You are on page 1of 30

The word company is derived from Latin.


is a voluntary association of person formed for the purpose of doing business, having a distinct name and limited liability.

Separate legal entity

Limited Liability By shares and limited by guarantee

Perpetual succession Common seal Transferability of shares Separate property Capacity to sue

Types of Companies

Royal Charter/ Chartered Companies

Registered companies

Statutatory Companies Eg. RBI,lic,Uti

Companies limited by shares.

Companies limited by guarantee.

Unlimited Companies

Public Companies

Private Companies


based of control Holding company Subsidiary company

Classification based on ownership Government company Foreign company

Private minimum paid up capital >= 1Lac 2<Members<50 cannot invite public to subscribe its share capital The right to transfer its shares is restricted by its Articles Private Limited at the end of its name. Legal controls are less Directors are allowed to borrow from the private companies less, restrictions on the remuneration of director Directors need not to be retire at 70

Public >=5Lac Members>7 invites the public to subscribe to share capital its shares are freely transferable limited Legal controls, restrictions are more and strict Directors cannot borrow from the public companies there are restrictions on the remuneration to be paid to its directors

Directors need to retire at 70

STEP: Documents to be filed are The memorandum of Association The Articles of association A list of directors A declaration stating that all requirements have been complied signed by any one i.e., a) An advocate of the Supreme court judge b) an attorney c) By a whole time CA d) a person named in the Articles


step: Getting Certificate of incorporation III step: Getting certificate of commencement of business Note: Physical filing of forms have been discontinued at the offices of the Registrar of companies. Only e-filing is done. This project is termed as MCA-21 launched by Ministry of corporate affairs.

promoter is a person who does the necessary preliminary work incidental to the formation of a company , the first persons who control a companys affairs are its promoters and so most often promoters are the first directors of the company.



articles of association are the rules, regulations, and bye-laws for the internal management of the affairs of a company. They are framed with the object of carrying out the aims and objects as set out in the memorandum of association.


of share capital Issue of share certificates Payment of underwriting commission Lien on shares Calls on shares Transfer of shares Forfeiture of share Conversion of shares into stock Issue of share warrants Alteration of capital


of Association is the document which contains the rules regarding constitution and activities or objects of the Company. is a fundamental agreement of the Company.



is governed by Memorandum of Association.



clause The name of the company with "Limited" as the last word of the name in the case of a public limited company, and with "Private Limited" as the last word of the name in the case of a private limited company. clause The State in which the registered office of the company is to be situated.




Clause The main objects or the purpose of the company is stated. It defines the scope of companies powers. clause: The memorandum of a company limited by shares or by guarantee shall also state that the liability of its members is limited.


Liability The


memorandum of a company limited by guarantee shall also state that each member undertakes to contribute to the assets of the company in the event of its being wound up. the case of a company having a share capital the memorandum shall also state the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount.


be printed,
be divided into paragraphs numbered consecutively, be signed by 7(2 in case of private company) subscriber.


It is the charter of company indicating its nature of business, its nationality and its capital Defines scope of activities within and outside the area beyond which the actions of the company cannot go

They are regulations for the internal management of the company and are subsidiary to the memorandum They are rules for carrying out the objects of the company as set out in the memorandum

It is a Supreme document
Every company must have its own memorandum There are strict restrictions on its alteration. It cannot be altered except with the sanction of company law board Any act of the company which is ultra a vires the memorandum is wholly void

It is subordinate to the memorandum

A company limited by shares need not have articles of its own. They can be altered by a special resolution Any act of the company which is ultra vires the articles can be confirmed by the shareholders


any document inviting deposits from public or inviting offers from public for the subscription of shares or debentures of a company is a prospectus.

prospectus to be in writing invitation to public offer to the public dating of prospectus (sec 55) registration of prospectus(sec 60) information of memorandum (sec 60-B)



General & add of company. 2. name of regional stock exchange. 3. rating of CRISIL. 4. date of opening and closing of the issue.5.declaration about refund of the issue. Capital structure authorized, issued, subscribed and paid-up capital 2) size of present issue 3)paid-up: a)after the present issue, b)after conversion of debentures

3)Term of the present issue : a)terms of payment b)rights of the instruments holder c)how to apply d)any special for company and its shareholders. 4)Particulars of the issue: a)object b)project cost c)means of financing. 5)Company ,management and project: a)history, main objects of business b)subsidiary of the company. C)promoters d)collaboration agreement


in regarding to the company: a) name of company b)year of the issue c)type of issue d)amount of issue e)rate of dividend paid management perception of risk factor :a)sensitivity to foreign exchange rate fluctuation b)difficulty in availability of raw material.


to third parties Under the act( relating to prospectus) Liability for acts of ultra vires Liability of frauds and torts o Liability to the company Ultra vires acts negligence Breach of trust Misfeasance(wilful misconduct)


for breach of statutory duties Eg: improper maintenace of accounts, filing of returns etc.,

for acts of his co-directors A director is not liable for the acts of his codirectors provided he has no knowledge and he was not a party. His co-directors are his agents or servants.

Winding up of a company is the process whereby its life is ended and its property administered for the benefit of its creditors and members. Modes of Winding up - A company may be would up in any one of the three ways,

(I) compulsory winding up ie., by Court (s.433) (Ii) voluntary winding up; (s 484) (ii) voluntary winding up subject to the supervision of the Court.(s 522)

Section 433 provides that a company may be wound up by the Court :

(a) if the company has, by special resolution, so resolved ; (b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting, where applicable; but petition should be filed within 14 days.

(c) if the company within a year from its incorporation, or does not commence its business suspend its business for a whole year, (d) if the number of members is reducedin the case of a public company, below 7, and in the case or a private company, below 2;

Voluntary Winding up - Winding up by the members or creditors without any intervention of the Court is called voluntary winding up. As per section 484, a company may be wound up voluntarily by Ordinary resolution or by Special resolution.

By passing an ordinary resolution in general meeting

- A voluntary

winding up may be effected under supervision of the Court where an application to that effect is made by a creditor or a contributory or the company or the liquidator and the Court makes an order that the voluntary winding up should continue subject to the supervision of the Court.