 Meaning

 Definition

 Kinds of Company

 Different between Public company

and Private company
Meaning
A Company means a group of person
associated to achieve some common objectives.
Definition
According to prof haney, “A company is
an artificial person created by law,
having separate entity, with perpetual
succession and common seal.
 On the Basis of Incorporation
(i) Chartered company
(ii) Statutory company
(iii) Registered company
 On the Basis of Liability
(i) Companies limited by shares
(ii) Company limited by Guarantee
(iii) Unlimited company
 On the Basis of Number of members
(i) private company
(ii) Public company
 On the Basis of control
(i) Holding company
(ii) Subsidiary company
 On the Basis of Ownership
(i) Government company
(ii) Foreign company
 Difference Public Private
Company Company
Minimum paid up  5 lakhs as  1 lakhs as a
capital minimum minimum
capital capital
Number of  Minimum 7  Minimum 2
Members members members
 Maximum  Maximum 50
unlimited members
 Difference Public Private
Company Company

Name of the  End with  End with

Company “limited” “private
limited”
Transfer of Shares  Shares are  No freedom to
freely transfer shares
Public transferable  Cannot invite
Subscription  Invite public to to purchase
purchase shares shares
 May or may  Cannot issue
Issue of prospects prospects
not issue
 Difference Public Private
Company Company

Issue of Share  It can issue  It cannot issue

warrants share warrant share warrant

Commencement  Start on  Start on

of business certificate of certificate of
commenceme incorporation
nt of business
Minimum no of  Required  Required
directors Atleast 3 Atleast 2
directors directors
 Formation of company
Definition
Stages of formation
 Documents of Company
Memorandum of Association (MOA)
Article of Association (AOA)
Definition
A company comes into existence when a group
of people come together with a view of forming
an association to exploit the business
opportunities by bringing together; men,
material, money and management
 Promotion stages

 Selection of Name

 Incorporation (Registration stage)

Promotion Stage
 Discovery of Business opportunities
 Detailed Investigation
 Assembling necessary requirements
 Financing of proportion

Selecting Company Name

To be identified for legal and business purpose
(i.e, “Ltd” or “Pvt Ltd” ). The name should not
be similar to the existing company.
Meaning
 The MOA is a document which contains the
fundamental rules regarding the constitution and
activities of the company.
 It is the charter of the company dines its reason for
existence.
 It lays down the area of operation of the company.
 It also regulates the external affairs of the company.
 The Name Clause
 The Register Office Clause

 The Object Clause

 The Capital Clause

 The Liability Clause

 The Association Clause

NOTE : The MOA must be signed by at least seven

subscribers in the case of public company and two
in the case of private company.
Meaning
 The AOA contains regulation regarding all
matter concerning the internal affairs of the
company
 AOA should be printed, divided into
paragraphs and serially numbered.
 Alteration AOA is done by passing a special
resolution
 Division of share
 Procedure of holding and conducting the
meeting
 Voting rights of members and rules regarding
methods of voting
 Matters relating to appointment, powers duties,
qualification and remuneration of directors
 Methods to increase or decrease capital
 Rules regarding common seal of the company
 Terms of appointment, remuneration,
delegation of authority
 Rules relating to issue of share capital
 Declaration of dividend and rules regarding its
payment
 Rules relating to accounts, audit charging of
depreciation and creation of reserves etc.
 Methods of securing loans
 Procedure of winding up of a company
 A company is said to be incorporated when it
fufill the formalities of registration and obtain
“CERTIFICATE OF INCORPORATION” by
submitting the MOA, AOA and written
consent of all the directors.
 A public to commence business should raise
the required capital and obtain the
“CERTIFICATE OF COMMENCEMENT
OF BUSINESS”.