This action might not be possible to undo. Are you sure you want to continue?
Sole Proprietorship One –Person Company Hindu Undivided family Partnership Firm Limited Liability Partnership Co-operative Societies Non-Government Organizations Non-Profit Company Insolvency Law
Sole - Proprietorship
Meaning and Features
A Sole Proprietorship is an unincorporated business owned by one person. The business is owned and represented legally by an individual. The life of sole proprietorship is limited to owners life span. No registration required All liabilities are the personal liabilities of owner. Can engage any no. of employees or contractors. All incomes and expenses are included in Sole Proprietor’s income tax returns.
.Proprietorship Low start up costs. Easy to form. Quick decisions. Better control and effective business administration. Minimal reporting requirements.Merits of Sole .
Limitations of Sole . activities rest on sole proprietor. . Productivity and creativity of business is affected as all decisions. All personal wealth and assets is at stake.Proprietorship Personal liability of the Sole Proprietor is the major disadvantage. No strict standards of financial control.
Nominee Director should be appointed to manage the affairs of the company in case of death or disability of sole person till date of transmission of shares to legal heirs of the demised person. .ONE-PERSON COMPANY (OPC) OPC was proposed by Irani Committee. OPC may be registered as a private company with one member and at least one director.
HINDU UNDIVIDED FAMILY (HUF) Meaning and Features .
.HINDU UNDIVIDED FAMILY The joint family business carried out by the members of a Hindu family is legally called ‘Hindu Undivided Family. Business is carried under the control and supervision of head of family also known as ‘karta’. It is not a creation by contract. Person acquires by birth an interest in the Joint family property.’ Consists of people who have lineally descended from a common ancestor and includes wives and daughters.
but the karta can. Two kartas of HUF can form a partnership but the individual members of the two HUF s do not automatically become partners. Coparceners are entitled for the partition of HUF. Members receive maintenance from HUF. Male members are called as coparceners and female members are referred as ‘members’. . A HUF cannot enter into a partnership with another person.
. Generally a HUF should consist of two male members. A HUF is assessed to tax as a separate person. The rights and liabilities are governed by the Hindu law. HUF is considered as a good tax cutter. But in case of partition a small family receiving a share can form a new HUF with one male member.
PARTNERSHIP FIRM THE PARTNERSHIP ACT 1932 .
THE PATNERSHIP ACT Came into force on 1st October 1932. Partnership firm may have minimum to partners. Definition Partnership is the relationship between persons who have agreed to share the profits of a business carried on by all. or any of them acting for all. A partnership contract is a special contract and hence principles of law of contract apply. A Partnership arises from contract and not from special status as in case of HUF. .
The partner can act as agent (to bind other partners by his acts) and as a principal (being bound by the acts of other partners). Type of relationship among the partners is termed as ‘Mutual agency’.Partnership Business The parties to a partnership agreement must carry a series of business transactions. . The profit must be distributed among the partners in agreed ratio.
. Partner by Estoppel or Holding out. Sleeping or Dormant Partner. Partner in Profits only. Sub-Partner.Kinds of Partners Actual or Ostensible Partner. Nominal Partner.
An unregistered firm cannot claim a set-off.Registration of Firms The registration of Partnership firms is not compulsory and can take place at any time during the continuance of the partnership firm. . A partner of an unregistered firm cannot sue the firm or any partner by civil suit but he can institute criminal proceedings against them. An unregistered firm cannot sue a third party however a third party can sue such an unregistered firm.
Receiver or the Court to realize the property of an insolvent partner of an unregistered firm. or for share of the property of dissolved firm. The powers of an Official assignee. The right of the partner to sue for dissolution of firm or for the accounts of dissolved firm. The right of a firm having no place of business in India. The partner can sue for criminal proceedings against other partners or third party. . The right of third party to sue the firm or any partner.There are certain exceptional circumstances wherein the non-registration of a firm does not affect the following rights.
Types of Partnership Partnership at will. Particular Partnership. Relations of Partner to One Another . Partnership for a fixed term.
. Equal share in absence of P/L sharing ratio. Freedom to express his views.Rights of a Partner Every Partner has a right to take part in the partnership business. Right to be indemnified for the losses incurred in the course of business. Right to access and inspect the accounts. Right to be consulted.
Right not to be expelled. Right to retire. Right to dissolve the Partnership at will. . Right to do all acts to protect the firm from losses. Right to receive interest on capital.
To attend duties diligently. . To be just and faithful to each other. Not to carry competitive business. Contribute losses.Duties of Partners To conduct the business in common advantage. To render true accounts and full information. Not to ask for remuneration unless provided in the agreement. To indemnify other partner.
. Nor shall the firm be liable for any act of the insolvent partner done after the date of insolvency. In absence of any agreement. If Partnership deed contains provision for insolvency then the insolvent partner shall not be liable for any act of the firm. firm stands dissolved on insolvency.Insolvency of Partner Partner ceases to be a Partner from the date of insolvency declared.
Limited Liability Partnership (LLP)
LLP is proposed by Irani committee. Liability joint and several. Unlimited liability is the cause for creation of LLP. LLP can function in competitive international market as it has unlimited capacity and provides internal flexibility.
Salient features of Proposed LLP
Corporate body. LLP as last word in partnership name. It can sue and be sued. Cannot be regulated by partnership law. A person ceases to be a Partner as per terms of agreement or by giving 30 days notice or upon his death or upon dissolution of LLP. Registration of LLP.
Co-Operative Societies are enterprises or business oriented organizations owned by an association of persons, wherein the members have common interest to achieve common goals. A Co-operative Society is a separate legal entity and enjoys a perpetual existence. The objective of Co-operative Society is both economical and social. The Co-operative Societies operate democratically which means, one man one vote, and through two bodies i.e. members and board of directors.
Producer’s Co-Operative Societies.Types of Co-Operative Societies Consumer’s Co-Operative Societies. . Worker’s Co-Operative Societies.
Legal Regulations of Co-Operative Societies The Co-Operative Societies in India are regulated by The state Co-Operative Societies Act. The multi state Co-Operative Societies Act. .
The perspective members are willing to contribute minimum amount of share capital prescribed by Registrar of Co-Operative Societies. 50 in case of multi state Co-Operative Societies. .Requirements for forming a Co-Operative Societies Minimum membership 10 in case of state Co-Operative Societies. The objective of forming of Co-Operative Societies must be promotion of economic interest of its members. Registration of Co-Operative Societies should not be adverse to co-operative movement.
Under the Multi-State Co-operative act Applications at least by 50 persons Share money Copy of proposed Bye-laws. .Registration Under State Act – Applications (minimum 10) Share money Copy of proposed Bye-laws.
Advantages of Co-Operative Societies Social and educational needs are served. Enjoys perpetual existence. Community needs are met with great ability. Can stimulate community development in remote areas. .
Disadvantages of Co-Operative Societies Members investing in large capital have no advantage over smaller contributors. . business decisions are more likely to be made for reasons other than the returns on investment. social and educational objectives. Due to democratic.
Limited company incorporated under Section 25 of the Companies Act. .Non-Government Organization NGO NGO may be a Society –registered under Societies Registration Act 1960. Trust – (constituted under the Trust deed and registered with Income Tax Authority).
Memorandum of Association. declaration . affidavits. Registration – with Registrar of Soy Documents for registration – Application. authority letters.NGO as a Society Common purpose is both legal and useful for others. Consent letters of members of managing committee.
NGO as a Trust Work for charitable purpose Powers embodied in Trust Deed Registration with Charity Commissioner .
charity etc. art. religion. science.Non – Profit Company (sec.25) Objectives – can include promotion of commerce. Profits applied for fulfillment of objects Non – profit Co may be Public or Private Registration – documents – Memorandum of Association & Articles of Association .
Acts of Insolvency – refers an act or default committed by the debtor. his properties are assigned to court. an insolvent is disqualified of his civil rights . He must be a debtor and must have committed an ‘ act of insolvency’. Consequences of Insolvency – debtor gets protection against legal proceedings by creditors.Insolvency Law in India A person who cannot or does not pay debts in full has committed an act of insolvency.
Insolvency Proceedings Insolvency Petition Admission of petition Interim Receiver Hearing of petition Adjudication of Debtor Vesting of Insolvent’s property Realisation and distribution of property Discharge of Insolvent. .
Law Relating to Corporate Business Entities List of Documents required to Incorporate a Company Buy – back of Securities Mergers and Acquisitions .
. manager or secretary of the company. Declaration to be given by advocate of the Supreme Court or a High Court. LIST OF DOCUMENTS REQUIRED TO INCORPORATE A COMPANY (i) Declaration of compliance in Form No. 1 that all the requirements of the Companies Act. 1956 and the rules made thereunder have been complied with in respect of registration and matters precedent and incidental thereto. in whole time practice in India who is engaged in in the formation of a Company. an attorney or a pleader entitled to appear before a High Court or a Secretary or a Chartered Accountant. or by a person named in the Articles as a director.
18. (ii) The stamped and signed cop of the Memorandum and Articles of Association. if any. (iv) Particulars in favour of one of the subscribers to the memorandum of association or any other person authorising him to file the documents and papers for registration and to make necessary corrections. This should be executed on non-judicial stamp paper of the requisite value. . (iii) Notice of the situation of the registered office of the company in Form No.
Original true copy of the Registrar of Companies’ letter intimating about the availability of name. . (v) Any other agreement. if referred to in the Memorandum and Articles of Association (vi) Any agreement which the company to be incorporated proposes to enter into with any individual for appointment as its managing or whole-time director or manager.
77A. .BUY-BACK OF SECURITIES Purchase of its own securities by a company is popularly referred to as ‘buy-back’ of securities. Company is prohibited from purchasing its securities through its subsidiary company or an Investment Company. Buy-back only from the sources and in the modes prescribed by sec. Authorized by special resolution passed in general meeting of the company. The basic provisions of buy-back of securities are that the articles of the company shall contain a provision authorizing the company to purchase its own securities.
Company and Unlisted Public Company (Buy-Back of Securities) Rules. in addition to compliance with the provisions of Companies Act.e. A company whose securities are not listed on a recognized stock exchange i. A listed company may buy-back its securities through tender offer or from the open market which may be through the stock exchange etc. 1999. A public company whose securities are listed on a recognized stock exchange shall. also comply with the SEBI (Buy-Back of Securities) Regulations. private company and public unlisted company shall. also comply with the Private Ltd. . in addition to the provisions of the Companies Act. 1998.
In case of a company which is to be wound up. dividend represents that portion of the profits which are distributed among the shareholders of the company. dividend represents a distribution of the co’s realized assets among the creditors and contributories according to their rights. .Dividend on Shares The term ‘dividend’ can be defined in two ways – In case of company which is going concern.
The power to pay dividend is inherent and is not derived from Companies ACT OR M/A or A/A. Sources out of which dividend should be paid – Current Profits Reserves Monies provided by Govt. and Depreciation .
A final dividend for any financial year can be declared and paid only when the Balance Sheet and Profit and Loss Account are presented to shareholders at Annual General Meeting. Shareholders can approve the recommended rate of dividend Preference Sh holders receive dividend at a fixed rate before any dividend is declared on Equity Shares. .
Dividend may be paid – in cash In the form of paid-up shares or debentures By issue of share warrant Capital profits for distribution of dividend if Article of Association permits .
. Acquisition – means acquiring the ownership in the property by purchase of controlling interest in the share capital of the company acquired. Takeover is also an acquisition.MERGERS AND ACQUISITIONS Merger / Amalgamation – One company loses corporate existence and the survivor co acquires the assets as well as takes liabilities of the merged co.
thus ensuring economical and timely supply of tools. For example. heavy engineering co acquires supplier co that provides tools. . Vertical Merger – when a co acquires or merges with another company that supplies raw material or provide services e.Types of Mergers Horizontal Merger – merging of two or more companies competing each other. a pharmaceutical co of one place acquiring another pharmaceutical co at another place.g.
This kind of merger diversify the products marketed. . Conglomerate Merger – It is merger of two or more companies which are dealing in different products or areas.
Amalgamation of cos is done through a Scheme of arrangement approved by shareholders and or creditors of the companies concerned. Brief procedure – A company has to approach the court with a scheme of arrangement and a petition .Amalgamation and Reconstruction of Non-Banking Companies To follow procedure u/s 391 to 396A of the Companies Act.
latest auditor’s report on the accounts of the company. . Directors disclosure of their interest in the scheme. The company is to file an affidavit giving all material facts like latest position of the company. for the fulfillment of the desired merger / amalgamation.
. Chairman submits minutes of the meeting to court. The court will hold a general meeting of the company and gives directions like how & where to conduct the meeting and will appoint a Chairman for the meeting. If number representing is 3/4th in value of the creditors. the court will pass its orders. The power to amalgamate is statutory.
RBI has to cancel licenses of many cooperative banks.Amalgamation and Reconstruction of Banking Companies RBI to manage the risk level of banking system The decision to wind up or merge the sick bank with another healthy bank. . The move to cancel licenses of bigger banks will have negative consequences and adverse impact on credibility of the banking system.
. Banking Co different from mfg or trading company. Procedure & Schemes for Amalgamation and Reconstruction of Banking Companies Banking Regulation Act. Banking co carries banking busi in India. 1949 (B R Act) provides for procedure and scheme. investment .e accepting deposits from public. Foreign Banks doing banking business in India are also covered under B R Act and provisions of Companies Act. lending money. i.
A resolution passed in general meeting or Board Resolution or an agreement is not valid if it is inconsistent with the provisions of B R Act.B R Act overrides Memorandum and Articles of Banking Company Provisions of the B R Act overrides provisions contained in memorandum and Articles of a banking company. .
Protection of interest of members.Scheme of Compromise / Arrangement by Banking Company To follow procedure given under sections 391 to 393 of the Companies Act. RBI has to certify that such scheme does not harm interest of depositors RBI can propose winding up if compromise / arrangement sanctioned by court is not satisfactorily worked out. . creditors and public is considered.
If both parties are banking companies. .Procedure for Amalgamation of Banking Companies The B R Act provides for scheme of compromise or arrangement for amalgamation of two banking companies. B R Act will apply. then provisions of Companies Act will apply. Compromise – High Court along with RBI has powers to finalize a scheme. If not.
After that. Resolution by 2/3rd majority value of share holders of each banking company. The draft of the terms of the scheme of amalgamation to be placed before shareholders of each banking company. Full details of such meetings to be published in two newspapers once a week for three consecutive weeks. . scheme to be submitted to RBI.
Reconstruction or Amalgamation of Sick Banking Company .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.