Company Law 1.PDF IV

LL.B. (3-YDC) Second Year, III Semester, Regular.
Paper – IV Company Law
Company law
Long Questions:
1) Define company and kinds of companies and its characteristics. How it

differs from partnership.
2) What do you mean by memorandum of association and its contents?

Distinguish between memorandum of association and article of association.
3) Define prospectus and its content and provisions what remedies are
available if there is misrepresentation in prospectus.
4) Explain the provision of incorporation and registration of company.
5) How directors are appointed. Explain right and duties of directors and
ground on which director can be removed
6) Explain various kinds of meeting and its relevant provisions specified in

company law
7) Explain the provision relating to oppression and mismanagement and rights

of minority members against majority rule.
8) Explain the various kinds of winding up of company and procedure and

reason of winding up
Law Students Federation – Company Law Study Material (III Semester) – Dec, 2015.
LL.B. (3-YDC) Second Year, III Semester, Regular. Paper – IV Company Law
Short Questions:
1) Multinational company
2) Promoters of company kinds of shares
3) Dividend
4) Secretary of the company
5) Multinational company
6) Dividend
7) Advantage of company
8) Debenture
9) Article of association
10) Right of share holders
11) Kinds of shares
12) Registration of company
13) Secrecy of company
14) Statutory meeting
15) Liquidator
16) Effects of winding up
17) Advantage of company
18) Resolutions
19) Quorum
Long Questions & Answers
1) Any company is association of two or more person to carry on lawful

commercial activist. It includes trade, business, occupation,
profession, transportation and any other activity which is lawful.
2) Essential requisites of company or nature of company or

characteristic of company
3) It is a legal person and every company is having name
4) Registration of company is compulsory
5) Company can carry out any lawful commercial activities
6) Company can sue and be sued.
There can be movable or immovable property in the name of company
1) Management of the company is carried by directors called as board

of directors
2) Audit report of the company have to be approved in general body

meeting of members
3) Company functions are a democratic manner because all directors

of company are taken in various meetings and there is no one ……..
Kinds of companies
There are many no of kinds of companies which are as follows
1) Private company: In this min of 2 members and a max 50 members
are allowed. In private company investment may be done by
members who establish company and it is not necessary to collect
capital by allotment of shares.
2) Public company: In public company min 7 members are necessary

to establish it. There is no limit for max no of members. Public
company collects capital by allotment of shares certificates and
debenture certificates.
3) Govt company : In gov company there may be complete investment

of state or central govt. If there is no complete investment then
these should be 51% or more investment of the govt.
Eg : Railways company, state transport company, airlines , co-

operation. Etc.
4) Limited and unlimited company : In limited company there are

restriction on area of business of the company and allotment of
shares. If It is limited company the word limited have to be written
after name of the company.
In case of unlimited company there is no restriction on business of

the company and it can be carry business throughout the country.
There is also restriction on allotment of shares. There is no need to
write unlimited word after the name of the company.
5) Foreign company : It can be established by permission of central

govt. It may be in collaboration of the govt or there in o
collaboration. Govt can fix reasonable terms and conditions for
establishment of foreign company. It is also called as multinational
company. Because of foreign company also govt collects taxes and
people get employment. In recent period there is globalization and
may Foreigners Company have been establish in India.
6) Banking company : there are many banks in public and private
sector rationalized bank, cooperative bank have been established
in India, Banking companies have to follow all provision of
company law ans also rules of RBI .It can carry on all financial
tractions.
7) Holding company: This is also called as parent company under this

company many independent companies carry on there functions.
They supply all the goods to holding company and follow there
directins.
8) Subsidiary company : There are many independent companies

established under main or parent company. There is supersion and
control of holding company on all subsidiary companies. Such
companies are established for better management of holding
company.
Distinguish between company and Partnership Company
# Company Partnership
1 It is a legal person It is not a legal person
2 Registration of Registration of partners ship firm is
company is compulsory optional
3 Management of Management of company is carried by
company is carried by partners
board of directors
4 Audit of company is Audit of company is optional
compulsory
5 Property belongs to Property belongs to partners
company
6 There is no need for Partners have to make consultation
company to consult with each others in important mattes
with members relating
to business
7 There is limited liability There is unlimited labiality of partners
of members when if partnership firm becomes insolvent
company becomes
insolvent
8 Dispute is settled Dispute is settled according to
according to the partniship act 1932
company law 1956
The above the details characteristics, kinds of companies and is

distinction from partnership.
Q) What do you mean by memorandum of association and its contents?

Distinguish btw memorandum of association and articles of association
There are 3 main documents required for a company & there are memorandum
of association, articles of association and prospectors. Memorandum of
association is the main document of the company which is required at the time
of registration. It is in booklet form & signed by all founder members of the
company. M O F A is also called as charter of the company or constitution of the
company being company have to carry on function according to MOFA
Otherwise It is also it is ground to wide up to company.
CONTENTS OF MOFA: following are the classes which are generally specified in
MOFA. It differs from company to company. It is mentioned in paragraphs with
beading because MOFA gives broad outline information about the company
1)NAME CLAUSE : Every company requires name because registration cannot be
done without name such as name should be desirable having no resemblance
with already existing company is carrying on similar business if it is limited
company for the world limited have to be added after name of the company.
2) REGISTERED OFFICE CLAUSE: There should be detail about place where

company has been Register Company is having head office at the place of
registration. Company can have branches throughout the country but
registration should not be done at more than one place. There should be
address of registration office.
3) OBJECT CLAUSE: There should be details about objects of the company,

Transport Company, finance company. It includes main objects & secondary
objects company should not carry functions contrary to object clauses. If there
is addition or deletion or alternation in object clauses then the prior approval of
registrar is necessary. Object clauses gives information about all activities of
company & it should not be unlawful
4) CAPITAL CLAUSE: In capital clause detail have to be given about investment

done by founder members and terms and conditions of investments.
Arrangement of capital done from all sources has to be mentioned. It includes
working capital and the capital which have been invested in movable &
immovable property
5) LIABILITY CLAUSE: In this clause detail have to be given about loan borrowed
from all the sources rate of interest & terms & conditions of repayment of loan
6) ASSOCIATION CLAUSES: In this clauses detail is given about founder members

who established company. It includes general technical qualification &
experience. And if any other companies established by them it gives better
impression to registrar & other people who wants to make investments in
company.
CONTENTS OF PROSPECTUS
Many points are mentioned in prospectus. Briefly it can be stated as follows
1) Details of movable& immovable properties of company
2) There are details about modern technology used by company
3) Number of employees appointed in company including temporary,

permanent, skilled and un skilled
4) Detail about administrative officers, directors with payment of remuneration,

qualification & experience
5) Facilities provided by company to employees
6) Rules of code of discipline for employees
7) There is detail about shares & debentures issued by company
8) Detail about business done by company in earlier years
9) Rule of meeting of the company
10) Rules relating to shares allotment & transfer of shares
11) Future plan of the company to do expansion of the business
12) Import & export done by the company
13) No of shifts in which company is functioning
Q) EXPLAIN THE PREVISIONS OF IN CORPORATION & REGISTRATION OF THE

COMPANY
In corporation means to establish the company. Members who establish the

company are called as founder members of the company. After incorporation of
company registration of company is necessary because company cannot
commence its business without registration. Founder members appoint one or
more persons to complete procedure of incorporation registration & they are
called as promoters of the company
If there is one promoter then he is sole promoter. if there are more number of
promoters then one of them is chief promoter, under whom all promoters carry
function founder member fix remuneration of the promoters for incorporation
and registration of the company. Therefore role played by promoters in
incorporation & registration of company is significant. Promoter is generally
technical person such as engineer, architect, C.A OR Legal expert unlimited
powers till completion of incorporation & registration of the company. They
have unlimited powers till completion of incorporation and registration of
company
RIGHTS &POWERS OF PROMOTERS:
1) There is right of promoters to get required capital according to necessarily

from founder members of the company
2) Promoters have to complete work of construction under his supervision & he

can take services of engineering architect when it is necessary
3) There is right of the promoter to do fitting of machines or equipments

according to requirement
4) Promoters have right to make consultation with founder member of the

company
5) Promoter also complete formalities to obtain loan for incorporation of

company as directed by founder member
6) If incorporation of the company to be done with in specific period but it is not

possible because of some reasons then promoters who can get period extended
from founder members
7) Promoters have to complete formalities of registration of the company which

includes following points
Formalities of the promoters
1: promoters have to apply for registration of the company in office of

registered having jurisdiction
2: he has to take signatures of founder members of the application
3: he has to enclose copy of MOFA with application
4: he has to file affidavit with application according to requirement
5: he has to give proof of address of the company
6: he has to enclose cheque of registration of fees with the application
7: if registered gives notice for additional information then it has to b provided
When registered is satisfied by required information to issue a certificate of

registration , signature of register & office bearers. The certificate contains
name of the office reference no, name of company, date of registration
signature of Registrator and office seal. This certificate is the proof registration
of company .After registration of company can carry on business activities
within 6 months periods
DUTIES OF PROMETER
1) Promoters have duty to maintain accounts of capital given by founder

members
2) He has duty to make consultation with founder member we can ever it is

necessary
3) There is a duty to maintain all the receipt of payments made to other
4) There is a duty to complete work of incorporation with in specified period
5) There is duty of promotion to take final meeting after incorporation and

registration of the company final meeting is attended by founder
members and creditors of the company he has to read his report about
incorporation and registration of the company he has to promote. if
members ask the questions he has to give explanation after final meeting
he takes remuneration and his jobs comes to an end if there is any mis
appropriation in the capital done by promoters then there is a civil &
criminal liability such as breach of trust miss appropriation funds etc..
promotions shout be carefully a director is in fact a director or controller
of the company affairs he is not a servant a director appointed for the
board of company
FUNCTIONS: THIS IS DETAIL AABOUT IN CORPORATION and registration

which is carried by the promoters
Q) How directors are appointed? Explain rights and duties of directors and
grounds on which directors can be removed?
Directors carry the management of the company all directors are called as
board of directors in private company mini 2 directors and in public company
mini 3 directions are necessary of the of directors is explained as follows
Directors as agents: Directors are like agents because they carry on all
transactions in name of the company and not personal name they represent to
the company in all transactions
Directors as Trustees: They are like trustees because company have full faith on
the directors, on all transactions in name of the company and not personal
name they represent the company in all transactions
Directors as owners: They can enter in to contract to purchase and save

movable and immovable properties of the company and therefore they also like
others
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Directors are not employees of the company be 2 company daily or sign in the
attendance register
APPOINTMENT OF DIRECTORS: There are 4 methods of appointment of directors
APPOINTMENT BY FOUNDER MEMBRANE when company is established then

directors are appointed by founders members of the company
BY GOVT all directors are appointed in govt company by respective govt and
there is no voting just govt may be either state govt or central govt under where
company is functioning
BY BOARD OF DIRECTORS: We can there is casual vacancy a rises be 2 of death

of director or resignation of the director then it is filled up by other directors
.This appointment is regularized when there is election of board of directors
Rights or powers of directors: u/s sec 179
All the powers are vested in board of directors
There are no of rights or powers which can be summarized as follows
1) Directors have right to hold meeting and pass the resolution relating to
affairs of the company it Is passed collectively or by majority opinion of
the directors
2) Directors have right to enter in to contract on behalf of the company
3) There is right to file cares on behalf of the company to protect rights and
interest of the company
4) There is right of directors to assign on share certificates debenture

certificates are prospectus
5) Directors have right to open account in the name of the company to issue
shares of the company
6) Directors have right to file to enter in to contract on behalf of the

company in bank and operate it with one of or more signatures
7) Directors have right to give notification on behalf of the company to
issues shares of the company
8) Directors have right to borrow loan if it is necessary for the company
9) Directors appoint sub ordinate stuff of the company and make super
vision and control of their work
10) Direction can call explanation from any sub ordinate employees
11) Directors can hold domestic enquiry for misconduct or illegality of

the employee and take necessary action
12) Directions can take decision to open branches of the company and
to promote business of the company
13) Directors have right to call general body meeting of members and
discuss major problem of the company
14) Directors have right to call general board meeting and right to
claim remuneration and allowances as per rules of the company
15) Directors can make alternation in M of A by holding meeting of

board of directors and by passing the reduction
DUTIES OF DIRECTORS u/s sec 166
1) There is duty to take any decisions collectively and not personally
2) Duty to enter in to contract in the name of the company
3) Duty to make re payment of loan are not taken for requirement of the
company
4) There is duty to have check and control over activities of employee of the
company be 2 they are answerable for any illegality in the company
5) There is duty of directors to hold meeting regularly for better

management of the company
6) We can one files a case against the company then direction have duty to
engage advocate and defend the case in the court
7) There is duty to declare elections was term of directors expires
8) Duty of attend annual general meetings and answer the question of

members and get the balance approved in the country
GROUNDS OF TERMINATION OR REMOVAL OF DIRECTIONS
1) We can there is expiry of the term of appointments
2) We can have any director commit acts of miss conduct or any other
criminal act
3) We can he remain directors persons such as un sound mind very old and
unable to do work
4) We can he remains absent for 3 continuous meeting without giving any

reason
5) We can he becomes director of on more than 20 companies
6) We can there is closer or winding up of the company
7) We can he submits resignation on any ground. This is detail about status,

appointment, rights and duties ground of determination of directors in
company law
Q) EXPLAIN VARIOUS KINDS OF MEETINGS AND ITSB RELEWANT PROVISIONS

SPECIFIED IN COMPANY LAW
Company law functions in democratic matter and all decisions are taken in
the meetings there are 5 kinds of meetings specified in company law
1) stationary meeting
2) annual general meeting
3) extra ordinary meeting
4) class meeting
5) board of directors meetings
Statutory meeting: This meeting is taken one time in the life of company. We
can company is in incorporated then statutory meeting to be taken within 6
months period we can company makes commerce of business promotion reads
his report called as promoters report or statutory report this meetings is
attended by promoters and f creditors and founder members of the company.
In statutory report there is detail about incorporation of the company and
investment and use of capital information of company if member ask any
question then promoters have to give explanation after statutory. This meeting
is compulsory otherwise it is a ground to winded up the company
**********&&&&&***************
Annual general meeting: This meeting has to be taken at any time during the
financial year. Gap between 2 meetings should not be more than 15 months.
Theses meeting is attended by the board of directors, these holders and
debenture holders of the company purpose of this meeting is to discuss affairs
of the company and get the balance sheet approval from the majority members.
Following are the rules of annual general meeting
1) The secretary calls this meeting according to instructions of the board of
directors.
2) Intimation of meeting to be given at least 21 days in advance to all the

members
3) Agenda of the meeting is enclosed with the intimation of letter
4) This meeting can be done in any place and it is mentioned in the notice.
5) There should be intimation about the date and time of the meeting.
6) Once the director is chair person who conducts proceeding of the meeting.
7) Members have to sign in attendee register
8) There should be quorum of members in the meeting which is 1/3 members.

If quorum in not completed then meeting may be postponed or by giving
gap of min ½ hours an max 2 hours meeting can be continued.
9) Minutes of the meeting are recorded in register
10) Question to be asked relating to agenda and any other question can be
asked by permission of chair person
11) After discussion there e is approval of balance sheet collectively or by

majority voting of members.
12) Auditor has to give reply about questions relating to account. And
directors reply questions relating to management
13) Dividends is declared in the meeting
Extra ordinary meeting: this meeting is called upon when there is majoir
problem arises in the company, such as declaring of illegal strike by employees,
heavy loss caused to the company, company is likely to become insolvent,
company want to declare lockout, when directors are not cooperating in
managements, where here is any order of the court to attached property of the
company. This meeting is also attested b share holders and debenture holders.
They discuss the problem in the meeting and pass resolution by voting of
members. They can take decision of lock out or closer in the meeting ware
majority members support it.
3 ) Class meeting : In this meeting all members are not invited to attend the
meeting where there is any problem relating to only share holders than
company call meeting of only share holders if it is problem of debenture holder
than they are called in this meeting
Eg : the company want to t reduce or increate rate of interest then

they call meeting of only debenture holders and take decisions
after their approval
4) Board of Directors meeting: this meeting is called by manager of the

company and intentions is given to all the director at least 3 days in
advance company can hold any number of meeting of board of director. In
this meeting they discuss day to day problems of the company and pass
resolution or take decision. such as to borrow loan , to appoint staff ,to
transfer staff, to take action against employee to open new branch of
company to appoint agents of the company , to give notification for
allotment of shares, therefore all regular matter of the company are decide
in the board of director meeting. This is the detail about different kinds of
meeting specified in company law.
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Q) Explain provision relating to operation and mismanagement and right
of minority members against the majority rules?
Any companies have to function systematically and in democratic

manners, any decision of the company is taken by holding various types
of meeting. It is called a resolution of the company were decision is taken
then it should be approved by all the members or majority of the
members, There are two types of resolution
1) Ordinary resolution 2) Special resolution
Ordinary resolution: In his resolution more than 50% members have to

vote in favor of the resolution. Decision relating to management of the
company come under ordinary resolution such as appointment of staff,
promotion, to appoint agents , to open branches of the company.
Special resolution: it is financial matter; It has to be approved by absolute

majority which is mini ¾ members. It is in all matters relating to finance
such as to borrow loan to give guarantee of the company, to increase
salaries of allowance of the employees.
Miss Management means improper administration and oppression means

misleading facts or not disclosing material facts or illegally activates of the
company.
Oppression and mismanagement includes number of act of the company, which

includes the following points
1)when company fails to hold election of directors within 6 months period after
expiry of the term
2)When directors use excessive power or take arbitrary decision without
holding meeting of the board of directors
3)When company is showing profit or record over thought loss has be caused to
company
4)When company is making irregular appointments to the employees
5)When there is irregular appointment or promotions of the employees
6)When company is unable to pay loan and interest borrowed by company
When company is not making payment of dividend to share holders for no of

years
When company is not holding annual general meeting for more that 1 year
period
When director or superior staff is doing corruptions in the company and it is not
controlled.
When company published false or misleading statement in the prospectus
When provision of N of A or A of A is violates by the company
When company commits fraud or any other criminal act
There for there are many act of company which are covered under oppression
and mismanagement. If oppression and mismanagement is approved by the
majority member then there are some right given to the minority members
which have been specified by the court in the leading cases
Foss u/s Harbottle
Company issued original and duplicate share to collect more money from the
share holders. It is a crime of forgery committed by the company many share
holders having duplicate shares could not get any dividend. Any they file case is
the court company represented in the court that there action have been
approved by the majority member in annual general meeting and company is
function in democratic manner. Court give imp judgment in this case stating
that when three is oppression and mismanagement then minority member can
also take proper remedy from the court. The judgment is also called as minority
right against majority .The court held that all the money collected by a the
company after issuing duplicate share have to be refunded with interest and
damages court stated in the decision that min 10% share holders can challenge
the decision of the majority member where there is oppression &
mismanagement. Therefore judgment of the court was in favor of minority
members by rejecting approval of majority members of the company. Therefore
in company law minority rights are also protected against majority rule.
This is the detail about the oppression and mismanagement and right of
minority members in the company
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q) Explain various kinds of winding up of company and procedure and reasons

of winding off?
Any winding up is last stage in the life of the company.
It is also called as liquidation of the company or dissolution of the company or

civil death of the company. Company is a legal person but winding off is like
death of the company. There are many reason of winding up of company .In
order to complete procedure of winding up three is appointment of officers
called as liquidator .He completes the procedure of dissolution of the company
Kinds of winding up: there are 3 kinds of winding up. There are different treason
to wind up company by procedure is common which is completed by liquidator
1) Voluntary winding up: it is done by company because of following reason
a) There is heavy loss caused to the company
b) There is a big financial crisis in the company and it is likely to become

insolvent
c) Companies unable to pay loss amount
d) There is no demand of product of the company in market
e) When company is having non cooperation of their employees and they

go on strike for a larger period
Because of all these reasons company calls meeting of members called as

extra ordinary meeting. In this meeting there is discussion about the
problem which company is facing. After discussion voting is taken in favor
of winding up of the company If 75% members vote in favor of dissolution
of the company then resolution is passed called as special resolution.
Company also appoints liquidator and fix his rumination in same meeting
liquidator is generally technical person such as engineers, ca legal experts
Company winding up: This winding up is done because of procedure of

govt. Registrator cancels registration certificate by issuing notice to the
company. Following are the grounds of the compulsory winding up
 When company fails to hold statuary meeting
 When company makes volition of object clause specified in MOFA
 When company does not carry on any activity with in 2 years period
after registration
When activities of company are illegal
 When company commits any criminal act
In compulsory winding up government & Registrator issue notice to

directors of the company to windup the company with a specific period.
Government also appoints liquidator to carry on winding up procedure
Winding up under supervision of the court:
In this winding up mini 10% share holders have file petition in high court
or supreme court and claim remedy of winding up of the company. This
winding up is done by orders of the court. Following are the grounds of
the winding up
1) When company is declared as insolvent
2) When company is unable to pay loan amount of the debenture holders
3) When company is unable to pay lawful taxes to the govt
4) When there is mismanagement of the company
5) Official of the company has done corruption in the company
6) Share holders are unable to get dividend for no of years and it is there
dead investment
7) When court has passed decree to attached property of the company
Court to also appoint liquidator to carry on procedure of dissolution of the
company
Liquidator: Right of power of liquidator:
1) Liquidator has right to take permission of movable and immovable

property of the company
2) He has right to make recoveries from the debtor
3) Liquidator can file cases against debtors
4) He can open a/c and keep recovered money in the account
5) He can give notification to dispose property of the company
6) He can make consultation or take direction from the court when it is

required
7) He can take opinion of experts when it is required
8) He has right to do necessary expenses
9) He has right to claim rumination.
Duties of liquidator:
 There is duty to maintain a/c of amount recovered and expenses done

during liquidation proceedings
 There is duty to complete liquidation with in specified period which is

generally 6 months which can be entered on reasonable grounds
 There is duty to sell property by public action
 There is duty to prepare priority list of payments such as bank load,
electricity bill, rent, employees benefits and after that payment is done to
creditor
 If complete payment is not possible then it is done in proposition to all

the creditors
 There is duty to hold final meeting after winding up which is attended by

creditor and interested parties. In this report details is given about the
recoveries and payments. If members ask any explain then he has to provide it
Liquidator is also having civil and criminal liability if he commits any

misappropriation or breach of trust
This is detail about winding up , kinds of winding up and role of liquidator in

winding up of company
***************End**************
Short Question & Answer.
Kinds of shares: Company can collect required capital by allotment of shares and
debenture. Notification published in news papers called as public issue.
Interested parties can apply on Performa application to purchase of shares of
the company and company may distribute max 67% profit among share holders
called as dividend. These shares are as follows
Ordinary shares: in ordinary share company makes payment of dividend

depends on profit earned by company in financial year. If the is nonprofit then
company will not pay dividend to share holders.
Preference shares: company also allots preference shares. Amount of this share
is higher than ordinary shares. Company declares to pay mini dividend to
preference share holders. Company can pay higher dividend depends on profit,
but mini dividend have to be paid even though there is loss to company
Founder shares: company issue founder shares to those persons who have
played import role in corporation of the company, such share are issued free of
cost or at lesser value in appreciation of their services
Bonus shares : the company may issue bonus shares to existing share holders as
incentives. It is given in percentage free of cost as incentives to the share
holders
Discount shares : the company may also give discount on shares. There is
collection of lesser amount then face value of the shares
Redeemable shares: these share holders may give security of share certificate to
company and borrow loan. Company may issue max 75% loan on face value of
the shares. After refund of loan amount with interest company may return back
the shares. If default is done then company may issue notice and forfeit the
shares.
Dividend: when investment is done in shares then company may issue dividend
to share holders .It is distribution of max 67% profit among the investor in
shares. Following are the provision relating to payments of dividend
1) Company can pay the dividend at any time during the financial year
2) The company hold annual meeting which is attended by share holders. In

annual general meeting here is approval of balance sheet issued by
creditor. There is discussion on balance sheet and share holders can take
any explanation from directors and auditors in the meeting
3) chair person of annual general meeting declares the dividend to be paid

to the share holders
4) Amount of dividend may be different one every year because it depends

on profit of the company during that financial year
5) If there is a loss to the company then there is declaration that company

cannot pay dividend during that year
6) Company may dispatch pay orders to share holders within one month of
declaration on their address
7) If there is change in address then new address to be communicated to

company and dividend is send on that address
8) If there is transfer of share then transfer should communicated to

company and company sends dividend in his or her name
9) If unclaimed dividend or un delivered, divided is returned back to

company and it is deposited in separate a/c
10) If dividend is not issued then share holder can claim it within 2
years then company may forfeit amount of dividend after 2 years.
Therefore dividend is benefit given by company to share holders for there
investment in the shares.
Debentures: the company may borrow loans form interested parties by

allotment of debentures certificates. This certificate is relating to loan advanced
to the company by any person it includes following pints
1) Company gives notification to issue debenture certificate
2) Company makes publication about rate of interest and terms of deposit

as loan
3) Interested parties can submit application by enclosing cheque to purchase

debenture of the company
4) Company issue certificate called as debentured certificate’s It contains

name of the company reference no, name of debenture holder, loan
amount in words and figures rate of interest payment after maturity. It is
signed by one or more doctors, There is date and place mention on
debentures
5) There are two types of debenture and these are
a) Debenture payable of specified person b) Debenture payable to

holders.
In case of debenture payable to particular person, then his identification have to

be given, so that company makes payment after maturity period. In case of
debenture payable to holder anybody can present debenture certificate and get
the amount with interest. This debenture is like currency notes. If the debenture
certificate is loosed than duplicate can be obtained by completing required
formalities. There is no liability of company if payment is done to wrong person
who presents it.
6) The company can also advance loan up to 75% on 2% higher rate of

interest to debenture holder after taking security of the certificate.
7) After repayment of borrowed loan company may return debenture

certificate
8) If default is done to repay loan amount then company may settle the
claim if it increases then after adjustment of loan amount it is paid to
debenture holder. If it is lover then company may forfeit debenture
certificate.
If debenture certificate is canceled before maturity period than company

can make payment after deduction of 10% amount.
Article of association: there are three main documents required for

company and these are a )memorandum of association b) article of
association and c)prospectus.
Memorandum is like skeleton and article is like blood, flesh and skin and
prospectus is like dressing.
Article gives detail about all internal mattes of the company.
It includes the following points
 It is a booklet form which is printed
 It is signed by one or more directors
 Approval of resistor is necessary for articles before circulation
 It give details about company such as assets and liabilities of the company
head office of company branches of company details f qualification and
expenditure of board of directors and nature of function carried by the
company.
 Any amendment in article can be done by more than 50% members in annual
general meeting
 Any misrepresentation or wrong statement in articles is base to claim

damages from the company by affected person
Right of share holders: they are called as members of the company. Those
persons who purchase shares of the company are called as share holder they
have following rights.
1) Right to attend annual general meeting of the company
2) Right to attend extra ordinary meeting of the company
3) Right to participate in discussion at the time of meeting
4) Right to take explanation from the directors relating to affairs of the

company.
5) Right to voting at the time of passing regulation
6) Right to send authorized person to attend meeting of the company

called as proxy
7) Right to examine minutes of the meeting when he did not attend

meeting of the company
8) Share holders can file a case if the is misrepresentation in
memorandum of articles prospects done by the company
Secretary of company: in very company it is necessary to appoint one or more

secretaries. He should be qualified person having certificate of institution of
company secretaries.
Following are the functions of the secretary of the company
He has control over management of the Company except account mattes
He communicates to call meeting of bard of directors
He provides require files about affairs of the company to bard of directors
Secretary bring to notice of the directors about requirements of the company
Secretary calls annual general meeting of th share holders according to the

instruction given by the directors
He carries on correspondence about company with government authorizes
He has to attend all to meeting of the company
There for role of secretary is very significant in management of the company.
Advantages of company: there are number of advantages or merits of the

company which can be listed as follows
There is no death of the company winding up is like a death but it is uncommon
Company functions in democratic manners and there no one man show
It is collective activity of more not of person in common name
There can be movable or immovable property in the name of the company
It is egistered and on record of the govt
It generates employment opportunities
It is can sue or can be sued in the court
Companies are trust worthy having confidence of the people
Company can collect required capital in to forms and share and debenture and
there is no shortage of the capital
Therefore company have more advantages than any other commercial acidity ,
companies are called as back bone of the country

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LL.B. (3-YDC) Second Year, III Semester, Regular.

Paper – IV Company Law

1) Define company and kinds of companies and its characteristics. How it

2) What do you mean by memorandum of association and its contents?

4) Explain the provision of incorporation and registration of company.

6) Explain various kinds of meeting and its relevant provisions specified in

7) Explain the provision relating to oppression and mismanagement and rights

8) Explain the various kinds of winding up of company and procedure and

2) Promoters of company kinds of shares

4) Secretary of the company

10) Right of share holders

11) Kinds of shares

12) Registration of company

13) Secrecy of company

14) Statutory meeting

16) Effects of winding up

17) Advantage of company

Long Questions & Answers

1) Any company is association of two or more person to carry on lawful

2) Essential requisites of company or nature of company or

3) It is a legal person and every company is having name

4) Registration of company is compulsory

5) Company can carry out any lawful commercial activities

6) Company can sue and be sued.

There can be movable or immovable property in the name of company

1) Management of the company is carried by directors called as board

2) Audit report of the company have to be approved in general body

3) Company functions are a democratic manner because all directors

There are many no of kinds of companies which are as follows

2) Public company: In public company min 7 members are necessary

3) Govt company : In gov company there may be complete investment

Eg : Railways company, state transport company, airlines , co-

4) Limited and unlimited company : In limited company there are

In case of unlimited company there is no restriction on business of

5) Foreign company : It can be established by permission of central

7) Holding company: This is also called as parent company under this

8) Subsidiary company : There are many independent companies

Distinguish between company and Partnership Company

The above the details characteristics, kinds of companies and is

Q) What do you mean by memorandum of association and its contents?

2) REGISTERED OFFICE CLAUSE: There should be detail about place where

3) OBJECT CLAUSE: There should be details about objects of the company,

4) CAPITAL CLAUSE: In capital clause detail have to be given about investment

6) ASSOCIATION CLAUSES: In this clauses detail is given about founder members

1) Details of movable& immovable properties of company

2) There are details about modern technology used by company

3) Number of employees appointed in company including temporary,

4) Detail about administrative officers, directors with payment of remuneration,

5) Facilities provided by company to employees

6) Rules of code of discipline for employees

7) There is detail about shares & debentures issued by company

8) Detail about business done by company in earlier years

9) Rule of meeting of the company

10) Rules relating to shares allotment & transfer of shares

11) Future plan of the company to do expansion of the business

12) Import & export done by the company

13) No of shifts in which company is functioning

Q) EXPLAIN THE PREVISIONS OF IN CORPORATION & REGISTRATION OF THE

In corporation means to establish the company. Members who establish the

RIGHTS &POWERS OF PROMOTERS:

1) There is right of promoters to get required capital according to necessarily

2) Promoters have to complete work of construction under his supervision & he

3) There is right of the promoter to do fitting of machines or equipments

4) Promoters have right to make consultation with founder member of the