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com

INTRODUCTION
Cherished child of English parents
First passed in India in 1850
First amendment in the year 1857
Amended several times later

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THE COMPANIES ACT 1956

Came into force on 1st april 1956
Based largely on the recommendations of company law

committee (Bhabha committee)

Largest piece of legislation (658 sections and 15
schedules)

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FEATURES
Full and fair disclosure of various matters in the

prospectus
Detailed information of financial affairs of the
company to be disclosed in its accounts
Provision for intervention and investigations by the
government into the affairs of the company

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FEATURES (Contd)
Restrictions on powers of managing agents and other

managerial personnel
Enforcement of proper performance of their duties
by company management
Protection of minority shareholders

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FORMATION OF COMPANY
Documents to be filed
MOA (Memorandum Of Association)
AOA (Articles Of Association)
A statement of the normal / authorized capital
A notice of address of the registered office of the

company
List of directors*
An undertaking*
A declaration

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FORMATION OF COMPANY ( contd )

Certificate of Incorporation
Certificate of Commencement of Business
Promoter
Liability of Promoters
Remuneration of Promoters

Preliminary or Pre-Incorporation contracts

Provisional contracts

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KINDS OF COMPANIES
BASED ON MEMBERSHIP
Private Company

-Min no. of members: 2

-Max no. of members: 50
-Restricts right to transfer its shares
-Prohibits public issue of shares or debentures
Public Company
-Min no. of members: 7
-Max no. of members: Unlimited
-Doesnt restrict right to transfer its shares
-Doesnt Prohibit public issue of shares or
debentures
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KINDS OF COMPANIES ( contd)

BASED ON INCORPORATION

Chartered companies -companies which are

incorporated under a special charter granted by
the king or queen in exercise of royal power.
-East India Company(1600)

Statutory Companies -which are created by

special act of parliament or state legislature at
central or state govt. level
-Reserve Bank of India

Registered Companies are companies which

are registered under the co.s act of 1956

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KINDS OF COMPANIES ( contd)

BASED ON LIABILITIES

Co.s limited by SHARES companies in which

the liability of its members is limited to the
extent of the amount unpaid on the shares held
by a particular member.
Co.s limited by GUARENTEE -the liability of
members is limited to a fixed amount which
members undertake to contribute to the assets
of the company in case of its winding up.
Unlimited Co.s wherein members are liable for
the debts of the company irrespective of their
interest in the company
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BASED ON CONTROL

A)
B)

Holding Company -51% of the share capital

Subsidiary Company less that 51%
Govt. Companies MNTC, ONGC
Foreign Companies IBM, MICROSOFT

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PUBLIC CO.

VS.

PRIVATE CO.

Number of members
Commencement of business
Invitation to public
Transferability of shares
Number of directors
Statutory meeting
Restrictions on appointment of directors
Managerial remuneration
Further issue of capital

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PARTNERSHIP

VS.

COMPANY

Registration

Liability

Number of members
Legal status

Creditors

Property
Contracts

Dissolution on death
Agency relationship
Transfer of interest
Statutory obligations

Management
Life duration

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MERGERS AND ACQUISITIONS

MERGER:

Combination of two companies to form new

company or to run business under any one of the
merging companies name.
Eg.:1. NBC Universal; NBC and Vivendi Universal
Entertainment
2. US Airways; with America West Airways
3. Sony Ericson; Sony and Ericson
4. NSN; Nokia and Siemens

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ACQUISITION:

Purchase of one company by another with no

new company being formed.
Eg.:1. P&G buys Gillette
2. Tata steel acquires Corus
3. Google buys Youtube
4.Vodafone acquires Hutch

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MOTIVES AND BENEFITS OF M&A

Economies of scale
Improved market reach
Reduction in Tax liability
Diversification of risk
Limit competition
Eliminating the financial constraints
Synergy

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TYPES OF MERGES
Horizontal merger
Vertical merger
Market-extension merger
Product-extension merger
Conglomerate merger

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M&A -ITS FINANCING

All Shares Deals
Cash
Hybrids

DEMERGER/SPIN-OFF/SPIN-OUT:
-Effective opposite of a merger
-One Co. splits into two

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