THE COMPANIES ACT

2013

L29
 Lecture Outcomes
• Realize the importance of the course
• Identify the features of a company
• Recognize the consequences of fraud
Company ????
 an artificial person created by law.

+
a group of persons associated together for the
attainment of a common end, social or economic.


 According to Section 2, Clause 20 of the
Companies Act, 2013 defines a company as
“a company incorporated under this
act (Companies Act,2013) or under any previous
company law”.
‘Existing Company’ means a company
formed and registered under any of the
earlier Company Laws.
Definition : Company

Lindley,
“ an association of many persons who
contribute money or money’s worth to a common
stock, and employ it in some common trade or
business, and who share the profit or loss
arising there from.”
Company :Characteristics

1. Separate legal entity

2. Limited liability
3. Perpetual succession
4. Common seal
5. Transferability of shares
6. Separate property
7. Capacity to Sue
Company :Characteristics
 1. SEPARATE LEGAL ENTITY
- an entity separate from its members.
- an independent corporate existence.
- members cannot be held liable for the acts of
the company.
- company’s money and property belongs to it
and not to the shareholders
CASE : Salomon v. Salomon & Co.Ltd.
- Business sold for £ 30,000
- Assets £ 6,000
- Liabilites £ 17,000
- Debentures £ 10,000
- Unsecured creditors £ 10,000
 2. LIMITED LIABILITY-

A company may be:

- a company limited by shares or
-a company limited by guarantee.
 3. PERPETUAL SUCCESSION-
- Being an artificial person a company never
dies, nor does its life depend on the life of its
members.
 4. COMMON SEAL-
 >The common seal acts as the
official signature of the company.
- >In Companies Act, 2013, a
common seal was required required
for a Company to provide various
authorizations and attestations on
behalf of the Company.
- >The requirement for common seal
has now been made optional
 4. COMMON SEAL-

• Provided that in case a company does not have a

common seal, the authorization shall be made by
two directors or by a director and the Company
Secretary, wherever the company has appointed a
Company Secretary.
5. TRANSFERABILITY OF SHARES

6. SEPARATE PROPERTY

7. CAPACITY TO SUE
What is corporate veil???
 Lifting/Piercing the Corporate
Veil
Veil and not a wall b/w
the company and its
members
(featuring corporate
personality)
- Courts crack the shell
of personality and look
into the beneficiaries.
Exceptions :