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COMPANIES ACT, 1956

INDEX
History Meaning & Definition Characteristic Features Kinds of Companies Formation and Incorporation of a Company Memorandum of Association Articles of Association

HISTORY OF COMPANY LEGISLATION


It was the British who pioneered the company legislation in India.
After many recast, the business companies were regulated by this Act At the end of 1950, the Govt. of India appointed a Committee under the Chairmanship of Shri H.C.Bhaba for the revision.

MEANING AND DEFINITION OF A COMPANY


a company formed and registered under this Act or an existing Company.

CHARACTERISTIC FEATURES
Separate Legal Entity Limited Liability Artificial person
Perpetual Existance Ownership of property Common Seal

KINDS OF COMPANIES

Private Company Public Company

DIFFERENCE BETWEEN PUBLIC & PRIVATE


Private Company Public Company Requires minimum 2 members Requires minimum 7 members

Maximum limit of 50 members

No Maximum limit

Minimum paid up capital Rs. 1 Lakh Minimum paid up capital is Rs. 5 lakh Raises deposits privately only from members, directors and their relatives Shares are not transferable except for the provisions in the articles May raise deposits from public as well Shares are freely transferable and may be even quoted on a Stock Exchange

FORMATION & INCORPORATION OF A COMPANY


The whole process of formation of a company may be divided into four stages, namely:
(i) Promotion (ii) Registration (iii) Floatation/Raising of Capital (iv) Commencement of Business.

PROMOTION
Who is a Promoter?

Legal Position of a Promoter


Duties Liabilities of promoters

Remuneration of promoters
Pre-incorporation contracts

REGISTRATION/INCORPORATION
Private Company : Minimum No. of Members required 2.
Public Company : Minimum No. of Members required 7 Important Steps

Type of Company Application for Availability of Name Preparation of Memorandum & Articles of Association Preparation of Other Documents Filing of Documents for Registration

REGISTRATION/INCORPORATION
Certification of incorporation Effect of certificate of incorporation Conclusiveness of certificate of incorporation Provisional Contracts

FLOATATION / RAISING OF CAPITAL


A company may raise capital through Private placement Private placement means raising of capital from friends, relatives and through brokers. Issue of Prospectus (i) in case public is to be invited to subscribe to its capital, or (ii) deliver a statement in lieu of prospectus

COMMENCEMENT OF BUSINESS (SECTION 149)


Where the Company has issued a Prospectus Where the company has not issued a Prospectus Penalty

MEMORANDUM OF ASSOCIATION
Every company has to have a Memorandum of Association. It contains, besides other significant information, the objects for which the company is formed.

CONTENTS OF MEMORANDUM
1. 2. 3. 4. 5. 6. Name Clause Registered Office Clause Objects Clause Liability Clause Capital Clause The association or subscription clause

DOCTRINE OF ULTRA VIRES


The object clause of the Memorandum of the company contains the object for which the company is formed. An act of the company must not be beyond the objects clause, otherwise it will be ultra vires and, therefore, void and cannot be ratified even if all the members wish to ratify it. This is called the doctrine of ultra vires

ALTERATION OF MEMORANDUM
1. 2. 3. 4. 5. Change of name Change of registered office Alteration of objects clause Alteration of liability clause Alteration of capital clause

ARTICLES OF ASSOCIATION
The articles of association of a company are its bye-laws or rules and regulations that govern the management of its internal affairs and the conduct of its business. Contents Model form of articles

COMPANIES WHICH MUST HAVE ARTICLES


Unlimited Companies:
The Articles of such a company must state: Total number of members; and Share capital.

Companies limited by Guarantee:


Articles of such company must state total number of members.

COMPANIES WHICH MUST HAVE ARTICLES CONTD.


Private Companies limited by shares:
must include requirements of 3(1)(iii). Section

No Article Company
A public limited company having share capital may be registered without Articles.

ALTERATION OF ARTICLES
Articles may be altered by a company by passing special resolution at a general body meeting of shareholders.

DOCTRINE OF CONSTRUCTIVE NOTICE


Every person dealing with the company is deemed to have read M/A and A/A and understood the contents thereof in the correct perspective.

DOCTRINE OF INDOOR MANAGEMENT

Rule of indoor management is an exception to the doctrine of constructive notice. Exceptions of indoor management

PROSPECTUS
It is an invitation issued to public to purchase shares/debentures. Date of Publication and Date of Issue. Matters to be stated in prospectus.

SHARE AND SHARE CAPITAL


A Share represents a unit into which capital of a company is divided. It represents a bundle of rights and obligations. Types of shares. Types of Share Capital.

Membership Investments, Loans, Borrowings & Debentures Divisible Profits and Dividend Company Meetings

PRESENTED BY
Radha R (11BSP0756) Emily Boral (11BSP0311) Mangesh Joshi (11BSP Abishek K (11BSP0421) Nikhil Patil (11BSP0619) Nikhil Yadav (11BSP0621) Nupur Juneja (11BSP0651)

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