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The Companies Act is a successor to the Indian

Companies Act of 1913 and is a consolidation of

many successive Amendment Acts, statutory rules and

principles laid down in decisions of the courts in India

and England.


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In the Companies Act, companies are classified as follows:

Types of

Companies

Companies

limited by

shares

Public

Companies

Deemed

public

Companies

Private

Companies

Companies

limited by

guarantee

Companies with

unlimited liability


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The Companies Act also maintains three special types of

companies namely:

Holding and Subsidiary companies Government Companies

Investment Companies


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Privatecompany

minimum

of two

members.

Maximum

50 members

minimum

paid capital

of`1,00,000

or more

shares

cannot be

transferred

freely

Cannot invite

public to

subscribe to its

shares or

debentures.


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3) Deemed public company:

a private company incorporated in India,which is a subsidiary of a public company,

can be called as deemed public company in

india


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A company not having any limit on the liability of its

members is termed as unlimited company.

The members of an unlimited company are liable, like

the partners of a firm, for all its trade debts without

any limit.

An unlimited company must have Articles of

Association, stating the number of members with

which it is registered and the amount of registered

share capital if it has any.


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The liability of the members of a guarantee company

is limited by a fixed sum which is specified in the

memorandum and beyond which they cannot becalled upon to contribute.


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. The Company which holds

more than half of the nominal value of share capital of

another company or controls the composition of

board of directors of another company is known

as Holding company.

A company whose more

than half of the nominal value of share capital is heldby another company or another company controls the

composition of board of directors of such company is

known as Subsidiary Company.


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A company incorporated

outside the region of a nation but has a place of

business in the nation is known as Foreign

Company.

:- A company whose

principal business is acquisition of shares,

debentures or other securities.


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Company comes existence when a

number of persons come together with an

intention to do some business. These

persons are called promoters


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.


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A Memorandum of Association is a fundamental

document of a company which is also known as the

Charter of the company. It lays down objects, scope of

activities, limitations,power of a company beyond

which a company cannot go.


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Essential to prepare MOA for

registration.

It should be originally framed.I t

cannot be adopted.

It lays objects, limitations of the

company.

serves as a basis of contract

between the company and the

outsiders.

It is usually unalterable.

It enable those who deal with the

company to know about the

permitted range of activities.


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THE NAME CLAUSE: Name which is confirmed by

the Registrar should be stated in this clause. The name

with Limited as the last word of the name in case of

public limited company and with Private Limited as

the last word of the name in case of private limited

company.

REGISTERED OFFICE CLAUSE: This clause states

the name of the state in which the Registered office of

the company is to be situated.

THE OBJECT CLAUSE M i bj b d


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THE OBJECT CLAUSE: Main objects to be pursued

by the company on its incorporation and

Objects incidental or ancillary to the attainment of

main objects.

THE LIABILITY CLAUSE: the nature and extent of

liability of its members.

THE CAPITAL CLAUSE: The amount of share capital

with which the company is to be registered. It shall

also give the number and face value of the shares.

THE ASSOCIATION OR SUBSCRIPTION CLAUSE:,

the subscribers express their desire and agreement to

form a company, agree to sign the memorandum and

take specified number of shares


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The Articles of Association is a document of a

company which contains the rules, regulations or bye

laws for regulating the internal affairs of a company.

It defines the mode and form in which the business of

the company is to be carried on.

They are framed with the object of carrying out the

aims and objects as set out in Memorandum of

Association.


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IMPORTANCE

OF AOA


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The articles of a company usually contain regulations relating to the

following maters:

Share Capital and rights attached to different classes of shares.

Calls on shares.

Forfeiture of shares.

Transfer and Transmission of shares.

Redemption of Preference shares.

Rights of members. General Meetings.

Rights of members in General meetings.

Constitution of Board of Directors.


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According to Companies Act, prospectus" means any

document described or issued as a prospectus andincludes any notice, circular, advertisement or other

document inviting deposits from the public or inviting

offers from the public for the subscription or purchaseof any shares in, or debentures of, a body corporate.

If No Public Issue, then a company shall issue a

Statement in lieu of Prospectus A private company does not issues prospectus because

is prohibited from making any invitation to the public


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A certificate of commencement of business is issued

by registrar after filing of a declaration by a director or

secretary stating that the company has collected the

minimum subscription stated in the prospectus and

that the directors have taken the qualification shares


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The MOA and AOA, if any, have to be submitted to

the Registrar of Companies of the state in which it is

proposed to locate the registered office of the

company.

Following documents should also be submitted:

Form1 declaration of compliance with the requirements of

Companies Act 1956

Form 10- notice of situation/ change of situation

Form 32- Appointment of Directors

Form 29- Consent to act as Director


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Of unsound mind

Undischarged insolvent

Applied to be adjudicated as an insolvent and his

application is pending.

Convicted by a court of any offence involving moral

turpitude and sentenced thereof to imprisonment for not

less than six months and not less than five years has

elapsed from the date of expiry of the sentence.

Not paid call moneyznd six months have elapsed from the

date of payment

An order has been passed from court in pursuance of

section 203


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Number of Meetings: In the case of every company ameeting of its board of directors shall be held at least

once in every 3 months and at least 4 such meetings shall

be held in every year.

Notice of Meetings: Notice of every meeting of the board

of directors of a company shall be given in writing to

every director for the time being in India and at his usual

address in India.

Quorum of Meetings: The quorum of the board shall be

1/3 of its strength or two directors which ever is higher.

The companies Act contains the following provisions relating to board

meeting.


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GENERAL POWERS

The BODs may exercise all powers of the Company

and can do all such acts and things that the Company

can do. But these powers must be according to

provisions of Companies Act., MOA, AOA and the

resolutions of the Company.


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Power to- Make calls on shareholders in respect of

money unpaid

To buy-back its shares

To issue debentures

To borrow other than debentures

To invest funds of the Co., and To make loans.

Powers only at the meetings: To fill casual vacancies in

the Board, additional directors or alternate directors.

To sanction a contract in which a director is interested

To recommend the rate of dividend to be declared.


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The BODs of a public Co. cannot exercise the following powers

without the consent of the shareholders in general meeting:

Sell or lease the undertaking of the Co.

Remit or give time for the re-payment of any debt

Invest otherwise than in trust securities.

Borrow money exceeding the aggregate of the paid-

up capital and free reserves. Contribute to any charitable not directly related to

the business of the Co.


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According to section 372 of the Companies Act, the

BOD of a company is entitled to invest in any shares

of any other body corporate upto 10% of the

subscribed capital of such other body corporate subject

to following:

The aggregate of investments made in all other companies

shall not exceed 30% of the subscribed capital of investingcompany

The aggregate of investments made in all other companies

in same group(under same management) shall not exceed

20% of the subscribed capital of investing company


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A company registered under Companies Act can cease to exist by any one of

the following legal methods:

If a company transfers its undertaking(s) to any other

company under a scheme of reconstruction or

amalgamation.

The name of a defunct company may be removed from

the register of companies of registrar

A company may be wound up under Part VII of the

Companies Act.

There are two principal modes of winding up of a company:


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There are two principal modes of winding up of a company:

Voluntary wind up

Compulsory wind up

A declaration of insolvency by the Board at its

meeting is necessary for Voluntary wind up of a

company by its members. Voluntary wind upmay be:

o At the instance of members or creditors

oro Under the provision of court


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A company may be wound up by court, if the company:

By special provision resolved that it be wound by court

Made default in delivering the statutory report to the

registrar or in holding the statutory meeting

Does not commence its business within a year from

date of its incorporation

Number of members is reduced; less than 2 in case of

private company and less than 7 in case of public

company

Unable to pay debts


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