TYPES

OF Co's
93% - Control by first 3 categories
 As on 31.12.2012 No. of Co’s

Co's on the Register 12,89,229

Private Limited Co’s 11,67,226
Public Limited Co’s 1,22,003
Foreign Co’s 3,191
(i) Delhi (1,737), (ii) Maharashtra (940), (iii)
Karnataka (338), (iv) Haryana (246) & (v)
Tamil Nadu (228)

Co’s - at work 8,72,957

Private Limited Co’s - at work 8,06,666
Public Limited Co’s at work 66,291
 Activity-wise per cent distribution of the Co’s at Work as on
31.12.2012
Economic Activities Private Public Total
Finance, Insurance, Real estate & Renting, 29.41 2.16 31.57
Business Services
Manufacturing 20.07 2.24 22.31
Wholesale & Retail Trade, Restaurants 15.15 0.70 15.85
& Hotels
Community, Personal & Social Services 5.55 0.43 5.98
Transport, Storage & Communication 3.05 0.17 3.22
Construction 10.14 0.60 10.74
Agriculture & Allied Activities 2.16 0.35 2.51
Electricity, Gas & Water 1.07 0.20 1.27
Mining & Quarrying 1.17 0.09 1.26
Others 4.64 0.65 5.29
Total 92.41 7.59 100.00
 Economic Activity-wise percentage Distribution of Authorized
Capital of Co’s at work

Industry Private Public Total

Manufacturing 8.3 16.08 24.45
Electricity, Gas & Water 2.47 19.17 21.63
Finance, Insurance, Real Estate & Renting, 7.13 12.30 19.43
Business Services
Construction 4.43 4.82 9.25
Wholesale & Retail Trade, Restaurants & Hotels 3.05 2.37 5.42
Transport, Storage & Communication 1.03 3.08 4.12
Community, Personal & Social Services 1.17 2.72 3.90
Mining & Quarrying 0.50 1.45 1.95
Agriculture & Allied Activities 0.35 0.51 0.85
Unclassified 2.19 6.81 9.00
Total 30.69 69.31 100.00
 No. of LLPs Registered
Year No. of LLPs
2009-10 1055
2010-11 3263
2011-12 4317
2012-13 3813
(Up to 31.12.2012)
 Vanishing Co's
 (i) Not maintaining their registered offices;
 (ii) Non filing of statutory returns with the
concerned ROC’s & SE’s as per listing
agreements for a period of two years;
 (iii) Non - correspondence between the SE & the
Co. for a long time.
IPOs (1992 to 2005)
238 Co’s were identified as
“Vanishing Co’s”.
 Regional Directors
Region Place
1 Eastern Region Kolkata
•Sec. 441 (2) (b)
2 Southern Region Chennai-
“Regional Director”
3 South East Region Hyderabad
means - A person
4 Northern Region Noida (Up)
appointed by CG as a
5 North Western Region Ahmadabad
RD for the purposes
6 North Eastern Region Shillong
of T/A.
7 Western Region Mumbai

• Supervise - Working of the offices of the ROC’s & OL’s working in

their regions.
• Liaison with the respective SG & CG in matters relating to the
administration of the Co’s Act & LLP Act.
 Certain powers of the CG U/T/A - Delegated to RD’s.
 RD - Declared as HOD
 Inspection unit attached to the office of every RD -
Carrying out the inspection of the books of accounts of
Co’s U/S 209A, CA.
 Registrar of Companies
 Appointed U/S 609, CA – (2013 - Sec 2 (75)
 “Registrar” means a Registrar, an Addl. Registrar,
a Jt. Registrar, a Dy. Registrar or an Asst.
Registrar - Having the duty of registering Co’s &
discharging various functions U/T/A;
 Primary duty - Registering Co’s & LLPs - In the
respective states & the Union Territories
 Ensuring that such Co’s & LLPs comply with
statutory requirements U/T/A
 ROC’s function as registry of records, relating to
the Co’s registered with them - which are available
for inspection by members of public on payment of
the prescribed fee.
 CG exercises administrative control over these
offices through the respective RD’s.
 ROC ROC
1 Andhra Pradesh & Telangana 11 Madhya Pradesh
2 Assam, Meghalaya, Manipura, 12 Maharashtra (A) Mumbai (B)
Tripura, Mizoram, Nagaland & Pune
Arunachal Pradesh
3 Bihar (ROC Patna) & 13 Orissa
Jharkhand (ROC Ranchi)
4 Chattisgarh 14 Puducherry
5 Delhi (New Delhi) & Haryana 15 Punjab , Chandigarh &
(Gurgaon) Himachal Pradesh
6 Goa ,Daman & Diu 16 Rajasthan
7 Gujarat 17 Tamil Nadu (A) Chennai (B)
Coimbatore
8 Jammu And Kashmir 18 Uttar Pradesh & Uttarakhand
(Kanpur)
9 Karnataka 19 West Bengal
10 Kerala
 Official Liquidators Sec. 359 (2013)
U/S 448, CA, 1956
 Officers appointed by CG
 Attached to various High Courts.
 Under the administrative charge of the
respective RD’s
 Conduct of WU of affairs of the Co’s
 Act under the responsibility U/S 360 (2013)
(U/S 463 (1956)) of exercising overall control
over OL
 To ensure – OL - faithfully perform duties & duly
observe all the requirement imposed on them U/T/A or
the Rules.
 One
Person
Company
 Associate Company 2 (6)
 In relation to another Co.,
 Means a Co. in which that other Co. has a
significant influence,
 But which is not a subsidiary Co. of the Co.
having such influence & includes a JVC.
 Explanation - For the purposes of T/Cl.
“Significant Influence” means
Control of at least 20% of total SC, or
Of business decisions under an agreement;
 Banking Company 2(9)
 Means a “Banking Co.” as defined in Sec. 5 (c) of the Banking
Regulation Act, 1949
 Sec 5(c) - Banking Co. - Means any Co. which transacts the
business of banking in India;
 Explanation - Any Co. which is
 Engaged in the manufacture of goods or carries on any trade
&
 Which accepts deposits of money from the public
 Merely for the purpose of financing its business (as
manufacturer or trader)
 Shall not be deemed to transact the business of banking
within the meaning of T/Cl.;
 Sec. 1(4) - Provisions of T/A shall apply to –
 (c) Banking Co’s, except in so far as the said provisions
are inconsistent with the provisions of the Banking
Regulation Act, 1949;
 Sec 1 (4) - Provisions of this Act shall apply to -
(a) Co’s incorporated U/T/A or Under any previous Co. law;
(b) Insurance Co’s, except in so far as… Provisions are inconsistent
with the provisions of the Insurance Act, 1938/IRDA, 1999;
(c) Banking Co’s, except… Provisions are inconsistent with the
provisions of the Banking Regulation Act, 1949;
(d) Co’s engaged in the generation or supply of electricity…
Provisions are inconsistent with the provisions of Electricity Act,
2003;
(e) Any other Co. governed by any special Act…
Provisions are inconsistent with the provisions of such
special Act; &
(f) Such body corporate, incorporated by any Act…, as CG may, by
notification, specify in this behalf, subject to such exceptions,
modifications or adaptation, as may be specified in the notification.
 Small Co. - Sec. 2 (85)
 Means a Co. other than a PLC -
(i) Paid-up SC - Does not exceed Rs. 50 lakh /
such higher amount as may be prescribed
which shall not be more than Rs. 5 crore; or
(ii) Turnover… as per its last profit & loss
account does not exceed Rs. 2 crore / Such
higher amount… which shall not be more than
Rs. 20 crore:
 P… nothing in this clause shall apply to -
(A) a Holding Co. or a Subsidiary Co.;
(B) a Co. registered U/S 8; or
(C) a Co. or body corporate governed by any
special Act;
 Public Company 2 (71)
 Means a Co. which -
 (a) is not a private Co.;
 (b) has a minimum paid-up SC of Rs. 5 lakh or
such higher paid-up capital, as may be
prescribed:
 P… a Co. which is a subsidiary of a Co., not
being a private Co., shall be deemed to be public
Co. for the P/o/T/A even where such subsidiary
Co. continues to be a private Co. in its AOA;
 If a Pvt. co. is a subsidiary of a public co. it is a
public Co.
 Private Company
Sec. 2(68) (2013) [Sec. CA, 1956, 3(1)(iii)]
 Means a Co. having a minimum paid-up SC of Rs. 1
lakh or such higher paid-up SC as may be prescribed, &
which by its AOA,
(i) Restricts the right to transfer its shares;
(ii) Except in case of OPC, limits the number of its
P… –
members to 200: (A) Persons – in - employment of
(iii) Prohibits any invitation
the Co. &to the public to subscribe
for any securities of the
(B)Co.;***
Persons(Shares/Debentures)
- Been formerly in the
P… where two or employment… were members…
more persons hold one While in that employment & have
or more shares in a Co. continued to be members after the
jointly, they shall, for employment ceased
the P/o/T/Cl., be treated Shall not be included in the
as a single member: No. of members
 Objective - To preserve the composition of the
SH’ing
 AOAs - Generally give - BOD complete
discretion to act on applications for transfer of
shares &…
 Court will not control the exercise of this
discretion, unless it is proved that - Directors
are not exercising it bona fide
 Re, Gresham, etc. Society (1872) LR 8 Ch.446; Re, Coalport China
Co. (1895) 2 Ch 404 (CA); Re, Smith and Fawcett Ltd. (1942) Ch.
 Are acting oppressively, capriciously, or corruptly or in
some way mala fide.
 Normal Practice (See Palmer’s Co. Law)
 Give - Right of pre-emption in case any SH wishes to transfer
shares.
 Shares have been offered first to the continuing members
- Either at par or at fair value.
 Value may be fixed:
 By the auditor, or
 Ascertained by arbitration, or
 By some sliding scale, or
 At the current price fixed half-yearly by a General Meeting, or
 10 times the average yearly dividend, or
 At the amount paid up with an addition proportioned to the
average profits during, say, the last 3 years past, or otherwise ;
 If none of the continuing members desires to purchase the
shares, they may be transferred to an outsider, but even in that
case the directors are usually given a very wide discretion as to
approving the admission of an outsider.
 Employment?
• A director simpliciter who is a SH of the
Co. cannot be excluded
• A MD/WTD may be regarded an employee
for the purposes of T/S/Cl. if the
relationship between him & the Co. is one
of employee-employer on the basis of terms
of his appointment.
• Ram Prashad v CIT (1972) 42 Comp Cas
544 (SC).
 Default in complying with Sec. 3(1)(iii) provisions
Ram Parshottam Mittal v Hillcrest Realty Sdn.Bhd.
 Result in the cessation of Co. - As a Pvt. Co.
 Shall cease to be entitled to the privileges & exemptions
conferred on Pvt. Co’s –
 Provisions of T/A shall apply to the Co. as if it were a
PLC.
 As soon as No. of its members exceeds 50 - Loses its
character as a Pvt. Co.?
 Or
It is not the records of ROC which determines
 Till such time as the records of ROC were not altered
the status of a Co. but whether it falls within the
to show that Co. had become a PLC - it could not be
definition of
treated as such a ‘Pvt. Co.’ or ‘PLC’ as defined in
 ss. 3(1)(iii)
(2009) & Cas
152 Comp 3(1)(iv) of (2009)
477 (SC)) Act 8 SCC 709
Altamas Kabir, Cyriac Joseph JJ
If - Co. had not increased its SC within
the stipulated time
Co. Deemed to have become defunct?

 Madras Techna Marine Enterprises Ltd v

Regional Director, Dept. of CA. (2010) 160
CC 192 (Mad).
 Exemptions & Privileges of Pvt. Co.
 Immune from a number of restrictions, controls
& regulations
 Most vital privilege - Lesser Governmental
control & interference.
 Blend of partnership & a Ltd. Liability body
corporate. It enjoys the benefits & advantages of
both.
 Bound by the Act as much as any other Co.
Trevor v Whiteworth (1887) 12 Appeal Case 409
HL.
 Sec 3 - (b) two or more persons, where the Co.
to be formed is to be a private Co.;
 Sec. 11 - Shall not commence any business or
exercise any borrowing powers unless –
Until a Declaration of the BOD with the ROC that
every subscriber to MOA has paid the value of the
shares agreed to be taken by him-
That not less than Rs. 1 lakh in case of a private
Co. on the date of making of this declaration
 Sec. 14 - Conversion of -
(a) a private co. into a public co.; or
(b) a public co. into a private co.
 P… where a co. being a Pvt. Co. alters its AOA in such
a manner that they no longer include the restrictions &
limitations which are required to be included in the
AOA of a Pvt. Co. U/T/A, the co. shall, as from the date
of such alteration, cease to be a Pvt. co.
 Sec. 23 - (2) A Pvt. Co. may issue securities -
(a) by way of rights issue or bonus issue in
accordance with the P/o/T/A; or
(b) through private placement by complying with the
provisions of Part II of T/Ch.
 Refusal for transfer or transmission of shares - Sec. 58 -
 (1) If a Pvt. Co. Ltd by shares refuses, whether in
pursuance of any power of the co. under its AOA or
otherwise,
 To register the transfer of, or
 Transmission by operation of law of the right to,
 Any securities or interest of a member in the co.,
 It shall within a period of 30 days from the date on
which the instrument of transfer, or
 Intimation of such transmission, as the case may be,
was delivered to the co. –
 Send notice of the refusal to the transferor & the
transferee or to the person giving intimation of such
transmission, as the case may be, giving reasons for
such refusal.
 Quorum for meetings Sec. 103 –
 (1) Unless AOA of the co. provide for a larger
number -
(b) in the case of a Pvt. co., two members personally
present, shall be the quorum for a meeting of the co.
 Sec. 149. Co. to have BOD - 2 – directors
 Sec. 164 (3) - A Pvt. Co. may by its AOA
provide for any disqualifications for
appointment as a director in addition to those
specified in ss (1) & (2):
 Sec. 167 (4) - A Pvt. Co. may, by its AOA,
provide any other ground for the vacation of
the office of a director in addition to those
specified in Ss (1).
 Sec. 190 - Contract of employment with
managing or whole-time directors.
(4) The provisions of this section shall not apply
to a Pvt. Co.
 Foreign Company 2 (42)
 Means any Co. or body corporate incorporated
outside India which, -
 (a) has a place of business in India whether by
itself or through an agent, physically or through
electronic mode; &
 (b) conducts any business activity in India in
any other manner.
• 8. (1) Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be
registered under this Act as a limited company -
• (a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of
environment or any such other object;
• (b) intends to apply its profits, if any, or other income in promoting its objects; and
• (c) intends to prohibit the payment of any dividend to its members,
• Formation of Co's with charitable objects, etc.
• the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow
that person or association of persons to be registered as a limited company under this section without the addition to its name of the
word “Limited”, or as the case may be, the words “Private Limited” , and thereupon the Registrar shall, on application, in the
prescribed form, register such person or association of persons as a company under this section.
• (2) The company registered under this section shall enjoy all the privileges and be subject to all the obligations of limited Co's.
• (3) A firm may be a member of the company registered under this section.
• (4) (i) A company registered under this section shall not alter the provisions of its memorandum or articles except with the previous
approval of the Central Government.
• (ii) A company registered under this section may convert itself into company of any other kind only after complying with such
conditions as may be prescribed.
• (5) Where it is proved to the satisfaction of the Central Government that a limited
company registered under this Act or under any previous company law has been
formed with any of the objects specified in clause (a) of sub-section (1) and with the
restrictions and prohibitions as mentioned respectively in clauses (b) and (c) of that
sub-section, it may, by licence, allow the company to be registered under this section
subject to such conditions as the Central Government deems fit and to change its
name by omitting the word “Limited”, or as the case may be, the words “Private
Limited” from its name and thereupon the Registrar shall, on application, in the
prescribed form, register such company under this section and all the provisions of
this section shall apply to that company.
• (6) The Central Government may, by order, revoke the licence granted to a company
registered under this section if the company contravenes any of the requirements of
this section or any of the conditions subject to which a licence is issued or the affairs of
the company are conducted fraudulently or in a manner violative of the objects of the
company or prejudicial to public interest, and without prejudice to any other action
against the company under this Act, direct the company to convert its status and
change its name to add the word “Limited” or the words “Private Limited”, as the
case may be, to its name and there upon the Registrar shall, without prejudice to any
action that may be taken under sub-section (7), on application, in the prescribed form,
register the company accordingly:
• Provided that no such order shall be made unless the company is given a reasonable
opportunity of being heard:
• Provided further that a copy of every such order shall be given to the Registrar.