Module 2

Company
Word company is an amalgamation of Latin word COM means with / together and PAINS means Breed

…Referred to a group of persons who took their meals together

…Association of persons formed or registered under the company law 2015

A company is nothing but a group of persons who have come together or who have incorporated
themselves into a distinct legal entity in the form of the company for that purpose

Company has several distinct features which together make its unique organization

1. SEPARATE LEGAL ENTITY

On incorporation under law a company becomes a separate legal entity as compared to its members

It has its own name, seal, its assets and liabilities

It is capable of owning, property, and incurring debt, borrowing money, having a bank account and
entering into contract

2. LIMITED LIABILITY
Liability of the members of the company is limited to the contribution to the assets of the
company up to the face value of the shares held by the company
Shareholders have a very little liability
Partners have an unlimited liability

3. PERPETUAL SUCCESSIONS
Company does not die or cease to exist unless it is wounded up or task for which it was formed
has been completed
Membership of the company keeps on changing from time to time but does not affect the life of
the company
Death or insolvency of members does not affect the existence of the company

4. SEPARATE PROPERTY
Company is separate legal entity
Company property is its own
A member cannot claim to be the owner of the company’s property during the existence of the
company
5. TRANSFERABILTY OF SHARES
Share in the company are freely transferable
Subject to the certain conditions such that no shareholder is permanently or necessarily wedded
to the company
When a company transfers his shares to another person transferee steps into the shoes of
transferor and acquire all rights

6. COMPANY SEAL
Company is an artificial person and does not have a physical presence
It acts through board of directors for carrying out the activities and entering various agreements
All contracts must be under the seal of the company
Company seal is the official signature of the company

7. SEPERATION OF OWNERSHIP FROM MANAGEMENT

Shareholders i.e. owners being scattered all over the country give right the directors to manage
the affairs of the company
Directors are the representatives of the share holders
Ownership is separated from the management

8. NUMBER OF THE MEMBERS

In a public limited company the minimum number is seven and there is no maximum limit
In a private limited company the minimum number of the members is 2 and the maximum
number is 50

9. ARTIFICIAL LEGAL PERSON

Company is an artificial person created by law
It has no body and no conscience still exists has a person
It can enter into contracts in its own name as a person

REGISTERING THE COMPANY

In order to register a company we have to record it in Indian Official Records [MCA]. As in olden
days one does not need to visit the corporate office for registration
Registration includes
 4 Major Steps

Step 1
Acquire Digital Signature Certificate [DSC]

Information technology Act 2000 has provisions for the use of digital signatures on the
documents submitted in E form in order to ensure the security and authenticity

Step 2
Acquire Digital Identification Number [DIN]

2ND step is to acquire an identification number. DIN is mandatory [2006 Amendment Act]

Step 3
Filling a new user registration / e.form

Having a MCA portal or registered user account for a e form filling

Mainly for transactions and online fee payment

Step 4
Incorporating the company

It is the final process

Incorporating company’s name, notice for the appointment of managers, secretary and
company directors

Different types of the company

1. SOLE PROPRIETORSHIP

This is the easiest form of company registration in India. One person manages the sole
ownership.
The following documents are required for registration
ADHAAR
PAN
Bank A/C
Registered office proof / rental agreements/ utility bills
 2. ONE PERSON COMPANY[OPC]
A new type of business structure called OPC introduced by Indian government 2013.
Until 2013 single person could not incorporate a company, you need minimum of 2 directors
An incorporated company helps entrepreneurs limit their liability and avail certain tax benefits
In an OPC an individual can incorporate a company and be a sole director while retaining 100
percent of the company.

3. PARTNERSHIP FIRM/ COMPANY

If you decide to have partners in your business then the easiest is to create a partnership firm.
PARTNERSHIP DEED is an agreement between the partners
It contains all the duties and obligations between partners and how profit is shared.
DETAILS
1. Name and address of all the partners
2. Name and address of partnership firm
3. Starting date of the company
4. Capital each partner has invested
5. Profit share ration among partners
6. Salaries and commissions
7. Rights of each partners
8. Duties and obligations
9. Other clauses which are mutually agreed upon

4. PRIVATE COMPANY
Company has minimum of 2 and maximum of 200[reversed]
It cannot raise funds from public
Company cannot publically issue the shares

WINDING UP OF A COMPANY

It is a process of dissolving a company. While winding up a company cease to business as usual. Sole
purpose is sell its stocks pay off creditors distribute any remaining assets to shareholders and partners.

Term winding is used in Great Britain where it is synonymous with liquidation [process of converting
assets into cash]
How winding up works

Legal process regulated by corporate laws as well as company’s articles of association or partnership
agreement

It can be voluntary or compulsory

Compulsory winding up

Company can be legally forced to windup by the court order. In such cases company is ordered to
appoint a LIQUIDATOR to manage the sales of assets and distribution of proceedings to creditors

Court order is often triggered by a suit brought by company’s creditors

They realizes that company is insolvent because bills have been remained pending/ unpaid

Winding up of the company I the final conclusion of a bankruptcy

In such cases company cannot satisfy it assets to debtors and creditors will face a economic loss

Voluntary winding up

Company share holders/ partner may trigger a voluntary winding up, usually by passing a resolution

If company is insolvent share holder trigger to wind up avoiding bankruptcy

If the company is solvent, shareholders may feel that their objectives are met and it’s the time to wind
up the company and distribute the assets

Winding up vs Bankruptcy

Winding up is not the same as bankruptcy, but usually an end result of bankruptcy. Bankruptcy is a legal
proceeding that involves creditors attempting to gain access to company’s asset so that they can
liquidate to pay off debts.

If it is a process of bankruptcy company can emerge as a new entity usually smaller and debt free

Once in windinmg up process company can no longer pursue business as usual

The only they can do is complete the liquidation and it assets

CONSUMER/ CONSUMER RIGHTS / CONSUMER PROTECTION ACTS

A consumer is a person who pays to consume the goods/ services produced by the seller

MAIN CHARACTERSTICS OF CONSUMER

• They look for solutions to their problems on internet

Consumer make an online research and chase after the information they need.they go for BLOG
AND ARTICLES. And nowaday we can see that company make a huge investement in blogs which
can provide arich information

• They don’t want ti be bombarded with advertisements

In past company made a large investment in advertisements and that was the very intrusive way
for promoting the business. Nowadays consumer behaviour has been changed and they looks
for the brand or the most reputed company

• They compare different brands to find the best value for money

In the past we had to move to different tores to check the price and payment and now it is
easier, internet provides a variety of resource so that consumer have to access to real
production information
The information related to
Quality
Durability
Level of customer satisfaction

• They want to purchase without bureauacracy

Current customers want to make their purchases with agility and zero bureaucracy. Time
consuming , complicated are discouraging and conumers just give up minimum personnal
informations with their purchase

• They want to feel the part of a community

Shopping in this modern world is not only based on individual interest and the consumers
behaviour has been changed. In the business relationship new consumer want to feel they are
part of something bigger

• They like to ask for others peoples opinion about a product

 • They are interested in new market trends

• They are influenced by the people they admire

• They take care of safety when they make a purchase

DIFFERENCE BETWEEN CONSUMER AND CUSTOMER

CUSTOMER

• One who is purchaing the product

• He may purchase and resell
• Customer need to purchase a product or service inorder to use it
• Motive may be for consuming or resale
• Amount is paid by customers

CONSUMER

• Consumer is one who is the end user of any goods/services

• He is unable to resell any products / services
• For a consumer purchasing a product or service I not essential
• Only for consumption
• May / maynot be paid by the consumer

DIFFERENT TYPES OF CONSUMERS

• Commercial consumers
• Discretionary spending consumers
• Extroverted consumers
• Inferior goods consumers

COMMERCIAL CONSUMERS

They buy goods in large quantity. They may not regard that they need the product or not. They always
associated with special needs with their purchaing power
DICRETIONARY SPENDING CONSUMERS

They have unique buying habits and purchase a lot of cloths and electronic goods

EXTROVERTED CONSUMERS

They prefer brands that are unique and become a loyal customer once they gain the trust as a consumer

INFERIOR CONSUMERS

Consumer have low incomeand buy the goods having low price

CONSUMER RIGHTS [ JAGHOGRAHAKJAGO]

Definition of consumer rights

“The right to have information about the quality, potency, quantity, purity, price and standard of goods
and services” as may be the case, but the consumer is to be protected againist any unfair practices of
trade

There are strong and clear law in india to defent consumer rights

CONSUMER PROTECTION ACT 1986

Consumer Right are listed below

1. The right to be protected from all kinds of hazardous goods and services
2. Right to be fully informed about the performance and quality of good and
services
3. Right to free choice of good and services
4. Right to be heard in all decision making process related to consumer interest
5. Right to seek redressal when ever consumer rights have infringed
6. Right to complete education
CONSUMER PROTECTION ACT 2019

CPA 2019 is a law to protect the interests of the consumers

Act was inevitable to resolve a large number of pending consumer complaints in consumer courts across
the country

Key features

1. Establishment of CENTRAL CONSUMER PROTECTION AUTHORITY[CCPA] was to impose penalty,

recall the product and address the every issues related to price

It will protect, promote, and enforce the rights of conumers

CCPA will regulate cases related to unfair trade practices, misleading advertisements, violation of
consumer rights

2. Rights of consumers

3. Penalty and prohibition for misleading advertisements

The authority has power to impose fines on the manufacturers upto 2 years of advertisements
for misleading or false information. The offense is repeated the penalty for 50 lakh to 5 years

CONSUMER DISPUTES REDRESSAL COMMISSION

Act has the provision of establishment of CDRC at national, state and district

Entertain complaints related to

• Over charging or deceptive charging

• Unfair or restrictive trade practices
• Sales of hazardous goods and services which may be hazardous to life
• Sales of defective goods/services

Act has a defined criteria of CDCA

• National CDCA hear the complaints worth moire than 10 crores

• State CDCA hear the complaints more than 1 crore and upto 10 crores
• District CDCA hear the complaints upto 1 crore
 CONSUMER DISPUTES / GRIVIENCES REDRESSAL MECHANISM

A 3 tier redressal system of consumer protection and consumer redressal procedure

National consumer redressal forum

State consumer redresal forum

District consumer redresal forum

• An appeal from district forum can be made to state commission

• An appeal against an order of state commission can be made in national
forum
• Specific timeline of 21 day to decide jurisdiction over a particular case

PROCESS OF FILLING A COMPLAINT

1. To send a legal notice of grevience to the repondent

2. Any person can file the complaint on a plain paper after notarising the document
3. Complaint can also be filled through postal address to particular redressal forum
4. Fees can only submitted by DD
5. 4 copies of the complaint has to be filled and if there are more than one respondents
then one copy for the each of the respondent has to filled
6. Fees are kept in minimum
7. Complaint has to be filled with in 2 years of cause of action followed through
consumer redressal procedure

BENEFITS

• Disputes are adjudiciated faster under this sytem hence the case is not pending for year
• Less cumbersome process

-Process of filling complaint is simple

• Complaintant can himself file the complaint and no need of advocate

• Complaint can also made by post
• Low cost