Online Class Rules

RULES TO BE FOLLOWED DURING ONLINE CLASSES
1. All students should join the class five minutes before time.
Do not join late to the class or leave early from the class.
2.You should be dressed appropriately and be seated

in an appropriate place.
3.You will be allowed in and marked attendance only

if you log in under your own name. Please ensure
good internet connectivity. Attendance will be taken
twice at any point of time, so you should be present
and attentive throughout your class.
4.You will mute yourselves throughout. Videos

should be off too. It will save your internet data
as well. This platform is designed to minimize use
of your data but requires good signal.
RULES TO BE FOLLOWED DURING ONLINE CLASSES.. Contd..
5.Keep your notebooks, book ( if available) and pens
ready. keep a rough book ready as well to note down
doubts.
6.Doubts can be put in the chat box which will be

cleared at the end. If you still have doubts, you can
click on the icon ‘raising of hand’ and once your
teacher gives permission you can unmute and speak.
7.Dont communicate with your friends during the

class.
8. Ensure that there is no disturbance during the

class. Behave and act maturedly.
9. Do not eat during online classes

CORPORATE ADMINISTRATION
Syllabus
UNIT CONTENT OF THE SUBJECT HOURS

Introduction: Company Law –Administration of companies Act-Specific reference to The
Companies Act 2013 with important provisions– Meaning – definition of Company, kinds of
I companies, characteristics of a company, Lifting of Corporate Veil. Types- limited and 10
unlimited, private and public, government companies, statutory, registered companies, OPC.

Formation of a Company:
Promotion: Meaning, promoters – function, position, rights and duties of promoters.
II Incorporation: Meaning procedure, certificate of Incorporation, and effects of registration, 15
capital subscription, commencement of business.

Documents of Companies: Memorandum of Association – definition, clauses, provisions and
procedures for alteration. Doctrine of Ultra Vires. Doctrine of Constructive Notice. Articles of
Association – Definition, contents, Doctrine of Indoor Management. Distinction between
III MOA and AOA. Prospectus – meaning, contents, liabilities for mis-statement in prospectus 15
(Civil and Criminal liabilities), Statement in lieu of prospectus.

Company Management: Key Managerial Personnel, Directors, types, Appointment,
qualifications, rights, duties, dis-qualification and liabilities of Directors. Company Secretary –
IV Meaning, position, appointment rights, duties, liabilities, qualifications and removal, Corporate 10
Social Responsibility (legal provisions).

Company meeting –Annual, Extra ordinary General meetings, Board meetings, Committee
V meeting –Secretarial compliances regarding drafting of the minutes for various meetings– 10
Resolution types, Quorum, Proxy.
Reference Books
Book for Reference
Book Name: Corporate

Environment
Author Name: K.C.Garg
Vijay Gupta
Joy Dhingra
Publisher: Kalyani Publisher

UNIT 1: COMPANIES ACT 2013- IMPORTANT PROVISIONS
1 The Concept of OPC- One Person Company.
2. Uniform Financial Year i.e from 1st April to 31st March.
3. Private companies can now have 200 members as against 50
members.
4. Object Clause need not be bifurcated into main, ancillary and
other objects.
5. Money raised through prospectus should be utilized only for
the specific project mentioned.
6. It is mandatory to have atleast one women director in the
Board of Directors.
7. The maximum number of directors that a company may have
is raised from 12 to 15 under 2013 act.
8. companies requires to hold atleast four meetings in every year
and the gap between two consecutive meetings should not
exceed 120 days.
9. The permissible limit of 18 months for holding AGM from the
date of its incorporation has been curtailed to 9 months.
10. A new provision relating to CSR has been introduced where
mandatorily companies having a specified networth must
contribute 2% of its net profit towards CSR.
DEFINITION OF A COMPANY
• Section 2 (20) of the Companies Act, 2013 provides that ‘’company means a company
incorporated under this act or under any previous company law.’’
• According to Justice Lindley, ‘’A company is an association of many persons who contribute
money or money’s worth to a common stock and employed for a common purpose. The
common stock so contributed is denoted in money and is capital of the company. The
persons who contribute it or to whom it belongs are the members. The proportion of
capital to which each member is entitled is his share. Shares are always transferable
although the right to transfer is often more or less restricted’’.

CHARACTERISTICS OF A COMPANY
1. Incorporated Association
2. Separate Legal Entity
Saloman V. Saloman and Co. Ltd. ( 1897)
3. Limited Liability
4. Separate property
Macaura V. Northern Assurance Co. Ltd (1925)
5. Perpetual Succession
6. Transferability of Shares
7. Common Seal
8. Capacity to sue and be sued.

KINDS OF COMPANIES
• 1. Chartered Companies
• 2. Statutory Companies
• 3. Registered Companies
* Companies limited by shares
* Companies limited by guarantee
* Unlimited Companies
4. Private Companies
5. Public Companies
6. OPC
7. Foreign Companies
8. Government Companies
DISTINCTION BETWEEN PUBLIC
COMPANY AND PRIVATE COMPANY
PUBLIC COMPANY PRIVATE COMPANY

• Minimum number of members • Minimum number of members
required to form a public required to form a private
company is 7. company is 2.
• There is no limit on the • A private company cannot have
maximum number of members. more than 200 members.
• A public company must have • A private company must have
minimum paid-up capital of Rs. minimum paid-up capital of Rs.
5 lakhs. 1 lakhs
• The name of the company must • The name of the company must
end with the word ‘’Limited’’. end with the word ‘’Private
Limited’’.
DISTINCTION BETWEEN PUBLIC
COMPANY AND PRIVATE COMPANY
PUBLIC COMPANY PRIVATE COMPANY

• A public company can issue a prospectus • A private company cannot issue a
to the public to subscribe for its shares. prospectus.
• There is no restriction on transferability • A private company must restrict the

of shares and can issue share warrants. right of members to transfer the shares
and cannot issue share warrants.
• A public company must have atleast
three directors. • A private company must have atleast
two directors.
• Quorum for public company is 5
members to be personally present for a
meeting. • Quorum for private company is 2
members to be personally present for a
meeting.
CONVERSION OF A PRIVATE COMPANY INTO A PUBLIC COMPANY
Conversion of a Private company to Public company
Conversion by default Conversion by choice
• A.CONVERSION BY DEFAULT
• SITUATION: Where any default is made in complying with these provisions the company loses
the privileges and the exemptions and the provisions of the act apply to the company as if it
were not a private company.
• Effect: A private company is entitled to certain privileges and exemptions. It can enjoy those
privileges as long as it complies with the requirements of its definitions.
• Power of Central Government: However, the company may be relieved of the consequences on
an application made to the Central Government and the Central Government on being satisfied
that the failure to comply with the conditions is not willful or that it is just and equitable may
grant relief.
CONVERSION OF A PRIVATE COMPANY INTO A PUBLIC COMPANY
• Conversion by choice
• Special resolution: A private company may deliberately choose to become a public
company . If a private company deletes from its articles the requirements of section 2
(68) by passing a special resolution, the company will cease to be a private company
from the date of the alteration of the article. Within 30 days of its becoming a public
company, it shall file with the registrar a prospectus or statement in lieu of prospectus
and a printed or ty[ed written copy of the special resolution
• Further requirements
• If the number of members is less than seven, it must be raised to atleast seven
• If the number of directors is less than three it must be raised to atleast three
• All the regulation contained in the article which are inconsistent with those of a
public company
• The word private shall be ‘deleted’ before the word ‘limited’ in its name
• Fresh certificate of incorporation
Company shall apply to the ROC for a fresh certificate of incorporation and the ROC shall issue
the name with the word ‘Private ‘ deleted
• Effect of conversion
The alteration in the articles of the company effected for the purpose of such conversion
doesn’t affect the legal personality of the company and it continues to remain the same
CONVERSION OF A PUBLIC COMPANY INTO A PRIVATE COMPANY
•Passing a special resolution
The articles have to be altered by passing a special resolution to include requirements pf

a private company as specified in section 2(68)
•Approval of the central government

The approval of the central government shall be obtained for the purpose
•Approval to be filed with the registrar
A copy of the approval along with the printed copy of the altered articles are to be filed
with the Registrar within one month of the receipt of the government approval
•Change in the name of the company
The name of the company must be changed so as to include the word ‘Private Limited ‘
at the end of its name
The conversion of a public company into a private company doesn’t affect the identity of
the company
LIFTING THE CORPORATE VEIL
One of the fundamental principles of company law is that a company has personality that is
distinct from that of its shareholders. The principle of separate entity is regarded as a curtain,
a veil, or shield between the company and its members, thus protecting the later from the
liability of the former.
The veil is impassable as an iron curtain. This theory of corporate entity is still the basic
principle on which the whole law of corporations are based.
e.g
1. A land lady’s attempt to regain tenanted premises for self business could not succeed as the
business was in the name of the company.
2. The managing director cannot be compelled in his personal capacity to produce books
of which he has custody in his official capacity.
3. The largest shareholder has no insurable interest in the property of the company.
LIFTING THE CORPORATE VEIL.. Contd..
SITUATIONS WHEN CORPORATE VEIL CAN BE LIFTED
LIFTING THE CORPORATE VEIL.. Contd..
SITUATIONS WHEN CORPORATE VEIL CAN BE LIFTED
A. UNDER JUDICIAL INTERPRETATION B. UNDER STATUTORY PROVISIONS

(COMMON LAW EXCEPTIONS) (STATUTORY EXCEPTIONS)
6. Avoidance of welfare legislations 6. Fraudulent Trading.
7. Punishment of contempt of court 7. Investigation of ownership of company.
8. Ascertaining true nature of transaction if 8. Liability for ultra vires acts.

alleged as sham
9. Determination of technical competence of 9. Liability under other statutes.

company.
10. Formation of subsidiary company to act

as an agent.
ADMINISTRATION OF COMPANY LAW
1. CENTRAL GOVERNMENT
2. NATIONAL COMPANY LAW TRIBUNAL
3. NATIONAL COMPANY LAW APPELLATE TRIBUNAL
4. THE ZONAL OFFICE ( HEADED BY REGIONAL DIRECTORS)
5. FIELD OFFICES ( REGISTRAR OF COMPANIES FOR EACH
STATE)
ADMINISTRATION OF COMPANY LAW .. Contd..
1. CENTRAL GOVERNMENT
The central govt is the supreme authority responsible for the administration of
Companies Act. The Central Govt acts through the Department of Company Affairs which
is a part of the Ministry of Finance.
Powers Vested specifically in Central Govt.
A. Sanction to change of registered office clause.
B. Order inspection of register of members/directors
C. Order inspection of minutes of general meetings.
D. Order supplying copy of annual accounts.
E. Making rules relating to winding up.
F. Order inspection of register od director’s shareholding.

NCLT is a quasi judicial body in India that adjudicates issues relating to Indian
Companies. The tribunal was established under the Company’s Act 2013 and was
constituted on 1st June 2016 by the govt of India. It is based on the recommendation of
the V. Balakrishna Eradi Committee on law creating to the insolvency and the winding up
of the companies.
Features and Benefits
1. Avoiding confusion of jurisdiction and distribution of powers.
2. Relieving court of mounting litigations.
3. Avoiding multiplicity of litigation
4. Faster disposal of cases


Constitution of Tribunal
Establishment of NCLT was issued on March 31 2003 and it came into force on 1 st June
2016.
Composition of Tribunal
The tribunal will consist of a President and such number of Judicial and Technical
Members not extending 62 as the central govt may deemed fit.
Qualifications for appointment of President and Members:
The president of the tribunal has to be a person who has been a high court judge or
qualified to be a judge of the high court.
1. Simpler and faster procedures and less formality than courts.
2. Professional having expert working knowledge of company law, finance, accounting,
taxation etc.
For Judicial Member:
1.he has for atleast 15 years held a judicial office in the territory of India.
2. He has for atleast 10 years been an advocate of a high court.
3. He has held for atleast 15 years years an equivalent post under central government or
state government including 3 years of service as a member of the Indian Company law
Service (Legal Branch).
Technical Member:
1. . He has held for atleast 15 years years an equivalent post under central government or
state government including 3 years of service as a member of the Indian Company law
Service (Accounts Branch).
2. He has been a joint secretary to the Govt of India.
3. He has been atleast 15 years in practice as a chartered accountant under Chartered
Accountants act 1949.
4. He has been atleast 15 years in practice as a cost accountant under Cost and Works
Accountants act 1949.
5. Should be a person of ability, integrity and having special knowledge of professional
experience of not less than 20 years in science, technology, economics, banking, industry,
law matters relating to industrial finance, industrial management, industrial reconstruction,
administration, investment, accountancy, marketing or any other matter.
6. Has been a Presiding officer of a labor court.
TERM OF OFFICE
The President and every other member of the tribunal shall hold office as such for a term of
3 years from the date on which he enters upon his office, but shall be eligible for re-
appointment.
However, no President or other member shall hold office if he has attained-
1. In the case of president, the age of 67 years
2. In the case of any other member, the age of 65 years.
Powers of NCLT
1. Reduction of share capital
2. Order investigation of affairs
3. Order investigation of membership of a company
4. Order termination of managerial personnel
5. Impose restrictions on transfer of shares or debentures
6. Powers regarding winding up.
7. Order inspection of documents
8. Powers of protection of employees during investigation
9. Powers to investigate books of accounts.
10. Sanction revival/ rehabilitation of sick units

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
According to Section 10FQ, an appeal against any order or decision of the NCLT will lie to the
Appellate Tribunal under the Act
Every appeal shall be filed within a period of forty-five days from the date on which a copy of
order or decision made by the Tribunal is received by the appellant and it shall be in such form
and accompanied by such a fee as may be prescribed
On receipt of an appeal, the Appellate Tribunal shall, after giving parties to the appeal, an
opportunity of being heard, pass such orders thereon as it thinks fit, conforming, modifying or
setting aside the order appealed against
The Appellate Tribunal shall send a copy of every order made by it to the Tribunal and parties
appeal
CONSTITUTION OF APPELLATE TRIBUNAL (SECTION 10 FR)
The Chairperson of the Appellate Tribunal shall be a person who has been a Judge of the
Supreme Court or the Chief Justice of High Court
A member of the Appellate Tribunal shall be a person of ability, integrity and standing having
special knowledge of, and professional experience of not less than twenty –five years in,
science, technology, economics, banking industry, law matters relating to labour, industrial
finance, industrial management, industrial reconstruction, administration, investment,
marketing or any other matter
APPEAL AGAINST ORDER OF THE APPELLATE TRIBUNAL (SECTION 10GF)
Any person aggrieved by the decision or order of the Appellate Tribunal can file an appeal to
the Supreme Court. Such an appeal has to be filed within 60 days of the date of
communicationof the said decision or order

REGIONAL DIRECTORS
The Central Government has set up four regional offices with headquarters at Mumbai,
Kolkata, Kanpur and Chennai. Each regional office is under a regional director
Functions
1. To maintain close contact with the offices of the Registrar of Companies and exercise
supervision and control them and co ordinate their activities
2. To advice and guide and Registrars on technical and administrative matters
3. To look after the progress of investigations started by the Board and to pursue
prosecutions arising out of investigations and other breaches of the provisions of
Companies Act
4. To function as a link between the Central Government and the State Government on their
respective zones
REGISTRAR OF COMPANIES
The Central Government has appointed a full time officer in each State to be known as
Registrar of Companies
Registrars are the fields officers who deal directly with the companies registered or intended
to be registered within their territorial jurisdictions. His office is a public office where
companies are required to file documents and returns, and any person may inspect the same
according to the provisions of law.
The Central Government may appoint such Registrar and such additional, joint, deputy and
assistant Registrars for the registration of companies under the act and may make regulations
with respect to the duties. The salaries of these officers shall be fixed by the Central
Government. The Central Government may direct a seal or seals of Registrar to the prepared
for the authentication of documents required for or in connections with registrations

CHAPTER-2 FORMATION OF A COMPANY-
PROMOTION AND INCORPORATION
STAGES IN FORMATION OF A COMPANY
PROMOTION
• Promotion: Promotion is the process of organizing and
planning the finances of a business enterprise under the
corporate form. It means the taking of such steps as would
persuade a number of persons to come together for the
achievement of a common objective through the company
form of organization. It is the discovery of business
opportunities and subsequent organization of funds,
property and managerial ability into a business concern for
the purpose of making profits there form. The persons
who undertake the task of promotion are called
promoters.
PROMOTION
• WHO IS A PROMOTER: U/S 2 (69) of the Companies Act
defines a promoter as a person
a) Who has been named as such in a prospectus or is
identified by the company in annual return referred o sec
92
b) Who has control over the affairs of the company, directly or
indirectly whether as a shareholder, director or otherwise;
or
c) In accordance with whose advice, directions or instructions
the board of directors of the company is accustomed to act.
PROMOTION
• Functions of a Promoter
• 1. Discovery of Idea
• 2 Detailed Investigation
• 3. Assembling of resources
• 4. Preparing preliminary documents
• 5. Entering into preliminary contracts
• 6. Naming a Company
• 7. Appointment of bankers, brokers, solicitors and
underwriters.
PROMOTION
LEGAL POSITION OF A PROMOTER
1. A promoter cannot make either directly or indirectly any
profits at the expense of the company he promotes.
2. A promoter is not allowed to derive a profit from the sale of
his own property unless all the material facts are disclosed
( Erlanger Vs. New Sombrero Phosphate Co.)
3. A promoter who wishes to sell his own property to the
company must make a full disclosure of his interest in the
transaction.
4. The promoter shall not make an unfair or unreasonable use
of his position.
PROMOTION
RIGHTS OF A PROMOTER
1. Right to receive preliminary expenses.
2. Right to recover proportionate amount from the co-promoters.
3. Right to remuneration.
LIABILITIES OF PROMOTERS
4. PRE-INCORPORATION CONTRACTS
5. LIABILITY TO HANDOVER SECRET PROFITS
6. MISSTATEMENT IN PROSPECTUS
A. CIVIL LIABLITY: UNDER SEC 35(1) AND SEC 36
B. CRIMINAL LIABILITY UNDER SECTION 34
4. LIABILITY IN CASE OF A WINDING UP OF THE COMPANY
i. LIABILITY IN CASE OF A PUBLIC EXAMINATION
ii. MISAPPLICATION.
INCORPORATION OF A COMPANY
A company comes into existence when a number of persons

come together with a view to exploit some business
opportunity. These persona are called as promoters. Under
section 3 such persons may form an incorporated company
for a lawful purpose by subscribing their names to the MOA
and complying with the other requirements in respect of
registration. Such an incorporated company may be a
company:
a) Limited by shares
b) Limited by guarantee
c) Unlimited company
Steps before proceeding with the procedure of filling

documents:
1. DIN has to be obtained
2. Digital signatures of promoters.
3. Both DIN and digital signatures will be registered with
the MCA.
Documents to be filed with the Registrar

1. Memorandum of Association
2. Articles of Association
3. Vetting of Memorandum and Articles, printing, stamping
and signing of the same.
4. Printing of MOA and AOA.
5. Stamping of MOA and AOA.
6. Signing of MOA and AOA.
7. Dating of MOA and AOA.
INCORPORATION OF A COMPANY(Contd)
Documents to be filed with the Registrar

8. Copy of proposed agreement.
9. Power of attorney
10. Consent of directors
11. Particulars of directors along with DIN
12. Filing of Agreement
13. Notice to Registered address must also be made
14. Statutory Declaration of Compliance.
Certificate of Incorporation Sec 7(2)
On registration, the registrar will
issue a certificate of incorporation
in Form INC 11 whereby he certifies
that the company is incorporated
and in the case of a limited
company, that the company is
limited. These days, Registrar of
Companies issue a certificate of
incorporation bearing a Corporate
Identity Number consisting of 21
digits.
The legal effect of incorporation is as under:

1. A company becomes a body corporate distinct from its
members.
2. A company has a perpetual succession and a common
seal.
3. A company can sue and be sued in its own name.
4. A company has a right to hold and alienate its own
property.
5. Company’s debts and obligations are the liabilities of the
company only and cannot be enforced against the
individual shareholders.
CONCLUSIVENESS OF THE CERTIFICATE
OF INCORPORATION
i. All the requirements of the act have been complied with
in respect of registration.
ii. The company is duly registered
iii. That the company came into existence on the date
mentioned in the certificate.
CERTIFICATE OF INCORPORATION DOES NOT MEAN ALL

OBJECTS ARE LEGAL.
CAPITAL SUBSCRIPTION
When a company has been registered and has received Certificate of

Incorporation, it is ready for flotation. That is, it can go ahead with raising
of capital necessary to commence business and to carry on its operations
satisfactory.
The promoters of a public company may not invite the public for raising
capital and may arrange privately as in the case of a private company.
However, majority of the public companies raise their capital in the very
first instance.
The companies Act requires every public company to take either of the
following two steps:
1. Issue a prospectus if public is to be invited to subscribe to its shares or
2. File a Statement in Lieu of Prospectus in case capital has been
arranged privately.
COMMENCEMENT OF BUSINESS
UNDER THE PREVIOUS ACT OF 1956, A PRIVATE COMPANY OR A
COMPANY HAVING NO SHARE CAPITAL CAN START BUSINESS RIGHT
FROM THE DATE OF INCORPORATION. BUT NOW, ACCORDING TO THE
NEW COMPANIES ACT OF 2013, BOTH PUBLIC COMPANY AND PRIVATE
COMPANY WILL HAVE TO OBTAIN CERTIFICATE OF COMMENCEMENT OF
BUSINESS.
PROCEDURE TO OBTAIN CERTIFICATE OF COMMENCEMENT OF BUSINESS

1. List of the members of the company with their shareholdings.
2. Confirmation for paid up share capital for both public and private
company.
3. List of Managing Director, Directors, Manager, Secretary, CEO, CFO,
Auditors and changes among them, if any since the data statement.
4. Consent of the Auditors.
5. Copy of the agreements for appointment of Managing Director,
Underwriters, Contracts entered into by the promoters before
incorporation of the company.
6. Certified copy of the MOA and AOA.
7. Details of the preliminary expenses already incurred.
8. Power of attorney to obtain the certificate of commencement of business
from the registrar.
Certificate to commence business is conclusive evidence of:

The Registrar, on perusal of the declaration in e-form INC-21, shall certify
that the company is entitled to commence business and to exercise
borrowing powers. The certificate shall be conclusive evidence that the
company is entitled to commence its business. The court will not take
any evidence that there have been irregularities.
IMPORTANT POINTS
Requirement to subscribe minimum capital
Filing of the notice for situation of the Registered office with the ROC.
Penalty for default in obtaining certificate of commencement of
business.
************************************************************
UNIT III- DOCUMENTS OF COMPANIES
MEMORANDUM OF ASSOCIATION
DEFINITION:
1. According to Sec 2(56) of companies act 2013, Memorandum means
’Memorandum of Association of a company originally framed or altered
from time to time in pursuance of any previous companies law or of this
act.’
2.According to Cairns, ‘ Memorandum of Association of a company is its
charter and defines the limitations of the powers of a company.
MEANING:
MOA is one of the documents which has to be filed with the registrar of
companies at the time of incorporation of a company. The MOA of a
company contains the fundamental conditions upon which alone the
company can be incorporated.
IMPORTANCE:
The MOA is an extremely important document in relation to the affairs of the
company. It is a document which sets out the constitution of the company and is
really the foundation on which the structure of the company is built. The MOA of a
company contains the fundamental conditions upon which alone the company can
be incorporated. It defines its relation with the outside world and the scope of its
activities.
PURPOSE OF MOA: It serves two purposes
1. The intending shareholder who contemplates the investment of his capital
shall know within what field it is to be put at risk. Thus he can find out from
the MOA the purpose for which his money is going to be used.
2. Anyone who deals with the company shall know without reasonable doubt
whether the contractual relation into which he is entering with the company is
one relating to a matter withing its corporate objects.
FORMS OF MEMORANDUM OF ASSOCIATION
1. Table A is a form for memorandum of association of a company
limited by shares.
2. Table B is a form for memorandum and articles of association of a
company limited by guarantee and not having a share capital.
3. Table C is a form for memorandum and articles of association of a
company limited by guarantee and having a share capital.
4. Table D is a form for memorandum and articles of association of an
unlimited company not having a share capital.
5. Table E is a form for memorandum and articles of association of an
unlimited company having a share capital.
CONTENTS OF MEMORANDUM OF ASSOCIATION
1. Name of the company with the word ‘limited’ for public company and ‘private limited’ incas
of a private company. One person company shall also describe as ‘One Person Company’ in
bracket.
2. The name of the state in which the registered office of the company is to be situated.
3. The objects of the company to be classified as- a. objects foe which the company is propose
to be incorporated and any matter considered necessary.
4. The liability of members is limited if the company is limited by shares or guarantee.
5. In the case of a company having a share capital, the amount of share capital with which the
company proposes to be registered and its division into shares of a fixed mount.
6. The MOA shall include with an association clause which must state the desire of the
subscribers to be formed into a company.
7. Nomination clause for OPC stating the name of Nominee.
CLAUSES OF MEMORANDUM OF ASSOCIATION
NAME CLAUSE: A Company is a legal entity. So, it must have a name to establish
its identity. Name Clause in the Memorandum of Association confers protection
against subsequent company registration in the same or closely similar name.
RULES REGARDING NAME CLAUSE
• (a) A name which is identical with or which closely resembles the name of another
company so as to deceive or mislead the prospective customer of one, trading with the
other.
• (b) A name, which in the opinion of the Central Government is undesirable or will mislead
the public and its use has been, therefore, prohibited by the Government under the
Emblems and Names (Prevention of Improper Use) Act, 1950. (Sec. 20)
• (c) The last word of the name must be ‘limited’ in the case of companies with the limited
liability and ‘private limited’ in the case of private limited companies. One person
company shall also describe as ‘One Person Company’ in bracket.
• (d) The proposed name is not offensive to any section of people.
• (e) The proposed names are not infringing the registered trademarks under the Trade
Marks Act 1999.
REGISTERED OFFICE CLAUSE: Memorandum of Association must state the name of the
State in which the registered office of the company is to be situated. It decides the domicile of
the company. Every company must have a registered office either from the day it begins to carry
on business or within 15 days of its incorporation, whichever is earlier.
IMPORTANCE OF REGISTERED OFFICE
1. Registered office of a company is the place of its residence for the purposes of
delivering or addressing any communication, service of any notice or process of
Court of Law and for determining the question of jurisdiction in any action against
the company.
2. It is the place where all the statutory books, records and registers of the company
shall be maintained.
3. Annual General Meetings of Company must be held in city/town in which
registered office is situated.
4. Proxy for meetings have to be deposited at registered office of the company.
Requisition for calling of Extra ordinary General Meeting shall be deposited at
registered Office.
5. If members want to circulate a resolution u/s 188, its notice has to be served at
registered office.
OBJECT CLAUSE: It is the most important clause in the Memorandum of
Association. It defines and limits the scope of operations of the company. It
explains to the members the scope of activity of the company where their capital
will be employed. It gives protection to the shareholders by ensuring that the
funds raised for specified businesses are not going to be risked in another.
The outside public dealing with the company is informed of the extent of the
powers of the company. A company can exercise only such powers as are either
expressly stated therein or as May fairly be implied there from, including matters
incidental or consequential to the powers so conferred.
IMPORTANCE OF OBJECT CLAUSE
This clause is the most important clause in the MOA of a company,
because it not only shows the objects for which the company is formed
but also determines the extent of the powers which the company can
exercise in order to achieve the objects. It is essential that the public
who purchase its shares should know clearly what are the objects for
which they are paying and which they want to encourage .
LIABILITY CLAUSE: Liability clause mentions the liability of members of the
company- In case of a company limited by shares, Memorandum of Association
must have a clause to the effect that the liability of the members is limited to the
extent of the amount of the unpaid amount of the shares held by him.
The Memorandum of Association a company limited by guarantee must state the
amount which each member undertakes to contribute to the assets of the
company in the event of its being wound up.
The liability clause is omitted from the memorandum of association of unlimited
companies.
Any alteration in the memorandum compelling a member to take up more shares
or which increases his liability would be null and void.
If a company carries on business of more than six months while the number of
members is less than 7 in the case of a public company and less than 2 in case of
a private company, each member aware of this fact is liable for all the debts
contracted by the company after the period of six months has elapsed.
CAPITAL CLAUSE: Memorandum of Association of a limited company
having share capital (i.e. company limited by shares or company
limited by guarantee having share capital) must also state the amount
of share capital with which the company is to be registered which is
usually called authorized or nominal capital.
Further, division of registered share capital into shares of a fixed
amount is also required to be given in the memorandum. Each
subscriber must take at least one share and write opposite his name
the number of shares he takes.
REQUIREMENT OF MINIMUM PAID UP CAPITAL
PRIVATE COMPANY- Rs. 1 Lakh
ONE PERSON COMPANY- Rs. 1 Lakh
PUBLIC COMPANY- Rs. 5 lakhs
• ASSOCIATION OR SUBSCRIPTION CLAUSE: This clause states that the persons
subscribing their signatures at the end of the Memorandum are desirous of
forming themselves into an association in pursuance of the Memorandum.
• Memorandum of Association must be signed by seven or more persons in
the case of a public company and by two or more persons in the case of a
private company. Signatures shall be attested by witnesses.
• There may be one witness for all signatures but one subscriber cannot be a
witness to the signatures of another. Full description, address, occupation,
etc. of the subscribers and witnesses must be written. One witness to all
the signatures is sufficient. But a subscriber cannot attest the signatures of
another subscriber.
• In the case of a company having share capital, each subscriber is also
required to take at least one share and to write opposite his name the
number of shares he agrees to take. Subscribers are required to pay for
these shares after the company is incorporated. They must also sign
articles of association of the company.
• NOMINATION OR SUCCESSION CLAUSE: In case of a OPC, there is a
requirement to have 7th clause to describe the nominee in the event of
the death of the subscriber. Prior written consent of the nominee is
required to be obtained in form no INC3. Nomination, in form no INC 2
along with written consent shall be filed with ROC at the time of
incorporation of the OPC along with its memorandum and articles.

ALTERATION OF MOA
1. CHANGE OF NAME CLAUSE
i. By special resolution
ii. By ordinary resolution
iii. Direction for changing name
iv. Defaulting companies prohibited to change the name
v. New Certificate of Incorporation
ALTERATION OF MOA
2. CHANGE OF REGISTERED OFFICE CLAUSE
i. Change of registered office from one place to another
place in the same city, town or village.
ii. Change of registered office from one town to another
town in the same state.
iii. Change of registered office from one state to another
state.
Special Resolution
Confirmation by Central Government
ALTERATION OF MOA
3. CHANGE OF OBJECT CLAUSE
The power of alteration of objects clause is subject to two limits:
A. Substantive Limits B. Procedural Limits
SUBSTANTIVE LIMITS
i) To carry on its business more economically or more efficiently.
ii) To attain its main purpose by new or improved means.
iii) To enlarge or change the local area of its operations.
iv) To carry on some business which under existing circumstances
may be conveniently or advantageously combined with the
business of the company.
ALTERATION OF MOA
SUBSTANTIVE LIMITS
Case LAW- Re Cyclists Touring Club (1907)
v. To restrict or abandon any of the objects specified in the
memorandum.
vi. To sell or dispose of the whole or any part of the
undertaking of the company.
vii. To amalgamate with any other company or body of
persons.
ALTERATION OF MOA
PROCEDURAL LIMITS: The following procedures must be
followed for altering the object clause.
Special Resolution
Consequences of non-filing
ALTERATION OF MOA
4. CHANGE OF LIABILITY CLAUSE
LIMITED COMPANY
UNLIMITED COMPANY
A limited company if authorized by its articles by a special
resolution may alter its memorandum to make the liability
of its directors or manager unlimited. This rule applies to
future appointees only. Such alteration will not affect the
existing directors and managers unless they have accorded
their consent.
ALTERATION OF MOA
5. CHANGE OF CAPITAL CLAUSE
Section 62 provides for increase in share capital. A li ited company, having a
share capital may alter its capital clause subject to the provisions of its articles by
a resolution in the general meeting. The confirmation of the court is not required
if alteration is made for any following purposes:
1. To increase its share capital
2. To consolidate and divide its capital into shares of larger amount.
3. To convert its fully paid shares into stock and vice versa.
4. To sub-divide its shares into shares of smaller amounts.
5. To cancel its shares.
INCASE OF REDUCTION OF SHARE CAPITAL, SPECIAL RESOLUTION IS NECESSARY.
DOCTRINE OF ULTRA VIRES: ‘ULTRA’ means Beyond, ‘VIRES’ means
Powers. An action outside the memorandum is ultra vires the company.
An act is said to be ultra vires when it is performed which, though legal
in itself, is not authorized by the object clause in the memorandum of
association or the statute. Such an act is void and cannot be ratified even
by unanimous resolution of all the shareholders.
PURPOSE: It serves two purposes
1. It protects the shareholders
2. It safeguards the interests of the creditors as the property of the
company cannot be diverted to unauthorized objects.
CASE LAW:
ASHBURY RAILWAY CARRIAGE AND IRON CO. LTD.V.RICHE (1875)
DOCTRINE OF ULTRA VIRES:
Effects/ Consequences of Ultra Vires Acts
1. Void ab intio
2. Injunction
3. Breach of warranty of authority
4. Personal liability of directors
5. Ultra Vires Contracts
6. Ultra Vires acquired property
7. Ultra Vires borrowing
8. Ultra Vires torts
ARTICLES OF ASSOCIATION
• CONTENTS OF ARTICLES
• 1. ADOPTION OF PRELIMINARY CONTRACTS
• 2. ALLOTMENT OF SHARES
• 3. LIEN ON SHARES
• 4. FORFEITURE OF SHARES
• 5. MEETINGS
• 6. BORROWING POWERS
• ACCOUNTS AND AUDITS
• VOTING RIGHTS AND PROXIES
• DIRECTORS AND THEIR APPOINTMENTS
• DIVIDENDS
• WINDING UP
• ALTERATION OF ARTICLES OF ASSOCIATION
• The tribunal may order a company to alter its
articles with a view to resolving complaints
against oppression and mismanagement in the
company on an application made under sec 241 of
the act.
• The company must file a certified copy of the
order with the registrar within thirty days of the
issue of that order.
• PROCEDURE OF ALTERATION OF ARTICLES OF
ASSOCIATION
Company by a special resolution alter or add to any
conditions to its article of association. The company
must file with the registrar a copy of the special
resolution within one month from the date of its
passing. The altered articles will bind the members
in the same way as did the original articles. A
company can alter its articles at any time by passing
a special resolution.
• LIMITATIONS ON POWER TO ALTER ARTICLES
• May not be against the provisions of the act.
• Must not be inconsistent to the Memorandum.
• Must not sanction anything illegal.
• Not be inconsistent with any alteration made by
tribunal.
• Approved by Central Government for conversion
of public company into private company.
• No increase in the liability of members.
• LIMITATIONS ON POWER TO ALTER ARTICLES
• Alteration by special resolution only.
• Should not cause breach of contract.
• Must be for the benefit of the company.
• Fraud on the minority.
• Retrospective alteration
• An articles cannot be made unalterable.
• An alteration of articles with permission of central
government only under sec 14.
DISTINCTION BETWEEN MOA & AOA
PARTICULARS MOA AOA
Meaning Memorandum of Association is a Articles of Association is a document

document that contains all the containing all the rules and regulations
fundamental information which are that governs the company.
required for the incorporation of the
company.
Type of Information contained Powers and objects of the company. Internal Rules of the company.
Status It is a supreme document but subordinate It is subordinate to the memorandum.

to the Companies Act
Major contents A memorandum must contain 6 or 7 The articles can be drafted as per the
clauses. choice and the requirement of the
company.
Alteration Alteration can be done, after passing Alteration can be done in the Articles by
Special or ordinary Resolution in AGM passing Special Resolution.
with the approval of shareholders/ Central
Government ) or NCLT.
Relation Defines the relation between company Regulates the relationship between
and outsider. company and its members and also
between the members inter se.
Ultra Vires Absolutely void if the acts is beyond the Can be ratified by shareholders.
scope of MOA and cannot be ratified.
BINDING EFFECT OF MEMORANDUM AND ARTICLES
• i) Members to the Company

• ii) Company to the Members
• Iii) Members inter se
• iv) Company to the outsiders
CONSTRUCTIVE NOTICE OF MEMORANDUM AND
• .MOA and AOA of every company are required to be

registered with the ROC. The office of the ROC is a public
office hence both MOA and AOA becomes public
documents and can be accessible to all.
• Both the documents are open for public inspection on
payment.
• Everyone dealing with the company whether a shareholder
or an outsider is presumed to have read the two
documents and also to have understood them according to
their proper meaning.
• When a person deals with a company in a manner which is
inconsistent with the provisions of the MOA or AOA or
enters into a transaction which is beyond the scope of the
powers of the company, he must take the consequences in
respect of such dealings.
DOCTRINE OF INDOOR MANAGEMENT
The doctrine of indoor management, also known as Turquand rule is a 150-year

old concept, which protects the outsiders against the actions done by the company.
The Doctrine of Indoor Management lays down that

persons dealing with a company having satisfied
themselves that the proposed transaction is not in its
nature inconsistent with the memorandum and the
articles, are not bound to inquire the regularity of any
internal proceeding. In other words, while persons
contracting with a company are presumed to know the
provisions of the contents of the MOA and AOA, they are
entitled to assume that the officers of the company have
observed the provisions of the articles.
Royal British Bank V. Turquand (1856) 6E & B.327
DOCTRINE OF INDOOR MANAGEMENT
Exceptions to the rule of doctrine of Indoor

Management.
1.Knowledge of Irregularity
2. Negligence
3. Forgery
4. Acts outside the apparent authority
5. No knowledge of the contents of
articles
PROSPECTUS
Meaning of Prospectus:
Any notice, circular, advertisements or other document inviting deposits
from the public or inviting offers from the public for the subscription or
purchase of any shares in or debentures of a body corporate.
A shelf prospectus
is a type of prospectus issued by companies making multiple
issues of bonds for raising funds. The advantage of a shelf
prospectus is that a new prospectus need not be issued every time
the company issues securities. A maximum of four issues of
securities can be made using a shelf prospectus. A shelf prospectus
should be used within a maximum of one year.
A red herring prospectus

contains most of the information pertaining to the company's operations

and prospects but does not include key details of the security issue, such
as its price and the number of shares offered.
PROSPECTUS
Legal requirements in relation to a prospectus
1. Dating of prospectus
2. Registration of Prospectus
a. Nature
b. Time limit
c. Signature
d. Date
e. Contents
f. Enclosure
g. Registrations
h. Penalty for non registration of prospectus
i. Opening of subscription list
PROSPECTUS
Contents of Prospectus
1.Matters in prospectus
Names and addresses The authority for the Minimum
issue subscriptions
Dates of the opening and Procedure and time Details of directors
closing
A statement Capital Structure Disclosures
Details about underwriting Main objects and
present business
Consent of the directors Particulars
2. Reports in Prospectus
a. Reports by the auditors
b. Reports relating to profits and losses
c. Reports made by the auditors upon the profits and losses of the
business
d. Reports about the business or transactions
3.Declaration
Mis statement in Prospectus
A prospectus must contain the whole truth and
must not conceal any facts which ought to be
disclosed
GREENWOOD V. LEATHER SHOD WHEEL CO.(1990)
Who can be sued???

The Company
Every director
 Every person whose name appeared in the prospectus as a
proposed director
 Every promoter
 Every person who authorize the issue of the prospectus
 An expert referred
Mis statement in Prospectus
Liability for Mis statement in a Prospectus
Civil liability
1. Against the company
a) Rescission of the contract
i. Prospectus was issued by or one behalf of the company
ii. Statements must be untrue
iii. Statement must be material representations
iv. Mis representations must have induced the share holders
v. Misrepresentation must be of facts and not of law
vi. That he has taken action promptly to resign the contract
Loss of right to rescind the contract

• Unreasonable delay
• Affirmation
• Commencement of winding up
b) Claim damages
2. Against the directors, promoters and experts

Civil liability
2. Against the directors, promoters and experts
Any person who has purchased shares or debentures on the
faith of the prospectus containing the untrue statement may sue
 Every director
 Every person whose name appeared in the prospectus
as a proposed director
 Every promoter
 Every person who authorize the issue of the prospectus
The aggrieved person may claim

 Compensation
 Damages for non – compliance with the requirements of
section 56
 Damages under the general law
 Compensation
Directors promoters and all others who authorized the issue
of prospectus are liable to compensate who subscribed for
the shares for the loss sustained due to untrue statement
Defenses of directors, promoters etc.
i. Withdrawal of consent
ii. Issued without knowledge
iii. Ignorance of untrue statement
iv. Reasonable ground for belief
v. Statement of expert
vi. Correct cop of an extract
Damages for non – compliance with the requirements of
section 26
Sec 26 requires that a company in its prospectus must
contain the prescribed particulars which may help the allottee
recover damages from the directors
However the directors could not be liable if he proves
i. He had no knowledge of the matter not disclosed in the
prospectus
ii. The non compliance arouse from a honest mistake
iii. The non compliance was not material
Damages under the general law
The remedy under general law shall be applicable where :
i. The right of rescission as against the company is lost
either through laches or negligence
ii. The company goes into liquidation
But the plaintiff will have to establish the following

iii. There was a fraudulent mis statement
iv. False representations related to some existing material
facts
v. Plaintiff was the original allottee
PEEK V GURNEY (1873)

CRIMINAL LIABILITY OF DIRECTORS
1. Imprisonment for a term which may not be less

than 06 months which may extend to 10 years; or
2. Fine which shall not be less than the amount

involved in the fraud but which may extend to 3
times the amount involved in the fraud; or
3. Both imprisonment and fine

UNIT IV COMPANY MANAGEMENT
Definition of a Director: According to section 2 (34) of the
companies Act 2013, ‘’director’’ means a director appointed
to the Board of a Company.
Meaning of Board of Director: Board of Directors or Board in
relation to a company means the collective body of the
directors of that company’’. The Board of Directors, controls,
manages and superintends the affairs of a company. It
formulates the general policy of the company.
Directors can exercise powers only when they act collectively.
An individual director has no authority to act on behalf of the
company unless he is so authorized by the:
i. Act
ii. Articles of Association
iii. A resolution of the Board of Directors
iv. A resolution of the shareholders
Deemed Directors: A person in accordance with whose
directions and instructions the Board of Directors of a
company is accustomed to act shall be deemed to be a
director of the company.
Only Individuals to be Directors: No body corporate,
association or firm shall be appointed director of a
company and only an individual shall be so appointed.
It is because, there should be somebody readily
available who can be held responsible for the failure to
carry out the obligations of such an office. It will be
difficult to fix that responsibility if the director is a
body corporate, association of person or firm.
Number of Directors: MINIMUM AND MAXIMUM
Every public company must have atleast 3 directors and every private
company must have a minimum of 2 directors and every one person
company must have 1 director.
The act has prescribed the maximum number of directors as 15. However a
company may appoint more than 15 directors after passing a special
resolution.
IMPLICATION WHERE NUMBER OF DIRECTORS FALL
BELOW STATUTORY MINIMUM
Since the provision of minimum number of director is
mandatory and any business transaction after the fall of
directors below the statutory minimum was held to be invalid.
Women Director: According to the New Companies
Act, the following companies shall appoint atleast ONE
WOMAN DIRECTOR:
i. Every Listed Company
ii. Every other public companies having a paid up share
capital of Rs. 100 Crores or more or turnover of Rs. 300
crore or more.
TYPES OF DIRECTORS
1. Ordinary Directors: Ordinary directors are also
referred to as simple who attend Board meeting of
a company and participate in the matters put
before the Board. These directors are neither whole
time directors nor managing directors.
2. Managing Director: It means a director who by
virtue of the articles of a company or an agreement
with the company or a resolution passed in its
general meeting or by its Board of Directors is
entrusted with substantial powers of management
of the affairs of the company and includes a
director occupying the position of managing
director, by whatever name called.
TYPES OF DIRECTORS:
3. Whole time or Executive Directors.
4. Additional Directors.
5. Alternate directors.
6. Professional Directors.
7. Nominee Directors.
8. Independent Directors.
9. Small shareholders Directors.
KEY MANAGERIAL PERSONNEL
Key Managerial Personnel (KMP) or Key Management Personnel refers
to the employees of a company who are vested with the most important
roles and functionalities. The Companies Act mandates certain classes
of companies to include such personnel in its ranks.
Under Section 2 of the Companies Act 2013, Key Managerial Personnel
in reference to a company are as Chief Executive Officer/Managing
Director/ Company Secretary/ Whole Time Director.
DIRECTORS IDENTIFICATION NUMBER
RESTRICTION ON NUMBER OF DIRECTORSHIP
CHOICE ON BECOMING DIRETOR OF MORE THAN 20

COMPANIES
PENALTY FOR ACTING AS DIRECTOR IN MORE THAN 20

COMPANIES
POSITION OF DIRECTORS
1. Directors as Agent
2. Directors as Trustees
3. Directors as Officers in the Company
4. Directors as Employees
5. Directors as Managing Partners
APPOINTMENT OF DIRECTORS
1. By the Articles as regard first directors (section 152)
2. By the Company at General Meeting
i) Retirement by Rotation
ii) Where annual general meeting is not held.
iii) Deemed reappointment of a retiring director
iv) No automatic reappointment
v) Fresh Appointment
vi) Appointment of each director to be voted individually
vii) Filing of Written Consent by Directors
3. By the principle of Proportional Representation
4. By the Board of Directors
A. Additional directors B. Alternate Directors C. Directors filling Casual
Vacancy
5. By third parties
6. By the Central Government
7. By the small shareholders
8. By the tribunal in Sick Industries
DUTIES OF DIRECTORS
1. FIDUCIARY DUTIES
2. DUTY OF CARE AND SKILL
3. DUTY TO ATTEND BOARD MEETINGS
4. DUTY NOT TO DELEGATE
5. DUTY TO DISCLOSE INTEREST
6. STATUTORY DUTIES
7. DUTY TO PREPARE DIRECTORS’S RESPONSIBILITY
STATEMENT AND SEND TO THE REGISTRAR ALONG
WITH BOARD’S REPORT.
SHARE QUALIFICATION OF DIRECTORS
The companies act does not lay down any specified
academic qualification for appointment as a company
director. The AOA generally require that the
qualification of director shall be the holding of a
specified number of shares known as qualification
shares. The articles of a company generally provide for
such qualification shares so that directors may have
personal interest in the company. Unless he is already
qualified, he must obtain the qualification shares
within two months after his appointment as a director.
It is not essential for the director to buy his shares
directly from the company. The director must hold
these shares in his own right. Until the required
number of shares are registered in the name of the
director, he is not qualified.
DISQUALIFICATION OF DIRECTORS
1. He has been found to be of unsound mind by a
competent court.
2. He is an undischarged insolvent.
3. He has been convicted of an offence.
4. He has not paid any call in respect of shares of the
company held by him.
5. He has been disqualified by an court for an offence
of fraud or misfeasance in relation to the company.
RIGHTS OF DIRECTORS UNDER COMPANIES ACT 2013
Individual rights are –
• a) Right to inspect books of accounts.
• b) Right to receive notices of board meetings.
• c) Right to receive draft circular resolutions.
• d) Right to receive sitting fee.
• e) Right to be heard at the General Meetings.
• f) Right to inspect minutes of board meetings
• h) Right to participate and vote at Board meetings.
• i) Right to claim travel, stay and other expenses
• j) Right to summon board meetings
• k) Right to ask the board to appoint alternate director.
Collective rights are –
• a) Right to refuse transfer of shares
• b) Right to elect a Chairman
• c) Right to appoint a Managing Director
• d) Right to recommend Dividend
• e) Right to approve investments.
LIABILITY OF DIRECTORS
1. CIVIL LIABILITY
2. CRIMINAL LIABILITY
CIVIL LIABILITY
A. LIABILITY TOWARDS THE COMPANY
i. Negligence ii. Misfeasance iii. Breach of trust
iv. Ultra Vires Acts
B. LIABILITY TO THIRD PARTIES
i. As to Contracts ii. As to frauds and torts
iii. Liability under the provisions of the act
* Mis-statement in a prospectus
*Failure to repay the application money for shares
* Irregular allotment
* Failure to repay application money for shares
* In case of a fraudulent trading by the company.
CRIMINAL LIABILITY OF DIRECTORS
a. Filing of prospectus containing untrue statement- two years
imprisonment and fine upto Rs. 50,000.
b. Issuing false advertisements inviting deposits- two years
imprisonment and fine upto Rs. 50,000.
c. Fraudulently inducing persons to invest money- five years
imprisonment and fine upto Rs. 1,00,000.
d. Undischarged insolvent acting as director- two years
imprisonment and fine upto Rs. 50,000 or both.
e. Failure to lay balance sheet at AGM- imprisonment upto 6
months or fine upto Rs. 10,000 or both.
f. Failure to supply information to auditors- imprisonment upto 6
months or fine upto Rs. 50,000 or both.
g. Acting as director after removal by court- imprisonment upto
one year or fine upto Rs. 50,000 or both.
h. False declaration of company’s solvency- imprisonment upto
one year or fine upto Rs. 50,000 or both.
COMPANY SECRETARY
Definition: Section 2(24) of the Act defines a secretary
as follows:
Secretary means a Company Secretary within the
meaning of Section 2(1) (c) of the Company Secretaries
Act, 1980 and includes any other individual possessing
the prescribed qualifications and appointed to perform
the duties which may be performed by a secretary
under this Act and any other ministerial or
administrative duties.
QUALIFICATION OF A COMPANY SECRETARY
The Whole-time company secretary as a KMP shall be a
member of the Institute of Company Secretaries of
India. A listed company or any other public company
having a paid up share capital of Rs. 10 crores or more
shall appoint any individual who possesses the
qualification of membership of the Institute of
Company Secretaries of India constituted under the
Company Secretaries Act 1980 as a whole-time
secretary to perform the duties of a KMP and Secretary
under the Companies Act 2013.
OTHER QUALIFICATIONS OF A COMPANY SECRETARY

a. Sound Education
b. Proficiency in language
c. Knowledge of Office organization and business
methods.
d. Knowledge of accountancy and taxation.
e. Knowledge of Mercantile Law.
f. Knowledge of economics, banking and finance.
g. Impressive personality.
RIGHTS AND POWERS OF A COMPANY SECRETARY

1. RIGHT TO SUPERVISE AND CONTROL THE
SECRETARIAL DEPARTMENT.
2. RIGHT TO SIGN DOCUMENTS.
3. RIGHT TO ISSUE SHARE CERTIFICATE.
4. RIGHT TO ACT UNDER COMPANIES ACT, INCOME
TAX ACT.
5. RIGHT TO FOLLOW THE ORDER OF THE DIRECTOR.
DUTIES OF A COMPANY SECRETARY
A. STATUTORY DUTIES
1. Under the Companies Act
2. Under Income-tax Act
3. Under Stamp Act
4. Under Other Acts
B. GENERAL DUTIES
1. Duties to the Directors
2. Duties to the shareholders and the public
LIABILITIES OF A COMPANY SECRETARY
A. STATUTORY LIABILITIES
 Default in filing a return of allotment- fine upto Rs. 1000 for every day
which may extend to 1 lac if the default continues.
 Default in filing annual return – fine upto Rs. 50,000 and if default
continues rupees 5 lacs.
 Default in holding AGM of the company- fine upto Rs. 1 lac plus fine upto
Rs. 5000 for every day after the first during which such default continues.
 Default in the circulation of the member’s resolution- fine upto Rs. 25,000.
 Refusal in allowing inspection of minutes of general meeting- fine upto Rs.
5000.
 Default in laying down P/L Account and Balance Sheet at the AGM- fine
upto Rs. 50,000
 Failure to give the due notice of board meeting- fine upto Rs. 25,000.
LIABILITIES OF A COMPANY SECRETARY
B. CONTRACTUAL LIABILITIES
 A company secretary is expected to perform his duties with reasonable
care and skill. He is liable to the company for damages caused by his wilful
misconduct or neglect of duties. On this ground, he may be dismissed.
 He should not do anything beyond his authority. If he acts beyond his
authority he will be personally liable for any damage or loss suffered by
the company or any third party as a result of his action.
 He is under an obligation not to disclose any confidential or secret
information relating to the affairs of the company.
 He stands in a fiduciary position to the company and if he makes a secret
profit on account of his position as secretary of the company, he will be
liable to account for it to the company.
 If he commits fraud or does any wrong within course of his employment,
he is liable to indemnify the company or any third party for he loss
suffered on account of his action. But, he is not liable for any fraud on the
part of any of his assistants unless he is party to it.
POSITION OF A COMPANY SECRETARY
The legal position of a secretary of a company is that of
an agent and servant of the company acting under the
directions of the board.
A secretary is a mere servant, his position is that he is
to do what he is told and no person can assume that
he has any authority to represent anything at all nor
any one assume that statements made by him are
necessarily to be accepted as trustworthy without
further enquiry.
DISMISSAL OF A COMPANY SECRETARY
The secretary may be removed from office by the B.O.D under
the powers expressly given in the articles or under their general
powers which the articles generally given them. A secretary
being a servant of the company, his suspension and dismissal
are governed by law applicable to employer and employees. The
service of the secretary may be terminated by giving him/ her
notice as per the terms of service agreement. If an agreement
does not mention any specific period of notice, reasonable
notice may be given. The services of secretary may be
terminated without notice, if he makes profits secretly. He may
be dismissed for willful disobedience, misconduct, negligence,
incompetence or permanent disability.
CORPORATE SOCIAL RESPONSIBILITY
MEANING: Corporate Social Responsibility (CSR) can be defined as a Company's sense of
responsibility towards the community and environment (both ecological and social) in which it
operates. Socially responsible companies do not limit themselves to using resources to engage in
activities that increase only their profits.
DEFINITION: The Companies Act, 2013 has formulated Section 135, Companies (Corporate Social
Responsibility) Rules, 2014 and Schedule VII which prescribes mandatory provisions for Companies to
fulfil their CSR.
Applicability of CSR Provisions:
On every Company including its holding or subsidiary having:
• Net worth of Rs. 500 Crore or more, or
• Turnover of Rs. 1000 crore or more, or
• Net Profit of Rs. 5 crore or more.
During any financial year shall constitute a CSR committee of the board.
CSR Committee:
• Every Company on which CSR is applicable is required to constitute a CSR Committee of the Board:
• Consisting of 3 or more directors, out of which at least one director shall be an independent
director. However, if a company is not required to appoint an independent director, then it shall have
in 2 or more directors in the Committee.
• Consisting of 2 directors in case of a private company having only two directors on its Board
• Consisting of at least 2 persons in case of a foreign Company of which one person shall be its
authorised person resident in India and another nominated by the foreign company
CORPORATE SOCIAL RESPONSIBILITY
Functions of CSR Committee:
• Formulate and recommend to the Board, a CSR Policy which shall indicate the
activities to be undertaken by the Company
• Recommend the amount of expenditure to be incurred on the activities referred to
in the CSR policy.
• Monitor the CSR Policy of the company from time to time
• Institute a transparent monitoring mechanism for implementation of the CSR
projects or programs or activities undertaken by the company.
CSR Activities
• The CSR activities shall be undertaken by the company, as per its CSR Policy,
excluding activities undertaken in pursuance of its normal course of business.
• The BOD may decide to undertake its CSR activities approved by the CSR
Committee
• a section 8 company or a registered trust or a registered society, not established
by the company, either singly or along with any other company.
The CSR projects or programs or activities not to be considered as CSR Activities
• Expenses for the benefit of only the employees of the company and their families
• Contribution of any amount directly or indirectly to any political party
Display of CSR Activities on its Website
• The BOD shall disclose contents of CSR policy in its report and the same shall be displayed on
the company’s website, if any.
Other Important Points:
• The balance sheet of a foreign company to be filed under section 381(1)(b) of the Act
shall contain an Annexure regarding report on CSR.
• The Board of Directors shall ensure that activities included by a company in its CSR
Policy are related to the areas or subjects specified in Schedule VII of the Act.
List of CSR Activities

• Eradicating hunger, poverty and malnutrition, promoting health care
including preventive health care and sanitation making available safe
drinking water.
• Promoting education, including special education and employment
enhancing vocation skills especially among children, women, elderly
and the differently abled and livelihood enhancement projects.
• Promoting gender equality, empowering women, setting up homes and
hostels for women and orphans; setting up old age homes, day care
centers and such other facilities for senior citizens and measures for
reducing inequalities faced by socially and economically backward
groups.
List of CSR Activities ( Continued…)
• Measures for the benefit of armed forces veterans,
war widows and their dependents;
• Training to promote rural sports, nationally
recognized sports, Paralympic sports and Olympic
sports
• Contribution to the Prime Minister’s national relief
fund or any other fund set up by the central govt. for
socio economic development and relief and welfare of
the schedule caste, tribes, other backward classes,
minorities and women;
• Contributions or funds provided to technology
incubators located within academic institutions which
are approved by the central govt.
• Rural development projects.
***************************************************************
UNIT V COMPANY MEETINGS
REQUISITES OF A VALID MEETING
1. A meeting to be valid must be called by a proper authority. The proper authorities to
call the meetings are:
i)Board of Directors ii) Members iii) The Tribunal
2. Notice: The second requirement of a valid meeting is that all those who are
concerned with business of the meeting and are entitled to attend it, are communicated of
date, time and business of the meeting. Such a communication is called ‘’notice of the
meeting’’.
i) Length of Notice: Not less than 21 days notice in writing or through electronic mode
should be given to the members to call a meeting of any kind. It means that both the date
of the meeting and the date on which it is served are to be executed. i.e 21 clear days
notice.
ii) Notice to whom: Notice of every meeting must be given to the following persons:
a. every member of the company at his registered address in India.
b. every person entitled to shares in consequence of the death or insolvency of a
member.
c. the auditor or auditors of the company.
d. every director of the company.
iii) Contents of the Notice: Every notice of a company must specify the place, day and hour
of the meeting and shall contain a statemen t of the business to be transacted threat. If
time for holding the meeting and other essential particulars required by the section 101
are not mentioned in the notice, the meeting will be invalid and all resolutions passed
thereat will be of no effect.
a. Place of the meeting: For AGM, at registered office of the company or at some
other place within the same city, town or village in which the registered office of the
company is situated. For other general meetings, it is not subjected to any provision.
b. Day of the meeting: For AGM, meeting can be conducted on any day that is not a
public holiday. For other general meetings there is no bar.
c. Time of the meeting: Every AGM must be held during the business hoursof the
company. But such meeting may continue beyond the usual hours.
d. Type of Businesses: Notice of meeting must contain a statement of nature of the
business to be transacted in the meeting. There are two types of classification:
*Ordinary Business: The consideration of accounts, balance sheet and the reports of the
directors and auditors. The declaration of dividend. The appointment od directors in place
of those retiring. The appointment of and fixing the remuneration of auditors.
*Special Business: Any business other than ordinary business transacted at an AGM and
extra ordinary general meeting is deemed as special business.
COMPANY MEETING
3. Proper Quorum: Quorum means the minimum number of members who must be
present in order to constitute a valid meeting and to validly transact business at the
meeting, if the quorum is not present, the meeting shall not be valid and therefore the
proceedings of such meeting shall be invalid.
REQUISITE QUORUM:
i. Public Company- 5 members personally present.
ii. Any other company- 2 members personally present.
iii. Preference shareholders are not counted in quorum when it is affecting their rights.
iv. Proxies are not to be counted in the quorum.
v. Where two or more corporate bodies are represented by a single individual, each of
the bodies corporate will be treated as personally present by the individual
representing it.
vi. Quorum need to be present only at the commencement of general meeting and
does not imply the requirement of a continued presence of quorum throughout the
meeting or when the meeting proceeds to vote.
COMPANY MEETING
3. PROXIES: The word proxy may mean any of the following two things:
i. A person appointed to represent another and vote at the meeting on behalf
of another.
ii. The instrument by which a person is appointed a proxy.
APPOINTMENT OF PROXY AND HIS RIGHTS: Sec 105 authorizes every member to
appoint another person as a proxy to attend and vote instead of himself. Unless:
iii. A member of a company having no share capital cant appoint a proxy.
iv. The member of a private company cant appoint more than one proxy to
attend on the same occasion. But a member of a public company may
appoint more than one proxy i.e he may appoint one proxy in respect of
certain shares held by him and a different proxy for other shares held by
him.
v. A proxy cannot vote except on a poll.
COMPANY MEETING
REQUIREMENTS AS TO INSTRUMENT OF PROXY
1. The instrument must be in writing.
2. Name should appear in the register.
3. Proxy must be deposited within 48 hours.
4. Rights of proxy
5. Disabilities of proxy
6. Revocation of Proxy
7. Inspection of Proxies
8. A body corporate can appoint a proxy
COMPANY MEETING
RESOLUTIONS
Decisions of the company are made by resolutions of its members,
passed at meetings of members. The word resolution has not been
defined in the Companies Act. It may be defined as the formal decision
of a meeting on any motion before it. A proposal when passed and
accepted by the members becomes resolution.
Three Kinds of Resolutions:
Ordinary Resolution
Special Resolutions
Resolutions Requiring a Special Notice
Resolution by Postal Ballot
ANNUAL GENERAL
MEETING
Every Company shall in each year hold in addition to any other meeting a
general meeting as its Annual General Meeting.
WHICH COMPANIES TO HOLD AGM??
Every Company except a OPC whether public or private having a share
capital or not; limited or unlimited must hold AGM.
Objectives of AGM:
1. Protecting the interest of the Shareholders.
2. Approval of Accounts.
3. Shareholders exercise control over the management.
4. Reappointment or replacement of Auditors.
5. Declaration of Dividends.
6. Transaction of Special Business.
ANNUAL GENERAL
MEETING
Subsequent AGM U/S 96
1. There must be one meeting held in each year.
2. The gap between two AGM’s must not be more than fifteen months.
3. AGM must be held not later than 6 months from the close of the financial year,
whichever is earlier.
NOTICE
A public company must give at least 21 clear days notice for convening AGM. It is calculated
excluding:
4. The day of service of the notice.
5. The day on which the meeting is to be held.
NOTICE TO WHOM
6. Every member of the company
7. Legal representatives of deceased.
8. Receiver or official assignee of an insolvent member.
9. Auditors of the company
10. Every director of the company.
ANNUAL GENERAL
MEETING
TIME, DAY AND PLACE OF HOLDING ANNUAL GENERAL MEETING
TIME: Every AGM shall be called during business hours. Business hours means between 9
am to 6 pm. Starting time should be within the business hours.
Day: AGM shall be called on a day which is not a public holiday.
PLACE:
1.The AGM must be held at the registered office of the company.
2. The di4ectors may hold the meeting at any other place within the town, city or village in
which the registered office is situated.
QUORUM
1. Quorum of AGM is 5 members for public company and of atleast 2 members for a
private company personally present
SECRETERIAL DUTIES IN
CONNECTIONS WITH AGM
Before the meeting
• To prepare final accounts
• To get approval from the board
• Submission of final accounts to the statutory auditors
• To draft various documents
• To fix the schedule of the AGM
• To fix board meeting
• To finalise the AGM
• Intimate the stock exchange
• Arrangement for printing
• To issue notice of AGM
• To fix the agenda of the meeting
• Publications of notices of closure of registrar of members
• To prepare the list of proxy forms
• To prepare dividend list
CONNECTIONS WITH AGM
At the meeting
• To collect attendance slip
• To assist the chairman in ascertaining the quorum
• To read the notice of the meeting
• Duty to read directors and auditors report
• Duty to make notes of proceeding of the meeting
After the Meeting

• Prepare Minutes
• To make arrangements for the issue of dividend warrants
• Deposit the corporate dividend tax
• To file copies of final accounts with the registrar
• To prepare annual return
• To get the special resolution registered
EXTRAORDINARY GENERAL
•
MEETING
All general meetings other than AGM shall be called Extraordinary general meeting
NEED for EGM

• Changes in MOA &AOA
• Reduction or reorganization of share capital
• Issue of debentures
• Removal of Directors
• Removal of auditors
BUSINESS TO BE TRANSCATED
All business transacted at such meeting is called special business
WHO CAN CONVENE
• The Board of Directors
• On its own
• On the requisition of share holders
• By Requisitionists themselves
• By the NCLT
EXTRAORDINARY GENERAL
• Notice MEETING
Notice of every EGM conducted by the Board of Directors atleast 21 clear days before the
meeting
Time and venue of meeting
According to Company’s act time and venue of holding AGM has no applicability to the
EGM . However Directors are expected to keep in mind convenience of members in fixing
the time and place of the meeting so that the can exercise their voting rights. A general
meeting other than AGM needs not held only at registered office
EGM convened by Requisitionists
• Time period for holding EGM
• Special businesses
• Expenses to be reimbursed
• No action against defaulting directors
Powers of Tribunal to call EGM
• On the application of member and Director
• Suo motu
CONNECTIONS WITH EGM
Before the meeting
• Duty to call the meeting within 45 days from the date of requisition
• To fix EGM
At the meeting
• To collect attendance slip
• To ensure that proxy will not be allowed to speak
• To assist the chairman

After the Meeting
• Prepare Minutes and to file in the stock exchange
• To file copies of special resolution with the registrar
BOARD MEETING
A board meeting is a meeting of a company's board of directors, held
usually at certain times of the year to discuss company-wide policies or
issues. The board of directors determines the overall business strategy of
the company
Frequency to conduct Board Meeting
i) According to Company’s Act not more than 120 days intervene between two board
meetings.
ii) At least four such meetings shall be held in every year.
First Board Meeting
The first meeting of the board of every company must be held within 30 days of its
incorporation.
Procedure of Convening Board Meeting
1. Arrangements
2. Notice
3. Participation through Video Conferencing
4. Roll Call
5. Statutory Register
BOARD MEETING
Matters Not Dealt Through Video Conferencing
The approval of the annual financial statement
The approval of the board report
The approval of the prospectus
The audit committee meetings
Approval of the matters related to amalgamations and mergers
Notice of the meeting: Not less than 7 days
Place : Board meeting may be held anywhere convenient to the
directors
Time : Meeting should be held on a working day , however it would not
raise any objection if the adjourned meeting is held on a public holiday
for the convenience of the directors.
Quorum: i. One third of its total strength ii. Two directors, whichever is
higher.
Disinterested Quorum- Quorum to be present throughout the meeting-
Adjournment for want of quorum.
SECRETARIAL DUTIES IN
CONNECTIONS WITH BOARD
Before the meeting
MEETING
• To make available various documents
• To fix the schedule
• To send Notice
• To issue notice of AGM
• To fix the agenda of the meeting
At the meeting
• To obtain the signatures
• To get the minutes of the previous meeting confirmed
After the Meeting
• Prepare Minutes and to file in the stock exchange
• Duties to carry out the decisions at the Board Meeting.
Liability of Director
1. Civil liability 2. Criminal Liability
1.CIVIL LIABILITY
a. Liability towards the company
b. Liability to the third parties
a.Liability towards the company
• Negligence
when the directors acting with their powers failed to use
reasonable skills as may be expected from person with their knowledge
and experience ,they can be held liable for negligence
• Misfeasance
It is defined as an breach of duty in the conduct of the company’s
affairs which causes loss to the company. The court may require the
directors who are guilty of mis reason to make good, the loss to the
company
• Breach of trust
It means any mis application of the funds of the company . The assets of
the company are entrusted to the directors to be applied to certain
defined objects and they are responsible for to look after the funds of
the company
• Ultravires act
When directors do any act which are beyond their powers or which are
ultravires and the company suffers a loss the directors shall be liable to
the companies to make good the loss
b.Liabilities to the third parties
• As to contracts
Where directors contracts with their own names without disclosing that they are
acting for the company they are personally liable on the contract
• As to frauds and torts
The director who is party to a fraud or to the commission is personally liable to the
injured party
• Liabilities under the provisions of the act
• Mis statement in the prospectus
• Failure to repay application money
• Irregular allotment
Where minimum subscriptions as stated in the prospectus has not been
subscribed, no allotment of shares can be made by the company. If the
allotment of shares is not made within 60 days after the closure of
subscription , all money received from the applicants shall be rapayed to
them without interest. When such money not so rapayed within further
10days the directors are liable to repay with interest. Any misinformation
which is untrue and false in the prospectus will penalized the director and
held liable for it under section 62
• Fraudulent trading
If the directors indulges themselves in any fraudulent trading with the
third parties they may render themselves personally liable for the contract
according to the act
Criminal Liability
• Filing of prospectus containing untrue statement
• Two years of imprisonment and fine of Rs 5 lakhs
• Fraudulent influencing persons to invest money .5 years of imprisonment
and fine of Rs 1 lakh
• Failure to repay excess application money . 01 year of imprisonment and fine
of Rs 50 thousand
• Concealing the name of creditor. 01 year of imprisonment and fine of Rs 50
thousand or both
• Undischarged insolvent acting as a director. 02 years of imprisonment and
fine of Rs 50 thousand or both
• Supply wrong information to Central govt.06 months of imprisonment and
fine of Rs 50 thousand or both

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RULES TO BE FOLLOWED DURING ONLINE CLASSES

2.You should be dressed appropriately and be seated

3.You will be allowed in and marked attendance only

4.You will mute yourselves throughout. Videos

6.Doubts can be put in the chat box which will be

7.Dont communicate with your friends during the

8. Ensure that there is no disturbance during the

9. Do not eat during online classes

Book for Reference

Book Name: Corporate

Publisher: Kalyani Publisher

incorporated under this act or under any previous company law.’’

although the right to transfer is often more or less restricted’’.

8. Capacity to sue and be sued.

PUBLIC COMPANY PRIVATE COMPANY

PUBLIC COMPANY PRIVATE COMPANY

• There is no restriction on transferability • A private company must restrict the

Conversion of a Private company to Public company

Conversion by default Conversion by choice

The articles have to be altered by passing a special resolution to include requirements pf

•Approval of the central government

•Approval to be filed with the registrar

•Change in the name of the company

A. UNDER JUDICIAL INTERPRETATION B. UNDER STATUTORY PROVISIONS

6. Avoidance of welfare legislations 6. Fraudulent Trading.

7. Punishment of contempt of court 7. Investigation of ownership of company.

8. Ascertaining true nature of transaction if 8. Liability for ultra vires acts.

9. Determination of technical competence of 9. Liability under other statutes.

10. Formation of subsidiary company to act

2. NATIONAL COMPANY LAW TRIBUNAL

3. NATIONAL COMPANY LAW APPELLATE TRIBUNAL

4. THE ZONAL OFFICE ( HEADED BY REGIONAL DIRECTORS)

5. FIELD OFFICES ( REGISTRAR OF COMPANIES FOR EACH

is a part of the Ministry of Finance.

Powers Vested specifically in Central Govt.

A. Sanction to change of registered office clause.

B. Order inspection of register of members/directors

C. Order inspection of minutes of general meetings.

D. Order supplying copy of annual accounts.

E. Making rules relating to winding up.

F. Order inspection of register od director’s shareholding.

1. NATIONAL COMPANY LAW TRIBUNAL

Features and Benefits

1. Avoiding confusion of jurisdiction and distribution of powers.

2. Relieving court of mounting litigations.

3. Avoiding multiplicity of litigation

4. Faster disposal of cases

1. NATIONAL COMPANY LAW TRIBUNAL

1. Reduction of share capital

2. Order investigation of affairs

3. Order investigation of membership of a company

4. Order termination of managerial personnel

5. Impose restrictions on transfer of shares or debentures

6. Powers regarding winding up.

7. Order inspection of documents

8. Powers of protection of employees during investigation

9. Powers to investigate books of accounts.

10. Sanction revival/ rehabilitation of sick units

Appellate Tribunal under the Act

and accompanied by such a fee as may be prescribed

setting aside the order appealed against

Supreme Court or the Chief Justice of High Court

finance, industrial management, industrial reconstruction, administration, investment,