THE COMPANY

ACT 1956
COMPANY
 In a simple words a company may be defined as a
voluntary association of persons who have come
together for carrying on some business like the
promotion of commerce , art ,science, religion, charity
or any other object and sharing the profits there from.
 Section 3(1)(i) of the Companies Act, 1956 defines a
company as: “a company formed and registered
under this Act or an existing Company”.
 ‘Existing Company’ means a company formed and
registered under any of the earlier Company Laws.
COMPANY ACT 1956
 The company act came into force from 1 April
1956.
 The act was based upon the recommendation of
company law committee appointed under the
chairmanship of Mr. C. H. Bhaba on 25 -10-1950.
 The committee submitted its report in 1952. The
Indian company act extends to the whole India.
 INCORPORATION UNDER
COMPANIES ACT 1956

 Separate legal entity

 Artificial person

 Perpetual existence

 Common seal

 Limited liability
 CASE STUDY

Lee vs. Lee’s Air Farming

Ltd. (1961) A.C. 12 (P.C)
TYPES OF COMPANIES
(Registered under company act 1956)
INCORPORATED
1.CHARTERED COMPANIES
These companies are incorporated under a special
charter such as the east India company, The bank
of England. The company act does not apply to it.
2.STATUTORY COMPANIES
These companies are incorporated by special act
of legislature (act of parliament or state legislature)
example of such companies are RBI, UTI, LCI
3. REGISTERED COMPANIES
Companies registered under the Indian
Companies Act, 1956 are called registered
companies. To become a registered company
one has to take the certification of
incorporation from the registrar.
COMPANY WITH LIABILITY
1. COMPANY LIMITED BY SHARE
companies in which the liability of its members is
limited to the extent of the amount unpaid on the
shares held by a particular member.
2. COMPANY LIMITED BY GUARANTEE
The liability of members is limited to a fixed
amount which members undertake to contribute to
the assets of the company in case of its winding up.
3. UNLIMITED COMPANIES
Wherein members are liable for the debts of the
company irrespective of their interest in the
company
NUMBER OF MEMBERS
1. PRIVATE COMPANIES
A private company is one which, by its Article
of association
- restricts the right to transfer its share, if any

- limits the maximum number of its member to

fifty
- prohibits any invitation to the public to subscribe

for any share or debenture of the company.

2. PUBLIC COMPANY
A public company means a company which is
not a private company. In other words, a public
company, means a company which by its article
does not-
(i) Limit the number of its member.

(ii) Prohibit any invitation to the public to subscribe

for any share in, or debentures, of the company.

COMPANIES ACCORDING TO
CONTROL
HOLDING AND SUBSIDIARY COMPANY
Where a company has control over another
company, it is known as the holding company.
The company over which control is exercised is
called the subsidiary company.
OWNERSHIP
1. GOVERNMENT COMPANY
A government company means any company
in which at least 51% of the paid up share
capital is held by the central government or by
any state government or partly by one or more
state Government.
MEMORENDUM OF ASSOCIATION

 The first step in the formation of the company is

to prepare memorandum of association. it is one
of the documents which has to be filed with
registrar of the companies at the time of
incorporation of a company.
 It is vital document, tell about the object of the

company’s formation ,the power of the

company as well as the boundaries beyond
which the action of the company can not go.
ARTICLE OF ASSOCIATION
 The article of association are the bye laws of
the company according to which director and
other officers are required to perform their
functions as regards the management of the
company, its accounts and audit.
 “Article of Association of the company as
originally framed or as attained from time to
time in presence of any previous companies
law or of this act.”
THANK YOU….