Company Law

Company Law
1956
Vivek Parashar: looksvivek@gmail.com

Contents
FEATURES
TYPES
FORMATION
COMMENCEMENT
DOCTRINES
DIRECTORS
METHODS OF RAISING CAPITAL
MEETINGS
WINDING UP
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FEATURES
Separate legal entity
Limited Liability
Transferability of shares
Perpetual Succession
Can own and sell property
Can sue and be sued
Types
Public
Private
Holding and Subsidiary
Companies limited by
shares/guarantee/unlimited
Corporations
Public Financial Institutions
FORMATION
PROMOTER and his role
Pre Incorporation Contracts
Documents for Incorporation
MOA
AOA
Agreement with MD/Director/manager
Qualification shares
Statutory Declaration.
Effects of Incorporation
Commencement
Not required in the case of Private Companies
Link with prospectus
Minimum subscription
Directors shares
DOCTRINES
CORPORATE VEIL
ULTRA VIRES
CONSTRUCTIVE NOTICE
INDOOR MANAGEMENT
CORPORATE GOVERNANCE
DIRECTORS
ROLE
TYPES
APPOINTMENT
POWERS
Role of Directors
Section 291 which states that the Board of
Directors can do all those acts which a
company can do. This leads to the principle of
Agency i.e. the Board of Directors are agents
of the company. However it may be noted that
this applies to the whole Board and not
individual Directors.
Role of Directors (continued)
The Directors have a fiduciary relationship with the
company i.e. a relationship of trust and faith.( please
note that it does not extend to the shareholders).
Four duties of Director (Prof Gower)
- to act in interest of company
- to act within the parameters
- not to put himself in a position of conflict where his
personal interests clash with the companys
- his responsibility cannot be fettered( delegated)
TYPES
Managing Director
Whole Time Director
Part Time Director
Independent Director
Nominee Director
Additional Director
Alternate Director
APPOINTMENT
By the Articles of Association
By the Shareholders
DEFINITION AND NATURE OF A
COMPANY
Company Law, 1956
Companys Act of 1956
a group of persons associated together for the
purpose of carrying on a business, with a view to
earn profits.
The word Company is an amalgamation of the
Latin word Com meaning with or together and
Pains meaning bread.
a group of persons who have come together or
who have contributed money for some common
person and who have incorporated themselves
into a distinct legal entity in the form of a
company for that purpose.
Characteristics of a Company
Separate Legal Entity
Limited Liability
Separate Legal Entity
On incorporation under law, a company becomes
a separate legal entity as compared to its
members.
The company is different and distinct from its
members in law. It has its own name and its own
seal, its assets and liabilities are separate and
distinct from those of its members.
It is capable of owning property, incurring debt,
borrowing money, having a bank account,
employing people, entering into contracts and
suing and being sued separately.
Salomon v. Salomon & co. Ltd.(1897) A.C. 22.
S sold his boots business to a newly formed company for 30,000.
His wife, one daughter and four sons took up one share of 1 each.
S took 23,000 shares of 1 each and 10,000 debentures in the
company.
The debentures gave S a charge over the assets of the company as the
consideration for the transfer of the business.
Subsequently when the company was wound up, its assets were found
to the worth 6,000 and its liabilities amounted to 17,000 of which
10,000 were due to S (secured by debentures) and 7,000 due to
unsecured creditors, the unsecured creditors claimed that S and the
company were one and the same person and that the company was a
mere agent for S and was hence they should be paid in priority to S.
Held, the company was, in the eyes of the law, a separate person
independent from S and was not his agent.
S, though virtually the holder of all the shares in the company, was also
a secured creditor and was entitled to repayment in priority to the
unsecured creditors.
Limited Liability
The liability of the members of the company is limited to
contribution to the assets of the company up to the face
value of shares held by him.
A member is liable to pay only the uncalled money due on
shares held by him when called upon to pay and nothing
more, even if liabilities of the company far exceeds its
assets.
On the other hand, partners of a partnership firm have
unlimited liability i.e. if the assets of the firm are not
adequate to pay the liabilities of the firm, the creditors can
force the partners to make good the deficit from their
personal assets.
This cannot be done in case of a company once the
members have paid all their dues towards the shares held
by them in the company.
A company does not die or cease to exist unless it
is specifically wound up or the task for which it
was formed has been completed. Membership of
a company may keep on changing from time to
time but that does not affect life of the company.
Death or insolvency of member does not affect
the existence of the company.
There is a very good saying. Even where during
war all the members of a private company, while
in general meeting was killed by a bomb, the
company survived; not even a hydrogen bomb
could have destroyed it.
Separate Property
A company is a distinct legal entity. The companys
property is its own. A member cannot claim to be
owner of the companys property during the
existence of the company
Transferability of Shares
Shares in a company are freely transferable, subject
to certain conditions, such that no shareholder is
permanently or necessarily wedded to a company.
When a member transfers his shares to another
person, the transferee steps into the shoes of the
transferor and acquires all the rights of the
transferor in respect of those shares.
Common Seal
A company is a artificial person and does not
have a physical presence. Therefore, it acts
through its Board of Directors for carrying out its
activities and entering into various agreements.
Such contracts must be under the seal of the
company. The common seal is the official
signature of the company. The name of the
company must be engraved on the common
seal. Any document not bearing the seal of the
company may not be accepted as authentic and
may not have any legal force.
Capacity to sue and Being Sued
A company can sue or be sued in its own
name as distinct from its members.
Separate Management
A company is administered and managed
by its managerial personnel i.e. the Board
of Directors. The shareholders are simply
the holders of the shares in the company
and need not be necessarily the
managers of the company.
Company Partnership
A Company is association of Partnership firm is sum total of
persons who have come together persons who have come together to
share the profits of the business
for a specific purpose carried on by them or any of them
Has a separate legal entity as soon It does not have a separate legal
as it is incorporated under law entity
Liability of shareholders of a Liability of the partners is unlimited
limited company is limited to the Property of the firm belongs to the
partners and they are collectively
extent of unpaid share entitled to it
Property belongs to the company A partner cannot transfer his shares in
and not to its members the partnership firm without the
consent of all other partners
Shares may be transferred without
Banking biz: 2-20 members
the permission of the other
Other business: 2-10 members
members, in absence of provision
100 % consensus is required for any
to contrary in AOA decision
Public co: 7-Unlimited members On the death of any partner, the
Private co: 2-50 Members partnership is dissolved unless there is
provision to the contrary
Decision of the majority prevails
Illegal Association
Not more than 10 (other business) or 20 persons (banking
business) can come together for carrying on any business,
unless the association is registered under the Companies Act
or any other Indian law. Any association, which does not
comply with the above norms, is an illegal association.
However, you cannot apply this provision in the following
cases
A Joint Hindu Family business comprising of family members only
But where two or more Joint Hindu families come together for
business through partnership, the total number of members
cannot exceed 10 or 20 as the case may be, but in computing the
number of persons, minor members of such family will be
excluded
Any association of charitable, religious, scientific trust or
organisation which is not formed with a profit motive
Foreign companies looksvivek@gmail.com
Consequences of non-Registration
Law does not recognize an illegal association. An
illegal association cannot enter into any contract,
cannot sue any members or any outsider, and cannot
be sued by any members or outsiders for any of its
debts. The members of the illegal association are
personally for the obligations of the illegal
association. A member may be liable to a fine of Rs.
1000. Any member of an illegal association cannot
sue another member in respect of any matter
connected with the association.
TYPES OF COMPANIES
Company Law, 1956
Public co Private co
2-50 Members
7-Unlimited Restricts the right of
members to transfer its
members shares
Limits the number of its
Minimum members to fifty
Prohibits an invitation to
number of the public to subscribe to
any shares in or the
directors is 3 debentures of the
company
Minimum number of
directors is 2
privileges and exemptions of a
private limited company
Minimum number of members is 2
Minimum number of directors is 2
Prohibition of allotment of the shares or debentures in
certain cases unless statement in lieu of prospectus has
been delivered to the Registrar of Companies does not
apply
A special resolution to issue shares to non-members is
not required
does not need a separate certificate of commencement
of business
No person other than the member of the company
concerned shall be entitled to inspect or obtain the
copies of profit and loss account of that company
Companies Deemed to be Public
limited Company
Where at least 25% of the paid up share capital of a
private company is held by one or more bodies
corporate
Where the annual average turnover of the private
company during the period of three consecutive
financial years is not less than Rs. 25 crores
Where not less than 25% of the paid up capital of a
public company limited is held by the private
company
Where a private company accepts deposits after the
invitation is made by advertisement or renews
deposits from the public
Company limited by guarantee Company limited by shares
is a registered company having the liability of members
the liability of its members is limited to the amount
limited by its MOA to such of uncalled share capital.
amount as the members may
respectively thereby No member of company
undertake to pay if necessary limited by the shares can
on liquidation of the company. be called upon to pay
The liability of the members to more than the face value
pay the guaranteed amount
of shares or so much of it
arises only when the company
has gone into liquidation and as is remaining unpaid.
not when it is a going concern. Members have no
A guarantee company may be liability in case of fully
a company with share capital paid up shares.
or without share capital. looksvivek@gmail.com
Government Companies
Any company in which not less than 51% of the paid up
share capital is held by the Central Government or any
State Government or partly by the Central Government
and partly by the one or more State Governments and
includes a company which is a subsidiary of a
government company.
Government Companies are also governed by the
provisions of the Companies Act.
However, the Central Government may direct that
certain provisions of the Companies Act shall not apply
or shall apply only with such exceptions, modifications
and adaptions as may be specified to such government
companies.
Holding and Subsidiary companies
A company shall be deemed to be subsidiary of another
company if
That other company controls the composition of its board of
directors
That other company holds more than half in face value of its
equity share capital
Company B is subsidiary of the Company A and Company C is
subsidiary of Company B, therefore Company C is subsidiary
of Company A
The control of the composition of the Board of

Directors of the company means that the holding
company has the power at its discretion to appoint or
remove all or majority of directors of the subsidiary
company without consent or concurrence of any other
person looksvivek@gmail.com
One man company
One man company is a company in which one man
holds practically the 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 his friends
or relations, hold just 1or 2 shares each.
It is like any other company is a legal entity distinct
from its members.
The dummy members are usually nominees of the
principal shareholder who is the virtual owner of
the business and who carries it on with limited
liability. looksvivek@gmail.com
PROMOTION AND FORMATION
OF A COMPANY
Company Law, 1956
forming
The process of forming a company can be
divided into four distinct stages:
Promotion
Registration or incorporation
Capital Subscription
Commencement of Business
Promotion
This is the first stage in the formation of a company. It refers to the entire
process by which a company is brought into existence.
It starts with the conceptualization of the birth a company and determination
of the purpose for which it is to be formed.
Promoters
The persons who conceive the company and invest the initial funds are known
as the promoters of the company.
The promoters enter into preliminary contracts with vendors and make
arrangements for the preparation, advertisement and the circulation of
prospectus and placement of capital.
However, a person who merely acts in his professional capacity on behalf of the
promoter (e.g. lawyer, CA, etc) for drawing up the agreement or other
documents or prepares the figures on behalf of the promoter and whom the
promoter pays is not a promoter.
Pre-Incorporation or Preliminary Contracts
The promoters of a company usually enter into contract to acquire some
property or right for the company, which is yet to be incorporated.
Such contracts are called Pre-Incorporation
looksvivek@gmail.com or Preliminary Contracts.
Company not bound by pre-incorporation
contract
English & colonial produce co. ltd Re (1906)
A solicitor prepared the memorandum and
Articles of association of a company and paid
the necessary registration fees and other
incidental expenses to obtain of the company.
He did this on the instruction of certain
persons who later became directors of the
company.
Held, the company was not liable of his work.
Company can not enforce pre-incorporation
contract
Natal land & colonization co. Ltd. V. Pauline colliery
& Development syndicate ltd., (1904)
The N company agreed with an agent of the P
syndicate Ltd before its formation to grant a mining
lease to the syndicate.
The syndicate was registered and discovered a seam
of coal.
The company refused to grant the lease.
Held, there was no binding contract between the
company and the syndicate.
Promoters are personally liable
Kelner v. Baxter, (1866)
A hotel company was about to be formed and persons
responsible for the new company signed an agreement
on 27th January, 1866, for the purchase of stock on
behalf of the proposed company, payment to be made
on 28th January, 1866.
The company was incorporated on 20th February 1866.
the goods were consumed in the business and the
company went into liquidation before the debt was
paid.
The persons signing the agreement were sued on the
contract.
Held, The persons signing were promoters and
personally liable on their signatures.
Promoter Duties
He must not make any secret profit out of the
promotion of the company. Secret profit is
made by entering into a transaction on his
own behalf and then sell to concerned
property to the company at a profit without
making disclosure of the profit to the
company or its members.
He must make full disclosure to the company
of all relevant facts including to any profit
made by him in transaction with the company.
If promoter duties not fulfilled,
company may
Rescind or cancel the contract made and if he has
made profit on any related transaction, that profit
also may be recovered
Retain the property paying no more for it then what
the promoter has paid for it depriving him of the
secret profit
the company can sue him to for breach of trust.
Damages up to the difference between the market
value of the property and the contract price can be
recovered from him looksvivek@gmail.com
promoter may be rewarded by the
company in these ways
The company may to pay some remuneration for the services
rendered
The promoter may make profits on transactions entered by
him with the company after making full disclosure to the
company and its members
The promoter may sell his property for fully paid shares in the
company after making full disclosures
The promoter may be given an option to buy further shares in
the company
The promoter may be given commission on shares sold
The articles of the Company may provide for fixed sum to be
paid by the company to him. However, such provision has no
legal effect and the promoter cannot sue to enforce it but if
the company makes suchlooksvivek@gmail.com
payment, it cannot recover it back
incorporation of the company
Registration
The promoters must make a decision regarding
the type of company i.e. a public company or a
private company or an unlimited company, etc
and accordingly prepare the documents for
incorporation of the company.
In this connection the Memorandum and Articles
of Association (MA & AA) are crucial documents
to be prepared.
Mode of forming incorporated company
Any 7 or more persons (2 or more in case of a
private company) associated for any lawful
purpose may form an incorporated company,
with or without limited liability.
They shall subscribe their names to a
Memorandum of Association and also comply
other formalities in respect of registration.
A company so formed may be:
A company limited by shares, or
A company limited by guarantee, or
Unlimited company
Registration of the Company
Once the documents have been prepared, vetted, stamped and
signed, they must be filed with the Registrar of Companies for
incorporating the Company. The following documents must be
filed in this connection:
The Memorandum of Association duly signed by subscribers and the
Articles of Association, if any signed by subscribers to the Memorandum of
Association
An agreement, if any, which the company proposes to enter into with any
individual for appointment as its managing director or whole-time director
or manager
A statutory declaration in Form 1 by an advocate, attorney or pleader
entitled to appear before the High Court or a company secretary or
Chartered Accountant in whole time practice in India who is engaged in
the formation of the company or by a person who is named as a director or
manager or secretary of the company that the requirements of the
Companies Act have been complied with in respect of the registration of
the company and matters precedent and incidental thereto
>> continued on next slide
In addition to the above, in case of a public
company, the following documents must
also be filed
Written consent of directors in Form 29 to
agree to act as directors and their written
consent to act as directors and take up
qualification shares
The complete address of the registered office
of the company in Form 18.
Details of the directors, managing director and
manager of the company in Form 32.
Certificate of Incorporation
Once all the above documents have been filed
and they are found to be in order, the Registrar of
Companies will issue Certificate of Incorporation
of the Company.
This document is the birth certificate of the
company and is proof of the existence of the
company.
Once, this certificate is issued, the company
cannot cease its existence unless it is dissolved by
order of the Court.
Rule In Peels Case
The certificate of incorporation given by
registrar in respect of a company is conclusive
evidence that all the requirements of the
Companies Act have been complied in respect
of registration
Commencement of Business
A private company or a company having no share
capital can commence its business immediately
after it has been incorporated. However, other
companies can commence their activities only after
they have obtained Certificate of Commencement
of Business. For this purpose, the following
additional formalities have to be complied with:
>> Continued on next slide
If a company has share capital and has
issued a prospectus
Shares up to the amount of minimum subscription
must be allotted.
Every director has paid to the company on each of the
shares, which he has taken the same amount as the
public has paid on such shares.
No money is or may become payable to the applicants
of shares or debentures for failure to apply for or to
obtain permission to deal in those shares or
debentures in any recognized stock exchange.
A statutory declaration in Form 19 signed by one
director or the employee - company secretary or a
Company secretary in whole time practice that the
above provisions have been complied with must be
filed. looksvivek@gmail.com
If a company has share capital but has
not issued a prospectus
It must file a statement in lieu of prospectus with
the Registrar of Companies
Every director has paid to the company on each of
the shares, which he has taken the same amount as
the other members have paid on such shares
A statutory declaration in Form 20 signed by one
director or the employee - company secretary or a
Company secretary in whole time practice that the
above provisions have been complied with must be
filed.
Once the above provisions have been
complied with, the Registrar of Companies
grants Certificate of Commencement of
Business after which the company can
commence its activities.
MEMORANDUM OF ASSOCIATION
Memorandum of Association of a
company is its charter & defines the
limitations of the powers of a company. It
contains the fundamental condition upon
which alone the company is allowed to be
incorporated
- Lord Cairns
Definitions
Memorandum of Association of a company as
originally framed or as altered from time to time in
pursuance of any previous companies law or of this
Act
Sec.2 (28)
The purpose of Memorandum of Association is to

enable the share holders, creditors and those who
deal with the company to know what its permitted
range of enterprise is.
- Lord Macmillan
FORM OF
Form as given in table B, C, D, & E in Schedule I

Printed
Divided into paragraphs
Numbered consecutively
Signed by at least 7 persons for public & 2 for
private company. Signatures attested by one
witness. Subscribers shall at least take one share
CONTENTS OF MEMORANDUM OF
ASSOCIATION
Six Clauses
Name Registered
Objects
office
Association
Liability Capital or subscription
DOCTRINE OF ULTRA VIRES
The words :
Ultra means beyond
Vires means the powers
Ultra Vires means beyond the powers
A company which owes its incorporation to statutory

authority cannot effectively do anything beyond the
powers expressly or impliedly conferred upon it by the
statute or Memorandum of Association.
ASHBURY RAILWAY CARRIAGE & IRON
COMPANY LTD. Y. RICHE
The company has been formed with the object :

To make and sell, or lend or hire railway carriage
and wagons and all kinds of railway plants, to
carry on the business of mechanical engineers and
general contractors etc.
The company contracted with Riche to finance the
construction of Railway line in Belgium. The
company repudiated the agreement and was sued
for breach of contract.
ASHBURV RAILWAY CARRIAGE & IRON
COMPANY LTD. Y. RICHE
Rich Contended :
Firstly, that the contract in question came well
within the meaning of the words general
contractors, and, was therefore, within the powers
of the company, secondly, that the contract was
ratified by the majority of the shareholders.
EFFECTS OF DOCTRINE OF ULTRA
VIRES
Void Ab Initio
Injunction
Personal Liability of Directors
Acquisition of Property that is Ultra Vires
Directors personally liable to third parties
ALTERATION OF NAME CLAUSE
Special Resolution.
Written Approval of Central Government.
No Approval of Central Government is
necessary if the change of name involves only
the addition or deletion of the word Private.
Change by ordinary resolution and approval of
Central Government when name is identical or
too closely resembles the name of an existing
company.
CHANGE OF REGISTERED OFFICE
From one premises to another premises in the

same city, town or village
By passing a resolution of Board of Directors
From one town or city or village to another town

or city or village in the same state
1. Special Resolution.
2. Confirmation of Regional Director when
jurisdiction of Registrar of companies is
changed.
3. Copy of (i) & (ii) to be filed with ROC.
4. Notice of new location to ROC within 30
days.
From one state to another state

1. Special Resolution
2. Confirmation of Central Govt.
3. For certain Purposes only
(As given in section 17)
ALTERATION OF OBJECTS CLAUSE
A. Special Resolution
B. Alteration is sought on any of these grounds:
To carry on its business more economically & more
efficiently
To attain its main purpose by new or improved means
To enlarge or change the local area of its operations
To carry on some business which under existing
circumstances may conveniently or advantageously be
combined with the business of the company
To restrict or abandon any of the objects specified in the
memorandum
To sell or dispose off the whole or any part of the
undertaking
To amalgamate with any other company
C. Copy of (A) is filed with ROC within 30 days
ALTERATION OF LIABILITY CLAUSE
The liability of a member of a company cannot

be increased unless the member agrees in
writing.
From unlimited liability, it can be made limited

by re-registration of the company.
ALTERATION OF CAPITAL CLAUSE
Increase of authorized share capital.
Consolidation and subdivision of shares.
Conversion of shares into stock & vice versa.
Diminution of share capital.
ARTICLES OF ASSOCIATION
Definition
Article means the articles of association of a

company as originally framed or as altered from
time to time in pursuance of any previous
companies laws or of this Act
Sec.2 (2)
ARTICLES OF ASSOCIATION
. The articles proceed to define the duties, the

right and the powers of the governing body as
between themselves and the company at large and
the mode and form in which the business of the
company is to be carried on and the mode and form
in which changes in the internal regulations of the
company may from time to time be made.
- Lord Cairns
CONTENTS OF ARTICLES
1. The extent to which Table A is applicable

2. Different classes of shares and their rights
3. Procedure of making an issue of share
capital and allotment thereof
4. Procedure of issuing share certificates and
share warrants
5. Forfeiture of shares and the procedure of
their re-issue
6. Procedure for transfer and transmission of
shares
7. The time lag in between calls on shares

conversion of shares into stock
8. Directors, their appointment, remuneration,
qualifications, etc.
9. Account and audit
10. Lien of shares
11. Payment of commission on shares and debentures
to underwriters
12. Rules for adoption for preliminary contracts if
any
13. Re-organization and consolidation of shares

capital
14. Alteration of share capital & Buyback of
shares
15. Borrowing power of directors
16. General meeting, proxies and polls
17. Voting rights of members
18. Winding up
ALTERATION OF ARTICLES (SEC 31)
Procedure :
Alteration by passing a special resolution.

Copy of resolution to be sent to registrar
within 30 days.
Copy of altered articles to be registered
within 3 months of passing of resolution.
LIMITATIONS REGARDING ALTERATION
OF ARTICLES
1. Alteration should not be inconsistent with

a. Provisions of Company Act or any other statute
b. Conditions contained in memorandum
2. Approval of govt. to be obtained in certain cases
3. Alteration must not deprive any person of his rights
under a contract
4. Alteration must not constitute a fraud on the
minority
5. Alteration must be bonafide for the benefit of the
company as a whole
BINDING FORCE OF MEMORANDUM AND
ARTICLES (SEC 36)
The following are the legal implications:
Company is bound to its members

Each member is bound to the company
Each member is bound to other members in
exceptional case only
Neither the company nor the members are bound
to outsiders
Memorandum of Articles of Association
Association
Charter of Company Regulations for interal management
Defines the scope of the activities Rules for carrying out the objects of
company.
Supreme document Subordinate to the memorandum.
Must for every company Company limited by shares need

not have it (Table A applies)
Strict restrictions, alteration only Can be altered by special

with sanction of central govt./ resolution.
tribunal.
Act, Ultra Vires is wholly void & Act Ultra Vires (but intra vires the
cannot be ratified. memorandum) can be ratified.
DOCTRINE OF CONSTRUCTIVE NOTICE
Documents are open & accessible to all.

Presumption that any outsider dealing with
company has read & understood the
documents.
It is a negative doctrine, acting only against
the outsiders & not the company.
DOCTRINE OF INDOOR MANAGEMENT
Persons dealing with the company in good faith

have a right to assume that the internal
requirements prescribed in public documents
have been observed
Persons are not bound to enquire into regularity
of internal proceedings
Exceptions :
Knowledge of irregularity
Negligence on part of the outsider
Forgery
Acts outside scope looksvivek@gmail.com
of apparent authority
Lifting the Veil of Incorporation
Although the general rule is that a company

has a separate legal identity from its
members, there are exceptions to this rule
when a court will not treat a company as a
separate entity
This is often referred to as lifting the veil
of incorporation
Often, this is to prevent abuse of the
principle of separate identity
Lifting the Veil of Incorporation (cont.)
For example, under the Companies Act

1985, if a company trades with fewer than
two members then the sole member has
unlimited liability for company debts
Also under the Companies Act, officers of
the company will become personally liable
if they issue bills of exchange or enter into
contracts on behalf of the company but do
not use the companys full name
At common law, the general principle is

that the courts will not allow a company to
be used for a fraudulent purpose or to
avoid a legal duty
For example, in Gilford Motor Co v Horne, a
term in an employees contract prevented
him from approaching former customers
after he left Gilford Motor Co
Therefore, when he left he formed his own

company, and the company approached his
former customers
The court held the company was a sham
being used to avoid the term in his contract
Thank You
Vivek Parashar: looksvivek@gmail.com

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Company Law

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Company Law, 1956

The control of the composition of the Board of

>> Continued on next slide

The purpose of Memorandum of Association is to

Form as given in table B, C, D, & E in Schedule I

A company which owes its incorporation to statutory

The company has been formed with the object :

From one premises to another premises in the

By passing a resolution of Board of Directors

From one town or city or village to another town

From one state to another state

(As given in section 17)

The liability of a member of a company cannot

From unlimited liability, it can be made limited

Increase of authorized share capital.

Consolidation and subdivision of shares.

Conversion of shares into stock & vice versa.

Diminution of share capital.

Article means the articles of association of a

. The articles proceed to define the duties, the

1. The extent to which Table A is applicable

7. The time lag in between calls on shares

13. Re-organization and consolidation of shares

Alteration by passing a special resolution.

1. Alteration should not be inconsistent with

The following are the legal implications:

Company is bound to its members

Supreme document Subordinate to the memorandum.

Must for every company Company limited by shares need

Strict restrictions, alteration only Can be altered by special

Documents are open & accessible to all.

Persons dealing with the company in good faith

Although the general rule is that a company

For example, under the Companies Act

At common law, the general principle is

Therefore, when he left he formed his own

Vivek Parashar: looksvivek@gmail.com

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