types of Companies ree uW A. CLASSIFICATION OF COMPANIES All companies may bi hed i See age 'y broadly be classified into three categories, as highlighted Classification of Companies 1 1 Mm Ceres companies Statutory Companies Registered Companies -—-ts (1) One Person Companies (OPC); (2) Companies Limited by Shares; BO en Lanse Comite p (4) Private Companic (©) Producer Companies; | (7) Formation of Companies with Charitable Obj \ uli eseaies end Saini Gata WT er Sees ez aon Cpenemer Simms eran (11) Government Companies. B. CHARATERED COMPANIES UNDER ROYAL CHARTERS ‘A chartered company is one, which is created by and under a royal charter, granted by the Head of the State. Such a company is given the exclusive power rights and privileges under the royal charter. Hence, such a company has to function in accordance with the terms and conditions of the royal charter. There had been many chartered companies in the past, such as, (i) the English East India Company in India, (ii) the Chartered Bank of ‘Australia, and (ii) the Bank of England, Today, however, chartered companies ar¢ not in existence. at {__©. STATUTORY COMPANIES (ESTABLISHED UNDER SPECIAL ACTS) [16 Statutory Companies : A statutory companies is one, which is created oF incorporated by a special Act passed either by the Central or State Legislature. It Enjoys the powers, rights and privileges, as laid down in the Act. Hence, statutory Cclebanies are not required to have a Memorandum of Association. Even though ned by the provisions of the Special Act, the statutory company is gove Companies Act, 1956 is also applicable to them. Bg, Reserve Bank of India, State Bank of India, Life Insurance Corporation of India, Indian Airlines Corporation, | Unit Trust of India, Industrial Finance Corporation Act, 1956. = REGISTERED ‘COMPANIES UNDER THE COMPANIES ACT, 2013 Registered companies are those, which are registered or incorporated with the Registrar of Companies under the provisions of the prevailing Companies Act. In India, most of the companies are registered companies under the Companies Act, 1956, or Companies Act, 2013. The registered companies may further be classified as : ‘Associate Company : A company may be treated as associate company jn case of which parent company posses atleast 20% of the stake in another company & having right over decision making power under an agreement.Both the associate & another company are joint venture cmpanies. : ii) Dormant company, One Person company, Private Com: i pany, Publi Company, Small Company, Company limited by Guarantee, Gombany. D.wv pusiness Law (S¥B.Com, (Sem a 2 ore ot is sy? Foreign Compan” limited by shares, Unlimited liability company raging Company Government company, Subsidiary company; producer Company. c E, ONE PERSON COMPANIES (OPC) [Sec- Where a single individual holds almost all the shares of known as aOne Man Company". Such a company has its legal Pers" man. satisfies all the conditions and requirements of incorporation. rivate company’ may be public or private, however usually such companies 4*° P companies. In one-man company in order to comply with the minimum requirements of law one or two nominal shares are allotted to dummy members who are ‘usually 2} friend or in relation of that person. In such a company statutory requirement is completed in all respects but practically one-man controls the whole company by! voting power as well as by share capital. A private company is registered with a share capital Z 5,00,000 divided into 5,000 shares of ® 1,000 each ‘A’ holds 4,999 shares and 1 share is allotted to ‘A's wife 'B' who is also nominee of ' In case of OPC one person must be citizen & resident oflindia] As per law in addtion to one person another person may be elected as a nominee with the consent of the another without any coercion. In the event of any eventualities Such as death or unsound mind the natural person nominee will take charge of the OPC. The natural person & nominee shall be the subscriber of only OPC & not more than that OPC. OPC has minimum one director & shall have minimum paid up capital Rupees 1,00,000/-. OPC can be company limited by guarantee & limited by shares. If the capital of OPC exceeds Rupees .50,00,000 or annual turnover goes beyond two crores in the preceeding three years it shall be converted into private company. After completion .of two years OPC can be converted into private or public company. In case of OPC there need not be any meeting or appointement of auditors. F. COMPANIES LIMITED BY SHARES [Sec. 2 (22)] “Company limited by shares” means a company having the liabili i members limited by the memorandum to the ‘amount, Te ae oe shares respectively held by them. In these companies, there is a share capital and each share has a fixed nominal (face) value, which the shareholder is beard to pay either at a time or by installments. The member is not bound to pa anything more than the fixed (face) value of the share, whatever may be wi, liabilities of the company. In other words, the liability of the members of coh company is limited to the extent of the amount, unpaid on the shares. auch @ Companies limited by shares may be classified into se categories, namely : (1) one person companies; (2) private compete aha companies; (4) Government companies; (5) foreign companies; (6) zl Publ companies; and (7) holding and subsidiary companies. ¥ eg G, COMPANIES LIMITED BY GUARANTEE [Sec. 2 (21)] Sec. 2 (21) says : “Company limited by jarantee” means a the liability of its members limited by the memorandum to such ameare we members may respectively undertake to contribute to the assets of the ened in the event of its being wound up. Generally these company are formed for <"Y. trading purpose. Its articles of Association must expressly state the number’ members to be registered. Public, Private & OPC can form a guarantee Silas of y 4Types of Companies Section (68) maximum 200 members. Joint holders ar Companies (Amendment) Act, 2015 There up share capital required for the formatio: restricts the right to transfer its shares; ss" 13 ____H._ PRIVATE COMPANIES [Sec. 2 (68)] Private company” means a company having a minimum two & treated as single shareholders. Under is no restriction on the minimum paid n of the company. The private company & prohibits invitation to the public. I, PUBLIC COMPANY (71) “public company” means a company which : a) b) 9 a) is not a private company; minimum number of members required is 7 & maximum unlimited. There is no restriction on minimum paidup capital. Requirement of ninteum capital has been deleted under Companies Amendment Act, A private company which is a subsidiary of a public company shall be treated as a public company. It can be listed or unlisted company. 4-5 PRODUCER COMPANIES peed. tee. A producer company is a hybrid between a private limited company and cooperative society. It combines the goodness of a cooperative enterprise and the vibrancy and efficiency of a company. It accommodates the unique elements of cooperative business with a regulatory framework similar to that of a private limited company . Introduced in 2002 by incorporating a new Part IXA (section 581A to 58127) into the Companies Act, 1956. Based on recommendations given by expert committee led by economist, Y. K. Alagh. A producer company is basically a body corporate registered as Producer Company under Companies Act, 1956 and shall carry on or relate to any of following activities classified broadly : a) b) °) dq) Produce of farmers, arising from agricult horticulture, floriculture, raising and farming plantation service which promotes the inte1 persons engaged in han number of members require or more individual producers or two or more production, harvesting, processing, procurement, grading, _ pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit; rendering technical services, consultancy: services, training, education, research and development and all other activities for the promotion of the interests of its Members; generation, transmission and distribution of power, revitalization of land ‘and water resources, their use, conservation and communications relatable to primary produce; promoting mutual assistance, welfare measures, insurance of producers or their primary produce; ure (including animal husbandry, viticulture, forestry, forest products, re-vegetation, bee products), or from any other primary activity or rest of the farmers or consumers; or Produce of dioom, handicraft and other cottage industries. The d for registering this type of company is 10 or more ten institutional producers or a financial services, combination of ten plus two producers.1“ vee Pusiness Law (S¥.B.Com) (Sem py fe i. UNLIMITED COMPANIES [SEC. 2 (92)] ‘ See. 2 (92) says : “Unlimited Company” means a company not having limit on the liability of its members.Sec. 3 (2) lays down that an uniigaa company may be public company or private company or a one pert coimpany.The members are liable to the full extent at the time of winding ues the company. Such company may or may not have share capital. If the eee? has share capital then it must specify the amount of eapital to be registered a no capital number of members to be registered. Private as well as public Inne! company can be registered as unlimited liability company. imited | 1. FORMATION OF COMPANIES WITH CHARITABLE OBJECTS (SEC. 8) (NON-TRADING COMPANY) ‘Sec. 8 of the Companies Act, 2013 lays down : ation of companies with charitable objects Section 8 (1) states that where it is proved to th isfacti ni Government that a person or an association of persons proneeed te be eee under this Act as a limited company has in its objects the promeion commerce, art, science, sports, education, research, social welfare, religion charity, protection of environment or any such other object; intends to apply ia profits, if any, or other income in promoting its objects and intends to prohibit the payment of any dividend to its members, the Central Government may, by license issued in such manner as may be prescribed, and on such conditions a it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, and there upon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section, (2) The company registered under this section shall enjoy all the privileges and be subject to all the obligations of limited companies. | (3) A firm may be a member of the company registered under this section. (4) A company registered under this section shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government. A company registered under this section may convert itself into company of any other kind only after complying with such conditions as may “4 prescribed. 3 a the satisfaction of the Central Government that a (5) Where it is proved to limited company registered under this Act or under any previous company law has been formed with any of the objects and with the restrictions and prohibitions may, by licence, allow the company to be registered under this section subject to such conditions as the Central Government deems fit and to change its name by omitting the word “Limited”, or as the case may be, the words - “Private Limited” from its name and thereupon the Registrar shall, on application, in the prescribed form, register such company. (6) The Central Government may, by order, company registered under this section if the company con! requirements of the conditions subject to which a licence is issue: al of the company are conducted fraudulently or in a manner violative of the objects of the Company or prejudicial to public interest, and without prejudice to any. chengation against the company, direct the company to convert its status ote Be its name to add the word “Limited” or the words “Private Limited”, as the may be, to its name and thereupon the Registrar shall, on application, in the Foi revoke the licence granted to a_ travenes any of the” d or the affairs__ Me HOLDING COMPANIES AND SUBSIDIARY COMPANIES ISEC. 2 (46) AND 2 (87)] Sec. 2 (46) says : “Holding company”, in relation to one or more other companies, neans @ company of which such companies are subsidiary companies. A company is demed to holding company of another if it.controlsthe composition of the directors of another company & holds more than half of its nominal value of the shares of the subsidiary company. I, What Is A Subsidiary Company? [Sec. 2 (87)] Section 2(87) “Subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which \ the holding company : (decided wu Wolclacy comp. i) controls the composition of the Board of Directérs; or ii) more than half of its nominal value of the shares of the subsidiary company is held by the holding company. iii) the expression “company” includes any body corporate;| { NN. SMALL COMPANIES [SEC. 2 (85)] ere 3P; rae Business Law (S-¥:B.Com.) (Sem.-1V) Section 2(85) means a company, other than a public company: i) paid-up share capital of which does not exceed fifty a ae i ay k higher amount as may be prescribed which shall not be 1 five crore rupees; or ii) turnover of which as per its last profit and 105% account docs not exceed two crore rupees or stich higher amount as MOY be pr | not be more than twenty crore rupees + i pe ei ' ‘A. a holding company or a subsidiary company} B. a company registered under section 8; oF - ecial A C. a company or body co Ac porate governed by any special £ (PANIES [SEC. 455] be classified as dormant when it is (lor Jatte .9..DORMANT COM! a future project or to hold an asset The 2013 Act Stated that a company can istered under this 2013 Act for h formed oval property med has no significant accounting transaction. Such an or intellectue Fi sre elication to the Registrar for obtaining the See ar oma a m appictive company is the one which does not status of a dormant accounting tansaction inpast two year oF has not filled have ay tement & annual returns for last two financial years.Dormant fanciel y is required to have minimum directors, hold minimum two board meetings. i P. GOVERNMENT COMPANIES [SEC, 2 (45)] ‘Sec. 2 (45) says : “Government company” means any company in which not~ less than fifty-one percent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the. Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company. fixample: HMT. The Government companies are goverened by the special provisions of the Act. Auditors shall be appointed by the comptroller & auditor general of India.Central Government is the member of the company. The annual | ort must be prepared within 3 months from the date of the AGM. ie “> (cag) + Co : f Q. FOREIGN COMPANIES [SEC. 2 (42)] Foreign company as a company, which is incorporated outside India but has a place of business in India. Not less than 51% of the paid up capital is held by bne or more Indian citizen or one or more body corporate incorporated in India 7 having its business in Idia. Sec. 380 lays down that, within 30 days of the establishment of the business in India, a foreign company must submit the following documents to the Registrar of Companies : a) A certified copy of charter, statues and Memorandum of Association and — Articles of Company. { b) The full address of registered office of the company abroad. c) A list of directors and secretary of company, giving. name in full,” residential address etc. d) The names and addresses of peisons, resident in India, who are authorized to accept documents in India, on behalf of the company. i<<] ; Uv ] C. DOCTRINE OF ULTRA VIRES AND OBJECT CLAUSE The. scope of activity of a company is always laid down in the object clause of memorandum when a company exercises its power to promote and/or realize anya's" oa ‘a vires (i.e. within the powers) of the company. ompany, which is outside the scope of the object is ultra vires (ie, beyond the powers) of the Anultra vires act is therefore void and not enforceable. Case : Ashbury Railway Carriage and Iron Co. Ltd, V/s Mr. Riche © The objects or purpose of Ashbury Railway Co. was to manufacture Railway aches and Wagons. The directors of this company contracted with Mr. Riche of elgium to contract and lay down Tailway lines or tracks in Belgium. It was held at the directors in contracting to lay down railway lines acted ultra vires the company, The general body of shareholders resolved that such an act on the part f its directors was ultra vires the company and therefore void and not legally inding on the company and therefore not enforceable against the company. ' So the doctrine of “ultra vires" serves as a legal defence and protection to the ompany against the ultra vires acts of its directors. The object clause has a two-fold purpose. It states affirmatively the ambit (limited and extent of powers of the company and its states negatively that thing shall be done beyond that ambit (limit). Therefore any act done by the company, which is neither authorized by the bjects nor by the company, since the act is void, it can't be ratified by the shareholders also. ffects of Ultra Vires Transaction a) Ultra vires contracts : Ultra virés contracts are void ab initio and not enforceable by or against the company b) Ultra vires torts and crimes : A company is held liable for the torts or crimes committed by its officers or directors or servants under the principle of vicarious liability, provided the following conditions are satisfied. ; i) The tort or crime has been committed by its Officer/Director/Servant in the course of employment. : ii) Such act must have been committed within the ultra vires powers [(i.e. within the objects of Memorandum] iii) If such torts or crimes come within ultra vires powers, the company is not liable. ¢) Liability of Directors : If the directors use the funds of the company for the purpose outside the object clause of the Memorandum, they will be personally liable to restore such funds to the company. When the directors contract with the third party (on behalf of the company) within the powers of the company and such powers are not contained in the Memorandum, the directors are personally liable. d) Ultra Vires Acquired Property : Although ultra vires transactions are void, yet if a company has acquired some property under an ultra vires transaction it has the right to hold that property and protect it against damage by other persons. This property which is legally transferred to the company is in law duly vested in such company even though the company was not empowered to acquire such property. e) Ultra Vires bier + Borrowings beyond the object clause of Memorandum are called ultra vires borrowings. In England. suchA. MEANING AND DEFINITION OF MEMORANDUM OF ASSOCIATION | Association may be called as the "charter of the company” and also explains the J. Meaning & Definition of Memorandum of Association Memorandum of Association of the company is a document of great significance. Preparation of Memorandum of Association is the first step in the formation of a company. Memorandum of Association includes the fundamental conditions upon which a company comes into existence. In other words, the Memorandum of Association contains the fundamental rules about the constitution and scope and about the activities of a company. Memorandum of reason for existence of company. It restricts the area of operations of activities of a company and also regulates the external affairs of the company relating to outsiders. 2. Purpose of Memorandum of Association (MOA) The purpose of Memorandum of Association is as under : a) To enable the members, creditors, shareholders, and all those persons who deal with the company in relation to the activities of the company to know the scope and ambit of the operation of activities of the company. b) To enable the outsiders to know the objects of the company with certainty they propose to deal with by entering into contract, are well within the scope and ambit of company. 3. Form of Memorandum of Association According to Section 4 of the Companies Act, 2013 & Section 14 of the Companies Act, 1956 the form of Memorandum of Association must relate to one | of the forms mentioned in Table A, B, C, D and E of Schedule 1 of the Companies Act, as admissible. Memorandum of Association of a company should be printed and should be divided into paragraphs consequently numbered and it should be| signed (by 7 subscribers in case of public company and by 2 subscribers in case |. of private company) mentioning the address and occupation in the presence of at| Memorandum of Association = ae fjeast one witness. Such witness i ; ane a is re his own-address Pescription of occlipation with ae ig ate. © mention, hie Section 2(56) defines Memorandum which “means the memorandum of i fal no perc oe company as originally framed or as framed or altered from time to time jn’pursuance of any previous company law or of this Act”. B. CLAUSES OF MEMORANDUM AND THEIR IMPORTANCE! j | 4 t Six Clauses Of Memorandum The capital significance of Memor: ies i it contai andum lies in the fact that it contains the fotowing key and fundamental clauses, which have frequently been described as peenie eonaicone of the company's incorporation under Section 13 of the comes’ (4) abil P viz. : (1) name clause; (2) registered office clause; (3) object clause; ity clause; (5) capital clause; and (6) subscription clause. ‘Sec. 4 of Companies Act, 2013 lays down : 2. Namo clause : The first clause.of MOA relates to the name of the company, ‘because, the company has a separate legal existence in the eyes of law and, therefore, it must have a name with a view to establish and as certain its identity. ‘Name s! ou not be undesirable. The name of the company should not be undesirable in the opinion of the Central Government. In fact, a company cannot ‘be registered in the name which is undesirable in the opinion of the Central “Government. > Name should not be identical The name of the company must not be identical with another company or the name of the company should not nearly resemble with the name of another ‘company. Such identical or name with near resemblance will be treated as undesirable and it will also lead to litigation requesting an injunction to restrain such a company with identical or near resemblance of name. > Use of the word "limited" Irrespective of the name of the company, if the liability of the shareholder of the company is limited, then the last word of the name should be "limited", and |in the case of a private company "private limited”. The purpose of insertion of the ‘word “limited” is to ensure to give clear notice to all the persons who are dealing with the company that the liability of the member is limited. > The name must be painted and printed It is mandatory under Section 4 & 5 of the Companies Act, 2013 that the name and the address of the company must be painted at an easily accessible place or position at which the business of the company is carried out and the ame must be printed on all business documents, such as letters, bill heads, notices, circular etc. If there is a ‘failure’ to comply with the provision of section _4(4) & (5). such non-compliance is punishable. > There is a prohibition on the use of certain name i ywered to declare that certain names and The Central Government is empo' emblems are not permitted to be used by the companies. The Emblems and ‘Names (Preventions of Improper Use) Act, 1950 restricts the use of the names or ‘emblems specified in the Schedule of the Act. The Emblem and Names (Preventions of Improper Use) Act, 1950 has prohibited the use of names such as UNO., WHO, Indian National Flag, Official Seal and Emblem of Central and State Government, name and pictorial representations of Mahatma Gandhi and the Prime Minister of India, or any other such name which the Government may declare from time to time.B. CONTENTS OF PROSPECTUS (SEC. 26) ‘a The main contents of a prospectus are : 1. Main object of the company with the names, addresses, description ‘and occupation of signatories to the memorandum and the number of shares subscribed for by them. 2. Number and classes of shares and the nature and extent of the interest of holders thereof in the property and profits of the company. 3. The number of redeemable preference shares intended to be issued and the date of redemption or where no date is fixed; the period of notice required for redeeming the share s and proposed method of redemption. 4. The number of shares. If any, fixed by the Article as the qualification ofa director and the remuneration of the directors for the service. 5, The names, occupation and addresses of directors, managing director and manager together with any provision in the Articles or a contract regarding their appointment remuneration or compensation for loss of office. 6. The time of opening of the subscription list should be given \in the prospectus. 7. ‘The amount payable on application and allotment on each share should be stated, If any prospectus is issued within two years, the details of the shares subscribed for any allotted. / 8. The particular about any option or preferential right to be given to any person to subscribe for shares or debentures of the company. 9. The number of shares or debentures which within the two preceding year . been issued for a considerations other than cash. | 10. Particulars about premium received on shares within two preceding years or r to be received. : 11. The amount or rate of underwriting commission. 12. Preliminary expenses. 13, The names and addresses of auditors, if any, of the company. 14, Where the shares are of more than one class, the rights of voting and rights as to capital and dividend attached to several classes of shares. 15. If nay reserve or profits of the company have been capitalized, particulars o capitalizations and particulars of the surplus arising from any revaluation of the assets of the company. 16. A reasonable time and place at which copies of-all accounts on which the report of auditors is based may be inspected. aaa a prospectus is issued in contravention of the provisions of this section, the en pany shall be punishable with fine which’shall not be less than INR 50000 which may extend upto INR 3,00,000 & every person who is knowingly @Prospectus: Ce ol “party to the i party folic uveucled such prospectus shall be punishable with imprisonment for Fee o0e ear end UPtO three years or with a fine which shall not be less “thal ut which may extend upto INR 3,00,000 or both. C. ADVERTISEMENT OF PROSPECTUS (SEC. 30) Section 30 lays down pene an advertisement of any prospectus of company is published in any manner, it shall be necessary to specify therein the contents of its memorandum sas regards the objects, the liability of members and the amount of share capital cof the company, and the names of the signatories to the memorandum and the nembe ares subscribed for by them, and its capital structure. D. VARIOUS KINDS OF PROSPECTUS Prospect i: io . pectus issued by company is different types and depending upon the “circumstances the prospectus is issued. Followi je f prospectus. . Following are the major, ppypes of a) Ordinary prospectus . SY It is the common form of pros; itis bs ectu: Fsied by any company. prospectus and it is the common form-df prospectus b) Deemed Prospectus When a company issues its securities to issuing house and the issuing house later on transfers these securities later on to public then the issuing house issues an offer document, this offer document is known as deemed prospectus. This deemed prospectus has all the contents of prospectus and it has to fulfill all the legal conditions regardirig the prospectus. c) Red herring prospectus This prospectus is issued by those companies who issue the securities by book building process hence in this process the price of securities will be calculated depending upon the demand from public. In this prospectus all the contents of a regular prospectus are present however it does not have the issue price of securities. The issue price is decided later on after which the company will issue an information memorandum which will contain the issue price of securities along with the necessary information. d) Statement in lieu of Prospectus Statement in lieu of Prospectus is issue by the company when the company docs not issue securities to public. This statement has all the contents of the prospectus and is registered with ROC like the normal prospectus. This Pretament is issued by company in private placements. They also has the ’ penalties if there is a misstatement. ¢) Shelf prospectus : This is the prospectus which is issued by’financial institutions and this prospectus remains valid for twelve months. This prospectus is issued so that the Praroial institution can issue the securities more than once during 12 months. During the process of issue ‘of shelf prospectus the financial institution must Pecne information’ memorandum for the change.on the company which have taken place in between the date of issue of prospectus and the date of issue of securities. f) Summary or Abridged prospectus ‘According to companies act 1956 every application form for purchasing the ‘ghares of company must be issued only with a copy of prospectus hence application form ‘cannot be issued without a.copy of prospectus. To save the[ARK ‘A. MEANING AND ESSENTIAL REQUIREMENT OF A TRADE M. c hat Is A Trade Mark? . i A trade mark is a visual symbol, governed by Beale Mery a 990 & Trade Mark (Amendment) Act 2010”, "includes a Paine cckavinn ie e, signature, word, letter, numeral, shape of goods, p: > eaten of colours, or any combination thereof," which is used pane 2 any goods or services, to suggest some kind of trade connection pees Ks ge Or services and the person using the trade mark and also to distinguis| iy ie Spence quality of the goods or services of one person from those of others in the competitive market economy. : “Trade mark” means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours, Distinction Between Trade Mark and Property Mark The distinction between ‘trade mark’ and ‘property mark’ lies in the fact that a ‘trade mark’ stands for, implies and denotes the manufacture and/or quality of goods, to which it is attached, whereas ‘property mark’ refers to and denotes the ownership in them, The function of a ‘trade mark’ is to reflect and indicate to the purchaser .or Possible purchaser as to the manufacture or quality of the goods, or-the trade - source, through which the goods have passed or their way to the market. A ‘Property mark’, on the other hands, refers to a mark,.which ig used to indicate the ownership of a movable Property to a particular person The symbol used for Trade Marks are : SM : For unregistered service mar TM : For unregistered Trade Mar!mettectat Property Rights ~ Ir wns 161 @ : Registered trade mark characteristics of good trade mark A trademark must be : 1. distinctive instead of descriptive, 2. affixed to the item sold, and 3. registered with the appropriate authority to obtain legal ownership and protection rights, 4 these rights are protected worldwide by international intellectual property treaties and may be assigned by their owner to other parties. 5. should be easy to pronounce, spell & remember, 6. it should satisfy the requirements of registration 7a it should not belong to th class of marks prohibited for registration Function of a trademark A trademark serves the purpose of identifying the source or the origin of goods. . Trademark performs the following four functions : It identifies the product and it’s origin. It proposes to guarantee its quality. It advertises the product. The trademark represents the product. It creates an image of the product in the minds of the public particularly the consumers or the prospective consumers of such goods. Marks that Cannot be Registered a) b) ° 4) e) f 8) h) i) The use of which would be likely to deceive or cause confusion. A mark the use of which would be contrary to any law for the time being in force. A mark comprising or containing scandalous or obscene matter. A mark comprising or containing any matter likely to hurt the religious susceptibilities of any class or section. A mark which would be disentitled to protection in court of law. A mark which is identical with or deceptively similar to a trademark already registered in respect of the same goods or goods of the same description. A word which is the accepted name of any single chemical name or chemical compound in respect of chemical substances. A geographical name or a surname or a personal name or any common abbreviation thereof or the name of a sect, caste or tribe in India. Words or shapes commonly used. - , oo‘A. INTRODUCTION & BACKGROUND OF IPR IN INDIA =a 1. The Concept of Intellectual Property Giatellectual property, very broadly, means the legal property which results from intellectual activity in the industrial, scientific and artistic fields. Countries have laws to protect intellectual property for two main reasons. One is to give statutory expression to the moral and economic rights of creators in their creations and such rights of the public in access to those creations\{The second is to promote, as a deliberate act of government policy, creativity and the dissemination and application of its results and to encourage fair trading which would contribute to economic and social development. | Intellectual Property law aims at safeguarding creators and other producers of intellectual goods and services by granting them certain time- limited rights to control the use made of those productions. These rights. do not apply to the physical object in which the creation may be embodied but instead to the intellectual creation as such. Intellectual Property is traditionally divided into two branches ; “industrial property ang copyright”. The first aspect is to give statutory expression to the moral & economic rights of the creators in their creations & the rights of the public in access to those creations. The second aspect is to promote, as a deliberate act of government policy, creativity & the dissemination & application of its result & to encouragtIntellectual Property Rights - I (Patents) rs 147 P fair trading which would contribute to the economic & social development by World Intellectual Property Organisation (WIPO) ‘The importance of intellectual property in India is well established at all levels- statutory, administrative and judicial. India ratified the agreement establishing the World Trade Organization (WTO). This Agreement, inter-alia, contains an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which came into force Fom-IJanuary 1995. It lays down minimum standards for protection and enforcement of intellectual property rights in member countries which are required to promote effective and adequate protection of intellectual property rights with a view to reducing distortions and impediments to international trade. The obligations under the TRIPS Agreement relate to provision of minimum standard of protection within the member countries legal systems and practices. ‘The Agreement provides for norms and standards in respect of following areas of intellectual property : © Copyrights and related rights \@-Trade Marks @ Geographical Indications @ Industrial Designs © Lay out Designs of Integrated Circuits © Protection of Undisclosed Information (Trade Secrets) \2-Patents ‘@ Plant varieties _Intellectuial_Property—(IP) is the information and original expression that brings its original value from creative ideas with a commercial value. Intellectual property allows the people to have fully independent ownership for their fnnovations and creativity like that for their own physical property. By safeguarding such innovations, can lead to the owner of IP can be encouraged for further innovations to the benefit of the society in general. It may not be possible to protect IP and obtain intellectual property rights unless they have been applied for the sanction obtained. } Most of the countries having large number of local industries with innovative designs have specific laws to safeguard the innovations by some regulations with respect to copying of inventions, identifying symbols and creative slogans. As in other developing countries, India too showed for quick enforcement of intellectual property right protection laws. India has to comply being a member of WTO for such implementation of laws at least by 2005. India's IPR scene is no deterrent to foreign companies. These laws consist of distinct types of intangible properties. Intellectual Property is an asset that can be bought or sold, licensed and exchanged. But ofcourse unlike other propertiés, intellectual property is intangible; rather. it cannot be identified by its specific parameters. These properties are protected on a national basis. i elA. INTRODUCTION TPR is not a new concept. It is believed that IPR initially started in North Italy during the Renaissance era. In 1474, Venice issued a law regulating patents protection that granted an exclusive right for the owner. The copyright dates back to 1440 A.D. when Johannes Gutenberg invented the printing press with replaceable/moveable wooden or metal letters. Late in the 19th century, a number of countries felt the necessity of laying down laws regulating IPR, Globally, two conventions. constituting the basis for IPR system worldwide had been signed; Paris Convention for the Protection of Industrial Property (1883) Berne Convention for the Protection of Literary and Artistic Works (1886). Protection of IPR allows the innovator, brand owner, patent holder and copyright holder to benefit from his/her work, labor and investment, which does not mean monopoly of the intellect. Such rights are set out in the International Declaration of Human Rights, which provides for the right to benefit from the protection of the moral and physical interests resulting from the right holder's work; literal or artistic product. 7 : Intellectual property is the product of the human intellect including creativity concepts, inventions, industrial models, trademarks, songs, literature, symbols, names, brands,....etc. Intellectual Property Rights do not differ from other property rights. They allow their owner to completely benefit from his/her product which was initially an idea that developed and crystallized. They also entitle him/her to prevent others from using, dealing or tampering with his/her product without prior permission from him/her. He/she can in fact legally sue them and force them to stop and compensate for any damages. B. MEANING OF COPYRIGHT al I, Exclusive Right To Do Or Authorize The Doing Of Certain Things S. 14 of The Copyright Act, 1957, as amended by the Copyright (Amendment) Act, 2012, states that "copyright" means the exclusive right, subject to the | )Intellectual Property Rights — IT se 183 provisions of this Act, to do or authorise the doing of any of the following ‘acts in respect of a work or any substantial part thereof, namely : “copyright” means the exclusive right given by law to the author or creator of original literary work, dramatic, musical, works & producer of cinematograph films & sound recordings. It is a right of reproduction, communication to the public, adaptation & translation work. ‘Thus Indian Copyright gives protection to the following work : Original Literary Work Original Dramatic Work Original Musical Work : : Original Artistic Work Cinematograph Films Sound recording Computer Programme Right enjoyed by author under Copyright : Work Rights enjoyed Dramatic or Literary Creator of the the work Musical Work Composer Cinematographer Producer Sound recording Producer Photograph Photographer Computer generated work/Programme |The person who causes the work to be created Il. Originality : Meaning and Content Under Section 17 (1) (a), for claiming copyright in literary, dramatic, musical and artistic works,originality is required in these types of works. What is originality in these types of works? There is, indeed, no statutorydefinition of the word ‘originality’. The concept ‘of originality and its content has been best illustrated by the Supreme Court of India in the famous case of RG. Anand V. DeLux Films, AIR 1978 SC 1613, 1626 para 45, which runs as follows : © An idea, principle, theme or subject matter, or historical or legendary facts, being common property, cannot be the subject matter of copyright of a particular person. © It is always open to any person to choose an idea as a subject matter and develop it in his own manner and give expression to the ide ing i a by t differently from others. bese © Where two writers write on the same subject, similariti 1 ies are bound occur because the central idea of both is the same and the similarities For the purpose of research or private study. For criticism or review. For reopening current events. In connection with judicial proceedings. hae Performance by an amateur club or society if the performance is given to anon paying audience & The making of sound recording of literary, dramatic or musical works under certain conditions. ' IV. What types of things are protected by copyright? Copyright protects an extremely wide range of creative expressions in eight categories. 1, Literary works Includes books, newspaper articles, and blog posts. Even your last email would be considered a literary work. The definition of literary works is so broad it even includes computer programs. 2. Musical works Includes musical notations of all kinds. The famous guitar notes that make up the intro to Stairway to Heaven is considered a musical work. 3. Dramatic works Includes plays, screenplays, and TV scripts. 4. Choreographic works Includes dances, ballets, and mime performances. 5. Pictorial, graphic, and sculptural works Includes paintings, drawings, photographs, and digital illustrations. 6. Motion pictures and other audiovisual works podenstides movies, live webcasts that are being saved, slideshows, and video .7. Sound recordings are a distinct and independent cate ical L i ory from musi Tecordings because they also includes everything that can be recorded and Produced that isn’t music, including speeches, sound effects, and audio books.Business Law (S.Y.B.Com,) (Sem, 156 wee C, INFRINGEMENT OF COPYRIGHTS AND REMEDIES I. Infringement of Copyrights ; 1. In case of Mterary, dramatic or musical work, not being @ compnts, rogram ing nent a is Produce the work in any material form including the storing of it in apy medium or any electronic mode; . P ») to issue copies of the work to the public not being copies already j, circulation; , ©) to perform the work in public, or communicate it to public; j d) to make any cinematography film or sounds recording in respect of the work; . ¢) to make any translation of the work; to make any adaptation of the work; | te do in relation to a translation or an adaptation of the work, any Of the act specified in relation to the work; 2. In case of computer program : | 2) to do any act specified in clause (a); b) to sell or give on hire or lease any copy of the computer program, jeeardless to whether such copy has been sold or given on hire er on lease on earlier occasions; In case of an artistic work : a) to reproduce the work in any material form including depiction in three’ gimensions of a two dimensional work or two dimensions of o three dimensional work; b) to communicate the work to the public; ©) to issue copies of the work to the public not being copies already in circulation; 4) to include the work in any cinematography film; €) to make any adaptation of the work; . 4) to do in relation to the translation of the work, any of the act specified in relation to the work in sub-clause (a) to ( In the case of cinematography films : 2) To make a copy of the film including a photograph of any image forming part thereof; . " ») To sell or give on hire or offer for sale or hire, any copy of the film, TeBardless of whether such copy has been sold or given on hire on carl occasions; ©) To communicate the film to the public; In the case of sound recording : a) To make any other sound recording identical to the existing work; b) To sell or give on hire, any copy of the sound recording, regardless of whether such copy has been sold or given on hire on cere occasions; c) To communicate the sound recording to the public. Infringement in nutshell : Reproducing without permission. Translation AdaptationIntellectual Property Rights - IT SPs se 157, > To perform the work in public. Communicate to the public without prior permission. To copy cinematographic film or sound recording. Jone In case of computer program right include the right to sell, lease, or hire any copy of the computer programme, regardless to copy sold, hired or leased in the earlier occasion. Il. Remedies of Copyright Infringement a) Civil Remedies > Injunction and Damages u/s 55 © Defendant not aware of copyright existed then only injunction, a decree of whole or part of the profits made by the defendant by sale of such publication as court deems fit. : @ All copies, plates and materials used indented for production shall be the property of the owners of copyright - accordingly make proceedings for the recovery of the possession. > Remedies for Groundless threat of Legal Proceedings Person claiming to be the owner of the copyright in any work, threatens any other person with any legal proceedings, in respect of alleged infringement — the aggrieved party can institute a declaratory suit that the alleged infringement is not an infringement of any legal rights of the person making such threat —.can seek injunction of that threat, till the disposal of the case after the final hearing. e Criminal Remedies > The aggrieved party to lodge a FIR reports with the Police alleging such infringement. ; > The police shall present the matter with a Judicial Magistrate, who on satisfaction shall issue a search warrant to the concerned Police Station to initiate an action. “+ The Police Inspector not below the rank of Sub-inspector of Police can issue a search warrant can seize and confiscate the material. > The Police inspector upon confiscation shall issue a “Panchnama” to the concerned person on whose premises the seizure is conducted. > The Police shall lodge the seized materials to the Judicial Magistrate as soon as possible and practicable. > The person found guilty shall be punishable with imprisonment for a term ‘between 6 months extendable up to 3 years and a fine, which may range between ¢ 50,000/- to % 3 lakhs or both.s's's" Business Law (S¥.B.Com, (Sem-1V / YY B. WHO CAN BECOME A MEMBER OF A COMPANY? Following are the persons who can become the member of a company under 1) pe@ompanies Act 2013 : Any person competent to contract. al 2\ Comp hy f another company sj 2 45 3d tompany can become a momar of Ee her RoR Hefinee they are Dfasetne fds ee person. 4 3 rng iC \Wtky hold shares in the names of individual partners who may be entered as joint holders. Since a firm is not a legal person cannot enter 1 into contfact in its own name. 1) Viale ur pce who buys shares will be treated as individual member in his personal capacity. Companies Amendment Act 1963 provides for. appointment of public trustee by the Union Government. Hence the trustee must make a declaration to the public trust within the prescribed period. A copy of the declaration must be sent within 21 days to the company after the declaration to the public trust. Failure to comply with these provisions will invite a penalty of fine. These provision are exempted in the following cases: i) where a trust is not created in writing. ii) even if the trust is created by an instrument in writing, if the value of the shares, held in trust does not exceed Rs. One lakh or it exceeds that amount, it does not exceed % 5 lakh or 25% of the paid up share s\registered| spiel of the company whichever is less. e) A registered society can become a member of a company since on gi iy «) Nn on-s qe a society acquires legal identity. ' ' WA ‘resident can become a member only with the prior permission of ATnselu oy gReserve Bank of India under Foreign Exchange Regulation Act 1973. g) ‘Ka insolvent may continue as a member so long his name appears in the register of members, notwithstanding the right of official assignee or receiver to be registered as a member. : ‘A minor cannot become a member by direct subscription of shares. This is based on the principle of an agreement with a minor is ab-initio void (Mohiri Bibi vs. Dharmados Ghose). However he can become a member on transfer or transmission of shares made in his favour and for his benefit provided the transferred or transmitted shares are fully paid and no liability is attached to them. h)MPANY <= B. VARIOUS MODES OF ACQUIRING MEMBERSHIP OF A CO’ )/ A person may following ways : 1. become a member (shareholder) of a company in any of the Subscribing to Memorandum of Association A subscriber of the Memorand agreed to become a member allotment of shares is neces: lum of Association shall be deemed to have of the company. Hence, neither application form, a sary. 2. Membership by Allotment of Shares A person may become a shareholder, if he agrees to take shares in the company by allotment. Allotment means an appropriation by directors of shares, to a particular persons. a\Muambrsisrip ly botdivg uate, in demateatized Saym‘e Hae Compan 8 \ When O Rewn buys — Wolds oho iN) devnedesdtcd Sore Lite ine lecdronte Gorm in Ws Wawel & a tonsPivid SeaeH In the etordy ff Cepasitaay vig a Member OF a Lowepontfembership of a Company wat * Membership by Transfer of Shares Ifa person buys a share of a company from open market and then applies to the company to register him as a member, he becomes a member on registration his name. Membership by Transmission of Shares On the death of a shareholder or member, the survivor or survivor's where fe member was a Joint holder, and his legal representatives where he was a sole holder, sI ¢ the only person i ing all title to Sa recognized by the company as having al . Membership by Acquiescence and Estoppels A person is deemed to be a member of a company, if he allows his name to be put on the registrar of members or otherwise holds himself out as a member, en if, no agreement to become a member. Thus, his liability springs into existence as a result of acquiescence and estoppels. Joint Membership When two or more persons hold shares in a company in their joint names it called a joint membership. . Membership By Taking Qualification Shares. No person can be appointed a director of a public company, unless he takes, Gr signs and files with the Registrar an undertaking to take, from the company is qualification shares, if any. They are deemed to have become members automatically as soon as the company is registered. Private company & company not having share capital cannot be covered under this provisions. 8. Name in the Records of Depository. Where the name of a person is entered as a beneficial owner in the records of uf d Jemmmiuion | [iq] wHAT ARE MODES OF CESSATION OF MEMBERSHIP OF A COMPANY? [3 person may cease to be a member of a company in any one of the lowing ways : 1. Ifhe transfers his shares to another person. However, he remains liable to be placed in the 'B' list for one year, if the company were to go into liquidation. 2. If his shares are forfeited by the company. 3. Ifthe company sells his shares under some provision in its Articles, as for example, in the exercise of its rights to enforce alien,” 4. If he validly surrenders shares to the company, where such surrender is permitted. _ 5. If his shares are sold in execution of a deer 6. If he rescinds the contract to take shares on the ground of misrepresentation in the prospectus or of irregular allotment. 7. If he is adjudicated insolvent. The shares of an insolvent vest in the Official Receiver or Assignee. 8. If he dies. However, the estate of the deceased member remains liable until the shares are registered in the name of his legal representative. 9. If redeemable preference shares are redeemed. 10.If the company is being wound up, a member remains liable as a contributor and is also entitled to share in the surplus assets, if any.1. E. APPOINTMENT OF DIRECTORS Appointment Of First Directors And Other Directors Sec. 152 governs appointment of directors. It runs as under : Where no provision is made in the articles of a company for the appointm of the first director the subscribers to the memorandum who are individu shall be deemed to be the first directors of the company until the direct are duly appointed and in case of a One Person Company an individual be member shall be deemed to be its first director until the director or direc’ are duly appointed by the member in accordance with the provision of section. Every director shall be appointed by the company in general meeting. No person shall be appointed as a director of a company unless he has t allotted the Director Identification Number under section 154.Directors, eas 61 4, para veasony Proposed to be appointed as a director by the company in seolaratin sti Shall furnish his Director Identification Number and a ion that he is not disqualified to become a director under this Act. 5. A person appointed as his consent to hold th with the Registrar witl may be prescribed. 6. a) Unless the articles annual general mee! a director shall not act as a director unless he gives e office as director and such consent has been filed hin thirty days of this appointment in such manner as Provide for the retirement of all directors at every directors atetccne ‘ting, not less than two-thirds of the total number of liable to deceuelic company shall be persons whose period of office is appointed by qnnation by retirement of directors by rotation; and be . a et E by the company in general meeting. ) remaining directors in the case of any such company shall, in default ject to any regulations in the articles of the company, also be appointed by the company in general meeting. °) pelts rst Annual General Meeting (AGM) of a public company held next + the date of the general meeting at which the first directors are appointed in accordance with the provisions of the Act and at every subsequent annual general meeting, one-third of such of the directors for the time being as are liable to retire by rotation, or if their number is neither three nor a multiple of three, then, the number nearest to one- third, shall retire from office. a) The directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment, but as between persons who became directors on the same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot. e) At the Annual General Meeting (AGM)at which director retires as aforesaid, the company may fill up the vacancy by appointing the retiring director or some other person thereto. 7. a) If the vacancy of the retiring director is not so filled-up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the same time and place, or if that day is a national holiday, till the next succeeding day which is not a holiday, at the same time and place. b) If at the adjourned meeting also, the vacancy of the retiring director is not filled up and that meeting also has not expressly resolved not to fill the vacancy, the retiring director shall be deemed to have been re-appointed at the adjourned meeting unless — i) at that meetng or at the previous meeting a resolution for the re- appointment of such director has been put to the meeting and lost; ii) the retiring director has, by a notice in writing addressed to the company or its Board of Directors, expressed his unwillingness to be so re-appointed; iii) he is not qualified or is disqualified for appointment, iv) a resolution, whether special or ordinary, is required for this appointment or re-appointment by virtue of any provisions of this Act; orYr 62 ree Il. Appointment of Director, Elected By Small Shareholders (Sec. 15] Rule 7) Business Law (S.Y-B.Com,) (Sem. A listed company may have one director elected by such small sharedhold in such manner and with such terms and conditions as may be prescribed.*Sm) shareholders” means a shareholder holding shares of nominal value of not mo than twenty thousand rupees or such other sum as may be prescribed. Sma) shareholders shall leave a notice of their intention to propose @ person ag canditate for the post of small shareholders’ director atleast 14 days before meeting under their signature giving complete details such name, shares he folio number of the person whose name is proposed along with the name of Proposer & other details & conditions as prescribed by the Act. Ill. Appointment Of Additional Directors, Alternate Directors, And Nomi Director (Sec. 161) | Sec. 161 lays down: 1. The articles of a company may confer on its Board of Directors the power, appoint any person, other than a person who fails to get appointed as; director in a general meeting, as an additional director at any time who she hold office up to the date of the next annual general meeting or the last d, on which the annual general meeting should have been held, whichever} earlier. | The Board of Directors of a company may, if so authorised by its articles ¢ by a resolution passed by the company in general meeting, appoint a a not being a person holding any alternate directorship for any other dire in the company, to act as an alternate director for a director during absence for a period of not less than three months-from India provided thy no person shall be appointed as an alternate director for an independ director unless he is qualified to-b€ appointed an an independent direct, under the provisions of this Act and an alternate director shall not hold offz for a period longer than that permissible to the director in whose place has been appointed and shall vacate the office if and when the director! ~~ whose place he has been appointed returns to India. | Similarly if the term of office of the original director is determined before! so returns to India, any provision for the automatic re-appointment ( retiring directors in default of another appointment shall apply to original and not to the alternate director. Subject to the articles of a company, the Board may appoint any person as. director nominated by any institution in pursuance of the Provisions of # law for the time being in force or of any agreement or by the Cent Government or the State Government by virtue of its shareholding i Government company. In the case of a public company, if the office of any director appointed byt company in general meeting is vacated before his term of office expires int normal course, the resulting casual vacancy m: ay, in default of and subject! any regulations in the articles of the company, n be filled by the Board) Directors at a meeting of the Board provided that it any person so appoit! shall hold office only up to the date up to which tl he director in whose he is appointed would have held office if it had not been vacated. A person will also not be appointed as an alternate director, if he/she! already an alternate director in that company.{Section 161(2)}. Section 16l¢ is now applicable to all companies wherein any casual vacancy is to be fil. and Board and subsequently will be approved in the immediate next gen” meeting. 3. é rayDirectors ot we! 63 Iv. inca Of Directors To Be Voted Individually 1. a general meeti: here persone ae ane 2 company, a motion for the appointment of two or inne pp ear ay of the company by a single resolution shall not be the meeting without any ee neves such a motion has first been agreed to at nol eing cast against it. 2. A resolution is not a: i : objection was taken arta ihe pena shall be void, whether or not any _ A motion foi i . eo AP pacensae approving a person for appointment, or for nominating a person Sen eoene rector, shall be treated as a motion for his An inde i ee ee eae roa ne for two consecutive terms of five years three years of ceasing to be A Seabee appointment after the expiry of the v. Selection Of Independent Directors (Sec. 149 (6)) 1: n indpendent director means a dit 7 . lirectot i i whole time director or a nominee director. arent are ae '2. In case of listed company y atleast 1/3 of i Dee ee /3* of the total number of the director 3, In case of puble company wth a pai 1 it paid up share capital of € 10 Crore or more there must be atleast two independent director. P 4, Company with a turn over of Rupees 100 crore or more, atleast two independent director. 5. Having an aggregate, outstanding loans, debentures & deposits of 50 crore or more there must be atleast two independent director. ctor shall be approved by the company nnexed to the notice of tment shall indicate the tment as independent there must be 6. The appointment of independent dire in general meeting and the explanatory statement a the general meeting called to consider the said appoin justification for choosing the appointee for “@ppoin director. ZC 7. The data bank shall create independent director in accord: and maintain data of persons willing to act as lance with such rules as may be prescribed. 8. The Central Government may prescribe the manner and procedure of vyection of independent directors who fulfill the qualifications and requirements specified under section 149 (6) & Rule 5. ‘ a) Must be other than a managing director, nominee director or whol! director. b) A person with relevant exp’ ©) A person who is or not a promoter oF relative of a) A person who does not have any relationship the company. e) No person or his relativ personnel in any of the thi No person is or have been an 3 wo pe three preceeding financial year: ~ g) Neither himself nor his relative should hold two percent 0} Neal voting power of the company: le time ertise knowledge & experience a promoter or director directly or indirectly with ¢ shall hold or have held any key managerial ree pereceeding financial year. ‘employee or properietor or a partner, in any 1 more of theb) Annual General Meeting (Section 96, 99, 103-122) le Every company other than ‘a One Person Company shall’in each year HOld in addition to any other meetings, a,general meeting aslits annual getieral meeting. The company shall specify the meeting as such in the notices calling Annual General Mécting. ; tenia (OF > ED Gy ORIN TRO . Time Periods for Annual General meeting) (In! case’ ofithé first anhual general meeting, it shall be held within a period of nine months from the date of closing of the’ first’ financial year of the company, If.a company holds - its; first annual general meeting as aforesaid, it shall not be necessary for the company'to hold any.annual general meeting in the year ofits incorporation. ‘This mearis, for a company incorporated on Ist day of January 2015, the first financial year shall be closed on 3ist day of March 2016 and Annual General Meétirig shduld be convened on or before 31st day of December 2016. However for a company incorporated on 31st day of December 2014, the first financial year shall be closed on 31st day of March 2015 and Annual General Meeting should be convened on or before 31st day of December 2015. _In any case other that first annual general meeting, it shall be held within a period of six months, from the date of closing of the financial year. Not more than! fifteen months shall elapse between the date of one annual general meeting of @ |eetings war 6s ompany and that of the next. The Registrar may, for any special reason, extend the time within which any annual general meeting, shall be held, by a period not exceeding three months. However the Registrar may not extend the time for first nual general meeting. Where, last annual general meeting was held on st day of December 2015, next annual general meeting shall be held on or fore 30th day of September 2016. However where, last annual general meeting was held on 31st day of May 2015, next annual general meeting shall be held on ir. before 31st day of August 2016. The Registrar may extend these dates to jist day of December 2016 and 30th day of November 2016 respectively. ay and time for Annual General Meeting ” Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held cither at the registered office of the company or at some other place within city, town or village in which the registered office of the company is situate. National Holiday” means and includes a day declared as National Holiday by the tral Government. Yet, Republic Day, Independence Day and Gandhi's ‘A notice of not less than 21 days in writing has to be given. Every notice of heeting of company must specify the place, the day and hour of the meeting and eontains the statement of the business to be transacted in the meeting. Such tice has to be given to every member of the company and also to persons Intitled to share in the event of death or insolvency of a member. Such a notice as also to be given to the auditor of the company as authorized by the Act. ‘The business of meeting must be classified into the following categories : Ordinary Business In respect of the annual general meeting, s ordinary business : i) The consideration of accounts, balance sheet, an directors and auditors. \The declaration of dividend. ) The appointment of directors in place of those retiring, and iv) The appointment of and fixing of the remuneration of the auditors. Special Business : All other business apart from the matters specified in ordinary business, Should be considered as special business. When special business is to be transacted at the meeting, a statement stating out all the material facts regarding .ch item of special business has to be annexed fo the notice of the meeting. the following should be considered d reports of the board of per the provisions of this section, the quorum for the meeting is 5 members in se of a public company, not being a company which became a public company 1d, in case of all other companies, 2 members must personally be present. If within half an hour from the time appointed for holding a meeting of the ympany, a quorum is not present, the meeting should stand adjourned to the me day in the next week, at the same time and place or, to such other day and ch other time and place as may be determined by the Board. If, at the djourned meeting also, a quorum is not present the members who are present fer the appointed time shall be considered to have formed a quorum.D. DIRECTOR IDENTIFICATION NUMBER (DIN) (SECTIONS 153 - 159 & RULES 2, 4, 9.- 12) Every individual intending to be appointed as director of a company shall ; make an application for allotment of Director Indentification Number to the _ Central Government in such form and manner and along with such fees as may be prescribed. The Central Government shall, within one month from the receipt of the application under section 153, allot a Director or Identification Number to an applicant in such manner as may be prescribed. Any person who has already been allotted a Director Identification Number under section 154, cannot obtain or possess another Director Identification Number. Rule 9(1) : Every applicant, who intends to be appointed as director of an existing company shall make an application electronically in Form DIR-3, to the Central Government for allotment of a Director Identification Number (DIN) along _with such fees as provided under the Companies (Registration Offices and Fees) Rules, 2014. Rule 9(3)(b) : Form DIR-3 shall be signed’ and submitted electronically by the applicant using his or her own Digital Signature Certificate and shall be verified by a company secretary in full time employment of the company or by the © managing director or director or CEO or CFO of the company in which the applicant is intended to be appointed as director in an existing company. Specific Instructions to fill the e-Form DIR-3 : © Every individual intending to be appointed as director of an existing Indian company or the existing director who has not taken a DIN is advised to make an application for allotment of Director Identification Number (DIN). @ DIN is a unique number, and is mandatory requirement for a company/ limited liability partnership (LLP) for filing certain e-Forms. © Government Fees % 500/-. © E-Form DIR-3 is required to be signed by the applicant and by director /manager/CEO/CFO/Company secretary of an existing company. © If the e-Form DIR-3 is signed by company secretary /director/manager /CEO/CFO and is not identified as potential duplicate, then the same shall be auto approved by the system (STP) and sent for verification to the DIN cell, The status of DIN shall be Approved’. © If the e-Form is signed by company secretary /director/manager /CEO/CFO. of the existing company, and identified as a potential Tae f60 ess" Business Law (S.¥.B.Com,) (Sem) Dif duplicate, then provisional DIN is allotted and same is sent for processing) 4- to the DIN cell. If the e-Form is not‘ approved, then status of provisional] DIN allotted is ‘Lapsed’ on rejection or invalidation of the e-Form as the 5. case may be. If verification is not passed, an email is sent to the director for filing DIR4 for making the desired changes. Documents for the DIR-3 Application : The following are the mandatory attachments to be filed in all cases : Proof of Identity of applicant In case of Indian nationals, Income-tax PAN is a mandatory requirement for proof of identity. In case of foreign nationals, passport is a mandatory requirement for proof of identity. Proof of residence of applicant. Address proofs like passport, election (voter identity) card, and ration card, driving license, electricity bill, telephone bill or Aadhaar shall be attached and should be in the name of applicant only. In case of Indian applicant, documents should not be older than 2 months from the date of filing of the e-Form. In case of foreign applicant, address proof should not be older than 1 year from the date of filing of the e-Form. Picture of the Applicant- attach on Photograph Box. Other Information : Mobile No and email address of the applicant. Qualification of Applicant. Occupation of the Applicant. Punishment for Contravention (Section-159) : If any individual or director of a company, contravenes any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which the contravention continues. /A maoloty it @ Business Law (S-¥.B.Com.) (Sem1y st a's" D.. WHAT ARE RIGHTS AND DUTIES OF MEMBERS OF A COMPANY I. Liabilities, Duties, and Obligations of Members The liability of members of a company depends upon the nature of the company, as explained below : 1. A Company with Unlimited Liability If the company is registered with unlimited liability, each and every membe, is liable in full for all the debts of the company, contracted during the period o his membership. 2. A Company Limited by Guarantee If the company is limited by guarantee, each member is bound to contribute a sum of money, agreed and specified in the liability clause of Memorandum of Association, in the event of being wound up. 3, A Company Limited by Shares Most companies are registered with the liability of members, limited shares. Each member is bound to be liable to pay the full nominal (face) value of the share, held by him; his liability ends there. However, if he has already paid only a part of the amount on the shares, then his liability is limited to the unpaid amount.on the shares in respect of which, he is a member. In such a case, he is liable to pay the unpaid amount as and when the calls are made. Il. What are the Rights of Members of a Company? ‘The following are the rights of the members of a company : 1. Statutory Rights The statutory rights are conferred upon members of a company by the Companies Act. These rights cannot be withheld, taken away, or modified by the Memorandum or Articles of Association. Some of the Statutory rights of a member are as under : a) A member has a right of priority to have shares offered in case of increase of cay ital. ig Be réceivé notices of meetings, attend and vote at meetings. ©) Right to transfer shares. 4) Right to receive a share certificate ) Right to receive copies of annual accounts of the company. f) Right to inspect the register of members, and copies of annual returns. 8) Right to apply to the Central Government for meeting if the board of directors fails to call s h) Right to apply to the Court for calling an extraordinary meeting of the company. j) Right to participate in a, annual general meetings. J) Right to petition to the Central Government { ii ii igati into the affairs of the company. evronesing an inveatigntleg k) Right to petition ‘to the Hi, ief i i mine fe petition) igh Court for relief in cases of oppression and register of debenture-holders calling an annual general uch a meeting. ppointments of directors and auditors in the ') Right to petition to the High Court for winding up of the company._ Membership of a Company ax 55 2. Documentary Rights These rights are conferred upon the members by the Memorandum and Articles of Association. 3. Proprietary Rights Proprietary rights include the following rights : a) Right to be registered as a member in the company’s register of members, subject only to valid and authorised transfer of shares. b) Privilege of immunity from personal liability of company's debts. c) Right to participate in dividend distribution, if ordered in the discretion of the directors. Finally, right to participate in the distribution of assets in case of liquidation of the company. Remedial Rights Remedial rights include the following rights : a) Right to information and inspection of company’s records. d) b) Right to bring representative suits on company's causes of action to remedy mismanagement or unauthorised acts and thereby to compel the company to enforce its rights. BW) Be ae podininte cin Hae tainta Cnnvaek Soe tet tn onde af?r me Quorum For Meetings (Sec..103) 4 b) sees, Ur wit DOLL. ‘Quorum! means the minimum number of members who must be present in order to constitute a valid meeting and transact business. If the Articles of a company does not provide any stipulation as to quorum minimum five members must be personally be present in case of a public company and minimum two in case of private company. The 2013 Act states that in case of a public company, the quorum will depend on number of members as on the date of meeting. The required quorum is as follows : > Five members if number of members is not more than one thousand. Fifteen members if number of members is more than one thousand but up to five thousand. > > Thirty members if number of members is more than five thousand. Private companies cannot impose restrictions on voting rights of members other than due to unpaid calls or sums or lien. ¢) a) e) If within half an hour from the time appointed for holding a meeting of a company a quorum is not present, the meeting, if called upon the requisition of members, shall stand dissolved. If the minimum quorum is not present within half an hour from the appointed time the meeting shall be adjourned to same day in the next week, at the same time and place, or to such other day and at such other time and place as the board may determine. If at the adjourned meeting also a quorum is not present within half an hour from the time appointed for holding the meeting, the members present shall be the quorum. ‘Quorum' means the minimum number of-riiembers who must be present in order to constitute a valid meeting and tfansact business. If the Articles of a company does not/provide any stipulation as to quorum minimum five bers must be pofsonally be present in case of a public of private company. The 2013 Act states , the quorum will depend on number of members as on the date of meejfigwThe required quorum is as follows : > Five members if number > Fifteen members if nu up to five thousand. > Thirty members if imber of members is more thah five thousand.