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company's law. The first law regulating the companies took its birth in 1850 as Joint Stock Companies Act. This act was based on the English companies Act 1844. The important principle of limited liability was not incorporated in this act, though the concept of separate legal entity for a company was introduced. However, it was only in the year 1857 the Joint Stock Companies act for the first time in India introduced the principle of Limited liability to the Banking companies also. Following the English act I862 a comprehensive act was passed in India in the year 1866, which sought 10 consolidate and amend the law ·relating to the incorporation, and winding up of trading companies and other association, this was - followed by the economic consolidation act of 1882 which repealed the companies act of 1882 which repeated the companies act 1866. Then came the Indian -company's act 1913, passed with the object of consolidating & amending the relating to trading companies and other association. However, even the act of 1913 proved to be inadequate and therefore the 1913 Act was amended several times. World War II witness many changes in the organization & management of the Joint Stock Company. In 1950 the government of India appointed a committee under the Chairmanship of Dr.H.J.Bhabha to make the suggestion for the company law reform. The committee comprised of reform. The committee submitted its report to the govemment of India in March ,1952 on the basis of recommendations the company's act of 1956 into force from April 1956. Inspite of the great care and caution in passing of companies Act 1956. The number of defects and loop holes remained in this act and therefore several amendments were made from time to time by the amendments act 1960. Ther were further amendments in 1962, 63, 65, 69, 70, 74, 77. Object of the Companies Act: The object of the companies act is to provide simple & cheap machinery for formation of the company & making the liability of its numbers limited, to the face value of the shares subscribed by them, whereby it eliminates any personal liability of its members in the case of partnership. It has also been enacted to consolidate & amend the
3) The shares in the share capital of the company are transferable. 2) To ensure proper administration 3) To arrange for investigation. DEFlNITIONS OF COMPANIES: (1) According to Section 3/1 (i) of the companies act 1956: "'A company is a company which is formed & registered under the act or an existing company. on the other hand in a particular case. a member may act as an agent or trustee or an employee for the company. 4) To prevent malpractices. can enter into contracts & can exercise the entire powers incidental to the attainment of its objects given in its M. It seeks to achieve the following objects: 1) To encourage investment.law relating to the companies and certain other association. (2) Section 566 of the companies act 1956 defines Joint stock company as: “A Joint stock company means a company having a permanent paid . or held and transferable as stock a dividend and held partly in one way & partly in the other. 4) It is an artificial legal person & enjoys almost all the rights & is subject to all the obligations as in the case of natural person.OA. 9)A company can sue and can be sued. 7) A company is not a citizen & has no fundamental rights under the constitution. This definition however is incomplete as in no way it helps us to know what the company is. ESSENTIAL FEATURES OF A COMPANY: 1) A company is compulsory registered under the companies act 1956. 6) A company is not an agent or a trustee of the members. 2) It is a separate legal entity from the members who constitute it. This makes the company independent from of its members & enjoys what is known as perpetual succession.” (3) Some also defines company as: “A voluntary incorporated association which is an artificial person created by law with limited liability having a common seal & perpetual succession. 5) A company being an artificial legal person can act only through natural persons. 8) A company being an artificial legal person has nationality & a domicile.up or nominal share capital of fixed amount divided into shares also of fixed amount." Thus according to the above mentioned definition any company registered under the present act of 1956 or an existing company (registered under any previous company's act is deemed to be a company.2- . .
Thus property of the company belongs to the company. Company for of Org Partnership is the relation between the people A voluntary incorporated association which is an who have agreed to share the profits of the artificial person created by law with limited liability business carried on by all or any one of them acting having a common seal and a perpetual succession. i. 7) Property: Property of partnership firm is also the property of The property of the company belongs only to the the partners company and not to the shareholders 8) Agency: Every partner is an agent of the other partner A share holder of the company is not an agent of the company or the other shareholders 9) Contract: A partner cannot contract with the firm A share holder can contract with the firm. . 2) Acts Governing the Org: The law relating to the partnership in India is The laws relating companies in India is content in content in the Indian Partnership Act 1932 Indian Company’s Act 1956 3) Registration: Registration of the partnership firm is not Registration of a company is compulsory under the compulsory.10) The liability or its members is limited. there is unlimited liability In company form of org. . to say. In partnership. 4) Membership: Minimum 2 persons are required to constitute a In case of Pvt Ltd Co minimum 2 and maximum 50 partnership. While minimum7 and partnership in banking business is 10 persons and maximum unlimited constitute a public Ltd Co.e. DISTINGUISH BETWEEN: 1) Partnership Form of Org. The work of managing a company lies in the hands of board of directors who are I elected by the shareholders. shareholders cannot be called upon to contribute more than what has been agreed by them to subscribe by way of participation in the share capital of the company. subject to restriction content in the consent of all partners articles can freely transfer his shares. 2) The company has the common seal which gives it an independent existence. Membership in the case of can form a Pvt Ltd Co. for other trading business 20 persons. companies act. 10) Management: Management of the firm lies in the hands of the partner except in case of a dormant or a sleeping partner. the liability of the shareholder is normally limited(exception a with unlimited liability) 5) Existence: Partnership has no perpetual succession A company has perpetual succession 6) Transferabilty of Shares: A partner cannot transfer his share3s without the A shareholder. for all. 11) The shareholders are not part owners or co owners of the company's property. & not to the shareholders. in the event of winding up of the company.
In case of the company form of org the memorandum & AOA defines the scope & objects of the company & also governs the day to day running of the business (A) ON THE BASIS OF INCORPORATION: I)Chartered companies / Royal chartered companies: A company which came into being by the grant of royal chartered issued by the king or queen are referred to as chartered companies or Royal chartered companies. Creditors of the company are only the creditors of the company & not of the shareholders individually. E. The Industrial Finance Corporation of India. 3. Most of the companies in India are registered co. leavings & responsibilities of the companies so creative. such companies enjoy the power of rights. The Chartered Bank of Australia. Bank of England.11) Creditors: Creditors of the firm are also the creditors of the partners 12) Audit of Accounts: In case of a partnership firm accounts need not to be audited by an auditor.. as laid down in the act The act also states the objects. Registered Companies: Registered companies are those which are incorporated with the registrar of the companies under the provisions of prevailing company’s act the company's act 1956 provides for the registration of companies procedure the companies are governed by the provision of companies Act. it is a partnership deed which defines the objects & scope of the firm.e. These companies are regulated (i.g. In accounts of the company must be audited by the auditor. 1956. RBI. Air India etc. privileges.g The East India Co. 2} Statutory Companies: Company which carne into existence by special act passed by the legislator of a country or a state is referred to as statutory company E. [B]ON THE BASIS OF LIABILITY: 1. LIC. under the company’s act 1956. 13) Documents: In case of a partnership. their powers & actions are governed) by that charter concern such type of company do not exist in India. SBI. i) The liability of members of a registered company may be limited or unlimited. ii) (S/l2(I) A company not having any limit on the liability of its members is called an “Unlimited company" or "A company with unlimited liability” -4 - . Company with an unlimited liability: S/l2 .
iii) ln the event of the winding up of the company the members are liable to contribute in the proportion of their share in the company a specified amount necessary to discharge in full the debts & liabilities of the company. ix) The articles of an unlimited company should state the no. i) The liability of members or a registered company may be limited or unlimited. the members are not liable to the company's creditors as the company being a separate legal entity from the persons who constitute it is liable to its creditor. b) A company limited by guarantee or c) A company limited by shares as well as by guarantee. v) In case. vii) If it has a share capital the article must state the amount of share capital with which the company is to be registered. ii) A company having a limit on the liability of its members is called a "Limited Company" or "A company with limited liability". Company with limited liability: . of members with which company is to be registered. vi) An unlimited company may or may not have a share capital. iii) A limited company may be. viii) An unlimited company with the share capital may be either a public company or a private company. 2. the creditors cannot obtain payment from the company they may petition the court for the 'winding up of the company. either: a) A company limited by shares or. a) A company limited by shares: . iv) How ever.
(ii) Such a company is also known as Guarantee Company. unpaid on the shares respectively held by them. (vi) A company limited by shares may be a public company or a private company. -5- . (iv) However. b) A company limited by guarantee: (i) A company limited by guarantee is one having the liability of its members limited by the memorandum to such amounts as the members may respectively under by the memorandum to contribute to the assets of the company in the event of its being wound up. (iii) The liability of members of Guarantee Company is limited by a stipulated amount mentioned in the memorandum.(i) It is a registered company having the liability of its members limited by its MOA to the amount. if nothing remains to be paid on the shares purchased by him. (ii) Such company also known as a share company. (v) His personal assets cannot be called upon for the payment of the liabilities of the company. a shareholder cannot be called upon to pay more than the amount remaining unpaid on his shares. (iii) The amount remaining unpaid on the shares can be called up at any time either during the life time of company or at the time of winding up of the company. . if any.
. charity. subscriptions etc. grants. (vii) In case of a company limited by guarantee having a share capital. or a private company. b) Prohibits the right to transfer its shares. limited by guarantee may or may not have a share capital.(iv) The guaranteed amount can be called up by the company from the member only at the time of winding up. culture. Private companies: S/3(i) (iii) (i) A private company is a company which by its articles. (iii) Every member of such a company is subject to two-fold liability i. charges. [C] ON THE BASIS OF GENERAL INTEREST OF THE PUBLIC: 1. (viii) A company limited by guarantee having a share capital may be a public co. science. a) Prohibits any invitation to the public to subscribe to any of its shares of debentures. subscriptions etc. (ii) Such a company raises its initial capital from its members. (vi) The working funds or a company limited by guarantee not having a share capital are raised from sources like donations.e. c) A company limited by shares as well as by guarantee: (i) It has both the elements of the guarantee company as well as the share company. (v) A Co. if the liability of the company exceeds to its assets. fees. to guarantee which may become effective either during the lifetime of the company or at the time of winding up. sports etc. & such companies are generally formed for the promotion of arts. while the normal working funds are provided from other sources such as fees. the liability of the members to limited to the face value of the shares subscribed by him.
which is a subsidiary of a gvt company.c) Limits the no. of its members to 50 excluding its employee's member or past employee member.& includes co. are governed by the provisions of the co act but by virtue of S/620. Public companies: S/3 (i) (iv) State that all companies other than private company are called public company. the central gvt may direct that any of the provisons or the act shall not apply to them or shall apply on with such exceptions. (ii) Just as any other co. 3. modifications & adoptions & may be notified by the gvt -6- . gvt co. 2. Government Company: S/617 (i) S/617 of companies act defines the government company as a company in which not less than 51 % of the paid up share capital is held by the central government or by any state government or government or partly held by the central gvt & partly by one or more state gvt/gvt’s.
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