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Group members

 Body

of specific act.

 Provision  Person

created by law.

 Legal

entity is distinct from members and promoters.

it is an artificial person created by law. with a perpetual succession and a common seal. as the case may be.  Justice LindleyAn association of many persons who contribute money or money‟s worth to a common stock and employ it in some trade or business and also share the profit and loss. Haney‟s- A company is an incorporated association. arising therefrom. . having a separate entity.

 Separate   legal entity Companies act 1956 Company can enter into valid contracts  Perpetual Succession   Continuity of life Members may come and go but the company go for ever .

To enter contract by a company.  Easy   transferability of shares Public company can transfer shares Private company cannot transfer shares . share holder will be eliminated without making any problem to company. must bear official seal of company. Common  seal   Separate personality of a company recognized. but needs human agency to act. It cannot sign.  Limited   liability Liability of members are limited to value of shares Once repaid.

 Stability  Limited liability  Easy and speedy transfer of shares  Economics of large scale .

 Complicated legal formalities  Heavy cost of floating a company  Separation of owner and control  Fraudulent promoters .

2. Filing of Documents The promoter has to get prepared the following documents and file them with the Registrar of Companies of the State in which the registered office of the company is situated. Approval for the proposed name A company can choose any name but it should not closely resemble the name of an existing company. .1.

authorised capital and the objects of the business. should contain the name. A minimum of two persons in the case of a private limited company and seven in the case of a public limited company must sign the document. the place where the registered office is situated.i) Memorandum of Association Defines the scope of activities of the company. iv) A List of Directors A list of directors who have consented to be its directors must be filed. ii) Articles of Association This contains the regulations connected with the internal management of the company iii) Original letter of approval Original letter of approval of name be obtained from the Registrar and be filed. .

v) Written consent to act as directors The directors have to give their consent in writing to act as its directors. he will issue the Certificate of Incorporation. . viii) The Registrar will scrutinize all the documents and if he finds them in order. vi) Notice of the Address of the Registered office vii) Statutory declaration A declaration stating that all the requirements of law relating to registration have been complied with is to be filed.

Name Clause Desires the name of a company 2. Situation Clause Determines the exact address of the registered office 3. Objects Clause states the activities of the company. .1.

Association Clause or Subscription Clause At least two persons in the case of a private limited company and seven in the case of public limited company must sign the memorandum and agree to take the number of shares shown against their names. Liability Clause states that the liability of members is limited.4. 5. . Capital Clause The amount of share capital with which the company is to be registered and its division into shares of fixed amount are also stated here. 6.

 Any document issued by a company inviting the public to buy shares or debentures comes under the definition of prospectus.  It serves as a “window through which a prospective investor can look into the soundness of a company‟s venture” .

1. 3. The kinds of shares with their total numbers and rights attaching to each class of shares. 4. It is fixed by the Articles . The main objects of the company. 2. description and occupations of the signatories to memorandum and the number of shares subscribed by each of them. The names. addresses. Qualification shares which a member must hold in order tobe eligible for election as director.

. rights and remuneration of the directors. managing directors and the secretaries and treasures. addresses.5. The amount payable along with application and on allotment of each class of shares which is being issued. The time during which subscriptions list will remain open 9. 8. The minimum subscription required for allotment of shares 7. the interest. The main points of any contract or proposed contract relating to preferential rights given to shares or debenturesof the company. 6. descriptions and occupations. The names.

The names of underwriters if any. 12. 15. .10. The amount of premium or discount on shares 11. The names and addresses of the auditors. Particulars regarding voting rights at the meetings of the company. A report by the auditors regarding the profits and losses of the company. 14. Particulars about reserves and surpluses. 16. 13. The amount of preliminary expenses .

rights attached thereto. .1. Share capital. etc. 7. Procedure relating to forfeiture of shares and their re-issue. Rules regarding transfer of shares and transmission of shares. Allotment of shares. 8. The extent to which the regulations in Table are to be excluded. 6. Issue of share certificates and share warrants. 3. calls on shares. 5. Conversion of shares into stock. Adoption or execution of preliminary contracts if any. different classes of shares. 2. 4.

manager and secretary. proxies and polls. Board meetings and voting rights of members. Alteration of share capital. Appointment of directors. 12. Qualification and remuneration of directors. Borrowing powers of directors. 15. Rules regarding use of common seal of company. .9. qualifications. 13. remuneration. duties. powers. etc of managing director. Appointment. 11. Payment of underwritting commission on shares and debentures. 14. 10.

. Payment of dividends. Procedure for conducting different kinds of general meetings. 17. creation of reserve. 19. 18. Winding up. if any.16. Issue of redeemable preference shares. etc.


 Public companies companies companies  Private  Foreign .

Shares are easily transferable. Minimum number of person is seven and there is no limit to the maximum number of shareholders.The public is invited to subscribe to the shares of the company usually by issuing a prospectus. . The name must end with the word „limited‟.

Restricts the right to transfer the shares. The Articles of Association may prescribe the following.A private limited company is a company which has a minimum paid up capital of rupees one lakh or such higher paid up capital. The name of the company must end with the words “ Private Limited”. . prohibits any invitation to the public to subscribe to any shares in or debentures of the company. if any. ii. i. as may be prescribed.members iii. limits the number of its members to 50 not including its present or past employee.

ii. There is no necessity for getting a certificate to commence business. A private Limited company can commence business on getting the certificate of incorporation. . iii. A private limited company can be incorporated with just two persons. A private limited company is prohibited from issuing prospectus for collecting its share capital. This facilitates easy formation as well as efficient functioning. iv. It can proceed to allot shares without having to wait for getting minimum subscription.i.

vii. vi. when further shares are issued.v. It is exempted from holding a statutory meeting. A private company can work with just two directors. But a private company is exempted from this restriction. Further they need not give any undertaking to take up any qualification shares . Directors of a private company are not required to file with the Registrar a written consent to act as a director. ix. they must first be offered to the existing shareholders. In the case of a public limited company. viii.

etc. . documents.Foreign company means a company incorporated outside India but having a place of business in India. It has to furnish to the authorities the full address of the registered or principal office of the company or a list of its directors or names and addresses of the residents in India authorised to receive notices.