Synopsis: 01

Subject: Business Law

Companies Act 1994

Company:

“Company” means a company formed and registered under this Act or an existing
Company- 2(1) c.

Public Company:

“Public Company” means a company incorporated under this Act or under any law
at any time in force before the commencement of this Act and which is not a private
Company -2(1)r.

Private Company:
“Private Company” means a company which by its Articles-
- Restricts the right to transfer its shares
- Prohibits any invitation to the public to subscribe for its shares or debenture
- Limits the number of its members to 50.
Jointly holding of any shares by two or more person shall be treated as single
member-2(1)q

The differences between the Memorandum and Article of Association are as

follows:

Sl.No. Memorandum Articles

1. The memorandum is the fundamental
deed of the Company determining its
constitutions and objectives.
2. Memorandum is the main guideline
of the company.
3. Alteration of Memorandum is
difficult, some cases it requires
Court’s permission
The Articles are rules regarding
internal Management.
Any rules in the articles contrary
to the memorandum is invalid.
Alternation of article is easy; it
requires a special resolution
only.

4. Memorandum defines the power of Articles define the internal

the Company regulation and Management
process.
5. Acts done by the company beyond Acts done by the Company
the power of the memorandum is beyond the articles can be
void which cannot be ratified. ratified by the share holders
provided they are within the
power of the Memorandum.
Illegal Association: (Section-4)

No company, Association, Partnership shall be formed consisting 10 member for banking

business and more than 20 members for other business unless it is registered under this
Act. If any Association is formed contravening this section shall be an illegal association.

State the steps involved in the formation of a company under the Companies Act
1994, Formation of a Company-Section-5

2 (two) or more persons (not more than 50) and 7 or more persons (unlimited) may form
a Private or a Public Limited Company respectively by subscribing their signature in the
Memorandum of Association They may form –
- a Company limited by shares;
- a Company limited by guarantee;
- an unlimited Company.

There are 3 stages for formation of a company –

(i)Promotion; (ii)Registration (iii)Commencement of business.

Promotion stages –

(i) Promoters
(ii) Clearance of name
(iii) Sponsors’ equity
(iv) Consent of the Directors
(v) Selection of objectives.

Registration stage-

(i) Submission of Memorandum & Articles of Association.

(ii) Payment of stamp duty & Registration fees.
(iii) Obtaining certificate of incorporation.

Commencement of business stage-

-For a Private Limited Company, the business of the Company can be

commenced after getting the registration i.e. certificate of incorporation.

-For a Public Limited Company, the Company shall obtain the certificate of
commencement of business from the registrar.

Section-11: Name of the Company and changes thereof

A Company may by special resolution and subject to approval of the registrar in
writing may Change the name
 The Registrar will enter the new name on the register in place of old name and
issue a certificate of Incorporation
This certificate shall the conclusive proof of Completion of changes of name
The Changes of name shall not change any right or obligation, or render defective
any legal proceedings by or against the Company
Section 12: Alteration of Memorandum
Subject to the Provisions of this Act, a Company may, by special resolution alter
the provisions of its memorandum with respect to the objects of the Company;
Confirmation of the Court is required for the alteration;
Before confirmation the Court must be satisfied that:
Sufficient notice has been given to every holder of Debenture, or others whose
interest may be affected
Why? What extent? What grounds?

To Carry on its business more economically or efficiently;

To attain its main purpose by new or improved means
To enlarge or change the local area of its operations
To carry on some business which under the existing circumstances may
conveniently be combined with the business of the Company
To restrict or abandon any object specified in MA
To Sell or dispose of the whole or any part of the undertaking of the Company
To Amalgamate with any other Company or body

Tanvir Hasan, FCA

General Manager
Finance Accounts & Treasury
Company Secretary
MIDAS Financing Ltd
tanvir24@hotmail.com
01715094176