Companies Act 2013

June 2016,Ranchi
DR. RAJEN MEHROTRA
FORMER SR. SPECIALIST ON EMPLOYERS ACTIVITIES FOR
SOUTH ASIA, ILO
&
FORMER HEAD CORPORATE HR of NOVARTIS INDIA & ACC LTD

E-mail: rajenmehrotra@gmail.com

Classification on The Basis of Liability

Companies with limited Liability.

(i) Limited by Shares {i.e. liability limited to the value of shares held
by a member }
(ii) Limited by Guarantee {i.e. limited to the fixed amount which a
member undertakes to contribute to the assets of the company on
being wound up } . These are companies not for profit but for the
promotion of art, science, charity, sports .
Companies with unlimited Liability In such a company every
member is liable for the debts of the company

Classification on The Basis of Number

of members

Private Company
(i) two or more persons as members with a minimum paid up
capital of Rs 100,000/- and by Articles (a)restricts the right to
transfer its shares (b) limits the number of members to 50 not
including employee members.
(ii) Minimum number of directors 2
Public Company
(i) seven or more persons as members has a minimum paid up
capital of Rs 500,000/(ii) Minimum number of directors 3

Classification on The Basis of

Ownership

Government Company
(i) any company in which not less than 51% of the paid -up share
capital is held by the Central Government or / and any State
Government
(ii) Annual report of Central Government company to be placed
before Parliament . Annual report of State Government company to
be placed before Legislative assembly
(iii) The auditor of a Government Company to be appointed by
Comptroller and Auditor General of India and the audit report also
to be submitted to Comptroller and Auditor General of India

Classification on The Basis of

Ownership

Association not for Profit (Section 8 of Companies Act ,2013 ).

(i) A company name must end with the word Limited in the case of
a Public Limited Company and with the word Private Limited in the
case of a Private Company
(ii) A company limited by Guarantee {i.e. limited to the fixed
amount which a member undertakes to contribute to the assets of
the company on being wound up } . These are companies not for
profit , but for the promotion of art, science, charity, sports can end
without the word limited after obtaining license from the Central
Government .

Classification on The Basis of

Ownership

One person company

(i) This is a company (usually Private ) in which one person holds
whole of the share capital of the company and in order to meet the
statutory requirement of minimum number of members , some
dummy members who are mostly relation or friend is made a
member with 1 or 2 shares.

Classification on The Basis of

Ownership

Dormant Company
(i) Which means companies that are not carrying on any significant
accounting transactions for a period of two years can apply to
Registrar of Companies for getting declared itself as Dormant
Company

Formation of Company

Incorporation of Company mode of forming incorporated

company
(i) Any 7 or more persons (2 or more persons in the case of a
private company) associated for any lawful purpose may form an
incorporated company, with or without liability . They shall
subscribe their names to a Memorandum of Association and also
comply with other formalities in respect of registration for
incorporation of the company and receive certificate of
incorporation from the registrar of companies.

Formation of Company

Effect of Registration
When a company is registered and a certificate of incorporation is
issued by the registrar three important consequences follow:-.(i) The company becomes a distinct legal entity . Its life
commences from the date mentioned in the certificate of
incorporation..
(ii) The company acquires a perpetual succession. The members
may come and go , but it goes on for ever unless wound up.
(iii) the company property is not the property of the shareholders.
The share holders have a right to the profits of the company hen
realized and divided. Likewise the liability of the company is not the
liability of the individual shareholders.

Memorandum of Association

Contents of Memorandum of Association

(i) Name of company with last word Limited or Private Limited
(ii) The state in which the registered office of the company to be
situated.
(iii) The object for which the company is proposed to be
incorporated and any matter considered necessary in furtherance
thereof.
(iv) Limited liability
(v) Share Capital

Articles of Association

Contents of Articles of Association

(i) Share Capital and variation of rights
(ii) Lien
(iii) Calls on Shares
(iv) Transfer of shares
(v) Transmission of shares
(vi) Forfeiture of shares
(vii) Alteration of capital.
(viii) Capitalization of Profits
(ix) Buy-back of shares
(x) General meetings

Articles of Association

Contents of Articles of Association

(xi) Proceeding of general meetings
(xii) Adjournment of meetings
(xiii)Voting Rights
(xiv) Proxy
(xv) Board of Directors
(xvi) Proceedings of the Board
(xvii)CEO, Company Secretary & CFO
(xviii) Seal

Articles of Association

Contents of Articles of Association

(xix) Dividend and reserves
(xx) Accounts
(xxi) winding up.
(xx) Indemnity

Share Capital & Debentures

Kinds of Share Capital

Equity shares capital (i) with voting rights or (ii) with differential
rights as to dividend ,voting or otherwise in accordance with rules
as may be prescribed and
Preference Share Capital.

Issue of Sweat Equity Share

Sweat Equity Shares

Means such equity shares as are issued by a company to its
directors or employees at discount or for consideration ,other tthan
cash, for providing their know-how are making avalable rights in
the nature of intellectual property rights ,or vaue additions by
whatever name called.

Power of Company to purchase its own

Equity

Presently companies which have huge reserves or have sold

some part of the business or sale of real estate are buying
back a certain percentage (i.e. 25 % or less of the aggregate of
paid up capital and free reserves of the company ) of shares
from their members and there are guidelines on it to take care
of the interest of minority shareholders.

Management & Administration of

Company

Annual General Meeting

Extraordinary General Meeting
Notice for meeting (21 days)
Quorum for Meeting in case of a public company (i) five members
personally present if the number of members as on date of meeting
is not more than 1000, (ii) fifteen members personally present if the
number of members as on date of meeting is not more than 5000 ,
(iii) thirty members personally present if the number of members as
on date of meeting is exceeding 5000 . If the quorum is not present
within half an-hour fro the time appointed for holding a meeting the
meeting shall stand adjourned to the same day in the next week at
the same time and place , or to such other date and time and place
as the Board may determine.

Management & Administration of

Company

Chairman of the Meeting

Proxies
Postal ballot

Audit & Auditors

Appointment of auditors
Removal , resignation of auditors
Eligibility , qualification of auditors
Remuneration of auditors
Powers and duties of auditors
Auditors not to render certain services

Appointment of Directors

Company to have One Third Independent Directors.

Director Identification Number (DIN)
Number of Directorships (maximum of 10 Public Limited
Companies)
Duties of Directors

Meeting of Boards & Its Powers

Meeting of Board
Quorum
Audit Committee
Nomination & Remuneration Committee and Stake holder
Relationship Committee
Powers of Board
Disclosure of Interest by Director
Related Party Transactions
.