, transfer of shares and acceptance of fixed

deposits. The liability of each shareholder is limited to the extent of the unpaid amount of

the shares face value and the premium thereon in respect in respect of the shares held by

him or her. A public company can be indicated as the company which

(a) has a minimum Rs. 5 lacs as paid-up capital;

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(b) is a private company which is subsidiary of a company which is not a private

company.

The minimum number of persons required to form a public company is 7 and there is

no restriction on maximum number of members or shareholders.

A public company must have at least 3 directors under section 252 of the Company

Act, 1956.

Incorporation of Company

Before a company is formed, certain preliminary decisions are necessary with regard to

what kind of company to be created i.e. Public or Private company, what its capital should

be, whether it is to be formed a new company or taking over an already existing business.

All these decisions are taken by certain persons who are known as Promoters. A group of

persons who undertakes, does and goes through all the necessary and incidental

preliminaries, keeping in view the object, to bring into existence an incorporated company.

Mode of forming incorporated company

As we are going to make a public company there should be at least 7 or more persons need

to associate with the company to form a new company. For forming a new company we will,

have to filled the following documents with the registrar of company in the nearest ROCs

office;-

1. The Memorandum of Association duly signed by the subscribers.

2. Articles of Association, if any, signed by the subscribers to the memorandum ofassociation. a public company limited by shares need not have its own articles of

association.

3. List of directors who have agreed to become the first directors of the company.

4. A declaration stating that all the all the requirements of the companies act and other

formalities relating to registration have been complied with.

5. Such declaration should be signed by the following persons;-

5.1. An advocate of supreme court or high court.

5.2. A secretary or a charted accounted in whole time practice in India.

5.3. A person named in the articles as a director or a manager or a secretary of the

company.

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The directors of an Indian Company both Indian and Foreigner Directors, are

required to obtain DIN (Director Identification Number) and DSC (Digital Signature

Certificate).

Setting Up An Automobile Company In India

Setting up an Automobile Company in India involves various steps, however the process canbroadly be classified into three steps:

1) Approval for Investments

2) Incorporation / Formation of Company, Foreign Branch Office / Liaison Office

3) Registration with various Authorities

Company has to take into consideration all the law related to the employees ,wages law,

ecological law. Company also will do a proper study of state govt.`s tax rule and regulation so

that it can select a state which is more beneficial to co.

Chapter 2

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Memorandum of Association

An MoA contains the fundamental conditions upon which alone the company is allowed to

be incorporated. It may be called as the charter of the company. MoA depicts the main,

ancillary and other objects of the proposed company. Its is prepared for the purpose to

enable the shareholders and others who deal with the proposed company to know what itspermitted range is.

A stamp duty is required to be paid on the MoA. This is required to be executed by the

promoters in their own hand in the presence of a witness in with stating their full name,

fathers name, residential address, occupation and number of shares subscribed for etc.

The Memorandum of Association of the company engaging in the Automobile sector will

have the following MoA i.e. the MoA of prospected Automobile Manufacturing Company

will contain the following contents:

1. The name of the company is Alcom automobile Limited.

2. The company is to be public company.

3. The companys registered office is to be situated in Barnala, Punjab.

4. The liability of the members will be limited.

5. The companys share capital is Rs. 50,00,000 divided into 5,00,000 shares of Rs. 10

each.

6. Objective:

6.1 Main aim of the company is to produce the four vehiler vehicle of different model.6.2 It can purchase necessary parts from everywhere it like.6.3 Co. by passing a special resolution can change or widned it`s area of operation.6.4 Co. can take its own land for infrastructure or can take on lease.6.5 Co. can sale the all kind of spare parts of its vehicle .6.6 The objective of the company is to provide an assortment of automobile parts

including wiper parts, engine mounting plates and others which are acclaimed fortheir attributes including robust construction, accurate dimension and corrosionresistance.

6.7 Co .can join with a financial institution to finance the vehicle to be sold by the co.

To achieve our objective we are offering customized solutions for our range and canmeet all kind OEM specifications from customers. Our own modern tool room will helpsus to produce these parts precisely and accurately.

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7. The following subscribers to this memorandum of Association wish to be formed into

a company pursuant to this Memorandum; and agree to take the number of shares

shown opposite our respective names.

__________________________________________________________________________

_________

Name & Addresses of Subscribers Number of shares taken by each

Subscriber

__________________________________________________________________________

__________________________________________________________________________

__________________

1. Resham Upadahy 10 shares138, Rohini, Delhi

2. Harshmeet singh Brar 10 sharesBrar estate, Haroli, Thesil Ratia, Distt. Fatehabad (Haryana)

3. Hargunpartap singh 10 sharesAulakh nagar, Mansa (Punjab)

4. Abhinav Sharma 10 shares74, Shanta Vihar, Rurkee (UttraKhand)

5. Dya Shankar Prasad 10 shares37, Indraprasat Marg, New Delhi

6. Ramdas Thirkey 10 shares562, Preet Vihar, Jodhpur (Rajyasthan)

10 shares7. Kaushal Kishore

64, Rajguru MahaMarg, Amritsar (Punjab)_____________________________________________________________________________

Total Shares Taken: Seventy______________________________________________________________________

_______________DATED: 18th Nov. 2009Witness to the above Signatures:-Bhagat singh colonypatiala (Punjab)

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FORM NO. 1

Registration No. of Company .......... Nominal Capital : Rs.

50,00,000 (Fifty Lacs only)

THE COMPANIES ACT, 1956

Declaration of compliance with the requirements of the Companies Act, 1956 on

application for registration of a company

[Pursuant to section 33(2)]

Name of Company Alcom automobile Limited

Limited/Private Limited

Presented by..

I, ., of do solemnly and sincerely

Declare that I am [1] Gokul sachdeva who is engaged in the formation of the

company, or a person

Named in the articles as a director/manager/secretary of the Alcom,automobile

Limited Limited/Private Limited.

And that all the requirements of the Companies Act, 1956, and the rules thereunder in respect

of matters precedent to the registration of the said company and incidental thereto have been

complied with. And make this solemn declaration conscientiously believing the same to betrue.

Date 28th Nov. 2009

Place Barnala Signature

Witness

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Designation

1. An advocate of the Supreme Court of the Punjab/Haryana High Court, an attorney or apleader entitled to appear before the ..Punjab/Haryana High Court or a charteredaccountant practising in India.

2. State whether director, manager / secretary /advocate/ chartered account.

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FORM NO. 1A


Application form for availability of names*

The registrar of Companies,

Sir,

Subject: AVAILABILITY OF NAMES---INFORMATION---FURNISHING OF

We, the following applicants, are desirous of forming a company to be registered under thecompanies Act, 1956 in the state of-

1. Name and full address of the person(s) applying forthe availability of the name (in block capitals)

2. Proposed name of the company

3. State whether public or private

4. In case the proposed name mentioned in item (2) isnot available, 3 names to be considered in the order

of preference5. Main object of the proposed company

6. Name and addressees of the prospective directors orpromoters, etc.

7. Particulars of the names and situations of registeredoffices of other companies in the same group orunder the same management

8. Proposed authorised capital

9. Please furnish particulars and results of anyapplication moved to this or any other Registrar

previously for availability of name10.Particulars of remittance of fee (Draft/IPO) Rs.

Situation

Dated Signature of the applicants

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*Refer rule 4A

FORM NO. 1AB


Consent of the person charged by the Board with the responsibility of complying with

the provisions of the Act

[Pursuant to section 5(f)]

To

The Board of Director of Ltd.

I son of hereby given my consent for being

charged by the board of directors of the company above named with the responsibility of

complying with the under-mentioned provisions of the Companies Act, 1956.

1.

2.

3.

Signature

Date this day of 19 Name of the Person

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FORM NO. 18

Registration No. of the Company Nominal Capital: Rs


Notice of the situation/change of situation of registered office

[pursuant to section 146]

Name of the company

Notice is hereby given that ----

1. (a) the registered office of the company is situated .with effect from

[date](b) the situation of the registered office of the company of was changed from to

with effect form .

[date]

2. Situation of registered office falls under the jurisdiction of(name of the police station).*

Dated this Day of 19

Signature

Name

(In Block Capitals)

Designation

*State address of nearest police station with district and tehsil.

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FORM NO. 19

Registration No. of the Company Nominal Capital: Rs


Declaration of compliance with the provisions of section 149(1)(a), (b) and of the

Companies Act, 1956

[pursuant to section 149(1)(d)]

[To be used by a company which issued a prospectus on or with reference to its formation]

Name of the company Alcom automobile Limited

Presented by

I of being a director/the secretary of .. Limited do

solemnly and sincerely declare:--

1.

That the amount of the share capital of the company

offered to the public for subscription is Rs..

2.

That the amount stated in the prospectus as theminimum amount which, in the opinion of the board of

directors, must be raised by the issue of share capital

in order to provide for the matters specified in clause(5)

of schedule II of the Companies Act, 1956, is Rs.

3.

That shares held subject held subject to the payment of

the whole amount thereof in cash have been allotted to

the amount of Rs. ..

4.

*That every director of the company has paid to the

company on each of the shares taken or contracted to

be taken by him , and for which he is liable to pay in c

ash a proportion equal to the proportion payable on

application and allotment on the shares offered for

public subscription* except the following directors,

namely

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who has/have not taken or contracted to take any

shares for which he is/they are liable to pay in cash.

*That no director of the company has taken or

contracted to take any shares for which he is liable to

pay in cash.

5.

That no money is, or may become liable to be repaid to

applicants for any shares or debentures which have

been offered for public subscription by reason of any

failure to apply for, or to obtain, permission for the

shares or debentures to be dealt in on any recognized

stock exchange.

6. The statements in paragraphs aboveare true to my knowledge and those in the remaining

paragraphs are true to the best of my information and

belief.

Dated this . Day of . 19

Signature

Designation: Director/Secretary

*Delete paragraphs not applicable.

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FORM NO 29

Registration No. of Company ........................ Nominal Capital Rs. ............................


Consent to act as director of a company and/or undertaking to take and pay for

qualification shares

[pursuant to section 264(2)/266(I)(a) and 266(1)(b)(iii)]

Name of company .Alcom auto..............................................

Limited ..........................................

Presented by ..................................................................................................................

To the Registrar of Companies .......................................................................

I, the undersigned, hereby testify my consent to act as director of the ..........................

limited, ................................ pursuant to section 264(2)/266(1)(a) of the Companies Act, 1956

and certify that I have not been disqualified to act as a director under sections 267 and/or 274

of the Companies Act, 1956.

I, the undersigned having consented to act as director of the ..............................

Limited, also hereby undertake to take from the said company and pay for ....................

shares of Rs. ................. each, being the number/value of the shares prescribed as the

qualification shares for the office of director of the said company.

Name and

surname in full

and fathers

names

Address Occupatio

n

Date of

birth

Nationality Signature

1 2 3 4 5 6

Signature ..............................

Designation ...........................

Dated the ........................... day of .................... 19

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Notes: (1) Delete the portion not applicable.

(2) If a director signs through his agent authorized in writing, the authority must be

produced

before the Registrar.

(3) In case of undertaking to take and pay for qualification shares, the form should be

accompanied by the necessary stamp duty.

Chapter 3

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Contracts:

Contract No 1:

The first contract is about purchase of chairs by company.

Offer by Company, Terms and Conditions:

There is invitation of offer by newspaper contained a detail price of chairs along with no of

specification of chairs and quality types.

The Alcom automobile limited requires 200 chairs of x model whose price is Rs.200 per chair.

Acceptance by Wooden Company:

The terms and condition specified by company was accepted by wooden Accouterna Companybut there were some terms and conditions put forward by consultancy Company. They are as follows:

After the delivery of chairs they want payment on the spot.

Acceptance by both:

We accepted their terms and conditions without any further obligation and both the party signed

for the contract.

Breach of contact:

The wooden L Company sends the 200 chairs to the Alcom company but the chairs were differentdelivered by the wooden company and Alcom company refuses to take the delivery of chairs becausechairs were of not that quality which they had ordered so the wooden company sued in court to Alcom

company for not taking delivery of chairs.

Decision by Court:

The decision by the court was in favor of Alcom ltd because the chairs which were delivered by the

wooden company was not of that quality as it was mentioned in the contract the terms of the contractwas violated by the wooden company and then wooden company made the chairs as was agreed and

delivered the chairs to Alcom ltd.

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Contract No 2:

The second contract is about warranty of cars.


The offer contained a detail price of vehicle model name , no and car name along with warrantyperiod and was tested before sale there was no defect in cars.

The price of car is 4,51,000.

The warranty of car is 1 year or 36000 km which may be earliar.

The car name is ZIP and model is U56.

Acceptance by Buyers:

The terms and condition specified by company are accepted by 500 buyers. There is nocondition by buyers for company.

Acceptance by us:


for the contract.

Breaking of contact:

The buyers used the cars for 8 months and later on they found that there are some defects in engine and

all buyers sued to company for violating the contract.

Decision by Court:

The decision by the court was in favor of buyers, buyers returned the cars to company and repaired the

technical defects as they had given the warranty of cars for one year.

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Contract No 3:

This contract is about the dealer of a comapny .


A dealer of company in Fatehabad he is being given a fixed rate of percentage of

commission on the sale made by him it was agreed that he will give free service to

the entire vehicle in first year of sale or 20000 km which is earlier.

Acceptance by y:

Y agreed to purchase car from A without any condition.

Acceptance by both:


for the contract.

Breaking of contact:

The car purchased from dealer refused to give free service during second time and

y sued to company for violating the contract.

Decision by Court:

The decision by the court was in favor y asY was having the direct agreement with

Company, the company forced the dealer to provide free service to Ys car.

Contract No 4:

The contact is about violating the terms and condition of MOA by company.

Company has given its four new car to a foreign deliberate free of cost. Company main aim was

to gain the publicity that foreigner are using these cars according to the term, the foreigner will

bear all the expenses during the time they owns the car. During this time two cars met with the

accident company sued on the foreigner to recover loss but court has given decision that it is not

described in the memorandum of association of company to give car on bailment. Its areas was

manufacturing and selling of cars in this company was violating the condition of MOA so it

cannot recover any loss from foreigner.

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5- case promissory note

Alcom automobile ltd`s one debtor gave a promissory note to the co. for the settlement of

a part of the sum.

_________________________________________________________________

Rs. 1,00,000 Date-12 july,2009

I promise to pay Alcom automobile ltd. Rs.1 lac and all the sums due to co.

To

Alcom Automobile ltd. Stamp////////

Barnala, (Punjab) __________

!_________ !

-__________________________________________________________________

Company asked to debtor for payment on due date .Debtor refused for payment on that

date .co. take the advice of a layer on that issue . He told that this promissory not is not made

in a proper manner , it should be made only for a certain sum of money. So it is not possiblefor the company to take money on date written in the promissory note.

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